PKMGLAW CHAMBERS
ADVOCATES AND SOLICITORS
ADVISER
Mr. Pradeep K. Mittal
B.Com., LL.B., FCS,
Advocate
Central Council Member
The Institute of Company Secretaries of India
E-mail:

9811044365
9911044365
SEBI-LAWS
Mr. C M Bindal
FCS
Company Secretary in Practice – Jaipur
E-mail : ,
9414962454
INCOME TAX
Mr. Himanshu Goyal
B.Com., LL.B., ACA,
E-mail:
9899566764
CIVIL LAWS
Mr. Praveen K.Mittal
B.Com., LL.B.,
E-mail: ,
:
9810826436
PKMG LAW CHAMBERS
ADVOCATES AND SOLICITORS
MONTHLY REPORT FOR DECEMBER ,2015

ADVISER
Mr. PRADEEP K. MITTAL
B.Com., LL.B., FCS, Advocate
Past Central Council Member
The Institute of Company Secretaries of India
E-mail:
:9811044365,9911044365
INCOME TAX
Mr. MANOJ KUMAR MITTAL
CHARTERED ACCOUNTANT
Ph:28756284, 41557022
9810764620

CIVIL LAWS
Mr. PRAVEEN K.MITTAL
ADVOCATE
E-mail:
9810826436
HONORARY ADVISER
Dr. SANJEEV KUMAR
M.Com. LL.B., Ph.D, PGDPIRL, AICWA, FCS
EXECUTIVE DIRECTOR – BAJAJ HINDUSTHAN LIMITED

CIRCULARS AND NOTIFICATIONS ISSUED BY THE MINISTRY OF CORPORATE AFFAIRS (MCA) IN THE MONTH OF NOVEMBER, 2015

  • CIRCULAR No.15/2015 Dated: 30.11.2015

The MCA came with a Circular vide Circular No.15/2015 dated 30/11/2015 relaxing the additional fees of Forms MGT-7 (Annual Return) ,AOC-4 (Financial Statement), AOC (CFS) and AOC-4 XBRL and extending the last date of filing of the above mentioned Forms upto 30.12.2015.

  • Notification dated: 16.11.2015

The Ministry of Corporate Affairs issued a notification amending The Companies (Management and Administration) Rules, 2014 substituting Form No. MGT-7.

  • Notifcation Dated: 06.11.2015

The MCA came with a notification amending the Companies ( Share Capital and Debentures)Rules, 2014 as Companies (Share Capital and Debentures) Third Amendment Rules,2015 substituting Rule 18(1)(a)(iii) by below mentioned rule:-

“(iii) Infrastructure Debt Fund Non-Banking Financial Companies as defined in clause (b) of direction 3 of Infrastructure Debt Fund Non Banking Financial Companies (Reserve Bank ) Directions, 2011;

(iv) Companies permitted by a Ministry or Department of the Central Government or Reserve Bank of India or by the National Housing Bank or by any other statutory authrity to issue debentures for a period exceeding ten years.”

COMPETITION ACT - BY SHRI PRADEEP K. MITTAL-9811044365

  • The Competition Appellate Tribunal upholds the order of Competition Commission of India rejecting garment export co.’s (appellant) complaint againstExport Credit Guarantee Corporation of India Limited (‘Respondent’), alleging anti-competitive conduct in not removing appellant’s name from ‘Specific Approval List’ (‘SAL’, list containing names of exporters who have defaulted in loan-repayment). The party did not disclose that they previously filed a writ petition before Bombay HC seeking similar reliefs but without success. The Appellate Tribunal holds that “a litigant who seeks intervention of any court to disclose all facts and should not suppress material fact, The Appellate Tribunal cost of Rs.5 lacs for suppressing material facts relying upon onSupreme Court’s rulings in Dalip Singh Vs. State of Uttar Pradesh, Amar Singh Vs. UOI, Jai Singh Vs. UOI, Mahabir Prasad Jain Vs. Ganga Singh. Export Credit Guarantee Corporation of India Ltd. Vs. A. Jaya Kumar: COMPAT: [LSI-802-COMPAT-2015-(NDEL)]

