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TMI Tax Updates - e-Newsletter
August 25, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
GST - States
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FTX. 56/2017/574 - dated
14-7-2020
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Assam SGST
Assam Goods and Services Tax (Sixth Amendment) Rules, 2020
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CT/GST-14/2017/270 - dated
2-7-2020
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Assam SGST
Seeks to extend the due date for furnishing FORM GSTR-3B for supply made in the month of August, 2020 for tax payer with annual turnover upto ₹ 5 crore.
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FTX.56/2017/Pt-III/465 - dated
1-7-2020
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Assam SGST
Amendment in Notification No. FTX.56//2017/Pt-ll/542 dated the 22nd May. 2020
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FTX.56/2017/Pt-III/464 - dated
1-7-2020
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Assam SGST
Assam Goods and Services Tax (Fifth Amendment) Rules, 2020
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883/XI-2-20-9(47)/17- U.P. Act-1-2017-Order-(139)-2020 - dated
17-8-2020
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Uttar Pradesh SGST
Governor, appoints the 30th day of June, 2020, as the date on which the provisions of sections 02 and 12 of the Uttar Pradesh Goods and Service Tax (Third Amendment) Ordinance, 2020, shall come into force
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882/XI-2-20-9(47)/17- U.P. Act-1-2017-Order-(138)-2020 - dated
17-8-2020
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Uttar Pradesh SGST
Governor, appoints the 18th day of May, 2020, as the date on which the provisions of section 11 of the Uttar Pradesh Goods and Service Tax (Third Amendment) Ordinance, 2020, shall come into force.
Indian Laws
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F. No. 1-1/2020-CCPA - dated
13-8-2020
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Indian Law
Central Consumer Protection Authority (Allocation and Transaction of Business) Regulations, 2020
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Claim of Refund with interest - Ocean freight - This court has declared the levy as ultra vires the IGST Act - The respondents are directed to sanction the refund and pay the requisite amount of IGST already paid by the writ applicant within six weeks - HC
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Illegal detention of applicant for three consecutive days - investigation not conducted in accordance of law - No grounds are made out to allow the presence of the Advocate while questioning or examination by the officers of the respondents - no inquiry/ investigating officer has a right to use any method which is not approved by law to extract information from a witness/ suspect during examination and in case it is so done, no one can be allowed to break the law with impunity and has to face the consequences of his action. - HC
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Classification of goods - Pattadar Pass Book cum Title Deed is a “Document of Title” - printing books - the Pattadar Pass Book cum Title Deed is not a document of title as claimed by the Appellant and is not classifiable under Chapter Heading 4907 of the Customs Tariff Act, The Pattadar Pass Book cum Title Deed is classifiable under Chapter heading 4820 of the Customs Tariff Act. - AAAR
Income Tax
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Capital gain computation - transaction under consideration is between the members of AOP - Deeming fiction - the provisions of section 50C of the Act are not applicable in the instant case and provision of section 45(3) of the Act will be applied. - AT
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Disallowance u/s 40(a)(ii) - though cess may be collected as part of income tax but that does not render such cess either rate or tax which cannot be deducted in terms of provision of section 40a(ii) - AT
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Penalty u/s 271(1)(c) - The AO as well as the CIT(A) only proceeded on the basis that there was no income during the year therefore there is no business activity, but the same is fallacy and cannot be taken as the basis for imposing the penalty. - AT
Customs
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Jurisdiction - willful misstatement - not a bonafide error - show cause notice ought to have been issued by an authority not below the rank of Additional / Joint Commissioner of Customs as per clause (ii) as the amount of drawback was way beyond ₹ 5.00 lakhs - SCN quashed - Fresh SCN may be issued in accordance with law - HC
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Valuation of imported goods - Misdeclaration of imported goods - the adjudication order is vitiated for not permitting the retesting, inspite of the prayer of the importer – assessee - further, as per the report of CRCL the variation in the declared percentage of nickel is hardly 1% which is a matter of normal variation not calling for any adverse inference. - AT
Corporate Law
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Oppression and Mismanagement - transfer of shares of promoters - The mere undertaking of the transferees not to transfer their shares will not cure the illegality. Since, the petitioners are questioning the actions of respondent No. 1-company, non-joinder of the Trust nor its Trustees as parties is not fatal and this Tribunal has every power to conduct legal scrutiny. - Tri
Indian Laws
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Seeking information from GSTN under RTI - Exemption from Disclosure of information - The CIC had passed a decision to give the Minutes of the Board Meeting directing expunction of information which was exempt under Section 8(1)(d) of the Act. Hence the CIC left the whole thing at the discretion of the petitioner which was held not to be the correct approach - Matter restored back with direction - HC
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Cancellation of assignment deed - When it comes to cancellation of a deed by an executant to the document, such person can approach the Court under section 31, but when it comes to cancellation of a deed by a non-executant, the non-executant must approach the Court under section 34 of the Specific Relief Act, 1963. Cancellation of the very same deed, therefore, by a non-executant would be an action in personam since a suit has to be filed under section 34. However, cancellation of the same deed by an executant of the deed, being under section 31, would somehow convert the suit into a suit being in rem. All these anomalies only highlight the impossibility of holding that an action instituted under section 31 of the Specific Relief Act, 1963 is an action in rem. - SC
IBC
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Withdrawal of CIRP proceedings on settlement between parties - when the Applicant wants to withdraw the application before Constitution of CoC, while resorting to amended Regulation 30 A, there is no bar for a party to simultaneously move Adjudicating Authority for withdrawal relying on Rule 11 of the NCLT Rules 2016. The Adjudicating Authority should receive such applications and can deal with the Applications in terms of above Para 79 while it may await response from IRP. - AT
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Initiation of CIRP - Counter claim - the Adjudicating Authority cannot decide the counter claim while admitting the Application. As such, all the essential requirements have been fulfilled and Application under Section 7 IBC was rightly admitted by the Adjudicating Authority - AT
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Initiation of CIRP - Effect of an ‘Acknowledgment’ of dues after the expiry of period of limitation - It cannot be gain said that ‘Acknowledgment of Liability’ is to be in writing, signed by a person against whom the property or right is claimed and the same must be within the period of Limitation. Suffice it for this Tribunal to relevantly point out that to bring an acknowledgment within the meaning of Section 18 of the Limitation Act, 1963, it ought to be an unqualified one which gives a fresh cause of action - AT
VAT
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Maintainability of Writ application - Gujarat VAT Act - Escaped turnover - Supply to SEZ unit - As in the instance case, the GVAT Act, 2003 provides complete machinery for the assessment/reassessment of tax, imposition of penalty and for obtaining relief in respect of any improper orders passed by the authorities, in our opinion, the writ applicant should not be permitted to abandon that machinery and to invoke the jurisdiction of the High Court under Article 226 of the Constitution, more particularly, when the writ applicant has the adequate remedy open him by an appeal to the Joint Commissioner - HC
Case Laws:
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GST
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2020 (8) TMI 570
Profiteering - direction to deposit the profiteered amount - Vires of Section 171 of the CGST Act and Chapter XV of the CGST Rules - vires of Rules 123 and 129 of the CGST Rules - HELD THAT:- This Court in PHILLIPS INDIA LIMITED VERSUS UNION OF INDIA ORS. [ 2020 (6) TMI 626 - DELHI HIGH COURT] , this Court directs the petitioner to deposit the principal profiteered amount i.e. ₹ 19,81,035/- (i.e. ₹ 20,80,087/- minus ₹ 99,052/-) in six equated monthly instalments commencing 01st September, 2020. The interest amount directed to be paid by the respondents is stayed till further orders. List on 03rd November, 2020.
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2020 (8) TMI 569
Confiscation of Detained and seized goods - section 130 of CGST Act - power of inspection, search and seizure - HELD THAT:- We suggested to Mr. Poddar that his clients should prefer an appropriate application under Section 67(6) of the Act for the provisional release of the goods. Mr. Poddar submits that his clients will prefer an appropriate application for the provisional release of the goods, however, this Court may direct the competent authority to pass an appropriate order on such application at the earliest. Without going into the merits of this case, we dispose of this writ application with the direction that pending the confiscation proceedings, if the writ applicants file an application under Section 67(6) of the Act for provisional release of the goods and the vehicle, if any, then the competent authority shall look into the same at the earliest and pass an appropriate order on such application within a period of fifteen days from the date of receipt of such application. Application disposed off.
