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2015 (5) TMI 1258 - CALCUTTA HIGH COURT
Police custody beyond remand period - Relevant date from which date the first period of fifteen days mentioned in Section 167(2) of the Cr.P.C. is to be computed - HELD THAT:- In the case in hand, the Additional Superintendent of Police, CBI, SCB (SIT), Kolkata effected arrest of the accused. Therefore, it is his duty to take or send the person arrested before the Magistrate having jurisdiction in the case. Section 57 Cr.P.C. commands that no police officer shall detain in custody a person arrested without warrant for a long period exceeding twenty four hours which period is exclusive of the time necessary for the journey from the place of arrest to the Magistrate. The only relaxation for production of the arrested accused within twenty four hours contained in Section 57 Cr.P.C. is in case the Magistrate under Section 167 Cr.P.C. by special order authorized the police officer to detain such person for a period of more than twenty four hours.
In case an arrested accused person acquired any health problem after his arrest, then it is for the police officer to produce the accused before the Magistrate within twenty four hours after obtaining Medical Certification of the accused from a Government Doctor and thereafter it is for the Magistrate who after authorising the custody of the accused to this specified authority under Section 167(2) Cr.P.C. to take a decision and to give a direction either to prison authorities in case the accused is authorised to be detained in prison or to the police authorities in case the accused is authorized to be detained in police custody, for getting necessary medical aid and to provide necessary medical facilities to the accused so detained. It is not for the police officer to admit the accused in a hospital and to violate legal and constitutional mandate of production of the arrested accused before the Magistrate within twenty four hours of his detention under arrest.
Such action on the part of the police officers is likely to lead unscrupulous tendencies like in the present case, where the accused was allowed to remain in hospital from 31.01.2015 to 06.02.2015 after his arrest without production before a Magistrate, till the accused was declared fit by the hospital authorities and he was produced on 07.02.2015. Such activity on the part of the police officers will give wrong signals to the society and to the public at large that rich and influential person can manage unscrupulous police officers, so that they need not go either to a Court or to a prison even after arrest while in custody. The said C.B.I. Officer prima-facie committed a Constitutional violation in not producing the accused before the Magistrate within twenty four hours of his arrest. His action/inaction in this regard is highly deplorable.
The remand order passed by the jurisdiction Magistrate alone has to be legally considered as first remand for all the practical purposes. In the case of CBI v. Anupam J. Kulkarni [1992 (5) TMI 191 - SUPREME COURT] the Hon'ble Supreme Court has clearly laid down that the period of 90 days or 60 days has to be computed from the date of detention as per the orders of the Magistrate and not from the date of arrest by the police. Consequently the first period of fifteen days mentioned in Section 167(2) has to be computed from the date of such detention and after the expiry of the period of first fifteen days it should be only judicial custody. In the instant case the Learned Magistrate passed the remand order on 01.02.2015 sending the accused into the judicial custody till 13.02.2015. Therefore, the impugned order passed on 15.02.2015 remanding the petitioner/accused to police custody till 21.02.2015 is beyond the first remand period of fifteen days. Therefore, such order is absolutely illegal and cannot be sustained.
This Court is of the firm view that the police custody cannot be ordered in any circumstances beyond the first remand period of fifteen days. In such view of the matter the impugned order under challenge is liable to be set aside and accordingly it is set aside.
Revision allowed.
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2015 (5) TMI 1257 - SC ORDER
Maintainability of appeal - appropriate forum - classification of goods - HELD THAT:- Since the subject matter does not pertain to classification of goods, appeal against the order of the Customs, Excise and Service Tax Appellate Tribunal is maintainable before the High Court under Section 35G of the Central Excise Act and not before this Court.
These appeals are, accordingly, dismissed, with liberty to the Revenue to file appropriate appeal before the High Court.
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2015 (5) TMI 1256 - ITAT KOLKATA
Bogus creditors - addition in respect of sundry creditors unexplained - CIT(A) deleted the addition - HELD THAT:- No illegality and infirmity has been committed by the CIT(A) in deleting the addition of sundry creditors, which did not arise during the impugned assessment order in their opening balance from the earlier assessment year 2005-06.
As per the provisions of section 68, any amount found credited in the books of assessee can be added in the previous year relevant to the assessment year, in case, the assessee fails to prove the nature and source of such credit, in which these amounts arose are credited. Since the amounts were not credited in the impugned A.Y., therefore, in view of the decision of Sridev Enterprises [1991 (1) TMI 52 - KARNATAKA HIGH COURT] we confirm the order of the CIT(A) deleting the said addition.