COMPANIES ACT 1956/2013 - BY SHRI PRADEEP K. MITTAL-9811044365

  • The Supreme Court has held that when there is no dispute between the parties about the title to the shares, the Company Law Board shall have the power to deal with the matter in exercise of its jurisdiction under Section 111/111A (now under Section 58 and 59 of Companies Act, 2013) and order for rectification of Register of Member. Jal Mahal Hotels (P) Ltd Vs. Rajkumar Devraj 2015 (128) CLA 375 SC.
  • In order to upheld the validity of transfer of shares, the compliance of provisions of Section 108 is mandatory. However, Section 111(4) of Companies Act, 1956 does not specifically provide for limitation for filing petition but, under Article 137 of Limitation Act, the period of three years shall be normal period within which the petition must be filed for rectification of register of members. Gaurishankar Neelkanth Vs. Mrs Sulochana Neelkanth 2015 (128) CLA 396 CLB.
  • When the Director appointed under the regime of Companies Act, 1956 crosses the limit of 70 years of age on Companies Act, 2013 being made applicable, such nominee shall continue to hold post of director and the provision of Section 196 (3) does not prohibit such person from continuing on such post after crossing the age limit of 70 years. Sridhar Sundarajan Vs. Ultramarine & Pigments Ltd 2015 (128) CLA 435 Bom.
  • In order that transfer of shares by way of pledge is upheld under Section 536(2) of Companies Act, 1956, it is mandatory that the applicant must plead and prove that not only transfer of shares was bonafide but also transfer of shares were in the interest of the company. Henkel Chemicals (P) Ltd Vs. Garware Nylons Ltd (In liquidation) 2015(128) CLA 445 Bombay HC.
  • Due to assignment of debt by a secured debtor in favour of an institutions, the liability of the borrower is neither diminished or enlarged. The Transferee is bound, in terms of Section (5)(3), of the liabilities of the Transferor. The High Court cannot, in a writ petition, interfere the assignment of debt by the second creditor in favour of the transferee. Majestic Hotels Ltd Vs. IFCI Ltd 2015 (128) CLA 453 (P&H).
  • The shareholders of the transferor company may accept consideration either in the form of allotment of shares or in any other which in their wisdom, may deem fit and proper and the Company Court cannot question their wisdom unless such consideration is illegal, in appropriate or against public interest. Thomas Cook Insurance Services (India) Ltd 2015 (129) CLA 8 Bombay.
  • When the acquisition of shares are in contravention of the provisions of SEBI Act or rules or regulation, the Company Law Board cannot decide the legality or otherwise and it is for the authorities under SEBI Act to deal with such objections. Any company while consideration the request for transfer of shares, has to ensure that the compliance of the provisions of Section 108 Companies Act, 1956 has been made or not. Tirupati Techno Projects Ltd Vs. Modi Spinning & Weaving Mills Ltd 2015(129) CLA 14 CLB.
  • When the case requires full dress of trial by cross-examination of various witnesses, the winding up petition shall not be maintainable for recovery of dues and more particularly when the winding up petition has been filed on the contention that the respondent company is only guarantor company and when there is no board resolution by the guarantor company guarantee the sum. Hence, the company petition is liable to be dismissed. Tasneem Patel Vs. AAT Academy India Ltd 2015 (129) CLA 42 Madras.
  • When the petitioner deliberately and intentionally suppress and conceal material facts in the company petition, such company petition is liable to be dismissed. When the petitioner hold 29% paid up share capital of the company, such petition cannot be dismissed at threshold and issue the maintainability will be decided later unless glaring case of maintainability has been made out. Neelesh Kanade Vs. Edifice Properties (P) Ltd 2015 (129) CLA 83 CLB.
  • The Company Law Board in a given case can order for investigation under Section 237 of Companies Act, 1956 suo-moto. In exercise of powers under Section 402 of Companies Act, 1956, CLB can order for buy out of the shares of the petitioner by the Respondent – though no case for oppression and mis-management has been made out. Tushar Clothing (P) Ltd Vs. Ramesh D Shah 2015( 129) CLA 120 CLB.
  • The Madras High Court has sanctioned the scheme of arrangement, which envisaged demerger and transfer of undertaking of de-merged Company and conversion of long term infra bonds to unsecured bonds. IDFC Ltd. Vs. IDFC Bank Ltd. 2015 (128) CLA 243 Madras.
  • The Punjab & Haryana High Court has sanctioned the scheme where the scheme of arrangement/amalgamation has been prepared in light of the accounting standard 14 and the transferor Company has undertaken that all procedural formalities required to be complied with shall be complied with. The Competition Commission of India has also directed that the Monitoring Agency shall monitor the price of drugs manufacturing by Combined Entity during the entire process of divestment is completed. The procedural requirements U/s 391 to 394 have also been complied with and there is no serious objection on the part of Regional Director and OL and no investigation is pending U/s 235 to 251 of the Companies Act, 1956, the Scheme of Arrangement is liable to be sanctioned. Ranbaxy Laboratories Ltd. Vs. Sun Pharmaceutical Industries Ltd. 2015 (128) CLA 260 Punjab & Haryana.
  • The Madras High Court has held that once the procedural formalities U/s 391 to 394 of the Companies Act, 1956 have been complied with and the High Court has sanctioned the Scheme, there is no need to have separate compliance U/s 13 read with Section 21 of the Companies Act, 2013 as section 391 is complete code and the Court has wide power to pass any orders and there is no need to pass separate orders U/s 13 of the Companies Act, 2013 (Section 21 of Old Companies Act, 1956). Michelin India Pvt.Ltd. 2015 (128) CLA 276 Madras.
  • The Andhra Pradesh High Court has held that the winding up petition U/s 433 is maintainable against the Company who stood as a guarantor for return of money by its own wholly owned holding Company. Mauritius Commercial Bank Ltd. Vs. Sujana Universal Industries Ltd. 2015 (128) CLA 287 (A.P).