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2020 (8) TMI 568
Claim of Refund with interest - Period of limitation - Ocean freight for the services provided by a person located in a non-taxable territory by way of transportation of goods by a vessel from a place outside India upto the customs stations of clearance in India - Benefit of N/N. 10/2017-IGST (Rate) dated 28.6.2017 - HELD THAT:- The Notification was a subject matter of challenge in a batch of writ applications, the lead matter being the MOHIT MINERALS PVT LTD VERSUS UNION OF INDIA 1 OTHER [ 2020 (1) TMI 974 - GUJARAT HIGH COURT ] . This Court in Mohit Minerals and allied petitions declared the Notification No.8/2017-Integrated Tax (Rate) dated 28th June 2017 and the Entry No.10 of the Notification No.10/2017-Integrated Tax dated 28th June 2017 as ultra vires the Integrated Goods and Services Tax Act, 2017 on the ground that the same lacked legislative competency. Both the Notifications referred to above were declared to be unconstitutional. The respondents are directed to sanction the refund and pay the requisite amount of IGST already paid by the writ applicant pursuant to the Entry No.10 of Notification No.10/2017-IGST dated 28th June 2017 declared to be ultra vires by this Court in Mohit Minerals - Petition allowed.
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2020 (8) TMI 567
Illegal detention of applicant for three consecutive days - investigation not conducted in accordance of law - Presence of lawyer during investigation - HELD THAT:- Reliance placed in the case of Hon ble Supreme Court titled SENIOR INTELLIGENCE OFFICER VERSUS JUGAL KISHORE SAMRA [ 2011 (7) TMI 910 - SUPREME COURT ]. The said judgment was passed because of special facts and circumstances of the said case as respondent i.e. accused Jugal Kishore Samra was suffering from heart disease and his medical condition was considered by the Ld. Sessions Judge while passing the order. The said case is, thus, distinguishable on the basis of facts and circumstances stated therein. So far as apprehension of petitioner that he may be physically assaulted or manhandled is concerned, this Court is of the opinion that it is a well settled law now that no inquiry/ investigating officer has a right to use any method which is not approved by law to extract information from a witness/ suspect during examination and in case it is so done, no one can be allowed to break the law with impunity and has to face the consequences of his action. No grounds are made out to allow the presence of the Advocate while questioning or examination by the officers of the respondents - Application dismissed.
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2020 (8) TMI 566
Classification of goods - Pattadar Pass Book cum Title Deed is a Document of Title - whether classifiable under HSN 4907 or as a Passbook under HSN 4820? - challenge to AAR decision. HELD THAT:- Section 2(6-b) of the Telangana records of Rights in Land and Pattadar Passbooks Act - 1971 defines title deed and pass book means the title deed and pass book issued under section 6-A. As per Section 2(7) of the Act Pattadar means includes every person who holds land directly under the Government under a Patta whose name is registered in land revenue accounts as Pattadar and who is liable to pay land revenue. Section 2(9) defines record of right means records prepared and maintained under the provisions, or for the purposes of this Act. The Pattadar Pass Book cum Title Deed is a document containing the details of the land owned by a person. The entries in the Pattadar Pass Book are based on the Record of Rights which is prepared in terms of the provisions of the Record of Rights in Land Act, 1971. The legal provisions for issue of the Pattadar Pass Book were first introduced in the Amendment Act 11/1980 to the Andhra Pradesh Record of Rights in Land and Pattadar Pass Book, Act 1971. Prior to this the pahani was the most basic textual land record in Telangana prepared by the Village Revenue Officer. It did not constitute a Record of Rights, but it recorded details like the owner of the land, how they came to be in ownership of the land, mutations and tenancies - The Amendment Act 1/89 to the Andhra Pradesh Record of Rights in Land and Pattadar Pass Book, Act 1971 provided for updating of Record of Rights under Section 3(1) of the Act and for the regularisation of unregistered transfers and alienations under section 5-A of the Act. Either a registered document or certificate issued from the Mandal revenue officer after paying registration fee and stamp duty is considered as document of title and on the basis of such document of title the revenue authority updates the Record of Rights. The updated information in the Record of Rights is entered in the Pattadar Pass Book cum Title Deed. Therefore, the Pattadar Pass Book cum Title Deed is not a document of title as claimed by the Appellant and is not classifiable under Chapter Heading 4907 of the Customs Tariff Act, The Pattadar Pass Book cum Title Deed is classifiable under Chapter heading 4820 of the Customs Tariff Act. AAR decision upheld.
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Income Tax
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2020 (8) TMI 565
Penalty u/s 271(1)(b) - non appearance before the Ld. A.O on the scheduled date of hearing - assessments were completed u/s 153A r.w.s. 143(3) for A.Y 2010-11 to 2015-16 and u/s 143(3) for A.Y 2016-17 - HELD THAT:- We find that the assessee cooperated in the assessment proceedings after attending the proceedings on subsequent dates. Based on these compliances the assessments were completed u/s 153A r.w.s. 143(3) for A.Y 2010-11 to 2015-16 and u/s 143(3) for A.Y 2016-17. Needless to mention that none of the assessment orders were framed ex-parte. We direct the revenue authorities to delete the penalty levied u/s 271(1)(b) of the Act for Assessment Year 2010-11 to 2016-17 - Decided in favour of assessee.
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2020 (8) TMI 564
Deduction u/s 80P(2)(d) - bonus received by the assessee from M/s. Karnataka Co-operative Milk Producers Federation (KMF) - interest or dividend derived by the Co-operative Society from its investments with any other Co-operative Society - HELD THAT:- Bye Laws of KMF, it is seen that every member is entitled to receive some amount as bonus and some amount as dividend as distribution of net profit by KMF on the basis of computing the allowable to be paid by the KMF is different. Bonus is payable for the members with the transaction with KMF and this is the restriction that it should not exceed 25% of the remaining profit after transfer to reserve fund and contribution to Cooperative Education Fund. The dividend is payable as percentage of investment of members out of remaining profit after deducting all other payments to be made such as transfer to reserve fund, contribution to Cooperative Education Fund, Bonus to Members, contribution towards infrastructure fund, contribution towards Nandini Dairy Farmers welfare trust, contribution towards development of affiliated milk union, contribution towards the co-operative propaganda fund, contribution towards Bad Debt Fund and contribution towards charitable fund and dividend is payable only if there is remaining profit after these transfers as noted above and such dividend should not exceed 25% of share investment. It is seen that the computation mechanism for payment of bonus and dividend are different but both are towards distribution of net profit of KMF. This is also accepted legal position that divided is only distribution of net profits. Under these facts, we find force in the argument of assessee that the nature of bonus received by the assessee from KMF is nothing but dividend only although the mechanism of its computation is different because both bonus and dividend are paid to the assessee as distribution of net profit only. Direct the AO to consider the amount of bonus received by the assessee from KMF as dividend received from KMF and allow deduction under section 80P(2)(d) of the Act in respect of receipt of bonus also. - Decided in favour of the assessee.
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2020 (8) TMI 563
Reopening of assessment u/s 147 - Addition of LTCG on land which belongs to HUF - land was inherited by the assessee from forefathers, it belongs to HUF - assessment has been reopened after a period of four years - HELD THAT:- In the instant case, we find the very same fact was examined by the AO in the first round of reassessment proceedings. Therefore, again issuing the notice u/s 148 of the Act by recording reasons for escapement of income on the same set of facts, in our opinion, amounts to change of opinion. Therefore, we find merit in the submission of the ld. Counsel that the reassessment proceedings initiated by the AO are merely on account of change of opinion and, therefore, is not sustainable. There has to be tangible material for the AO to come to the conclusion that there is escapement of income and there must be a live link with such material for the formation of the belief. Merely using the expression failure on the part of the assessee to disclose fully and truly all material facts is not enough. The reason must specify as to what is the nature of default or failure on the part of the assessee. As mentioned earlier, the Tribunal, in the instant case, while deciding the case of Smt. Ashrafi Devi, had merely directed the AO to verify as to whether the HUF has filed the return disclosing the capital gain arising from transfer of such land. However, in the instant case, the AO, instead of verifying the same, reopened the assessment on wrong appreciation of facts which is nothing, but, mere change of opinion. Original assessment was framed u/s 147/143(3) on 26th March, 2014 accepting the returned income at ₹ 3,580/- wherein the issue of capital gain on transfer of such land was duly considered and accepted on the basis of various supporting documents filed at the time of such reassessment proceedings and since there is no allegation in the reasons recorded that there is failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment, therefore, the notice issued u/s 148 after a period of four years from the end of the relevant assessment year in the instant case is illegal and invalid being without jurisdiction. - Decided in favour of assessee.