Bogus purchase - Notice issued u/s 133(6) was sent, which was returned unserved - CIT(A) deleted the addition - HELD THAT:- As noted that in this case the sales shown by the assessee has duly been accepted by the AO. In our opinion, the assessee cannot make the sales until and unless the purchase has been made by the assessee. AO has not rejected the books of accounts but made the addition towards the bogus purchase. The payment has been made to these parties in the subsequent year, which has not been dispatched by the Revenue. It is not a case where the accounts has been rejected or the profit has been estimated. We, therefore, do not find that it is a fit case, which warrants our interference. We accordingly confirm the order of the CIT(A) deleting the addition.
Appeal filed by the Revenue is dismissed.
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2015 (5) TMI 1255 - SUPREME COURT
Illegal Gratification - Bribe - rebuttal of presumption - conviction Under Sections 7 and 13(1)(d) read with Section 13(2) of Prevention of Corruption Act - HELD THAT:- Mere recovery of the tainted amount is not a sine qua non for holding a person guilty Under Sections 7, 11 and 13 of the Act. This Court has observed in NARENDRA CHAMPAKLAL TRIVEDI & HARJIBHAI DEVJIBHAI CHAUHAN VERSUS STATE OF GUJARAT [2012 (5) TMI 603 - SUPREME COURT], that there has to be evidence adduced by the prosecution that bribe was demanded or paid voluntarily as bribe. The demand and acceptance of the amount as illegal gratification is a sine qua non for constituting an offence under the Prevention of Corruption Act. The prosecution is duty bound to establish that there was illegal offer of bribe and acceptance thereof and it has to be founded on facts.
In the present case the factum of demand and acceptance has been proved by the recovery of the tainted amount and the factum of there being a demand has also been stated. The essential ingredient of demand and acceptance has been proved by the prosecution based on the factum of the case. It has been witnessed by the key eye witnesses and their testimonies have also been corroborated by other material witnesses. The offence Under Section 7 of P.C. Act has been confirmed by the unchallenged recovery of the tainted amount. Thus, it is the obligation to raise the presumption mandated by Section 20 of P.C. Act. It is for the accused Respondent to rebut the presumption, by adducing direct or circumstantial evidence, that the money recovered was not a reward or motive as mentioned Under Section 7 of the P.C. Act.
Thus, the accused Respondent has not successfully rebutted the presumption Under Section 20 of the P.C. Act. The prosecution, on the other hand, has established the demand and acceptance of the tainted money. The recovery also has gone unchallenged.
The appeal is allowed.
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2015 (5) TMI 1254 - ITAT DELHI
Correct head of income - Taxing the rental income from property - income from house property or Income from other sources - real owner of property - assessee stated to have been received property as gift from her father - AO did not accept the ownership of flat of the appellant therefore, assessed the receipt of stated rent under the head "Other Sources" and disallowed statutory deduction u/s 24 (30% towards repairs) and payment of Municipal taxes - According to the ld CIT(A) the transfer of the house property is not in accordance with law because the Gift Deed of immovable property was not registered by payment of stamp duty
HELD THAT:- As decided by Smt. Kamla Sondhi [2004 (2) TMI 741 - DELHI HIGH COURT] under the common law, owner means a person who has got valid title legally conveyed to him after complying with the requirements of law such as the Transfer of Property Act, Registration Act, etc. But, in the context of section 22 of the Income Tax Act, having regard to the ground realties and further having regard to the object of the Income Tax Act, namely, to tax the income, we are of the view, owner is a person who is entitled to receive income from the property in his own right.
We find that the Ld CIT(A) got carried away by the judgment of Suraj Lamps and Industries Pvt. Ltd. (2011 (10) TMI 8 - SUPREME COURT), wherein, SC delivered the judgment in a different context and highlighted the well settled law on the importance of registration of property as per the Registration Act and frowned upon the menace of transaction being done of immovable property by General Power of Attorney and the said case has nothing to do with the Income Tax Act 1961, which we are dealing with. However we find that the aforesaid order of the Hon’ble High Court of Delhi bolsters the case and claim of the appellant.
Since there is no dispute that income/rent from the flat No-21, Hope Apartments, Sector-15, Gurgaon is received by the assessee/ appellant then as per the Income Tax Act, owner is the person who is entitled to receive income in his own right. Respectfully following the order of the Hon’ble High Court in the case of CIT vs. Smt. Kamla Sondhi (Supra) as held by the Hon’ble Supreme Court in Poddar Cement (supra), we set aside the order of the revenue authorities and decide the issues in dispute in favour of the assessee.
