Rejects Kingfisher's 'natural justice' plea for Advocate representation before Bank's Wilful-defaulter committee
HC. in Kingfisher Airlines' writ petition, rules that a borrower who has been tagged as 'Wilful Defaulter' under RBI Master Circular is not entitled, as a matter of right, to be represented by an advocate before the Grievance Redressal Committee, holds that principles of natural justice not violated; SBI Grievance Redressal Committee had issued show-cause notice to Kingfisher Airlines on non-repayment of Rs.6900 cr owed by it towards consortium of banks, against which Kingfisher had requested for representation through a counsel, which was denied; HC observes that there cannot be any straight jacket formula to decide whether a person is entitled to be represented by an advocate, merits of a case to be looked into, holds in instant case petitioner "not entitled to be represented by lawyer"; However, in order to meet the ends of justice, on the basis peculiar facts and circumstances of the case and to avoid further delay, HC permits Kingfisher to appoint an Advocate to represent itself on an undertaking that hearing would be concluded in one day; Relies on Calcutta HC & Delhi judgments in ruling in petitioner's own cases:Bombay HC
The ruling was delivered by V. M. KANADE and B. P. COLABAWALLA, Justice
Sr. Counsel Milind Sathe and Rohan Cama represented petitioners while Sr. Counsel P.K. Samdani, Vikash Kumar, Anil T. Agarwal, Gaurav Joshi, Advocates N.R. Prajapati represented respondents.
Start-ups tardy in protecting patents, Bata-Relaxo settle trademark dispute; Consumer court hauls-up CA for deficient service
Start-ups tardy in protecting patents, Bata-Relaxo settle trademark dispute; Consumer court hauls-up CA for deficient service
Issues warnings, orders caution in making corporate announcements under listing agreement
SEBI disposes of show cause notice against Zigma Software Ltd. ('Noticee'), that alleged non-implementation of several corporate announcements (relating to bonus issue, preferential issue of shares & real estate project), thereby violating PFUTP Regulations; However, warns noticee to be more cautious and careful in future in making such corporate announcements; Observes that the promoter entities and associate entities did engage in trades and substantially diluted their stakes in noticee company in proximity with the series of corporate announcements; However, relying on adjudication proceedings against associate entities which exonerated them from the allegations of PFUTP violations, relieves noticee as well; Notes that with respect to bonus issue corporate announcement, Noticee had applied to BSE for in-principle approval & SEBI for no-objection certificate, states that this indicates that at least some steps were taken to implement the announcements:SEBI
Sahara Mutual Fund not 'fit & proper' person, cancels registration, observes compliance lapses
SEBI orders cancellation of registration certificate of Sahara Mutual Fund ('Sahara MF') effective from 6 months from the order, restrains Sahara MF / Sahara Asset Management Company ('Sahara AMC') from taking any new subscription from investors, orders transfer of activities to new Sponsor & SEBI approved AMC; Observes that Board of Trustees were under obligation to recognise that Sahara AMC did not fulfill 'fit and proper' criteria and Trustees ought to have shifted the responsibility of managing the assets to another entity, opines that Sahara MF Trustees also cannot be allowed to remain in their trustee position on an on-going basis; Observes that Sahara AMC failed to provide updated bio-data of all the Directors within prescribed time, states that such disclosure is mandatory pursuant to Mutual Fund Regulations; Relies on Designated Authority's Report and refers to SEBI Mutual Fund Regulations, observes that Mr. Subrata Roy Sahara holds responsible position in Sahara Sponsor, being the single largest shareholder (80% holding) and capable of exercising control and influence over management & appointment of majority of directors on Board; For performing test of 'fit and proper person', SEBI relies on Intermediaries Regulations, states that it is authorized to consider factors like integrity, reputation, character, convictions, restraint orders, competence (financial solvency & networth) of principal officer, key management persons, person influencing decision-making and states that prescribed criteria ought to fulfilled at the time of obtaining registration and continuously throughout period of validity of registration:SEBI
SEBI issues FAQs on Delisting of shares
SEBI issues FAQs on Delisting of shares; Explains the term 'delisting', difference between 'voluntary delisting' & 'compulsory delisting', Clarifies on the exit opportunities available, elaborates on exit-offer to shareholders; SEBI also clarifies on demonstration of delivering the letter of offer to all public shareholders in accordance with Delisting Regulations, where atleast 25% of public shareholders do not participate in book building process: SEBI
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SEBI exempts registered Portfolio Managers from obtaining 'Research Analyst' registration
SEBI issues interpretive letter under Informal Guidance Scheme, 2003 read with SEBI (Research Analyst) Regulations, 2014 ('RA Regulations'), to registered Portfolio Manager; Refers to definition of 'investment adviser' and 'fund manager' in RA Regulations, states that SEBI-registered Portfolio Managers are not required to seek registration under such Regulations; Clarifies that irrespective of registration, Portfolio Managers are required to comply with Chapter III of RA Regulations relating to issuance / circulation of research report to public / director / employees making public appearances: SEBI