INCOME TAX CIRCULAR, NOTIFICATION ANDPRESS RELEASE-BY SHRI MANOJ KUMAR MITTAL CA - 9810764620

  • The CBDT has issued a press release dated 26.11.2015 pointing out that after notification of ICDS, it has been brought to the notice of the CBDT by the stakeholders that certain provisions of ICDS may need further clarification/ guidance for proper implementation. These implementation issues raised by the stakeholders have been referred to an expert committee comprising of departmental officers and professionals and the committee is currently examining these issues. The CBDT has stated that in order to issue a comprehensive guidance/clarification on this matter, the stake holders and general public are requested to bring out issues/points which in their opinion would require further clarification/guidance for proper implementation of the provisions of the ICDS. These issues/points may be submitted by 15th December, 2015 at the email address () or by post at the stated address.
  • The CBDT has issued a press release dated 20.11.2015 stating that the Finance Minister in his Budget Speech, 2015 has indicated that the rate of corporate tax will be reduced from 30% to 25% over the next four years along with corresponding phasing out of exemptions and deductions. This is a step towards simplification of tax laws, which is expected to bring about transparency and clarity. The CBDT has identified the precise provisions that will be affected as a result of the phasing out plan. The CBDT has invited comments on the aforesaid phasing out plan within 15 days
  • In National Petroleum Construction Company Vs. DIT in ITA Nos. 143, 144, 533/2013 and 795/2014, the Delhi High Court in its order dt. 13.08.2015, dt. 20.08.2015 and 28.09.2015 directed the Income Tax Department to formulate and implement a standard operating procedure relating to seamless transfer of case from one standing counsel to another, filling re-filling of appeal in time and maintaining record of order of SC or High court which has attained finality relating to any aspect whether in favor of assessee or department.
  • Pursuant to the said directives of the High Court, the Chief Commissioner has issued a detailed document titled “PROCEDURE FOR FILING APPEALS, CURING DEFECTIVE APPEALS AND EFFECTIVE REPRESENTATION IN THE DELHI HIGH COURT”. The said document sets out the standard operating procedure to be followed by the department in all cases.
  • Pursuant to thesolemn promise made by Prime Minister Narendra Modithat a mechanism would be set up to ensure that Assessing Officers are accountable for the unreasonable additions that they make in the assessment order, the CBDT has issued Instruction No. 17/2015 dated 09.11.2015 in which it has admitted that the tendency of the AOs to frame high-pitched and unreasonable assessment orders reflects harassment of taxpayers and leads to generation of unproductive work for the Department.
  • The CBDT has consequently set up a committee of high-ranking officials which will examine whether there is a prima-facie case of high-pitched assessment, non-observance of principles of natural justice, non-application of mind , gross negligence or lack of involvement of assessing officer. The Committee would ascertain whether the addition made in assessment order are not backed by any sound reason or logic, the provisions of law have grossly been misinterpreted or obvious and well established facts on records have out rightly been ignored. The Committee would also take into consideration whether the principles of natural justice have been followed by the assessing officer. If it is established that unreasonable and high-pitched additions have been made by the assessing officer, a report would be sent to the Pr. CCIT by the Local Committee who will then take suitable administrative action against the Assessing Officer. Further, the departmental position as determined by the Local Committee in such cases would be appropriately presented before the Appellate Authorities so that litigation is curtailed.
  • The CBDT has issued Instruction No. 16 of 2015 dated 06.11.2015 in which it has taken a stern view of the fact that the time limit of six months specified in s. 12AA(2) of the Income-tax Act 1961 for passing an order granting or refusing registration under s. 12AA are not being adhered to by the Commissioners of Income Tax (Exemptions). The CBDT has directed the Chief Commissioners to monitor that the Commissioners are adhering to the time limit and to take suitable administrative action in the case of laxity
  • The Ministry of Finance has issued a Notification dated 29.10.2015 in which it is stated that where the variation between the arm’s length price determined under section 92C and the price at which the international transaction or specified domestic transaction has actually been undertaken does not exceed one percent of the latter in respect of wholesale trading and three percent of the latter in all other cases, the price at which the international transaction or specified domestic transaction has actually been undertaken shall be deemed to be the arm’s length price for Assessment Year 2015-2016.