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2015 (5) TMI 1253 - ITAT JAIPUR
Estimation of income - bogus purchases - HELD THAT:- We are not inclined to grant adjournment and inasmuch as before the Hon’ble High Court, whether the question of law has been admitted, stage of hearing and likelihood of time of decision has not been explained to us. It will be expedient that instead of mounting the pendency before ITAT and refixing these appeals again and again, the AO will take a view in this matter in consonance with the Hon’ble Rajasthan High Court’s judgment. It will avoid repeated fixation and unnecessary pendency before the ITAT inasmuch as the Hon’ble Rajasthan High Court judgment will be binding on all concerns. In view thereof, we reject the adjournment application. After hearing the ld DR, perusing the material available on the record, we set aside the matter back to the file of Assessing Officer to decide the same.
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2015 (5) TMI 1252 - ITAT CHENNAI
Revision u/s 263 - Non application of mind to the material available on record by AO - Commissioner found that the assessee claimed Duty Drawback from income, payment of sales commission, payment of cash exceeding ₹ 20,000/-, VAT returns, charity and donation, job work charges as expenses in the return of income, but AO has not made any reference in the assessment order about all its genuineness or allowability of the claim - HELD THAT:- The assessment proceeding before the AO is a judicial proceeding u/s 136. Therefore, AO is bound to pass a speaking order. Reason for conclusion reached shall be reflected in the assessment order itself. AO is expected to dispose the issues raised by the assessee and record his own reasoning for allowing or disallowing the claim of the assessee, in accordance with law. The order of the AO is subject to further appeal/revision before the higher authorities. In this case, admittedly, the AO has not discussed anything in the assessment order regarding issues raised by the Commissioner. Hence, it shows non- application of mind by the Assessing Officer.
Therefore, recording of the reasons is all the more mandatory for the appellate/revisional authorities to appreciate the reasons for the conclusions reached by the AO in his order. It is a well settled principle of law that the reasons for conclusion reached in a judicial order shall contain in the impugned order itself. In other words, reason for the conclusion arrived in a judicial/administrative order cannot be substituted by way of filing additional document or affidavit before the higher forums. Appeal of the assessee is dismissed.
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2015 (5) TMI 1251 - ITAT HYDERABAD
Determination of the head of income - profits arising from the transfer of lands as per the development agreements and sale of flats/bungalows allotted by the developer in lieu of or as consideration for transfer of land - intention behind the entire transaction on the part of the assessee - HELD THAT:- In the present case, there was not only conversion by the assessee company of land held as capital asset till the date of development agreement into stock in trade, but there was also a change in the form of capital asset in as much as in lieu 73% of the land area, what the assessee company got on conversion was 27% of the total built up area of the project. The remaining 27% of the land area continued to be held by the assessee company, but as stock in trade on conversion. Thus, as a result of development agreement, there was conversion of capital asset into stock in trade as well as change in the form of asset in the sense that in place of 100% land area held as capital asset, the assessee company got 27% of the total built up area of the project alongwith proportionate undivided share in land as stock in trade, which became available to it for the purposes of dealing during the post development agreement period.
We direct the AO to compute the income of the assessee form transfer of land held by the assessee company as capital asset by way of development agreement and subsequent sale of flats and bungalows received as consideration for such transfer which took the character of stock in trade on conversion in the manner and as per the method specified above, relying on the provisions of S.45(2).
Change in the method of accounting followed by the assessee to recognize the income - Following our decision rendered in the case of M/s. Hill County Properties Ltd [2015 (5) TMI 930 - ITAT HYDERABAD] we direct the AO to adopt the date of registration of agreement or possession of units as the date of sale of units for the purpose of computing the income of the assessee as per the provisions of section 45(2) of the Act.
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2015 (5) TMI 1250 - KERALA HIGH COURT
Legality of judgment of conviction and sentence under Section 3 and 7 of the Essential Commodities Act, 1955 - Seized article are Kerosene or not - possession of huge quantity of kerosene or not - violation of Kerosene Control Order or not - denial of incriminating circumstances by accused.
Revenue contended that the seized article was kerosene which was stated in the chemical examination report and no question was asked in the trial Court about the smoke test.
HELD THAT:- The expression possessed is used in certain statutory offences, in which conscious possession is necessary for proving the offence. Thus possession for the purpose of the Act means physical possession with animus custody or domain over the property. In the instant case, PW5, the Executive Officer, Ramanattukara Panchayat produced Ext.P5 extract of the building tax register which shows appellant is in possession of the building. In Ext.P6, the Village Officer, Ramanattukara reported that appellant is in possession of the property comprised in Sy. No.500/2 of Ramanattukara Village from where the article seized. Analysing the evidence of PW1, PW5 and PW6 it is found that the City Rationing Inspector on 7.8.92 searched appellant's house and seized certain article.
