Shri. K. C. Singhal, former Vice President of the ITAT, has carefully analyzed the judgement of the Delhi High Court inChryscapital Investment Advisors (India) (P) Ltd vs. CIT [2015] 56 taxmann.com 417 (Delhi) and explained the law relating to the selection of comparables in the context of section 92C and Rule 10B
There had always been a dispute between the revenue and the assessees as to which comparables should be included or excluded while determining the ALP u/s 92C of the Income Tax Act 1961 (hereafter called the 'Act'). What factors should be taken into consideration while selecting such comparables had been the core issue before the appellate authorities. Various decisions have been delivered by the hon'ble Tribunal on this issue. Recently, the hon'ble Delhi high court had to consider such issue in the case of Chryscapital Investment Advisors (India) (P) Ltd vs. CIT [2015] 56 taxmann.com 417 (Delhi) and such decision is of great significance on such issue.
Two major issues were raised before the hon'ble court, firstly, whether multiple year data or single year data should be used while selecting comparables for the purpose of determining the ALP under TNMM. The assessee had applied TNMM for determining the ALP and used the multiple year data of three years while the TPO used the single year data relating to the year under consideration; secondly whether entities having abnormal profits or losses should be excluded from the list of comparables. The contention of the assessee was that because of fluctuation in the margins of the comparable entities, multiple year data of the comparables was warranted to remove the effect of year specific aberrations. According to the assessee, such method was in consonance with the provisions of Rule 10B(4) and OECD guidelines. On second issue, it was contended that entities earning "super normal" or "abnormal" profits should be excluded from the list of comparables in view of several decisions of the tribunal including the decision of special bench. On the other hand, TPO selected comparables showing abnormal profits by using single year data and made adjustments in determining the ALP. The additions made by AO based on TPO report were sustained by the CIT(A) as well as the Tribunal.
At this stage, it is pointed out that the TPO included three entities as comparables which had very high profit margins as compared with that of the assessee. These entities namely, Brescon Corporate Advisors Limited ("Brescon") (Operating Margin of 87.4%), Keynote Corporate Services Limited ("Keynote") (Operating Margin of 191.58%) and Khandwala Securities Limited ("Khandwala") (Operating Margin of 80.79%) had exceptional profit margins as compared with the Assessee (Operating Margin of 27.05%) and rejected three other comparables selected by the assessee (i.e. IDFC Investment Advisors Ltd. (17.35%), Sumedha Fiscal Services Limited (9.14%) and Future Capital Holdings Limited (20.56%).
The contention of the assessee's counsel before the hon'ble high court was as under—
• That Brescon and Keynote should be excluded from the list of comparables as its (the assessee's) risk profile is not similar to that of those two companies. They are risk-taking entities whereas the assessee operates on a cost plus model wherein a guaranteed return of 25% on costs is assured to it.
• That its functional profile is significantly different from that of Keynote. Unlike the assessee, Keynote is involved in capital market activities, including lead managing IPOs, Rights Offers, Buybacks and Takeovers. Also, Keynote considers its activities to be a Merchant Banker as evidenced by its Director's Report and Notes to Accounts of the concerned financial year. The assessee submits that in the audited financials of Keynote, there is no service-wise break-up of profits and therefore, the profitability of the advisory services segment (which may be considered similar to the services being rendered by the assessee) is not available to be compared with the assessee's profitability. The assessee argues that Keynote's profit margins have shown volatility over the years which could be attributed to abnormal business conditions and therefore Keynote should be rejected as a comparable altogether.
• That Rule 10-B of the Rules contemplates adjustment on account of functional and other differences. Hence, adopting of any method ultimately envisages comparison of like functions, transactions and enterprises. OECD guidelines were also pressed into service in support of such contention.
• Reliance was also placed on the proviso to Rule 10-B (4) and stated that though the mandate of the law is ordinarily to rely upon comparables' data for the current year, in certain circumstances, it is possible for the authorities to rely on previous years' data restricted to two previous years. This is to eliminate any distorted picture which might be the consequence of adherence to the contemporaneous data, like in the present case.