TRANSFER PRICING CASE LAWS - BY SHRI MANOJ KUMAR MITTAL CA - 9810764620

  • COMMISSIONER OF INCOME TAX VS.NESTLE INDIA LTD. (2011) 337 ITR 0103:Transfer pricing—Applicability of Chapter X—Deductibility of royalty payment of associated concern—Sec. 92 does not apply in respect of ‘payments of royalty etc.’ which are not the part of regular business carried on between a resident and a non-residentInternational Taxation
  • DIRECTOR OF INCOME TAX VS.INFRASOFT LTD. (2013) 85 CCH 0319 DelHC : Consideration received by the Assessee on grant of licences for use of software is not taxable as royalty within the meaning of Article 12(3) to the DTAA between India and the USA.

INTERNATIONAL TAXATION CASE LAWS - BY SHRI MANOJ KUMAR MITTAL CA - 9810764620

  • COMMISSIONER OF INCOME TAX vs.DERBY TEA & INDUSTRIES PVT. LTD. (2015) 45 CCH 0242 Kol Trib :Apex Court in the case tit led as Collector Land Acquisition, vs. Mst. Katiji & Ors (1987 AIR 1353, 1987 SCR (2) 387) analyzed the situation while dealing with the delay on behalf of the Government and observed as enumerated below:When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non deliberate delay. "It must be grasped that judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so. (para 3)
  • DEPUTY COMMISSIONER OF INCOME TAX vs.BENGAL AMBUJA HOUSING DEVELOPMENT LTD. (2015) 45 CCH 0232 KolTrib:While computing the profits for the purpose of deduction the loss incurred by the assessee in any other eligible industrial undertaking could not be set off against the profits a particular industry that would qualify for deduction.
  • HEMANT KUMAR GODARA vs.ASSISTANT COMMISSIONER OF INCOME TAX, (2015) 45 CCH 0233 MumTrib :Where Tax authorities had drawn adverse inference only on basis of denial of supply of machinery to assessee’s personal name by supplier despite overwhelming evidences furnished by the assessee to support the claim of manufacture and sale of goods, the tax authorities were not justified in holding that assessee was not manufacturing goods; and sssessee was entitled to deduction.
  • SWAMI DAYANAND EDUCATIONAL TRUST vs.COMMISSIONER OF INCOME TAX,(2015) 45 CCH 0256 DelTrib: when no allegation had been brought on record that Assessee was conducting activities beyond its object as per trust deed or fees and donations were being used for activities which were not charitable and beyond ambit of objects of assessee applicant trust, Applicant trust eligible for registration u/s 12A.
  • COMMISSIONER OF INCOME TAX & ORS. VS FIVE VISION PROMOTERS PVT. LTD. & ORS. (2015) 94 CCH 0101 DelHC: Provisions of s 68 can be invoked only where assessee offers no explanation at all or explanation offered is unsatisfactory; and addition thereunder can be made only on that condition.