It is the fundamental principle of criminal jurisprudence that an accused is presumed to be innocent unless the prosecution proves the guilt of the accused beyond reasonable doubt. Generally speaking, they can rely both oral and documentary evidences to prove that the accused had committed the offence with requisite mens rea. The domain of criminal cases can be ascertained by examining, what act or omissions are declared by the State to be crimes - penal statute must be construed strictly. An accused cannot be convicted on the basis of conjectures or suspicions.
The samples were not identified as kerosene, since no smoke test was conducted, therefore Ext.P12 chemical examiner's report is not admissible in law for a conviction. Normally statutory offence like this, the requirement of smoke test is mandatory. The noncompliance of the smoke test indicates a nullification of the procedure. It is true that there is no ready test or formula to determine a provision mandatory or not, but weighing the consequence of the non-compliance, the appellant is entitled to get the benefit of doubt.
The conviction and sentence under clause 16 of the Kerala Kerosene Control Order, 1968 r/w. Sections 3 to 7 of the E.C. Act are hereby set aside - the appellant is acquitted and set at liberty - appeal allowed.
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2015 (5) TMI 1249 - GAUHATI HIGH COURT
Constitution of Arbitrator Panel - whether another arbitrator panel should be appointed by substituting the earlier panel constituted exclusively by technical experts? - HELD THAT:- Appointment of alternate arbitrator by Court under Section 11(6) of the Arbitration Act by making a departure from the agreed procedure is permissible in deserving cases like inordinate delay in completion of arbitration proceeding and where the Arbitral Tribunal fails to perform its functions. In such events, the Court may step in to appoint substitute arbitrator by disregarding the procedure agreed by the parties.
The Apex Court in the case of UNION OF INDIA (UOI) VERSUS U.P. STATE BRIDGE CORPORATION LTD. [2014 (9) TMI 1274 - SUPREME COURT] noted that the High Court can appoint substitute arbitrators if the appointed arbitrator fails to discharge his duties - Similarly in NORTH EASTERN RAILWAY VERSUS TRIPPLE ENGINEERING WORKS [2014 (8) TMI 1236 - SUPREME COURT], it was observed by the Supreme Court that in exercise of powers under Section 11(6) of the Arbitration Act, the Court can deviate from the procedure agreed by the parties to provide for effective resolution of dispute through arbitration. Thus in a deserving case when a fresh decision of the arbitrator is necessary when the previous decision was quashed by Court, the law permits appointment of new arbitrator by departing from the agreed arrangement.
The want of judicial approach was the primary reason for the perverse decision by the Arbitration Tribunal, which was constituted only by retired/serving railway officers. In such circumstances, it is felt that a departure from the agreed process will improve the quality of adjudication and the decision making process in the de-novo process, necessitated by the Court quashing of the previous arbitral award.
Mr. Justice H.N. Sarma, a Former Judge of this Court is nominated as the Arbitrator for resolution of the contractual dispute - case disposed off.
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2015 (5) TMI 1248 - DELHI HIGH COURT
Condonation of delay in re-filing the petition under Section 34 of the Arbitration & Conciliation Act - failure to explain the undue delay in re-filing - HELD THAT:- This court had duly followed this principle while disposing of the application for condonation of delay in re-filing and has not dismissed the application for condonation of delay in re-filing on the ground that the delay was beyond the time specified in Section 34(3) of the Act. The application was dismissed on the ground that the petitioner had failed to explain the undue delay in re-filing.
According to the proposition of law in DDA case [2013 (11) TMI 1527 - DELHI HIGH COURT], on which the applicant has relied, he is required to explain satisfactorily the reason for such delay and the court has clearly observed "A liberal approach in condoning the delay in re-filing an application under Section 34 of the Act is not called for". The petitioner was required to explain the delay satisfactorily but here in this case, although the delay was of 84 days in re- filing, the petitioner had claimed and explained the delay of only 24 days. No explanation, what to say "satisfactory explanation" has come from the petitioner of balance days of 60 days. No explanation for condonation of delay of these 60 days in re-filing has been given by petitioner either in his application CM No. 18445/2013 or during arguments or in written submissions.
No ground for review of the order has been made out - Application dismissed.
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2015 (5) TMI 1247 - ITAT CUTTACK
TDS u/s 194C - Joint Venture responsibility to deduct the TDS on the payments made to its constituents for the work executed by them assessee has given a sub-contract to its constituents - assessee was required to deduct TDS on the payments - AO has held the assessee to be in default u/s.201(1) - HELD THAT:- As undisputed fact that the deductee has already paid the taxes on the payments received from the JV. Since the tax has been paid on the receipts by the deductee, the deductor cannot be held to be assessee in default.
