|
Advanced Search Options
Case Laws
Showing 1 to 20 of 27 Records
More information of case laws are visible to the Subscriber of a package i.e:-
Party Name, Court Name, Date of Decision, Full Text of Headnote and Decision etc.
-
2020 (9) TMI 1305
Seeking transfer of Criminal cases pending on the file of the Court of the Additional Judicial Magistrate, Gurugram, Haryana, to any competent Court in New Delhi - lack of territorial jurisdiction - cause of action - HELD THAT:- Chapter XIII of the Code of Criminal Procedure, 1973 contains provisions relating to jurisdiction of criminal Courts in inquiries and trials. The Code maintains a distinction between (i) inquiry; (ii) investigation; and (iii) trial. The words "inquiry" and "investigation" are defined respectively in Clauses (g) and (h) of Section 2 of the Code.
Apart from Sections 177 to 184, which lay down in elaborate detail, the Rules relating to jurisdiction, Chapter XIII of the Code also contains a few other sections. Section 185 empowers the State Government to order any case or class of cases committed for trial in any district, to be tried in any Sessions division. Section 186 empowers the High Court, in case where 2 or more courts have taken cognizance of the same offence and a question as to which of them should inquire into or try the offence has arisen, to decide the district where the inquiry or trial shall take place. Section 187 speaks of the powers of the Magistrate, in case where a person within his local jurisdiction, has committed an offence outside his jurisdiction, but the same cannot be inquired into or tried within such jurisdiction. Sections 188 and 189 deal with offences committed outside India.
Clause (a) of Section 26 makes the provisions contained therein, subject to the other provisions of the Code. Therefore, a question arose before this Court in the State of Uttar Pradesh v. Sabir Ali [1964 (3) TMI 137 - SUPREME COURT] as to whether a conviction and punishment handed over by a Magistrate of first class for an offence under the Uttar Pradesh Private Forest Act, 1948 were void, in the light of Section 15(2) of the Special Act. Section 15(2) of Uttar Pradesh Private Forest Act made the offences under the Act triable only by a Magistrate of second or third class. Though the entire trial in that case took place before a Magistrate of second class, he was conferred with the powers of a Magistrate of first class, before he pronounced the Judgment. This Court held that the proceedings were void Under Section 530(p) of the Code of Criminal Procedure, 1898 (as it stood at that time). It is relevant to note that Section 461(l) of the Code of 1973 is in pari materia with Section 530(p) of the Code of 1898.
What is now Clause (a) of Section 26 of the Code of 1973, is what was Section 28 of the Code of 1898. The only difference between the two is that Section 28 of the Code of 1898 referred to the eighth column of the second schedule, but Section 26(a) of the Code of 1973 refers to the first schedule - Similarly, Clause (b) of Section 26 of the Code of 1973 is nothing but what was Section 29 of the Code of 1898.
It is possible to take a view that the words "tries an offence" are more appropriate than the words "tries an offender" in Section 461(l). This is because, lack of jurisdiction to try an offence cannot be cured by Section 462 and hence Section 461, logically, could have included the trial of an offence by a Magistrate, not empowered by law to do so, as one of the several items which make the proceedings void. In contrast, the trial of an offender by a court which does not have territorial jurisdiction, can be saved because of Section 462, provided there is no other bar for the court to try the said offender (such as in Section 27). But Section 461(l) makes the proceedings of a Magistrate void, if he tried an offender, when not empowered by law to do.
The upshot of the discussion is (i) that the issue of jurisdiction of a court to try an "offence" or "offender" as well as the issue of territorial jurisdiction, depend upon facts established through evidence (ii) that if the issue is one of territorial jurisdiction, the same has to be decided with respect to the various Rules enunciated in Sections 177 to 184 of the Code and (iii) that these questions may have to be raised before the court trying the offence and such court is bound to consider the same.
As seen from the pleadings, the type of jurisdictional issue, raised in the cases on hand, is one of territorial jurisdiction, atleast as of now. The answer to this depends upon facts to be established by evidence. The facts to be established by evidence, may relate either to the place of commission of the offence or to other things dealt with by Sections 177 to 184 of the Code. In such circumstances, this Court cannot order transfer, on the ground of lack of territorial jurisdiction, even before evidence is marshaled. Hence the transfer petitions are liable to be dismissed.
Accordingly, transfer petitions are dismissed.