CORPORATE LAWS - BY SHRI PRADEEP K MITTAL ADVOCATE - 9811044365

  • The Andhra Pradesh High Court has held that a Writ Petition is not maintainable seeking to restrain the bank who is a secured creditor from taking possession of assets and putting them to sell for recovering the mounting debts payable by such Company. The provisions of Securitization Act shall prevail over the provisions of Sick Industrial Companies (Special Provisions) Act. S.V.P.C. L. Ltd. Vs. State Bank of India 2015 (128) CLA 328 (A.P).
  • If the partnership firm is not registered as required U/s 63 of the Partnership Act, the Partnership firm can still file a petition before the High Court U/s 11 of the Arbitration & Conciliation Act for appointment of Arbitrator. 2015 (128) CLA SNR (2) Madras.
  • If the Complaint U/s 138 of Negotiable Instrument Act for dishonour of cheque has not been filed within 30 days from the date of accrual of cause of action (i.e. after the expiry of 15 days from the date of service of notice), the Magistrate can condone the delay upon sufficient ground being shown in the light of the judgement of the Hon’ble Supreme Court in the case of Dashrat Rup Singh Rathore Vs. State of Maharashtra 2015 (128) CLA (SNR) 3 Kerala DB.
  • The Kolkata High Court has held that the Secured Creditor has no power to publish the photographs of borrower who has defaulted in repayment of debt payable to the bank. U.K.Das Vs. State Bank of India 2015 (128) CLA SNR 4 Kolkata.
  • The proceedings under Section 138 of NI Act, for dishonour of cheque, cannot be stayed in exercise of the power under Section 446 of Companies Act, 1956 (now Section 297/280 Companies Act, 2013) - though the words “legal proceeding” as appearing in Section 446 of Companies Act, 1956, are wide enough so as to take within its sweep criminal proceedings but the proceedings under Section 138 of NI Act shall not be covered. Poly K Ayyampally Vs. A Pradeep Kumar 2015(129) CLA 36 Kerala High Court.
  • Doctrine of Piercing the Corporate Veil allows Court to disregard the separate legal personality of company and impose liability upon persons exercising real control over said company. Application of doctrine would depend upon peculiar facts and circumstances of each case. Digital Radio (Mumbai) Broadcasting Ltd. & Anr. Vs. Union of India 222 (2015) Delhi Law Times 243 (DB).
  • Non-implementation of scheme of amalgamation already sanctioned by High Court on the premises that Paras 17.1 and 17.2 of scheme contemplate withdrawal of said scheme in case same found unviable. Reliance placed on two Bombay High Court decisions by applicants, viz., “Topworth Steels” and “Sansath Life Sciences Private Limited”, where company concerned was allowed to withdraw scheme after same had been sanctioned by Court. Accordingly, the recall of order granted. Capital 18 Fincap Pvt. Ltd. 222 (2015) Delhi Law Times 257.
  • Where the Petitioner had knowledge of having signed the documents with respect to the impugned transfer of shares earlier in 2007, the Company Law Board would not be inclined to accept that the Petitioner came to know for the first time only in 2011 with respect to the impugned transfer of shares. Such documents having been signed beyond 3 years, the petition, which came to be filed after expiry of three years, would be barred by limitation. Gaurishankar Neeklanth Kalyani Vs. Mrs. Sulochana Neeklanth Kalyani (2015)( 128 CLA 396 (CLB).
  • Where it stands proved that the Appellant Company got itself incorporated with the name Vardhaman Crop Nutrients Private Limited which was identical to the already incorporated Respondent Company and both the companies were dealing in the same business, the Appellant Company was directed to change its name by deleting the word “Vardhaman”. Vardhaman Crop Nutrients Pvt. Ltd., Vs. Union of India (2015) 128 CLA 162 (P&H).
  • Where the scheme of amalgamation is passed through procedure laid down under section 391 and approved by the majority of shareholders, there exists no necessity to have a repeated compliance with the same in terms of section 21 read with section 13 of the Companies Act, 2013. Michelin India (P) Ltd., In r4e. 2015 (128) CLA 276 (Madras).

CENTRAL EXCISE –BY SHRI PRADEEP K. MITTAL-9811044365