In this regard a reference was made to the orders of the Tribunal in case of Raja Chkravarty [2015 (8) TMI 753 - ITAT LUCKNOW] and Rajeev Kumar Agarwal [2014 (6) TMI 79 - ITAT AGRA] in which it has been held that once the deductee has made the payment of taxes on the receipts the deductor cannot be held to be assessee in default. Therefore, on both counts, the assessee cannot be held to be in default u/s. 201(1) of the Act.
Interest charged u/s. 201(1A) cannot be charged once it is held that there is no liability to deduct the TDS on the payments made by the assessee to its constituents. It is irrelevant that in few assessment years, the assessee has deducted the TDS on payments made to its constituents. If the assessee has done something wrong, it does not make him responsible to commit mistake in succeeding years
Joint Venture is not responsible to deduct the TDS on the payments made to its constituents for the work executed by them in the light of the facts, where the Joint Venture was formed to obtain the contract from the Government and the contract was executed by the constituents. We, therefore, of the view in the instant case that, the assessee was not liable to deduct the TDS, therefore, he cannot be held to be in default and liable to be charged interest u/s. 201(1A) - Appeals of the assessee are allowed.
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2015 (5) TMI 1246 - DELHI HIGH COURT
Dishonor of Cheque - discharge of legally enforceable debt or not - security cheques and could not form the basis of a complaint under Section 138 of the NI Act - HELD THAT:- The parties, admittedly, recorded the outstanding liability of the accused, existing on the date of the execution of the MOU (Ex. CW-1/4). In this light, it does not stand to reason as to why they would not record the repayment of the amount of Rs. 90,000/- in some form, if the money had actually been so returned by the accused to the complainant. Pertinently, CW-1 in his deposition stated that at the time of repayment of Rs. 1.5 lakhs in three instalments of Rs. 50,000/- each, not only three security cheques were returned by the complainant to the accused, but the accused also got the vouchers signed from the complainant. On this aspect, there was no challenge raised by the accused during the course of the complainants cross examination - it stands established beyond all reasonable doubt that the debt of Rs. 1.50 lakhs was outstanding and payable by the accused to the complainant when the three cheques in question were presented for payment.
Whether the complaint of the appellant was maintainable under Section 138 of the NI Act since the cheques in question were "security cheques"? - HELD THAT:- It has come in evidence that the cheques (Ex. CW-1/1, CW-1/2 & CW-1/3) were all filled up in all respects by the accused at the time of their being delivered to the complainant, simultaneously with the execution of the MOU (Ex. CW-1/4). The said original cheques are placed on the Trial Court Record which has been summoned and perused, and it is clear to the naked eye that they had been filled by the same person, and in the same ink. It is not even the case of the accused that these cheques were blank when given to the complainant, or that the appellant/complainant had filled them up subsequently. Even otherwise, merely because the cheque may be blank in some or all respects (except that it bears the signatures of the drawer), and the blanks may have been filled in by the drawee subsequently, that by itself does not invalidate the cheque. It cannot be said that a complaint under Section 138 NI Act would not lie in respect of such a cheque, consequent upon its dishonor for reason of insufficient funds.
There is no magic in the word "security cheque", such that, the moment the accused claims that the dishonoured cheque (in respect whereof a complaint under Section 138 of the Act is preferred) was given as a "security cheque", the Magistrate would acquit the accused. The expression "security cheque" is not a statutorily defined expression in the NI Act.
In ICDS. LTD. VERSUS BEENA SHABEER [2002 (8) TMI 577 - SUPREME COURT], the cheque in question had been issued by the guarantor (wife) of the principal debtor (husband) in respect of a hire purchase agreement entered into by the principal debtor with the complainant for purchase of a car. The cheque in question was issued by the guarantor towards part payment to the appellant/complainant - in this case Supreme Court laid emphasis on the use of the word, 'any'-which suggests that, if, for whatever reason a cheque drawn on an account maintained by the drawer with the banker in favour of another person for the discharge of any debt or other liability is dishonoured, the liability under Section 138 NI Act cannot be avoided. The Supreme Court also emphasized that the legislature had been careful enough to use not only the expression "discharge, in whole or in part, of any debt", but has also included the expression 'other liability' in the language of Section 138 NI Act. The Supreme Court held that the issue regarding the liability of a guarantor and the principal debtor being co-extensive, was out of purview of Section 138 of the NI Act and did not call for any discussion.
In Sai Auto Agencies through its partner Dnyandeo Ramdas Rane v. Sheikh Yusuf Sheikh Umar, [2010 (2) TMI 1243 - BOMBAY HIGH COURT], the defence of the respondent/accused was that, in relation to purchase of a tractor and equipments from the appellant, five blank cheques were given only as security. The respondent claimed that the complainant had already received the entire purchase consideration, and that the cheque in question was without consideration. The Court rejected the defence of the accused that the entire consideration stood paid to the appellant supplier.