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2020 (8) TMI 562
TP Adjustment - adjustment on account of corporate and performance guarantee - assessee submits that provision of corporate guarantee does not lead to any income generation for the assessee and does not fall within the ambit of section 92C - whether determination of guarantee fee of 1.25% p.a. is arbitrary and incorrect? - whether guarantee is not an international transaction? - HELD THAT:- Considering the order of the Tribunal for earlier years [ 2020 (7) TMI 435 - ITAT MUMBAI] we direct the AO/TPO to compute the corporate guarantee @0.5%. So far as charging the performance guarantee assessee vehemently submitted that the lower authorities have not appreciated the fact that entire revenue from the performance of the contract flows to the assessee guaranteed for its own performance and there was no risk as regard the performance guarantee and it is the assessee who guaranteed for its own performance. Assessee in its statement of facts before ld DRP has specifically pleaded that in case of performance guarantee extended by the assessee, the contract entered by the Itelnet UK Ltd (on behalf of which the assessee has provided performance guarantee) with third party customers, it was actually the assessee who is undertaken they were as Itelnet UK Ltd subcontracts the work back to the assessee. The assessee is not exposed to any default risk on account of performance guarantee as it is the assessee itself who performs the work for the customer. Thus, the provision of performance guarantee by assessee with third party on behalf of its AE, Itelnet UK Ltd, has benefited the assessee itself since the actual service to be provided to third party was outsourced by the assessee by its AE. It is further pleaded that entire compensation received from the customer back to the assessee. We have noted that there is no finding of TPO on these facts. Considering the aforesaid factual aspects this part of ground of appeal related with performance guarantee is restored to the file of assessing officer/TPO to examine the effect and pass the order a fresh in accordance with law - appeal related with performance guarantee is allowed for statistical purpose. Adjustment of interest received from loans to AEs - assessee submits that the assessee provided loans to its four AEs - TPO made adjustment based on domestic cost of borrowing i.e. State bank of India (SBI) rate + 3% markup resulting in to a total rate of 9% for all the loans - assessee submits that the assessee had correctly charged and benchmarked interest received on loans advanced to AEs at LIBOR plus 2% - HELD THAT:- Considering the order of the Tribunal for earlier years [ 2020 (7) TMI 435 - ITAT MUMBAI] we direct the AO/TPO to recompute the adjustment of interest on loan by following the decision of CIT Vs Tata Autocomp System Ltd [ 2012 (5) TMI 45 - ITAT MUMBAI] - The assessee is directed to provide necessary details to AO/TPO. In the result this Ground of appeal is allowed for statistical purpose. Short deduction of TDS - HELD THAT:- AO is directed to verify the fact and grant appropriate relief to the assessee. MAT Computation u/s 115JB - error in computing the tax payable in terms of Section 115JB - assessee submits that the AO computed the tax liability in terms of section 115 JB by applying Minimum Alternate Tax rate of 18% instead of correct rate of 15% - HELD THAT:- Considering the submissions of the ld. AR for the assessee that the rectification application of the assessee is pending disposal from the year 2015, we direct the AO compute the tax liability in terms of the provisions of section 115JB as amended up to date.
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2020 (8) TMI 561
Capital gain computation - transaction under consideration is between the members of AOP - addition by invoking the provisions of Section 50C - Introduction of development rights by way of capital contribution under section 45(3) - HELD THAT:- Provisions of section 45(3) provides that when a person transfer his capital asset to a firm or a body of individual or to AOP by way of capital contribution for becoming a partner/ member therein, then for the purposes of section 48 of the Act, the amount recorded in the books of account of the assessee firm or AOP, the value of the capital asset shall be deemed to be full value of consideration received or accruing as a result of the transfer of capital asset. As per the deeming fiction an amount recorded in the books of account thereby the full value of consideration for the purpose of section 48 Provisions of section 45(3) of the Act is a charging provision having two limbs joined by conjunction AND . The first limb is a charging provision which levies capital gain tax on gains arising from contribution of capital asset in the AOP by a member and second limb is an essential deeming fiction for determining the value of consideration without which the charging provision would fail. We also noted that the provisions of section 50C of the Act also deeming fiction deems only the value of consideration for the purpose of calculating capital gains in the transfer of capital asset from one person to another. In view of the above, we are of the view that the provisions of section 50C of the Act are not applicable in the instant case and provision of section 45(3) of the Act will be applied. Hence, we reverse the orders of the lower authorities and allow the appeal of the assessee on this issue.
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2020 (8) TMI 560
Disallowance u/s 40(a)(ii) - tds on cess on income tax - Whether the aforesaid amount is towards the cess on income tax and is not allowable u/s 40(a)(ii)? - HELD THAT:- Hon ble Bombay High Court in the case of Sesa Goa Ltd. [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] has held that education cess and higher and secondary education cess to be eligible for deduction while computing income chargeable under the head of Profit and Gains of Business. The Hon ble High Court has held that though cess may be collected as part of income tax but that does not render such cess either rate or tax which cannot be deducted in terms of provision of section 40a(ii) of the Act. We further find that Hon ble High Court while arriving at the aforesaid conclusion had also considered the CBDT Circular No. F. No. 91/58/66-ITJ(19), dated 18.05.1967. Revenue has not placed any contrary binding decision in its support. In such situation, we, relying on the decision of Hon ble Bombay High Court in the case of Sesa Goa (supra) hold that the AO was not justified in disallowing the amount of cess paid on income tax. We therefore, direct its deletion. Thus, ground of appeal of the assessee is allowed.
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2020 (8) TMI 559
Deductions u/s 80P(2)(a)(i) - interest and dividend earned from investments with other cooperative banks/societies - HELD THAT:- Issue involved in present appeal filed by the assessee is squarely covered in favour of the assessee by the decision in the case of M/s. Quepem Urban Credit Society Ltd. vs ACIT [ 2015 (6) TMI 573 - BOMBAY HIGH COURT] where under identical set of facts, the Hon ble High Court held that interest and dividend earned from investments with other cooperative banks/societies is entitled for deductions u/s 80P(2)(a)(i). In the case of Mahapalika Kshetra Madhyamik Shikshak Sahakari Patsanstha Maryadit [ 2019 (11) TMI 407 - ITAT MUMBAI] had considered an identical issue and held that where assessee, a co-operative credit society had not undertaken any of banking business and was providing credit facilities to its members only and not to general public, it would not hit by provisions of section 80P(4) and thus, entitled for deduction u/s 80P(2)(a)(i) of the I.T.Act, 1961. In this case, on perusal of facts available on record, there is no dispute with regard to the fact that the assessee is not carried out any banking business to public at large, but was engaged in the providing credit facilities to its members only. Income earned by the assessee, including interest and dividend received from investments with other co-operative society/co-operative banks is entitled for deduction u/s 80P(2)(a)(i) - we direct the Ld. AO to allow the benefit of deduction u/s 80P(2)(a)(i) of the I.T.Act, 1961, in respect of interest and dividend earned from investments with other co-operative banks/societies. - Decided in favour of assessee.
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2020 (8) TMI 558
Assessment u/s 153A - Addition u/s 80IA - incriminating materials found during the search or not? - HELD THAT:- CIT(A) has recorded categorical finding that there is no reference to any incriminating material found as a result of search, in respect of additions made towards disallowances of deductions claimed u/s 80IA(4) CIT(A) has also, recorded a categorical finding that the issue has attained the finality in view of decision of CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD., ALL CARGO GLOBAL LOGISTICS LTD. [ 2015 (5) TMI 656 - BOMBAY HIGH COURT] as upheld the claim of deductions claimed u/s 80IA(4) - thus in absence of any incriminating material found as a result of search, no additions could be made in the assessment framed u/s 143(3) r.w.s. 153A when the assessment year in question was unabated as on the date of search. In this case, there is no doubts with regard to the fact that the assessment year in question was unabated as on the date of search. Therefore, we are of the considered view that there is no error in the findings recorded by the Ld.CIT(A) to delete additions made by the Ld. AO towards disallowances of deductions claimed u/s 80IA(4) - Decided against revenue.
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2020 (8) TMI 557
Penalty u/s 271(1)(c) - AO determining the loss different as against the returned loss declared by assessee in the return filed on 29.09.2015 - HELD THAT:- Assessee company had taken loan against property from M/s. Hero Fincorp Ltd. and paid interest thereon and capitalized the said expenditure upto the date of acquisition which amounted to ₹ 14,84,895/- but inadvertently in the return ₹ 85,05,595/- was claimed as interest. AO was not convinced with the explanation of assessee merely on the ground that the assessee company was not carrying on any business activity during the year as well as in earlier years, therefore, expenses claimed by it cannot be allowed. Therefore, the Assessing Officer disallowed the total expenses And added back to the income of the assessee. This does not amount to furnishing of inaccurate income or concealment of income as envisaged in Section 271(1)(c) - Assessee has explained before AO and the CIT(A), that the business activity of the assessee is investment in real estate business and the same constitutes the business activity. The Assessing Officer as well as the CIT(A) only proceeded on the basis that there was no income during the year therefore there is no business activity, but the same is fallacy and cannot be taken as the basis for imposing the penalty. Thus, provisions of Section 271(1)(c) are not applicable in the present case. - Decided in favour of assessee.
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2020 (8) TMI 556
Penalty u/s. 271(1 )(c) - disallowance of promotion expenses - expenses prohibited by the Medical Council Act - HELD THAT:- We find that the ITAT, Mumbai G bench in [ 2018 (4) TMI 1813 - ITAT MUMBAI] has deleted additions made by the Ld. AO towards sales promotion expense, in light of the circular issued by the CBDT, on the basis of MCI regulations. We further noted that ITAT, Mumbai G bench [ 2018 (5) TMI 2013 - ITAT MUMBAI] has also deleted additions made towards sales promotion expenses being freebies given to doctors on the basis of circular No.05/2012 dated 01/08/2012 issued by the CBDT. Once, addition on which penalty levied u/s 271(1)(c) has been finally deleted by the appellate authorities, then there is nothing survives to levy penalty u/s 271(1)(c) - CIT(A) after considering relevant facts and also, by taken note of facts that the Tribunal has deleted additions made by the Ld. AO, which triggered levy of penalty of u/s 271(1)(c) has deleted penalty levied on such additions, We, therefore are of the considered view that the Ld.CIT(A) was right in deleting penalty levied by the Ld. AO u/s 271(1)(c) - Decided against revenue.