The contention of the revenue before the hon'ble high court was as under—-
• Referring to the Rule 10B it was submitted that price charged or paid for the property transferred or service rendered in the comparable transaction is relevant in case of CUP and re-sale price method while the cost of production incurred in respect of property transferred or services provided is relevant for cost plus method. However, there is no mention of any property transferred or services provided in case of TNMM. They are provided for other methods. He contended that the relevant Rule thus makes it clear that specific characterization of the property transferred or services is not relevant for TNMM and this position is in conformity with the relevant OECD guidelines which suggest that broad comparability of functions should be done for TNMM.
• That neither the Act, nor the Rule contemplate exclusion of relevant transactions of like enterprises, in any manner other than what is prescribed. It was argued here that a comparable cannot be removed from consideration merely because it suffers loss; likewise, a unit or enterprise which enjoys higher profit (than the assessee or a significantly high profit in the industry) or even one making a so called "super profit" too cannot be eliminated.
• Generally, both loss making units and high profit making units cannot be removed from the list of comparables unless, such removal is statutorily permitted by Rule 10-B (2) or (3). Counsel also submitted that this is also evident from a reading of Rule 10-C. It was pointed out that Rule 10B (3) (ii) and Rule 10 C (2)(e) permitted adjustment to eliminate material defects of the difference between the assessee and comparables. Counsel argued that only those factors which result in material difference in the comparables of transactions as between the assessee and the unrelated transaction or the third party enterprise, have to be reasonably adjusted to avoid distortions under the said provisions. The step envisioned there had to be necessarily followed keeping in view the mandate "shall".
• That OECD guidelines cannot be applied because there are specific provisions of Rule 10B (2) & (3) and the first proviso to Section 92C(2) which apply. Reliance was placed on the decision of DHC in case of CIT v. Mentor Graphics (Noida) (P.) Ltd. [2013] 354 ITR 586.
Findings of the court
After referring to the provisions of Section 92C and Rule 10B as well as various decisions of the tribunal and decision of its own court, the hon'ble high court has held that provisions of the Act and Rules are supreme and therefore, ALP must be determined in accordance with such provisions. Hence, the OECD guidelines cannot be resorted to in preference over such provisions.
Since TNMM was selected as most appropriate method (MAM) u/s 92C by the assessee as well as the TPO, it was held that comparables had to be selected as per Rule 10B. . It would be appropriate to refer to the relevant findings in paras 31, 32, 33, 35, 37 of the judgment—-
1. Where the arm's length price of the international by the assessee is to be determined by applying TNMM as MAM then, ALP must be determined with reference to the functions performed, taking into account the assets employed or to be employed and the comparability the risks assumed by the respective parties to the transaction as per rule 10B(2)(b). [para 31]
2. The specific characteristics of the property transferred or services provided (contemplated by Rule 10B(2)(a)) in either transactions may be secondary, for judging comparability of an international transaction in the TNMM, because the price charged or paid for property transferred or services provided and the direct and indirect cost of production incurred by the enterprise in respect of property transferred or services provided go into reckoning comparability analysis in the transaction methods, i.e the comparable uncontrolled price, resale price and cost plus whereas the profit based method such as transactional net margin method takes into account, the net margin realised.[para 31]
3. Rule 10B(3) mandates that a given or select uncontrolled transaction selected in terms of Rule 10B(2) "shall be comparable to an international transaction" if none of the differences, if any, between the compared transactions, or between enterprises entering into such transactions "are likely to materially affect the price or cost charged or paid or the profit arising from such transaction in the open market or reasonably accurate adjustment can be made to eliminate the effects of such difference.[para 31]
4. The sequitur of Rule 10B (2) and (3) is that if the comparable entity or entity's transactions broadly conform to the assessee's functioning, it has to enter into the matrix and be appropriately considered.[para 32]
5. The other exercise which the TPO has to necessarily perform is that if there are some differences, an attempt to "adjust" them to "eliminate the material effects" should be made.[para 32]
6. Such being the case, it is clear that exclusion of some companies whose functions are broadly similar and whose profile – in respect of the activity in question can be viewed independently from other activities-cannot be subject to a per se standard of loss making company or an "abnormal" profit making concern or huge or "mega" turnover company. [para 33]