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Phantom Stock Scheme not within scope of Share Based Employee Benefits, Regulations
SEBI provides informal guidance to Mindtree Limited ('Mindtree') for applicability of SEBI (Share Based Employee Benefits) Regulations, 2014 ('SBEB Regulations') to Stock Appreciation Rights Scheme / Phantom Stock Scheme; Refers to SBEB Regulations, states that 'dealing in or subscribing to or purchasing securities of company, directly or indirectly' is one of the conditions for SBEB Regulations applicability; Observes that Stock Appreciation Rights Scheme / Phantom Stock Scheme does not fulfill such condition, thus, states that SBEB Regulations are not applicable to such Scheme; Notes that Mindtree is issuing notional Stock Appreciation Rights units at pre-determined grant price & promoters are entitled to get cash payment for appreciation in share-price over grant-price for the awarded units: SEBI
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Cautions investors from deceitful CIS, provides cautionary checklist for investor awareness & protection
SEBI notices that certain Collective Investment Schemes (CIS) are offered by entities that are neither registered with SEBI nor offer documents are filed; States that, since January 2011, appropriate actions have been taken and necessary orders are passed against 91-entities & directors, for carrying on unregistered CIS activities; States that SEBI has restrained entities & directors from collecting further money under existing / new schemes, launching any new scheme or alienating any assets / money collected, and, in certain cases, SEBI has directed winding-up of unregistered schemes and debarring entitities from accessing capital markets; Provides cautionary checks before investing in CIS, which include (i) whether entity is SEBI-registered, (ii) whether CIS has filed offer document with SEBI, (iii) Subscription to CIS units is permitted only though banking channel, (iv) No guaranteed returns are permitted; Recommends that investors do not invest / subscribe in 91-unregistered entities, suggests them to report to SEBI &State authorities, along with appropriate details / documents:
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Heads you Quote PAN: Tails you obtain a PAN!!!!!
Chirag Wadhwa has analyzed the provisions of section 206AA of the Income-tax Act, 1961 in relation to its applicability to foreign entities in the light of the judgement of the Pune Bench of the ITAT in Serum Institute and other applicable judgements
Permanent Account Number ("PAN"), other than just being a tax payer identification number, is a very important mechanism in the context of International taxation. This is so because, in India, any credit for taxes whether deducted or paid, is given only against a PAN of a person. In terms of international taxation it gains importance, because, for claiming tax credit, the credits against the PAN of foreign entity would act as a proof to substantiate the deduction of tax, and accordingly claim credit for the same.
Inspite of PAN being such an important mechanism, foreign companies refrain from obtaining PAN. The main reason for not obtaining PAN is to avoid any reporting to Indian Tax authorities, thereby trying to shield themselves from the wrath of the implausible Income Tax Assessments. The provisions of Section 206AA of The Income Tax Act, 1961 ("Act"), are attracted when the receiver of income, does not quote his PAN. The section mandates deduction of tax at source at higher of the rates in force, rates specified under relevant provision of the Act or 20%. To guard themselves from the atrocities of provision of Sec 206AA of the Act, benefit of Sec 139A(8)(d) of the Act r.w.r 114C(1)(b)or Sec 90 of the Act is taken. The former option was struck down in the judgment of Bosch Ltd1 while the latter was upheld in the case of Serum Institute of India Ltd2 (herein after referred as "Serum")The deeming provisions of section 9 of the Act being too steep, benefit of Double Taxation Avoidance Treaties are sought after.
The Pune tribunal in the case of Serum broke the stalemate on the ambiguity in the area as to whether Provisions of Sec 206AA of the Act, being a non-obstinate clause, override the beneficial treaty provisions of Sec 90 of the Act. In the case of Serum, the assessee had availed treaty benefit thereby the tax was deducted at a lower rate vis-à-vis the rate mandated by sec 206AA of the Act. The contention of department was that Sec 206AA of the Act would override the beneficial treaty provision and tax should have been deducted at 20%. The Pune tribunal held that the provisions of Sec 206AA of the Act, being a machinery provision cannot override the beneficial treaty provisions. The claiming of treaty benefit is one aspect, the repercussion of claiming treaty benefit is the second aspect.
The quintessence of the second aspect is that, if treaty benefit is claimed, the person claiming treaty benefit is liable to file Return of Income. So, in a way the benefit given by the treaty over the non obstinate clause of provision of sec 206AA of the Act, is taken back by provision of Sec 139 of the Act. Time and again, the Authority for Advance Rulings have in several cases* have held that if treaty benefits are claimed, it is obligatory to file Return of Income. Although the decisions of AAR are binding on the specific assessee in whose case the judgment is given, however, principles can be laid down by such AAR rulings. Provision of Sec 139 of the Act casts an obligation to file return on every person being a company. Thus provisions of Sec 139 of the Act requires filing of return by every company!! Although the scope of provision of Sec 139 is too spacious, it needs to be construed liberally.