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Customs
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2020 (8) TMI 555
Jurisdiction - allegation that Deputy Commissioner was not the competent authority for adjudication in view of the Circular dated 31.05.2011 HELD THAT:- In the Circular, the Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise and Customs has revised powers of the adjudication of the officers of the Customs. Having perused the clauses (i) and (ii) of Para-5 of the Circular, it is clear that in clause (i) it would be only in case of simple demand of erroneously paid drawback, and where there is a collusion, willful misstatement or suppression, it would be clause (ii) which would be applicable. A perusal of the show cause notice clearly indicates that the petitioner had knowingly classified its goods in a different category in order to avoid duty, and therefore, it would amount to willful misstatement and not a bonafide error. Accordingly, show cause notice ought to have been issued by an authority not below the rank of Additional / Joint Commissioner of Customs as per clause (ii) as the amount of drawback was way beyond ₹ 5.00 lakhs. Petition allowed.
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2020 (8) TMI 554
Provisional Release of goods - 1811+10 LED Television Sets - Section 110-A of the customs Act - provisional release of the goods on the condition that the writ applicant shall furnish a bond of re-determined value, pay the amount of differential duty and submit bank guarantee of 30% of the differential duty. HELD THAT:- There is no dispute with regard to the fact that the writ applicant has deposited a sum of ₹ 18 lakh, which is approximately 40% of the amount of differential duty assessed. However, despite the deposit of ₹ 18 lakh, the officer of the DRI declined to release the goods. It appears that the goods came to be seized way back in the year 2018. The amount towards the differential duty is to the tune of ₹ 48,80,647/-. The amount to be recovered towards the differential dues is to the tune of ₹ 48,80,647/-. The writ applicant has already deposited ₹ 18 lakh with the competent authority being 40% of the differential duty. We need to secure the balance amount so as to protect the interest of the Revenue. The goods are lying with the respondents Nos.3 and 4 past almost two years. In such circumstances, we direct the writ applicant to furnish an indemnity bond of the balance amount of ₹ 30,80,647/-. The indemnity bond shall be furnished to the Assistant Commissioner of Customs, Surat. The Assistant Commissioner of Customs, Surat shall inform about such furnishing of indemnity bond to the Commissioner of Customs (Imports), State of Maharashtra. Upon receipt of the intimation of the furnishing of the indemnity bond, the Commissioner of Customs (Imports) of the State of Maharashtra shall, at the earliest, communicate to the respondent No.4 to release the goods in favour of the writ applicant. The indemnity bond of the amount of ₹ 30,80,647/- shall be furnished before the respondent No.4 - the Assistant Commissioner of Customs, Surat within a period of eight days from today. Application disposed off.
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2020 (8) TMI 553
Smuggling of Gold Bangles - section 123 of the Customs Act, 1962 - Interpretation of statute - section 11 of the Customs Act, 1962 read with Import Control Order No. 17/55 dated 01-12-1992 - applicability of the provision of section 111(b) (d), 112(b) (i), 114AA, 117 123 of the Customs Act, 1962 while reversing the Judgments dated 26-04-2018 11-10-2018 passed by the Adjudicating Authority - appreciation of evidences on record. HELD THAT:- Respondent No. 1 was intercepted at the airport security point under the suspicion that she was carrying gold bangles made of smuggled gold. Pursuant to show cause notice proceedings order for confiscation and fine was passed. The Tribunal set aside the order passed by the Adjudicating Authority and confirmed by the Appellate Authority. Perusal of the materials on record and the impugned judgment, would show that the entire issue is based on appreciation of evidence on record. It is a pure question of fact. No question of law arises. Appeal dismissed.
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2020 (8) TMI 552
Valuation of imported goods - Misdeclaration of imported goods - mis-declaration of percentage of Nickel content in the imported goods - rejection of declared transaction value - request for retest of the remnant sample - denial of retest - principles of natural justice - HELD THAT:- The transaction value has been arbitrarily rejected in violation of the provisions of Section 14 of the Customs Act, 1962 read with the Valuation Rules. Further, the adjudication order is vitiated for not permitting the retesting, inspite of the prayer of the importer assessee - further, as per the report of CRCL the variation in the declared percentage of nickel is hardly 1% which is a matter of normal variation not calling for any adverse inference. There are no merits in the appeal - appeal dismissed - decided against Revenue.
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Corporate Laws
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2020 (8) TMI 551
Delivery of possession of the premises/flat - Sub-Section (2) of the Section 452 of the said Act - HELD THAT:- Having considered the period of service, the scheme referred to, the quarter/premises being part of the entitlement in terms of service and the settled principles of law which have spelt out the proposition regarding the provisions of Sub-Section (2) of Section 452 of the Companies Act (earlier Sub-Section (2) of Section 630 of the Companies Act, 1956), I am of the opinion that the accused/opposite party is unnecessarily dragging the issue relating to vacating the quarter/premises belonging to the company and a plea of granting extension of stay for a limited period for finding a suitable accommodation was unreasonably converted into a right. In view of the conduct of the accused/opposite party and the provisions of law along with the settled principles as has been decided by the Hon ble Apex Court in GOPIKA CHANDRABHUSHAN SARAN VERSUS XLO INDIA LTD. [ 2009 (2) TMI 465 - SUPREME COURT] as also this Court, I hold that the order dated 17-4-2019 passed by the Ld. ACJM, Durgapur is not in consonance with the principles of law and is liable to be set aside. The order passed by the Ld. ACJM, Durgapur is hereby set aside and CRR 2592 of 2019 is allowed.
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2020 (8) TMI 550
Oppression and mismanagement - validity of board Meeting - right to transfer the rights - investment of surplus funds - HELD THAT:- The Trust has no connection with 1st respondent. It is true that the 2nd Respondent has gifted the amount to appellant. From the statement we find that the appellant has utilised the amount for their personal expenses. We fail to understand when the account was opened with Indian Overseas Bank then why it was shifted to HDFC Bank and huge amounts withdraw. We find no illegally in freezing the account by 2nd respondent. It is true that merely adding an additional signatory to a bank account cannot be claimed to be an act of oppression especially when she continues to be one of the signatories. After we reserved the judgement, learned counsel for the appellant filed an IA No.605/2020 praying for an order of interim injunction restraining the Respondents from conducting the Board Meeting on 10.2.2020 and passing any resolution on the business mentioned in the notice dated 27.1.2020 pending disposal of the appeal. After hearing the parties, this Appellant Tribunal on 6.02.2020 ordered that the Meeting may not be convened till further orders. Appeal dismissed.
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2020 (8) TMI 549
Oppression and Mismanagement - transfer of shares of promoters in Board Meeting without considering his objections only with an intention to convert the land of respondent No. 1 for construction of real estate project against the aims and objects of respondent No. 1-company - HELD THAT:- As rightly contended by the petitioners those 117 shares were held by M/s. Kalicharan Das Trust and they cannot be transferred in a routine manner like transfer of shares of other members, as the said shares belongs to a Trust created by the founder member of respondent No. 1-company late Dr. Kali Charan Das. The burden of proof with regard to the legal and valid mode of transfer of those shares is upon the respondents and they have miserably failed to discharge their burden. As rightly contended by the petitioners, respondent No. 1-company has to observe all the legal formalities for transfer of shares of a trust, be it private or public. It is very clear from the conduct of the respondents that those shares were transferred in a routine manner, taking advantage of the majority in the Board. The mere undertaking of the transferees not to transfer their shares will not cure the illegality. Since, the petitioners are questioning the actions of respondent No. 1-company, non-joinder of the Trust nor its Trustees as parties is not fatal and this Tribunal has every power to conduct legal scrutiny. Even otherwise, the provisions of the Code of Civil Procedure, 1908 are not applicable except to the extent provided under the Companies Act to the proceedings before this Tribunal. Therefore, the objection of the respondents with regard to non-joinder of parties is not legally sustainable and is rejected. Transfer of shares of other members in the board meeting - HELD THAT:- Those shares were held by other individual members who have every right to deal in their own right and, there-fore, this Tribunal is not inclined to interfere. Appointment of Mr. Sunil Agarwal, CA Bal Kishan Bansal, Mr. Anup Kumar Khemani and CA Saloni Bansal - HELD THAT:- Since Mr. Anup Kumar Khemani purchased the shares of M/s. Kalicharan Das Trust, his directorship automatically gets cancelled in view of setting aside the transfer of shares of M/s. Kalicharan Das Trust by this Tribunal unless he possesses some other shares other than the shares of M/s. Kalicharan Das Trust - In so far as appointment of Mr. Sunil Agarwal, CA Bal Kishan Bansal and CA Saloni Bansal is concerned, the appointment of directors and auditors is the exclusive domain of the Board and this Tribunal shall not interfere unless serious prejudice to the public interest or to the affairs of the company is shown. The petitioners are not entitled to all the reliefs claimed in the petition except to the extent of setting aside the transfer of 117 shares of M/s. Kalicharan Das Trust - it is hereby declared that the transfer of 117 shares of M/s. Kali charan Das Trust in the board meeting dated January 24, 2018 is not in accordance with law - Petition allowed in part.