7. Rule 10B (3) on the other hand, indicates the approach to be adopted where differences and dissimilarities are apparent. Therefore, the mere circumstance of a company – otherwise conforming to the stipulations in Rule 10B (2) in all details, presenting a peculiar feature – such as a huge profit or a huge turnover, ipso facto does not lead to its exclusion. The TPO, first, has to be satisfied that such differences do not "materially affect the price…or cost"; secondly, an attempt to make reasonable adjustment to eliminate the material effect of such differences has to be made. [para 33]
8. As regards the relevance of multiple year data for transfer pricing determination, this Court is of the opinion that the general rule as prescribed in Rule 10B(4) mandates the tax authorities to take into account only the relevant assessment year's data. [para 35]
9. The proviso to Rule 10B(4) permits data relating to two years prior to the relevant assessment year to be taken into account in the event that they have an influence on the determination of price. However, in such instances, the onus lies upon the assessee to establish the relevance of such data. The language of Rule 10B(4) does not leave any scope for ambiguity on this issue. [para 35]
10. The Guidelines, have of OECD therefore only persuasive status; they do not have any legal sanction- unlike, for instance Double Taxation Avoidance Agreements which courts are duty bound to interpret and implement, in terms of municipal law, given the compulsion of provisions of the Income Tax Act.—- – the provisions of the Constitution compel a national legislation, to embody the terms of a treaty, for it to be enforceable in courts in India. This is because of Article 253 of the Constitution and the dualist tradition (of International law) followed by India, whereby treaties by themselves are legally unenforceable in courts, but are to be assimilated through municipal (or national) legislation.— Thus, the Courts are primarily bound by the law on the subject in India; if the law is clear and unambiguous, there is no question of resorting to extrinsic sources. The only rider is that if the terms of such conventions or treaties are similar to the law applicable in India, courts may consider precedents in that regard; however those are only of persuasive value. The reliance was placed on its earlier decision in Mentor Graphics (P.) Ltd. 354 ITR 586(Delhi) [para 37-38]
11. In any event, the OECD Guidelines relevant herein are in consonance with the Rules. Para 3.63 of the Guidelines states that an extreme comparable cannot be excluded "on the sole basis that the results arising from the proposed 'comparable' merely appear to be very different from the results observed in other proposed 'comparables' and that "further examination would be needed to understand the reasons for such extreme results".[para 38]
12. Similarly, para 3.65 states that "loss-making comparables that satisfy the comparability analysis should not however be rejected on the sole basis that they suffer losses". Further, para 3.64 states that "it is the facts and circumstances surrounding the company in question that should determine its status as a comparable, not its financial result". The same approach is prescribed in para 3.66 for entities making supernormal profits. Therefore, both the OECD Guidelines as well as Rule 10B (2) and 10B (3) do not, in any manner, prescribe automatic exclusion of entities with extreme financial results. [para 38}
13. Similarly, insofar as the use of multiple year data is concerned, Para 3.75 of the OECD Guidelines states that "[m]ultiple year data should be used where they add value to the transfer pricing analysis." This is akin to the proviso to Rule 10B(4) which provides for "data relating to a period not being more than two years prior to such financial year [to] be considered if such data reveals facts which could have an influence on the determination of transfer prices in relation to the transactions being compared." [para 38]
14. In the present case, this Court holds that once Brescon, Keynote and Khandwala Securities are held to be functionally similar to the assessee, they would be included as comparables, notwithstanding their high profit margins, provided that the material difference on account of such high profit margins can be eliminated under the Rule 10B(3) analysis. [Para 40]
15. However, in respect of Keynote, the court noted that services provided by the assessee were quite different from the services provided by the Keynote and therefore Keynote could not be considered as comparable one. The court also held that keynote could not be included in list of comparable merely because it was included by the assessee itself. [para 42]
Impact of the judgment
This judgment is of great significance on various aspects relevant for determining the ALP u/s 92C by applying TNMM as most appropriate method. Firstly, it lays down that provisions in the Act & Rules are supreme and therefore, the OECD guidelines cannot be pressed in to service while determining the ALP u/s 92C. The reason given in para 37 is that it has no legal sanction since India is not party to it unlike DTAAs which have legal sanction by virtue of provisions in the Income Tax Act 1961. The only rider is that if the terms of such conventions or treaties are similar to the law applicable in India, courts may consider precedents in that regard; however those are only of persuasive value. Thus, the effect of this legal position is that the ALP must be determined in accordance with the provisions of the Act & the Rules made thereunder.