Thus, the defence that the cheques in question Ex. CW-1/1, CW-1/2 and CW-1/3 were issued as "security" cheques has no force in the facts and circumstances of this case, as, on the date when the said cheques were issued simultaneously with the execution of the MOU (Ex. CW-1/4), the debt of Rs. 1.5 lacs was outstanding. The appellant was well within his rights to enforce the security in respect whereof the cheques in question were issued and to seek to recover the outstanding debt by encashment of the said cheques. Since the cheques in question were dishonoured upon presentation, the accused suffered all consequences as provided for in law and the appellant became entitled to invoke all his rights as created by law - the appellant was entitled to invoke Section 138 of the NI Act; issue the statutory notice of demand, and; upon failure of the accused to make payment in terms of notice of demand - to initiate the complaint under Section 138 of the NI Act.
The learned Magistrate has returned findings of fact which are palpably wrong; its approach in dealing with evidence is patently illegal; its decision is based on an erroneous view of the law, and; the impugned judgment, if sustained, would lead to grave miscarriage of justice - the impugned judgment is set aside - accused is convicted of the offence under Section 138 of the NI Act.
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2015 (5) TMI 1245 - DELHI HIGH COURT
Maintainability of the suit on the ground that the appropriate remedy available to the plaintiffs - Section 34 of the Act specifically bars the jurisdiction of a civil court or not - suit is nothing but an endeavour to block the process of recovery initiated by the Bank or not - forum shopping or not - whether the nature of fraud, as alleged by the plaintiffs, could form the basis of maintainability of the present suit under the exception carved out by the Supreme Court in MARDIA CHEMICALS LTD. VERSUS UNION OF INDIA [2004 (4) TMI 294 - SUPREME COURT]?
HELD THAT:- On a meaningful reading of the plaint as a whole, it appears that in sum and substance, the plaintiffs‟ case is that the letter dated 31.12.2012 was not issued by them and that it was fraudulently created by the Bank, hence the transfer of monies from the plaintiffs‟ account to M/s. Tulip Telecom Limited was wrong and the said amount was depleted from their account only to classify it as an NPA. This according to the plaintiffs amounts to fraud and would form the basis of the maintainability of the present suit.
In the present case, the monies, i.e., Rs. 20 crores had clearly been credited from the plaintiffs‟ Term Loan Account to their Current Account. Thereafter, Rs. 19.89 crores was transferred to Tulip. By any standard of reckoning an amount of Rs.19.89 crores is not small and transfer of such amounts would send alarm bells ringing for any account holder especially like the plaintiffs, whose annual turnover is in the range of Rs.600.00 crores. Bank too are known to be especially careful about high-value accounts and the transaction made therein.
This Court is of the view that if a standard classic defence, such as fraud by the Bank, is allowed to form the basis for maintaining a suit, then the provisions of the Act would become redundant, all the more so in the face of the express stipulation in Section 34 thereof - the Court cannot be oblivious to whether the allegations of fraud and misrepresentation are made only for the purpose of creating cause of action, thereby leading to the maintainability of the suit.
This Court is also of the view that in the present case, the plaint does not aver any complicated facts leading to the case of fraud or how the measures adopted by the Bank are fraudulent/absurd/untenable. There is nothing in the plaint which would lead to the conclusion that the plaintiffs‟ case falls under the exception carved out by Mardia Chemicals, i.e., the plaintiffs‟ grievances ought to be determined in a suit - In the facts and circumstances of the case, this Court is of the view that the issue of fraud sought to be raised in this suit can well be agitated in proceedings under Section 17 of the Act since the plaintiffs evidently fall in the category of “any person” thereof.
This Court is of the view that the Supreme Court in Mardia Chemicals has emphasised that only to a limited extent, the jurisdiction of civil courts can be invoked. This import of the sentence is evident from the expression that recourse to civil courts will only be to a very limited extent, i.e., only when the action of the secured creditor is alleged to be fraudulent or his claim may be so absurd and untenable which may not require any probe whatsoever.
This Court is of the view that the ground of fraud raised by the plaintiff can be duly addressed in proceedings under Section 17 of the SARFAESI Act, 2002 and the said plea of fraud, in the peculiar facts and circumstances of the case, does not fall in the exception carved out in Mardia Chemicals - the suit is not maintainable and is accordingly, dismissed.