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Insolvency & Bankruptcy
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2020 (8) TMI 548
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of debt - Existence of dispute - Adjudicating Authority has dismissed the Application under Section 9 observing that there was a preexisting dispute between the Parties prior to the issuance of Demand Notice - HELD THAT:- As subject matter of the case relates to Existence of a Dispute , we are of the view that the case has to be decided on the touchstone of what the Hon ble Supreme Court has observed in Mobilox Innovations Private Limited vs. KIRUSA Software Pvt. Ltd. [ 2017 (9) TMI 1270 - SUPREME COURT ] , where it was held that Going by the test of existence of a dispute , it is clear that without going into the merits of the dispute, the appellant has raised a plausible contention requiring further investigation which is not a patently feeble legal argument or an assertion of facts unsupported by evidence. The afore-noted e-mail communication dated 29.11.2018, 15.12.2018 and 17.12.2018 read together with the Minutes of the Meeting held on 16.11.2018, which is prior to the issuance of the Demand Notice dated 29.03.2019, establishes that there is plausible contention which requires further investigation and that the Dispute is not patently feeble, legal argument or an assertion of fact unsupported by evidence. We hold that the dispute truly exists in fact and is not spurious, hypothetical or illusory. The IBC proceedings are summary in nature and this is not a substitute for debt enforcement Procedure. There are no illegality or infirmity in the order of the Ld. Adjudicating Authority - appeal dismissed.
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2020 (8) TMI 547
Approval of the Resolution Plan - impugned order is assailed on the ground that the Adjudicating Authority has failed to consider objections raised by the Appellant to the Resolution Plan submitted by APSEZ as also the objections raised by the Appellant qua the rejection of settlement proposal submitted by Balaji Infra Projects Limited - HELD THAT:- A plain reading of the provision of section 31 of I B Code, makes it abundantly clear that the Resolution Applicant is required to obtain necessary approval required under any extant law within one year from the date of approval of the Resolution Plan by the Adjudicating Authority or within such time as may be provided in such law but not later than one year. However, this requirement of obtaining the necessary approval pursuant to approval of the Resolution Plan by the Adjudicating Authority has been subjected to one exception carved out in the form of proviso to sub-section (4) which enjoins upon the Resolution Applicant to obtain approval in regard to provision for combination, while such provision has been made in the Resolution Plan, prior to approval of such Resolution Plan by the Committee of Creditors. A cursory look at the provision engrafted in sub-section (4) of Section 31 of the I B Code reveals that while with regard to an ordinary Resolution Plan, the Resolution Applicant is required to obtain necessary approval required under any extant law within one year from the date of such approval by Adjudicating Authority only after such Resolution Plan has been approved by the Adjudicating Authority, however, a Resolution Plan containing the provision for combination is required to obtain approval of the Competition Commission of India prior to the approval of such Resolution Plan by the Committee of Creditors. It is manifestly clear that a Resolution Plan containing provision for combination has been treated as a class apart requiring approval of the Competition Commission of India even prior to such Resolution Plan being approved by the Committee of Creditors. However, treating such requirement as mandatory is fraught with serious consequences. The issue regarding the statutory requirement of a Resolution Plan containing a provision for combination requiring prior approval of the Competition Commission of India even before such Resolution Plan is approved by the Committee of Creditors, being not mandatory and only directory in nature. The view taken by this Appellate Tribunal in ARCELORMITTAL INDIA PVT. LTD VERSUS ABHIJIT GUHATHAKURTA [ 2020 (1) TMI 277 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] holds the field as the same has not been reversed or set aside in appeal or other proceeding. Obtaining of requisite approval under Competition Act, 2002 with regard to the provision of the Combination in the instant case is stated to be not required as the same is below threshold limit. Objection raised to buttress the argument that in absence of necessary prior statutory approval of the Committee of Creditors qua the combination, Resolution Plan of APSEZ is in contravention of Section 31(4) of the I B Code , cannot be sustained and the Appellant cannot be heard to say that the approved Resolution Plan of APSEZ being in contravention of law leaves no option but to send the Corporate Debtor into liquidation. All objections raised qua the action of the Resolution Professional during Corporate Insolvency Resolution Process, approval of Resolution Plan of APSEZ by the Committee of Creditors and its subsequent approval by the Adjudicating Authority being unfounded are hereby repelled - appeal dismissed.
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2020 (8) TMI 546
Maintainability of application - Corporate Debtor failed to make repayment of its dues - Financial debt or not - Appellant has assailed the impugned order passed by the Adjudicating Authority on the basis that the alleged debt does not fall under the definition of financial debt as defined under Section 5(8)(f) of the Code - HELD THAT:- The Petitioner, as Director has a status different than that of the Creditor. In the instant case, the Petitioner has invoked the provision of the Code as one of the Creditors of the Respondent Company, and the amount claimed by the Petitioner is a financial debt within the meaning of the Code. The Petitioner contends that the bank statements reveal that the transactions have been made by him in favour of GNIDA on behalf of the Company, given the Resolution Plan passed by the Board of Directors in its meeting dated 01st September 2015. The copies of the balance sheets filed for the years ending 2015, 2016 and 2017 depict the borrowings from Directors, Shareholders and related parties under the heading Short Term Borrowings to the tune of ₹ 9 crore. The record is sufficient to show that the amount as claimed by the Applicant is due and payable , which was disbursed by the Petitioner to GNIDA on behalf of the Respondent Company and based on the above the Adjudicating Authority has admitted the petition. Reliance was placed in the three Member s Bench of this Tribunal in the case of DR. B.V.S. LAKSHMI VERSUS GEOMETRIX LASER SOLUTIONS PRIVATE LIMITED [ 2018 (2) TMI 447 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] has held that has noticed that the Appellant has failed to establish that there has been disbursement against consideration of time value and money. The amount, as reflected in the balance sheet of the Company merely describes certain unsecured loans being payable to the Appellant whereas the Auditor certificate states that no amount is due and payable to the Appellants. In the circumstances, this Tribunal has rejected the contention of the Appellant and held that Appellant has failed to show that the amount has been raised by the Respondent under any other transaction, such as sale or purchase agreement, having the commercial effect of borrowing - the above case law does not apply to the facts of the present case. In the instant case, the Respondent No.1 has advanced various sums to the Corporate Debtor B.K. Educational Society to ease its liquidity crunch, thereby improving its economic prospects and to save the allotments by making direct payment to the GNIDA for the plot allotted in the name of Corporate Debtor - the amount deposited by the respondent No.1 in the account of GNIDA to save the corporate debtor on account of financial crunch to save the allotment made in the name of corporate debtor falls within the ambit of financial debt . Admittedly, the amount has not been paid back, and there is a default. The adjudicating authority had admitted the petition filed under Section 7 of the Insolvency Bankruptcy Code, 2016. There are no justification for interfering with the impugned order - appeal dismissed.