The benefit from treaty may be such that it could make the income not taxable in a country or provide lower rate of deduction of tax in that country. In either of the situation, the obligation to file return of income is not changed. Although, vide the judgment of Serum (Supra), the rate at which tax may be deducted would be less than 20%, but the very fact that treaty benefit is claimed would itself throw the person into the apprehensive web of obtaining a PAN because till date there is no mechanism by which a return income can be filed without obtaining a PAN!!
So a question would arise, that just like it is mandatory to have a valid Tax Residency Certificate for claiming treaty benefits, would PAN also be required for claiming treaty benefits??
A straight forward answer to the above question would be NO; for the reason being that PAN is not a pre-requisite for claiming treaty benefits, but it is the obligation being cast upon for availing treaty benefits.
Although it is a well-established law3 that provisions of Sec 90 override the general provisions of the Act, however such principle would not be applicable in the case to discharge the liability for filing return/obtaining PAN. This is for the simple reason that Provision of Sec 90(2) of the Act gives an option to opt for the beneficial position, either in the Act or in the treaty. It is due to this that tax is deducted at lower rates as provided in treaty vis-a-vis, the rates provided u/s 206AA of the Act. However in case of filing return of Income, there is no corresponding provision in any treaty which provides that Return of Income should not be filed. It can be explained as follows: the obligation to file return of income is cast by domestic laws, there is no Article in a treaty which requires non filing of Return. So the question of beneficial position does not arises as to be better off in a situation, two alternatives/options are required, whereas, in case of return filing there is no option as such because there is no corresponding Article covering such aspect. To elaborate if the treaty provides deduction of tax @ 10% on a royalty payment, however Sec 206AA, which casts an obligation for deduction of tax @ 20.In this case, the benefit of 10% will be available as it more beneficial compared to the alternative position under the Act to deduct tax @ 20%. However there is no such corresponding position in the treaties with regards to filing return of income. A situation which is not covered by treaty is to be dealt with domestic laws. Hence the liability of filing of return of income thereby obtaining PAN cannot be dispensed off.
So the whole issue boils down only towards the timing of PAN i.e. either the foreign enterprises obtain a PAN and quote the same thereby avoiding conflict with the provisions of Sec 206AA of the Act or they take treaty benefits and later on obtain a PAN and file Return of Income.
The intention of introduction of Sec 206AA of the Act was to improve compliance with the provision of quoting of PAN in the TDS regime however with due regards to judgment of Serum, the provisions of Sec 206AA of the Act are rendered futile to the extent of dealing with non-residents. Whether the same will be challenged with judicial authorities or there may be an amendment in the Act would have to be observed.
It now remains to be seen that the Castelton4 Judgment which opened the gates of fury for the Foreign Investors by the levy of MAT provisions would also oblige them to obtain PAN and thereby brining their nightmares of unfounded Tax assessments come true, because in the same Castleton judgment, it has been held by AAR authority that the entity claiming treaty benefits is liable to file return of income.
First Section 206AA of the Act being held to be constitutionally Invalid in case of A. Kowsalya Bai5& then the same being bought against Provision of sec 139A(8) in case of Bosch1, & then now again provisions of section 206AA of the Act, being tapped down in case of Serum; the government should indeed act on the reconstruction of the section with regard to issues being faced. Also the provisions of Section 139 of the Act may be re-looked with due regard to the fact that, there are AAR judgments in favour of assessee# stating that Return of Income need not be filed, if after claiming of treaty benefits, the income is not taxable !!.So how is the provision of sec 139 construed in due course of time by the judicial authorities, remains to be seen….
However it is to be noted that it is only the approach of Department that hinders the process of effective and efficient taxation regime. The approach of the legislature cannot be questioned as the government should have the basic data as to which entities are taking benefit of treaty, whether there is any treaty abuse, whether the objectives for which the treaty had been entered into is being achieved or not etc. This data collected by the government in turn helps in decision making.
Realty linked private-equity & venture-capital funds substitutable market, despite differences
CCI dismisses investors' complaint against a private alternative investment advisory firm, alleging abuse of dominance, absent dominant position; Investors had alleged that the firm refused to pay interest due on capital contribution made by them, unilaterally extended the tenure of the scheme and imposed one-sided clauses in the contribution agreement; CCI delineates the relevant market as market for "provision of services relating to management of investment in realty linked venture capital funds and reality linked private equity funds in India"; States that though there are marginal differences between realty linked private equity and reality linked venture capital funds, "the two are substitutable from the point of view of consumers looking for high returns from investments in the real estate sector"; Accordingly, notes that in relevant market, there are substantial number of realty linked private equity/ venture capital firms such as Kotak group, IL&FS, Aditya Birla group, HDFC etc, thus, the firm in question not dominant player:CCI
The ruling was delivered by Shri. Ashok Chawla (Chairperson), Shri. S. L. Bunker, Shri. Sudhir Mital, Shri. Augustine Peter, Shri. U. C. Nahta, Shri. M. S. Sahoo (Members).
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