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2015 (5) TMI 1244 - ITAT CHENNAI
Revision u/s 263 - deduction under sec.80IA - Scope of meaning of the word “derive” - interest income earned from deposits - whether the interest income earned by the assessee on the fixed deposits is business income derived from the industrial undertaking or it is an income from other sources? - HELD THAT:- In the case of Pandian Chemicals [2003 (4) TMI 3 - SUPREME COURT] the meaning of words “derived from” was again considered and after relying on the judgment of Cambay Electric Supply Industrial Co. Ltd.[1978 (4) TMI 1 - SUPREME COURT] it was held that the expression “derived from” had a narrower connotation than the expression “attributable to”.
After having considered the meaning of the words “derived from”, as per the various decisions of Supreme Court, in our opinion, the interest earned by the assessee from deposits made in trust and retention account maintained under the financing agreement with the lenders, cannot be considered as profits and gains of business derived from the industrial undertaking. Thus, we find no infirmity in the order of the Commissioner(Appeals) in following the judgment of the Supreme Court in the case of Pandian Chemicals Ltd. (supra). DR was of the opinion that benefit of netting of interest cannot be allowed in this case, as the interest paid and interest received do not partake the same character, as held by the Supreme Court in the case of CIT v. Keshavji & Ravji [1990 (2) TMI 1 - SUPREME COURT] and CIT v. V. Chinnapandi [2006 (1) TMI 65 - MADRAS HIGH COURT]. Therefore, no benefit of netting of interest is allowed. Accordingly, this ground is dismissed in both the appeals.
Invoking the provisions of sec.263 so as to withdraw deduction given to the assessee, after considering the interest income received from fixed deposits made with the trust and arising from trust and retention account required to be made with the intention to service debt under financing agreement as business income - The issue regarding treating the interest income earned from deposits and retention account made under financing agreement is to be considered as income from other sources. As such, the order of the Assessing Officer suffered from infirmity, which is prejudicial to the interests of the Revenue. Hence, the Commissioner of Income-tax is justified in invoking the jurisdiction under sec.263 of the Act stating that the said interest is to be considered as business income. As we have already held in earlier years that the said interest income is to be considered as income from other sources, the assessee fails on this ground also.
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2015 (5) TMI 1243 - CALCUTTA HIGH COURT
Lifting of Corporate Veil - Demand of transfer fee for recording the name of the petitioner-company - Change of name of a company - transfer or not - main case of the petitioners, however, is that change of the name of a company does not constitute transfer of leasehold right or any assets of the company - HELD THAT:- I am not entering into the question in this writ petition as to whether the transfer of majority equity holding of a company would result in transfer of assets of the company or not because that is not the lis which has arisen in these two proceedings, though the State has referred to that dispute tangentially. On permitting recordal of Dabur Pharma Limited as the lessee on 15th March, 2005 the State had recognized independent juridical entity of Dabur Pharma Limited as a lessee. Subsequently, change of the promoter group, which eventually led to the change of corporate name, in my opinion, cannot saddle the petitioner company with an independent obligation to pay transfer fee. That would result in combining distinct identity of the shareholders with that of the company, which can be done on certain exceptional circumstances. This dispute does not require lifting of corporate veil - there are no demand for transfer fee can be raised on the petitioner company as a condition precedent for recordal of its name as a lessee, on the ground that there has been transfer of leasehold right. The licence of the petitioner company cannot be withheld under the 2000 Order also for this reason.
The authorities are directed to record the name of the petitioner company as a lessee on compliance of all other relevant formalities, if any, in respect of the subject plot and also grant the petitioner company licence in terms of the 2000 Order if the petitioner company is otherwise eligible for such licence - application disposed off.
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2015 (5) TMI 1242 - BOMBAY HIGH COURT
Assessment u/s 153A - Legality and validity of the proceedings under section 153A - HELD THAT:- Tribunal applied the decision of Commissioner of Income Tax Vs. Anil Kumar Bhatia [2012 (8) TMI 368 - DELHI HIGH COURT] and All Cargo Global Logistics Ltd. and Others [2012 (7) TMI 222 - ITAT MUMBAI(SB)] Mr.Kotangale fairly states that we have upheld the decision of the Special Bench in the case of All Cargo Global Logistics Ltd. and Others [2012 (7) TMI 222 - ITAT MUMBAI(SB)] The revenue's appeal challenging that decision of the Special Bench has been dismissed by us.
Following that order and finding that the controversy in the present appeal is identical, the parties are same and barring difference in the assessment year, no distinguishing features have been placed on record, once the validity of notice has not been upheld by us, then, this appeal raises no substantial question of law. It is accordingly dismissed.
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2015 (5) TMI 1241 - ITAT CHENNAI
Addition made in respect of warranty provision - AO stated that if the assessee's estimation of warranty provisions is considered in the light of above observation of the Supreme Court, it can be seen that the assessee has not made its working in a proper manner - HELD THAT:- Supreme Court in the case of Bharat Earth Movers [2000 (8) TMI 4 - SUPREME COURT] held that if a business liability has definitely arisen in a financial year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certainty though actual quantification with accuracy may not be possible, if these requirements are satisfied, the liability is not a contingent one.