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2020 (8) TMI 545
Maintainability of application - initiation of three simultaneous CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt or not - HELD THAT:- The issue raised by the Appellant as a shareholder of the Corporate Debtor is that the Respondent Nos.1 and 2 being Financial Creditors could not be allowed to initiate and trigger three simultaneous Corporate Insolvency Resolution Processes for one set of claim. Reliance has been placed on the judgment rendered by this Appellate Tribunal in DR. VISHNU KUMAR AGARWAL VERSUS M/S. PIRAMAL ENTERPRISES LTD. [ 2019 (2) TMI 316 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ], which is still occupying the field as the same has not been set aside by the Hon ble Apex Court. It is not in dispute that the aforesaid judgment in Dr. Vishnu Kumar Agarwal s case rendered by this Appellate Tribunal has neither been stayed nor set aside by the Hon ble Apex Court and it holds the field till date. The proposition of law is unmistakably, unambiguously and lucidly clear that where a Financial Creditor , whether singly or jointly with other Financial Creditors seeks initiation of Corporate Insolvency Resolution Process against the principal borrower or one or the other corporate guarantors in respect of a claim, it cannot file second application for the same set of claim against the other Corporate Debtor , be it the principal borrower or one or other Corporate Guarantor. Since the order passed by this Appellate Tribunal in appeal arising out of triggering of Corporate Insolvency Resolution Process initiated at the instance of an Operational Creditor against the principal borrower has been set aside by the Hon ble Apex Court and the dismissal of appeal by this Appellate Tribunal against the order of admission dated 28th August, 2019 stands quashed by the Hon ble Apex Court, interim protection granted in terms of order dated 30th September, 2019 which had been extended by the Hon ble Apex Court in terms of order dated 18th February, 2020 while dismissing the appeal and the Adjudicating Authority having extended the interim protection till further orders while being ceased of application under Section 65 of the I B Code , in essence the matter qua the principal borrower stands remanded back to the Adjudicating Authority to go into the allegation of the Corporate Insolvency Resolution Process having been initiated fraudulently and with malicious intent not for the purpose of resolution in the context of there being a collusion between the principal borrower and the operational creditor. It is abundantly clear that the interim protection granted by the Hon ble Apex Court and further adopted and extended by the Adjudicating Authority is in regard to the admission of the application under Section 9 of the I B Code allegedly filed by the Operational Creditor in collusion with the principal borrower. The appeal is disposed off .by directing the Adjudicating Authority to have a fresh look at the order of admission of application of the Financial Creditors under Section 7 of the I B Code against the Corporate Guarantor -EUIPL (which has been impugned in this appeal) only after application under Section 65 of the I B Code filed by the Financial Creditors is disposed of
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2020 (8) TMI 544
Claim of damages and compensation - CIRP process - Appellant comes out with a plea that since the Company had failed to perform its obligations as per Agreement, the Appellant was perforced to initiate Arbitration proceedings against the company - HELD THAT:- The very observations of the Adjudicating Authority in the impugned order that the Liquidator had not given reasons in detail but that does not mean that reasons are not given etc., will go to show that the same is not a valid and correct one. In this regard, as per Section 40 of the Code a Liquidator being an Authority decides the matter in a quasi-judicial manner and his decision is open to challenge u/s 42 of the I B Code. An unreasoned order may be just and valid from the point of view of an authority who passes the same. But to the affected, the said order is not a valid one . A Reasoned order will have an appearance of Justice . A decision by judicial or quasi-judicial Authority not informed of reasons provides room for arbitrariness and such decision cannot be supported. In terms of the ingredients of Section 40 of the I B Code, reasons are to be spelt out for rejecting the claims, which in the present case was not followed by the Liquidator . An Adjudicating Authority can interfere when a Liquidator had not exercised its discretion in a bonafide manner or he had proposed a thing which no reasonable person would act. A Liquidator as an Officer of the Adjudicating Authority / Tribunal is expected to perform his duties fairly, justly and honorably in dealing with the claims of persons. It cannot be forgotten that Interest due on damages sought for violation of contract gives rise to a legal right to claim payment. It also qualifies as an actionable claim . Apart from that, considering the fact that the Appellant stakes a claim for interest which can be awarded on equitable grounds and further it had submitted a surveyor s report along with the claim and the said report is based on bills provided by the Appellant and there being rejection of these claims, this Tribunal without any haziness holds that the impugned order of the Adjudicating Authority is liable to be set aside. Appeal allowed.
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2020 (8) TMI 543
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and default or not - Appellant proceeds to point out that in the present case in Form-1, the date of default is shown as 01.11.2012 and that the Application was filed under Section 7 of the Insolvency and Bankruptcy Code on 06.09.2018 - time limitation - HELD THAT:- It cannot be gainsaid that as per Section 18 of the Limitation Act, 1963, an acknowledgement is not limited in respect of the debt only, but in relation to any property or right , which is the subject matter of LIS between the parties. Needless for this Tribunal to point out that there has to be an acknowledgement , as per ingredients of Section 18 of the Limitation Act, 1963 and it must be an unqualified one and the same will create fresh cause of action to a party/ litigant to cement its claim on such acknowledgement . The acknowledgement must be an acknowledgement of an existing liability - More importantly, an acknowledgement of debt must relate to an admission of existing relationship of a Debtor and Creditor and then intention to continue it should also be evident. An acknowledgement is to be in writing, the same is to be within the period of limitation and is to be signed by a litigant party whom the property or right is claimed - In the present case, the 1st Respondent/ Bank had provided adequate opportunity to the Corporate Debtor to pay the balance amount and also admittedly issued a legal notice dated 26.06.2017 whereby and whereunder it was mentioned that they had sanctioned additional loan of ₹ 5 crores in the larger interests of the purchasers of the apartments to complete Phase-I works . The fact of the matter is that the Corporate Debtor had failed to complete the Phase-I works, although additional fund was granted and because of the non-completion of the Phase-1 work, the persons who had thought of purchasing the apartments had not deposited the money in respect of BWSSB and BESCOM. The impugned order dated 16th July, 2019 passed by the Adjudicating Authority (NCLT), Bengaluru Bench admitting Section 7 Application is free from any legal error. Also, the plea of the Appellant that Application under Section 7 of the IBC is barred by limitation is also negatived by this Tribunal because of the fact that the said Application was filed before the Adjudicating Authority (National Company Law Tribunal), Bengaluru Bench on 05.09.2018, well within time, from the date of defaulted and stopped payment from 31.5.2017 - Appeal dismissed.
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2020 (8) TMI 542
Withdrawal of CIRP proceedings on settlement between parties - date of filing of application for withdrawal to Adjudicating Authority - Section 12 A of IBC and Regulation 30 A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT:- Constitution of CoC makes a difference to the original Applicant and the Corporate Debtor in settling. Before Constitution of CoC they both can settle and withdrawal can be permitted but once CoC is constituted, the Scenario changes and requirement is to settle with the other Financial Creditors and Operational Creditors and one is required to go before the CoC which may allow withdrawal with 90 per cent voting share. There is no reason why Parties cannot resort simultaneously to the window given by Hon ble Supreme Court in above Para 79. In our view when the Applicant wants to withdraw the application before Constitution of CoC, while resorting to amended Regulation 30 A, there is no bar for a party to simultaneously move Adjudicating Authority for withdrawal relying on Rule 11 of the NCLT Rules 2016. The Adjudicating Authority should receive such applications and can deal with the Applications in terms of above Para 79 while it may await response from IRP. The matter is remitted to the Adjudicating Authority - the original Operational Creditor are permitted to move the CoC under Section 12A of IBC. CoC will urgently consider Form F.A. hearing the Appellant also.
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2020 (8) TMI 541
Fees of a Liquidator - CIRP process - whether the fees of the Liquidator shall be proportionate to the liquidation estate assets? - Section 34(8) of I B Code - HELD THAT:- Section 34 of the I B Code 2016 speaks of Appointment of Liquidator and fee to be paid . In reality, the ingredients of Section 34(8) of the Code enjoin that the Fees of the Insolvency Professional appointed as Liquidator shall be determined in proportion to the value of Liquidation assets . A Liquidator is entitled to such Fee and in such manner as determined by the Committee of Creditors before a Liquidation order is passed under Section 33 (1)(a) or Section 33(2) of the Code. In respect of other cases, other than those covered under Sub-Regulation (2), the Liquidator shall be entitled to a percentage of the amount realised net of other Liquidation Costs and of the sum distributed as provided in this Regulation. Further, Sub-Regulation (4) specifies that the Liquidator shall be entitled to receive half of the fee payable on realisation under Sub-Regulation (3) only after such realised sum is distributed. A Liquidator will be entitled to remuneration for the services rendered by a member of his staff. In this connection, it is pertinent for this Tribunal to make a mention that a court/tribunal has a discretion to decide the fee or remuneration of a voluntary Liquidator but the fact of the matter is that where the expense are neither justified nor ancillary/incidental to the winding up, the same may not be reimbursed. This Tribunal is of the earnest opinion that for the services to be rendered/rendered by the Liquidator in regard to the I.T. Refund Amount and the same being converted into cash, even though much effort is not required, certainly, the Liquidator is entitled to claim remuneration for this outturn of work, of course, in conformity with the I B Code coupled with the IBBI (Liquidation Process) Regulations 2016 - Appeal disposed off.
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2020 (8) TMI 540
Admissibility of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - debt due and payable or not - order of admission challenged on the ground that the debt has been satisfied and set off in diminution of the amount of ₹ 1,561.87 Crores against debt of ₹ 226.50 Crores claimed by Respondent No. 1 herein - HELD THAT:- Form-1 filed by the Respondent No. 1 with regard to the debt and default is perused - there are no hesitation to say that the grounds raised by the learned Counsel for the Appellant does not have any merit. In view of the legal position, Respondent No. 1 is a Financial Creditor and the debt is a Financial Debt. In accordance of Section 5(8) of IBC, the Application filed by the Respondent No. 1 is maintained and the same is in accordance with law. The Appellant has failed to show by actionable material that the Valuation Report, got done officially when Receiver seized stock at the instance of ICICI has been held to be wrong. Mere averment to the contrary to claim set off that the stock was worth ₹ 1561.87 Crores without official valuation got done is not helpful. With regard to Counter claim is concerned, the Adjudicating Authority cannot decide while admitting the Application. As such, all the essential requirements have been fulfilled and Application under Section 7 IBC was rightly admitted by the Adjudicating Authority - The Counter Claim and the set off as claimed by the Appellant herein cannot be decided either by the Adjudicating Authority or by this Appellate Tribunal, such issues not decided. Appeal dismissed.