Secondly, it lays down that ALP must be determined only on the basis of single year data as provided in Rule 10B(4). The proviso to this Rule would be applicable only in exceptional cases where data reveals facts which can have an influence on determination of transfer prices in relation to the transaction being compared. The onus would be on the person invoking the provisions of the proviso.
Thirdly, where TNMM is considered as most appropriate method, the ALP has to be determined in accordance with the provisions of Rule 10B. Thus, firstly, ALP must be determined with reference to the functions performed, taking into account the assets employed or to be employed and the risks assumed by the respective parties to the transaction as per rule 10B(2)(b). The specific characteristics of the property transferred or services provided (contemplated by Rule 10B(2)(a)) in either transactions may be secondary. If the comparable entity or entity's transactions broadly conform to the assessee's functioning, it has to enter into the matrix and be appropriately considered. The other exercise which the TPO has to necessarily perform is that if there are some differences, an attempt to "adjust" them to "eliminate the material effects" should be made.
As a result thereof, the entit1es making high/extremely high profits/losses will not, ipso facto, lead to its exclusion from the list of comparables for the purposes of determination of ALP since such factor is not covered the provisions of Rule 10B. In such circumstances, an enquiry under rule 10B(3) ought to be carried out, to determine as to whether the material differences between the assessee and the said entity can be eliminated. If such exercise is not warranted then the entity should be included as a comparable.
In view of such legal finding, all the decisions of the tribunal directing the exclusion of the entities declaring abnormal profits or showing losses stand disapproved in the absence of any other decision of any high court or the apex court.
Lastly but not the least, where any comparable is included by the assessee in its transfer pricing study and intends to exclude the same before the tax authorities, the TPO cannot refuse such request if otherwise is not comparable under the Rules. This finding is based on the principle that there is on estoppel against the law. In the present case, entity "Keynote" was included by assessee but later requested TPO to exclude the same on the ground that functionally, it was different from the assessee's entity. The court has held that TPO could not refuse such request merely because it was included by the assessee itself
SEBI moves against money laundering in listed SMEs; Merger control regulations amendments soon: CCI
CLB re-constitutes Benches under Companies Act & CLB Regulations
CLB re-constitutes Benches for the purpose of exercising and discharging powers and functions laid down under the Companies Act & CLB Regulations; Prescribes the constitution of the CLB Benches at New Delhi, Kolkatta, Mumbai and Chennai for the matters filed before Principal Bench before March 31, 2008 and pending before respective benches; States that the matters pending before the Additional Principal Bench as on March 31, 2008 shall be dealt with by the Chennai Bench consisting of Chief Justice M. M. Kumar, (Chairman) and Shri. Kanthi Narahari (Member, Judicial); Prescribes the constitution of Principal Bench for all the matters relating to Section 250, 269 and 388B of Companies Act, 1956 and states that the same shall be dealt by Chief Justice M. M. Kumar (Chairman); Prescribes the constitution of New Delhi Bench, Kolkata Bench, Mumbai Bench, Chennai Bench for matters relating to all sections of Companies Act, 1956 and 2013 (excluding Section 250, 269 and 388B of Companies Act, 1956): CLB Order
Grants injunction to Vellore Institute's well-known mark VIT, rejects 'common acronym' defence
HC grants interim injunction against use of 'VIT' Bagaria Education Trust (defendant) for their institute Vivekananda Institute of Technology in Jaipur, Rajasthan, as similar to plaintiff, Vellore Institute of Technology's (in Vellore, Tamil Nadu) registered trademark VIT; Rejects defendant's contention that VIT was used as acronym, which was common to trade, holds that even assuming that acronym VIT was common and generic word, plaintiff has been using the said word VIT from 2001 and got it registered in 2005; Further holds that by long and continuous usage, plaintiff has built the mark VIT as a "well known mark" under Trademarks Act, and use of similar mark would cause confusion in general public; Rejects defendant's reliance on SC ruling in Khoday Distilleries Ltd. vs. Scotch Whisky Association to contend that where the class of buyers was quite educated and rich, the test to be applied is different from the one where the product would be purchased by the villagers, illiterate and poor; Holds that, "When there is an earlier registration of the mark VIT in favour of the plaintiff, definitely the plaintiff is entitled for statutory protection"; Relies on Blue Hill Logistics Pvt. Ltd., vs. Ashok Leyland Limited:Madras HC