The liability is in praesenti though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain. In the present case, the assessee has not produced any basis on which the provision of warranty was determined before the Assessing Officer. However, it has produced actual working of warranty before the CIT(Appeals). It is not clear that what extent the liability actually required in the assessment year under consideration while framing the assessment by the AO. The provision made whether on actual quantification or not, was not verified by the AO. CIT (A) after getting the assessee’s actual working of warranty not get verified from the AO and he has decided himself that it is correct. Therefore, in our opinion it is appropriate to remit the issue to the file of the Assessing Officer to examine the actual quantification of the provisions made towards warranty and decide in the light of the judgment of Supreme Court in the case of Rotork Controls India Pvt. Ltd. [2009 (5) TMI 16 - SUPREME COURT]
Disallowance of provision towards electricity, additional energy and demand charges and provision for interest on VABAL - AO observed that an amount as shown as provision made during the year towards litigation and related disputes in addition to the amount outstanding as at the beginning of the year - HELD THAT:- It is necessary to make provision for ascertained liability towards expenses at the end of the year. In this background, in the accounting frame work, the assessee ought to have recorded the expenses in the relevant accounting year, wherein the liability to incur such expenses arisen. A.R. tried to justify the assessee’s case that it has issued demand notice seeking the payment and it was crystallised the expenditure in this assessment year only. He is not able to say whether that expenditure entirely relates to the assessment year under consideration or not. The assessee’s accounts are mandatorily audited both, under the provisions of the Company’s Act as well as Income-tax Act, 1961. Therefore, the assessee should be made the provisions in the relevant accounting period for the expenses based upon the consumption/bill. The contention of the assessee that it is following mercantile system of accounting consistently, does not help the cause of the assessee in asmuch as, as if a practice is adopted, which is not correct as per the law, then claim is liable to be rejected, as said practice violated the principles of matching of cost with revenue and also resulting in hybrid system of accounting, which is not at all permitted now. Accordingly, in our opinion, it is not allowable expenditure in this year under consideration. In other words, in our opinion, the disputed dues of electricity charges for earlier years are not to be allowed in this assessment year and claim of deduction relating to the present assessment year to the extent it is ascertained to be allowed in this assessment year.
The issue of disallowance of provision for interest on VABAL is to be considered on similar line as in para 12 above and this ground is partly allowed. Accordingly, both these two issues are remitted back to the AO to consider afresh in the light of our observations.
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2015 (5) TMI 1240 - PUNJAB AND HARYANA HIGH COURT
Dishonor of Cheque - manipulation of the cheque - it is alleged that the cheques in question have been manipulated later on by filling in the necessary particulars in the body of the cheques - section 138 of NI Act - HELD THAT:- This Court in case YASH PAL VERSUS KARTAR SINGH [2003 (5) TMI 536 - PUNJAB AND HARYANA HIGH COURT], has also laid down that expert opinion to check the age of ink cannot help to determine the date of writing of the document as the ink used in the writing of the document may have been manufactured years earlier.
In case TARSEM SINGH VERSUS RAVINDER SINGH [2013 (12) TMI 1734 - PUNJAB AND HARYANA HIGH COURT], this Court has again reiterated that there is no scientific method available for determine the age of the ink. In case S. GOPAL VERSUS D. BALACHANDRAN [2008 (1) TMI 991 - MADRAS HIGH COURT], the Hon'ble Madras High Court has taken the same view and laid down that the age of the ink cannot be determined by an expert with scientific accuracy.
In view of the consistent rule of law laid down in the cases referred above, it will not be possible for an expert to give any definite opinion on the age of the ink as there is no accurate scientific method to determine the age of the ink.
Petition allowed.
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2015 (5) TMI 1239 - DELHI HIGH COURT
Seeking sanction of the Scheme of Amalgamation - Sections 391(1), 393 & 394 of the Companies Act, 1956 - HELD THAT:- Considering the approval accorded by the equity shareholders of the petitioner companies to the proposed Scheme of Amalgamation and the affidavits filed by the Regional Director, Northern Region, and the Official Liquidator not raising any objection to the proposed Scheme of Amalgamation, there appears to be no impediment to the grant of sanction to the Scheme of Amalgamation. Consequently, sanction is hereby granted to the Scheme of Amalgamation under Sections 391 and 394 of the Companies Act, 1956. The petitioner companies will comply with the statutory requirements in accordance with law. Certified copy of this order be filed with the Registrar of Companies within 30 days.
Petition allowed.
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