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2020 (8) TMI 539
Principles of Natural Justice - Appellant submits that the Adjudicating Authority passed impugned order dated 10.12.2019 by overlooking essential facts of the case and wrongly allowed the application filed by the Insolvency Resolution Professional for exclusion of time - HELD THAT:- In the present case, as the corporate insolvency resolution process remained stayed for 166 days due to the interim order passed by the Adjudicating Authority on 15th September, 2017 which was vacated on 28th February, 2018, the Committee of Creditors / Resolution Professional rightly requested the Adjudicating Authority to exclude the period of 166 days for the purpose of counting the total period of 270 days. In an extraordinary circumstance(s), the Adjudicating Authority can extend the Corporate Insolvency Resolution Process beyond the time limit adumbrated in Section 12(3) of the Code. The extension of time can be only on an application made by the Insolvency Resolution Professional on the basis of Committee of Creditors as mentioned in sub-Section 2 and 3 of Section 12 of the IBC, 2016. A glance of the impugned order dated 10.12.2019 indicates that the order of the Adjudicating Authority dated 05.12.2018 was not communicated to the IRP as well as to the Corporate Debtor by the office of the Adjudicating Authority (NCLT III New Delhi), due to inadvertence. - In this connection, this Tribunal relatively pointed out that Maxim , Actus , Curiae , Neminem , Gravabit i.e. Act of the Court shall harm no Home-Sapien. Owing to an inadvertent omission on the part of the Registry of the Adjudicating Authority , exclusion of period was rightly allowed. Appeal dismissed.
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2020 (8) TMI 538
Maintainability of application - initiation of CIRP - Alleged belated application - operational debt was dated back to 05.12.2002 - Service of demand notice - time limitation - HELD THAT:- The Notices were served on the Corporate Debtor prior to the change of Registered Office i.e., on 16.04.2019. Further the learned Adjudicating Authority after filing of the Application ordered notice to be served to the new address of the Corporate Debtor and its Directors. As per the Direction of the learned Adjudicating Authority, Respondent No. 1 herein had taken steps in serving the Notice on Respondent No. 2 - the statutory Demand Notice under Section 8 and courier receipt and the delivery report evidencing proper service has already been filed. Thus, there is ample proof that the Notice had been served on Respondent No. 2 by the Respondent No. 1. Time limitation for admitting of petition - HELD THAT:- The claim is not time barred for the following reasons as stated here at. It is an admitted fact that Respondent No. 2 owe a debt to the Respondent No. 1 and failed to pay the debt to Respondent No. 1. Respondent No. 1 invoked the jurisdiction of arbitration. The Respondent No. 2 participated in the Arbitral proceeding before the Sole Arbitrator through their Counsel and it is evident from the Award of the Sole Arbitrator that the Respondent No. 2 contested the matter. The learned Sole Arbitrator had passed the Award and the same is binding on Respondent No. 2 - by passing Award by the learned Sole Arbitrator, the amount has been crystalized and by default in payment and by not honouring the Award, the amount became due and payable. The Respondent No. 1 had rightly invoked jurisdiction of the Adjudicating Authority under Section 9 of the IBC after issuance of Demand Notice as prescribed under Section 8 of IBC. As per Article 116 of the Limitation Act 1963, which is under the Second Division Appeal, the period prescribed is 90 days to file Appeal before the High Court from any Decree/Order. Against the order passed under Section 34 of the Arbitration and Conciliation Act, 1996, the only Appeal lies under Section 37 of the Arbitration and Conciliation Act 1996 before the Hon ble High Court and the limitation for the said period is covered under Article 116 of the Limitation Act which is under the caption of Second Division appeal - In the present case, the learned XXIV Additional Chief Judge, City Court, Hyderabad, dismissed the petition on 27.01.2016 and the statutory period for filing Appeal under Section 37 of Arbitration and Conciliation Act is 90 days in case of Decree. The Appeal under Section 37 of the Arbitration and Conciliation Act excludes the limitation from 27.04.2016 i.e. 90 days from 27.1.2016 as per Article 116 of the Limitation Act and if three years is taken from 27.01.2016, and as per Article 137 of the Limitation Act, three years period would expire on 27.04.2019. Whilst, the Application under Section 9 of IBC filed on 03.04.2019. Accordingly, it is well within the period of limitation. The Application filed by the Applicant before the Adjudicating Authority is within the period of limitation - Appeal dismissed.
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2020 (8) TMI 537
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - time limitation - HELD THAT:- In the present case, the Corporate Debtor by its letter dated 18th March, 2016/ 20th March, 2016 has specifically stated that it will make an effort in reducing their outstanding dues and raise other funding to save their Bank account from getting NPA - the period of limitation stands shifted to the date on which the Corporate Debtor agreed to pay and thus, we hold that the Application under Section 7 of the I B Code was not barred by limitation. There is nothing on the record to suggest that with regard to the same very debt, M/s Chamber Constructions Pvt. Ltd. had issued any guarantee. The Appellant has enclosed certain Bank Guarantee, which has been issued by certain individual. Therefore, the Appellant has failed to make out a case to get relief in terms of decision of this Appellate Tribunal in DR. VISHNU KUMAR AGARWAL VERSUS M/S. PIRAMAL ENTERPRISES LTD. [ 2019 (2) TMI 316 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ]. Appeal dismissed.
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2020 (8) TMI 536
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and default - applicability of time Limitation - HELD THAT:- Keeping in view of provision of Section 18 of the Limitation Act and reading the same with the contents of letter dated 09.06.2016, the same needs to be construed as an acknowledgement of the debt outstanding and merely because in the document the Corporate Debtor mention that the proposal was given was without prejudice to the rights and contentions in pending Court proceedings, will not make any difference - when NPA was declared on 30.6.2009, the documents pointed out by the learned Counsel for the Appellant dated 24.04.2012 (page 277), 12.03.2014 (page-419) and 09.06.2016 (page-420) calculated from the date of NPA, give fresh periods of limitation and filing of Section 7 Application on 11.7.18 was not barred. The Adjudicating Authority erred in dismissing the Application under Section 7 of the IBC - matter is remitted back to the Adjudicating Authority - appeal allowed by way of remand.
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2020 (8) TMI 535
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of loan - main plea taken on behalf of the Appellant is that inasmuch as the Recovery Certificate was issued based on the Compromise Terms and the said Recovery Certificate became final and binding upon the Respondent - Effect of an Acknowledgment in writing as per Section 18 of the Limitation Act, 1963 - HELD THAT:- Any sum which is due and payable by a Corporate Debtor to the Bank (Financial Creditor) is a Financial Debt as per Section 5 (8) (a) of the Code. With a view to sustain an Application under Section 7 of the I BC, 2016 an Applicant is to establish an Existence of Debt , which is due from the Corporate Debtor . A dispute is to be a bona fide, reasonable/genuine one, of course, based on tangible materials. The Debt is not due, if it is not payable in law or on facts. A Corporate Debtor has an option to point out that the Default had not occurred (inclusive of a disputed claim and the same is not due. An Adjudicating Authority is to ascertain whether the record is complete or otherwise, whether there is a Debt and Default was committed by the Corporate Debtor . It is an established fact that existence of an Undisputed Debt is a condition precedent for commencement of Corporate Insolvency Resolution Process. Effect of an Acknowledgment in writing as per Section 18 of the Limitation Act, 1963 - HELD THAT:- It cannot be gain said that Acknowledgment of Liability is to be in writing, signed by a person against whom the property or right is claimed and the same must be within the period of Limitation. Suffice it for this Tribunal to relevantly point out that to bring an acknowledgment within the meaning of Section 18 of the Limitation Act, 1963, it ought to be an unqualified one which gives a fresh cause of action - As per Article 62 of the Limitation Act, 1963, a suit to enforce the mortgage is to be filed within Twelve years from the date when money fell due, unless the limitation period is extended in terms of any provision of the Limitation Act. It is to be borne in mind Article 137 of the Limitation Act, 1963 not only applies to the Civil Procedure Code but also to the Special Acts. As a matter of fact, Article 137 constitutes a Residuary Article pertaining to Applications . As such it can be safely and securely be said that Article 137 will apply to the Civil Procedure Code or in respect of any other special statute. What Article 113 of the Limitation Act, 1963 relates to suit, the Article 137 of the Limitation Act, pertains to Application . Appeal dismissed without costs.