Denies Wipro's infringement application against Heinz, no exclusivity over 'generic' sub-trademark 'BOLTS'
HC dismisses Wipro's (plaintiff) application to grant injunction against Heinz (defendant), alleging infringement of its mark BOLTS, used for glucose based chewy tablets, by respondent's VOLT used for similar product; Notes that neither plaintiff nor defendant use their respective trademarks in isolation, but with their house name GLUCOVITA (GLUCOVITA BOLTS), and GLUCON-D (GLUCON-D VOLT); Also notes that the word BOLTS means a sudden and unexpected event, whereas the word VOLT means unit of electromagnetic force, which is descriptive in nature, to describe the product; Thus, holds that, "when a sub brand of the plaintiff is distinctive in nature and that was used along with the house name of the plaintiff, unless the plaintiff establishes that the word BOLTS has acquired secondary meaning by continuous, long and uninterrupted usage, they are not entitled for interim injunction at this stage"; Also observes that the design and colour combination of the disputed trademark were different from plaintiff's mark, holds "prima facie, I find that the label of the first defendant could be distinguished from the label of the plaintiff. trade dress must be seen in its entirety and not in isolation"; Relies on Madras HC Division Bench ruling in Nutrine Confectionery Co. Ltd. v. Icon Household Products, co-ordinate bench ruling in A.V.Rajadurai Nadar Vs. P.Ayya Nadar and another:Madras HC
'DRORIT' infringes pharma trademark 'DROTIN', being deceptively similar
HC holds use of trademark 'DRORIT' for pharmaceutical / medical preparations constitutes infringement & passing off of plaintiff's trademark 'DROTIN', being deceptively similar; Observes plaintiff to be prior adopter of mark since 1997, unlike defendants who advertised about it only in 2013; Also observes that plaintiff's trademark DROTIN is extensively used in the course of trade and has acquired enviable goodwill & reputation; Refers to co-ordinate bench ruling in Walter Bushnell Pvt. Ltd. and others vs. Miracle Life Sciences and Anr & SC ruling in Cadila Health Care Ltd. vs. Cadila Pharmaceutical Ltd:Delhi HC
Permanent injunction against use of 'KEYENCE' for water-system, infringes automation-manufacturer's trademark 'KEYENCE'
HC holds use of mark KEYENCE WATER SYSTEM by defendant without any due cause, infringes plaintiff's (developer & manufacturer of automation equipment) trademark 'KEYENCE'; Observes that such use of mark KEYENCE is detrimental to goodwill & reputation as well as distinctive character of plaintiff's registered trademark; States that, "It also amounts to dilution of mark KEYENCE"; Thus, grants permanent injunction to plaintiff restraining defendants from using trademark KEYENCE:Delhi HC
Grants permanent injunction to fungicide manufacturer's trademark 'CONTAF', infringed by mark 'CONTA'
HC in an ex-parte order, grants permanent injunction against use of CONTA / CONTA PLUS, as identical / deceptively similar to plaintiff's registered trademark CONTAF / CONTAF PLUS, both being used for fungicides; Observes that, "the continued use of the impugned trademark by Defendant is bound to create confusion and deception in the minds of the public"; Considering the nature of infringement and with a view to dissuade others from indulging into such activities awards punitive damages of Rs 1 lakh to plaintiff :Bombay HC
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HUL, Gillette amicably settle trademark dispute; NSE gears up for e-IPOs & start-up listing
HUL, Gillette amicably settle trademark dispute; NSE gears up for e-IPOs & start-up listing
ity being Order in Original. In the said appeal there was delay of 118 days in preferring appeal and therefore, the Tribunal dismissed the appeal on the ground of delay since as per the Tribunal, there was no power to condone the delay beyond 30 days by the Commissioner (Appeals). Under the circumstances, this petition was filed.
When the appeal came up for hearing before the Division Bench of the High Court, the Division Bench noticed that since as per the provisions of section 35 of the Central Excise Act, 1944, the delay cannot be condoned beyond the period of 90 days, i.e., 60 days being the prescribed period and further discretion to condone the delay is 30 days. But the petitioner placed reliance upon the another decision of the Division Bench of High Court in the case of Amitara Industries Ltd. vs. Union of India decided on 30.01.2013 and contended that as per the view taken in the said decision, the delay can be condoned beyond the period of 90 days provided there is a good case on merits and the petitioner also relied upon other decisions of High Court including the decision in the case of D.R. Industries Ltd. vs. Union of India 2008-TIOL-300-HC-AHM-CX. The Division Bench found that the matter is required to be referred to the Larger Bench for decision. Hence, the matter has been referred to the Larger Bench inter alia with the following questions:
Where a statutory remedy or appeal is provided under Section 35 of the Central Excise Act, 1944 and the delay cannot be condoned under Section 35 beyond the period of 90 days, then whether Writ Petition under Article 226 of the Constitution of India would lie for the purpose of condoning the delay in filing the appeal?
When if the statutory remedy or appeal under Section 35 is barred by the law of limitation whether in a Writ Petition under Article 226 of the Constitution of India, the order passed by the original adjudicating authority could be challenged on merits?
On behalf of respondent department, it was contended that:
It has become a regular practice on the part of the assessee to prefer writ petition under Article 226 of the Constitution in practically all cases where the limitation period is over for condonation of delay and such course deserves to be discouraged. The view taken by the Division Bench of the High Court in the case of D.R. Industries Ltd. deserves to be diluted or deserves to be further explained keeping in view the subsequent decisions of the Apex Court wherein the Apex Court has declined interference to the orders of the High Court wherein the power under Article 226 of the Constitution were not exercised on account of the expiry of the period of limitation including for condonation of delay.
After hearing both sides extensively and referring to various judgments including that of Supreme Court in case of Singh Enterprises, the Larger Bench held:
As per the decisions of various Division Bench of this Court, it can be said that the legal position prevailing uptil now are as under -
(1) The appeal deserves to be preferred within the prescribed time limit as per section 35 of the Act and the delay beyond the period of 30 days cannot be condoned by the appellate authority. Hence, the outer limit of preferring appeal including the period for condonation of delay could be said as 90 days.(2) In exceptional cases, where it is a case of "gross injustice", the aggrieved person can invoke the writ jurisdiction under Article 226 of the Constitution and if the Court is satisfied that it is an exceptional case of gross injustice, the power under Article 226 can be exercised.
After referring to various decisions on the jurisdiction of High Courts under Article 226 and whether Section 35 of the Central Excise Act can whittle down or dilute or nullify the power of the constitutional court under Article 226 of the Constitution, the High Court answered the questions referred as under:
Limitation provided under section 35 of the Act cannot be condoned in filing the appeal beyond the period of 30 days as provided by the proviso nor the appeal can be filed beyond the period of 90 days. The petition under Article 226 of the Constitution would not lie for the purpose of condonation of delay in filing the appeal. However,
A) The petition under Article 226 of the Constitution can be preferred for challenging the order passed by the original adjudicating authority in following circumstances thatA.1) The authority has passed the order without jurisdiction and by assuming jurisdiction which there exist none, orA.2) Has exercised the power in excess of the jurisdiction and by overstepping or crossing the limits of jurisdiction, orA.3) Has acted in flagrant disregard to law or rules or procedure or acted in violation of principles of natural justice where no procedure is specified.