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2020 (8) TMI 534
Release of raw material/stock lying at the plant of Corporate Debtor as belonging to it - CIRP process - HELD THAT:- It must be remembered that Section 9 Application was admitted on 23.08.2018 and thus there were occasions which were required to be taken note with regard to pro or post moratorium. In view of this, the Adjudicating Authority passed orders as noted. It is not found that the Appellant can find fault with the Resolution Professional if the claim as made by the Appellant did not get support from the Books of Accounts of the Corporate Debtor. At the time of argument, learned Counsel for the Resolution Professional submitted that as there were dues payable by the Appellant, the Corporate Debtor could exercise lien on the goods which were available with the Corporate Debtor and thus, according to the learned Counsel, the Adjudicating Authority rightly protected the interest of the Appellant as well as Corporate Debtor by directing that while returning the goods, side by side the dues payable by the Appellant should come to the Corporate Debtor. There are no fault with the directions of the Adjudicating Authority as recorded in paragraph-21 of the Impugned Order. The actions taken by the Resolution Professional were placed before the CoC and even CoC had found that the Appellant should clear the outstanding dues of the Corporate Debtor before goods could be returned. Appeal dismissed.
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CST, VAT & Sales Tax
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2020 (8) TMI 532
Principles of Natural Justice - Validity of assessment order - Input Tax Credit - cancellation of registration certificate of the vendor - allegation that disallowance of Input Tax Credit without providing the copy of the order of cancellation of registration certificate of the vendor - HELD THAT:- The issue raised in the present writ application is identical to the issue which was raised before the Coordinate Bench in the case of M/S. B.K. TRADERS THROUGH ITS PROPRIETOR VIRALBHAI VINODBHAI KARIA VERSUS STATE OF GUJARAT [ 2020 (7) TMI 471 - GUJARAT HIGH COURT ] where it was held that In the instant case, since there is violation of principles of natural justice, more particularly, when the petitioner chose to approach the respondent-authority on 13.03.2020 and requested for relevant and vital documents, in response to the notice issued by it, without supplying the same, respondent-authority has imposed the petitioner with not only the heavy penalty but also interest by the order dated 24.03.2020, which is impugned in this petition, we, therefore, deem it appropriate to entertain this petition and at the joint request made by both the sides, matter deserves to be remitted, quashing and setting aside the impugned order of assessment. There are many procedural lapses on the part of the respondent No.2 going to the root of the matter. There is no escape from the fact that the hearing for the purpose of imposing penalty under the Act, 2003 pursuant to the notice issued in that regard in Form No.309 was fixed on 24th March 2020. The notice in Form No.309 is dated 17th March 2020. However, it appears that when the representative of the writ applicants appeared before the respondent No.2 on 17th March 2020, a copy of the Form No.309 was served upon him and on the very next date i.e. 18th March 2020, the hearing was undertaken and the order also came to be passed on the very same date including the order of penalty. We are not convinced with the manner in which the proceedings have been dealt with by the respondent No.2. It would have been very easy for us to decline to entertain this writ application on the ground that the remedy of appeal is available to the writ applicants, but we believe that justice should not only be done, it should manifestly appear to have been done - There is one another aspect of the matter. It is not even the case of the respondent No.2 that the vendors from whom the goods were purchased by the respondent No.2 had not paid tax on the transaction on which the writ applicants claimed the Input Tax Credit. It is also not the case of the respondent No.2 that the writ applicants purchased the goods from such vendors after their registrations were cancelled. The matter is remitted to the respondent No.2 for its consideration a fresh, on merits. The claim of Input Tax Credit shall be considered a fresh after giving due opportunity of hearing to the writ applicants - Application allowed.
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2020 (8) TMI 530
Maintainability of application - alternative statutory remedy of appeal - Gujarat VAT Act - whether we should entertain this writ application in exercise of our writ jurisdiction under Article 226 of the Constitution of India or relegate the writ applicant to avail the statutory remedy of preferring an appeal as provided under the provisions of the GVAT Act? HELD THAT:- If the order is made by a Deputy Commissioner as in the case on hand, the appeal shall lie to the Joint Commissioner. In the case of an order passed in appeal by a Joint Commissioner, a second appeal would lie to the Tribunal. Ultimately, an appeal lies to the High Court from every order passed in appeal by the Tribunal, if the High Court is satisfied that the case involves a substantial question of law. Thus, the GVAT Act, 2003 provides for a complete machinery to challenge an order of assessment and the impugned order of assessment can only be challenged as prescribed by the Act and not by a writ application under Article 226 of the Constitution of India. It is a settled position of law that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute must only be availed of. Reliance placed upon the decision of the Supreme Court in the case of TITAGHUR PAPER MILLS CO. LIMITED. AND ANOTHER VERSUS STATE OF ORISSA AND ANOTHER [ 1983 (4) TMI 49 - SUPREME COURT] , wherein it is observed that where a right or liability is created by a statute, which gives a special remedy for enforcing it,, the remedy provided by that statute must only be availed of. As in the instance case, the GVAT Act, 2003 provides complete machinery for the assessment/reassessment of tax, imposition of penalty and for obtaining relief in respect of any improper orders passed by the authorities, in our opinion, the writ applicant should not be permitted to abandon that machinery and to invoke the jurisdiction of the High Court under Article 226 of the Constitution, more particularly, when the writ applicant has the adequate remedy open him by an appeal to the Joint Commissioner - it is not convincing that it is not a case wherein we should entertain this writ application under Article 226 of the Constitution of India despite there being an efficacious alternative remedy of filing an appeal. This writ application cannot be admitted and the writ applicant is relegated to avail the alternative remedy of filing an appeal under Section 73 of the GVAT Act, 2003 - application dismissed.
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Indian Laws
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2020 (8) TMI 533
Cancellation of assignment deed - section 31 of the Specific Relief Act - suit for specific performance - rectification of the instrument - arbitral proceeding - HELD THAT:- A perusal of section 26(1) of the Specific Relief Act, 1963 would show that when, through fraud or mutual mistake of parties, a contract or other instrument in writing does not express the real intent of the parties, then either party or his representative in interest may either institute a suit to have the instrument rectified or as defendant, may, in addition to any defence open to him, ask for rectification of the instrument. Importantly, under section 26(3), a party may pray in a rectification suit for specific performance and if the Court thinks fit, may after rectifying the contract, grant specific performance of the contract. Thus, what is made clear by this section is that the rectification of a contract can be the subject matter of a suit for specific performance, which have been already seen, can be the subject matter of an arbitral proceeding. Under section 27(1) of the Specific Relief Act, 1963, any party interested in a contract may sue to have it rescinded and such rescission may be adjudged by the Court in the cases mentioned in clauses (a) and (b) of sub-section (1). Sub-section (2) of section 27 refers to four exceptions to this rule - Third parties to the contract are not persons who can be said to be any person interested , particularly when section 27(2)(c), which refers to third parties, is seen and contrasted with the expression any person interested in section 27(1) under section 27(2)(c), third parties come in as an exception to the rule only when they have acquired rights in good faith, without notice and for value, during the subsistence of the contract between the parties to that contract. The factum of registration of what is otherwise a private document inter parties does not clothe the document with any higher legal status by virtue of its registration. When it comes to cancellation of a deed by an executant to the document, such person can approach the Court under section 31, but when it comes to cancellation of a deed by a non-executant, the non-executant must approach the Court under section 34 of the Specific Relief Act, 1963. Cancellation of the very same deed, therefore, by a non-executant would be an action in personam since a suit has to be filed under section 34. However, cancellation of the same deed by an executant of the deed, being under section 31, would somehow convert the suit into a suit being in rem. All these anomalies only highlight the impossibility of holding that an action instituted under section 31 of the Specific Relief Act, 1963 is an action in rem. Appeal dismissed.
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2020 (8) TMI 531
Seeking information from GSTN under RTI - Exemption from Disclosure of information - Section 8(1) (d) and Section 8(1) (j) of the RTI Act, 2005 - Respondents (CIC) has directed the petitioner to provide copies of the minutes of the board meetings as well as the resolutions for the period 01.04.2013 to 31.12.2015 after severance of the record containing information which is exempted from disclosure under the RTI Act. HELD THAT:- the minutes of the board meetings are bound to contain some confidential information relating to the commercial aspects of the company, the technological aspects of the technology and other IT network that it is providing to various governments/government agencies. It would include information of commercial confidence, information which can be termed to be trade secrets, information which can be termed to be intellectual property regarding the various IT technologies used. Disclosure of such information is likely to harm the interest of the petitioner. Respondent has failed to show that larger public interest warrants the disclosure of such information. This aspect has not been noted or stated in the impugned order. The CIC had passed a decision to give the Minutes of the Board Meeting directing expunction of information which was exempt under Section 8(1)(d) of the Act. Hence, as noted by the aforenoted judgment, the CIC left the whole thing at the discretion of the petitioner which was held not to be the correct approach. A perusal of the reply given by the CPIO dated 17.09.2014 to respondent No. 2 s application shows that there were in all 10 Board Meetings that had been held. Further details are not on record. In the facts of this case, it would be for the CIC to go into the minutes of the Board Meetings and of the AGMs and to determine as to which of the information which is contained in the minutes attracts the provision of Section 8(1)(d) of the Act, namely, are exempt from disclosure and which portion of the minutes can be given to respondent No. 2 in response to his application under the RTI Act. The matter is remanded back to the CIC for fresh consideration - petition allowed by way of remand.
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