CBDT Top Brass Expresses Shock And Dismay At Apathy Of Dept Even In Sensitive Search Cases
Hon'ble Shri. S. K. Ray, Member (A&J), CBDT, has addressed a letter dated 03.07.2015 in which he has expressed his dismay at the fact that despite several instructions on the subject, necessary due diligence and caution is not being exercised while granting authorization for filing of appeals. He has referred to several decisions where courts have taken an adverse view against the Department. He has also referred to a "shocking incident" in a "sensitive search case" where he says the "apathy of the Department Officers is evident". He has warned that Courts are taking a "stern and inclement view" of the Department's actions in litigation matters. He further points out that litigation not only entails financial costs but also tarnishes the image of the Department and strains its resources. He has stated that it is imperative that the available resources are optimally utilised to obtain maximum benefit out of litigation.
GOVERNMENT OF INDIA
CENTRAL BOARD OF DIRECT TAXES
S.K. RAY
Member (A&J), CBDT
Tel: 011-23094683
Fax: 011-23092591
Email: Subratk.ray@nic.inD.O.No.279/M-88/2014-ITJ3rd July, 2015DearSubject; Filing of Appeals on merits- Observations of Courts – reg,Reference the earlier D.O. dated 19th September, 2014 on the above subject.2. It has been noted that despite several instructions on the subject, necessary due diligence and caution is not being exercised while granting authorization for filing of appeals. Several court decisions have been noted where courts have taken an adverse view against the Department. A few such decisions are:(i) ITAT, Mumbai in the case of M/s Prescon Builders Pvt. Ltd. has stated that the very fact that the AO filed the appeals without even verifying the year, which was mentioned in the ground of appeal, also indicated that the appeals were filed in a routine manner which causes lot of inconvenience to the tax payers and such a practice should be deprecated.(ii) High Court, Mumbai, in the case of CIT-2 Vs. State Bank of India, Financial Reporting, Compliance & Taxation Department .noted that where the Revenue has accepted the order by not preferring any Appeal against the earlier order, the Revenue should not challenge the subsequent order on the same issue. In case an appeal is preferred from the subsequent order, then the Memo of appeal must indicate the reasons as to why an appeal is being preferred in the later case when no appeal was preferred against the earlier order of the Tribunal which has merely been followed in the later case. The absence of this being indicative of non-application of mind, does undoubtedly give an opportunity to the Revenue to arbitrarily pick and choose the orders of the Tribunal which they would challenge in the Appeal before the Court.(iii) ITAT, Mumbai in the case of Sh. S. Ganesh has stated that the act of disregard and disobedience of the orders of the higher judicial authorities in hierarchy amounts to the gross abuse of process of law and is an act which tends to lower down the authority of the higher courts. In this case an appeal was filed on an issue settled by the ITAT in its earlier decision in the same case.2.1 The apathy of the Department Officers is evident in another shocking incident where in a sensitive search case, appeal was filed by the Department in High Court. The Registry pointed out certain defects in filing of appeal and the Court granted time to remove the defects. This relates to the year 2009. From 2009 till 2014, no follow-up action was taken and the case was dismissed due to default on part of the Department in curing procedural defects. The Department filed a MA praying for restoration of the main appeal and subsequently a Review Petition which were dismissed by the Court. When the matter travelled to the Supreme Court, the Apex Court has taken a serious view and directed that Department ascertain and fix responsibility of the individual/ (s) guilty of inaction and for taking appropriate action against them for such inaction. This default was compounded by the fact that the SLP was filed after a delay of 240 days.2.2 Needless to say that the Courts are taking a stern and inclement view as far as Department's actions in litigation matters is concerned.3. Further, besides financial costs, litigation also entails tarnishing the image of the Department and straining its resources. The significance of filing appeal and pursuing litigation only in deserving cases cannot be over-emphasized, more so in the backdrop of the fact that Department is facing shortage of officers at all levels. It is imperative that the available resources are optimally utilised to obtain maximum benefit out of litigation.4. This must be brought to the attention of all concerned for compliance.With regards,
Yours sincerely,
(S.K. Ray)
Deplores prevailing practice of writs, despite alternate, efficacious remedy under FEMA
HC dismisses writ petition against order of Appellate Tribunal under FEMA, as alternate efficacious remedy to file appeal before Court u/s 35 of FEMA present; Holds that, "This Court cannot in the garb of the Writ Petition allow the parties to get over such statutory provisions and which they did not avail though being aware of the same"; Expresses disappointment and states that, "We have been noticing of late parties repeatedly approaching this Court directly in the face of alternate and equally efficacious remedy of an Appeal"; Observes that appeal under FEMA was alternate & equally efficacious remedy petitioner should have resorted to:Bombay HC
The ruling was delivered by Justice G.S. Kulkarni and Justice S.C. Dharmadhikari.
Advocates Swapnil Bangur, Yatin R.Shah and Tejashree Tawde argued on behalf of the petitioner. Respondents were represented by Senior Counsel B.M.Chatterjee alongwith Mr.M.S. Bhardwaj.
Wipro's Azim Premji sets aside 50 per cent wealth for charity
BT Online Bureau New Delhi Last Updated: July 7, 2015 | 13:12 IST
Wipro Group chairman Azim Premji (Source: Reuters)
Wipro Group chairman Azim Premji has committed 50 per cent of his stake in Wipro for philanthropic purposes.
He has also become the first Indian to sign the Giving Pledge , sponsored by Warren Buffett and Bill Gates to invite the world's wealthiest to donate majority of their wealth to charity.
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Premji, who holds 73.39 stake in Wipro that is worth about Rs 99,500 crore, has given away 18 per cent shares to philanthropy , a report in the Economic Times said. This is in addition to the 39 per cent stake that he had committed for charity, in the company's annual report for FY 15.
Premji, who turns 70 this month, has thus set aside half of his wealth for philanthropy with major focus on education.
"Over the past 15 years, I have tried to put this belief into action through my personal philanthropic work. Over these years, I have irrevocably transferred a significant part of the shareholding in Wipro, to a trust," he said.
Premji carries out the philanthropic work through Azim Premji Foundation and recently formed Philanthropic Initiatives. He hired Amnesty India head G Anantha Padmanabhan for Philanthropic Initiatives, which provides grants to NGOs working for the street children, under-privileged teenage girls, etc.
Anurag Behar, CEO of Azim Premji Foundation said that the organization works towards improving government school education in states.
SEBI told to align RPT provisions with Cos.Act; Services attract highest FDI; NYSE suffers outage
SEBI told to align RPT provisions with Cos.Act; Services attract highest FDI; NYSE suffers outage
PFA
CBDT releases 32 clarifications on compliance window in Q&A format
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Prescribing NPA norms not essential legislative function, permits delegation to 'expert' bodies
SC upholds constitutional validity of amended definition of 'non performing asset' ('NPA') under SARFAESI Act, whereby regulators other than RBI can also issue guidelines for asset classification (earlier only RBI was empowered to issue such guidelines); Rejects borrowers' contention that such definition leads to excessive delegation of 'essential legislative function'; Holds that "the function of prescribing the norms for classifying a borrower's account as a NPA is not an essential legislative function", as laying down of such norms requires a constant and close monitoring of financial system demanding considerable amount of expertise in public finance, banking etc.; Rules that if the Parliament chose to define a particular expression by providing that it shall have the meaning as is assigned to it by a body which is an expert in the field covered by the statute and more familiar with the subject matter of the legislation, "the same does not amount to any delegation of the legislative powers"; Also rejects borrowers' contention that by authorizing different Regulators to prescribe different norms for identification of NPA with reference to different creditors would amount to unreasonable classification, violating Article 14 of Indian Constitution, holds that all creditors do not form a uniform/homogenous class; Refers to SC rulings in In re Art. 143, Constitution of India and Delhi Laws Act (1912), B. Shama Rao v. Union Territory of Pondicherry, Devi Das Gopal Krishnan etc. v. State of Punjab & Others, Municipal Corporation of Delhi v. Birla Cotton, Spinning and Weaving Mills, Delhi & Another:SC
The ruling was delivered by Justice J. Chelameswar and Justice S.A. Bobde.
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