-
2020 (9) TMI 1299
Cancellation of bail granted - HELD THAT:- The bail granted to the respondent-accused by the learned ASJ, Patiala House Court, New Delhi vide order dated 30.04.2020 and affirmed vide order dated 06.05.2020 by the Delhi High Court cannot be cancelled - it is deemed appropriate to impose certain conditions on grant of bail.
SLP disposed off.
-
2020 (9) TMI 1293
Gross misconduct and indiscipline by virtue of ordering of a false GD Entry - extra-constitutional authority by issuing unlawful orders to Constable KK Sharma to give false statement to substantiate the aforementioned fake GD entry - corruption for illegally collecting bribes from contractors of BPCL through his subordinates - Effect of criminal enquiry on disciplinary proceedings.
HELD THAT:- It is well settled that the Constitutional Courts while exercising their powers of judicial review would not assume the role of an appellate authority. Their jurisdiction is circumscribed by limits of correcting errors of law, procedural errors leading to manifest injustice or violation of principles of natural justice. Put differently, judicial review is not analogous to venturing into the merits of a case like an appellate authority - The High Court was thus rightly concerned more about the competence of the enquiry officer and adherence to natural justice, rather than verifying the Appellant's guilt through documents and statements. It clearly noted that evidence was led, cross-examination was conducted and opportunities of addressing arguments, raising objections, and filing appeal were granted. The conclusion obtained was based upon these very evidences and was detailed and well-reasoned.
Even in general parlance, where an appellate or reviewing Court/authority comes to a different conclusion, ordinarily the decision under appeal ought not to be disturbed in so far as it remains plausible or is not found ailing with perversity. The present case is neither one where there is no evidence, nor is it one where we can arrive at a different conclusion than the disciplinary authority, especially for the reasons stated hereunder.
Effect of criminal enquiry on disciplinary proceedings - HELD THAT:- It is beyond debate that criminal proceedings are distinct from civil proceedings. It is both possible and common in disciplinary matters to establish charges against a delinquent official by preponderance of probabilities and consequently terminate his services. But the same set of evidence may not be sufficient to take away his liberty under our criminal law jurisprudence - The employer always retains the right to conduct an independent disciplinary proceeding, irrespective of the outcome of a criminal proceeding. Furthermore, the CBI report dated 07.03.2000 does recommend major disciplinary action against the Appellant. The said report also buttresses the Respondent's case.
Punishment and plea of leniency - HELD THAT:- The Appellant's contention that the punishment of dismissal was disproportionate to the allegation of corruption, is without merit. It is a settled legal proposition that the Disciplinary Authority has wide discretion in imposing punishment for a proved delinquency, subject of course to principles of proportionality and fair play. Such requirements emanate from Article 14 itself, which prohibits State authorities from treating varying-degrees of misdeeds with the same broad stroke. Determination of such proportionality is a function of not only the action or intention of the delinquent, but must also factor the financial effect and societal implication of such misconduct. But unlike in criminal cases, in matters of disciplinary proceedings Courts only interfere on grounds of proportionality when they find that the punishment awarded is inordinate to a high degree, or if the conscience of the Court itself is shocked. Thus, whereas imposition of major penalty (like dismissal, removal, or reduction in rank) would be discriminatory and impermissible for trivial misdeeds; but for grave offences there is a need to send a clear message of deterrence to the society. Charges such as corruption, misappropriation and gross indiscipline are prime examples of the latter category, and ought to be dealt with strictly.
It is clear that the punishment of dismissal from service is far from disproportionate to the charges of corruption, fabrication and intimidation which have unanimously been proven against the Appellant. Taking any other view would be an anathema to service jurisprudence. If we were to hold that systematic corruption and its blatant cover-up are inadequate to attract dismissal from service, then the purpose behind having such major penalties, which are explicitly provided for Under Article 311 of the Constitution, would be obliterated.
Appeal dismissed.
-
2020 (9) TMI 1276
Maintainability of petition - the impugned order passed by the Arbitral Tribunal on 08.01.2017 was challenged only 2½ years late and the petitioner filed the writ petition at the last minute after the arguments had concluded before the Arbitral Tribunal - writ petition has been dismissed, filed under Article 227 directly against a section 16 application without following the drill of section 16 of the Arbitration Act - patent lack of inherent jurisdiction to interfere with deposit orders - HELD THAT:- A foray to the writ Court from a section 16 application being dismissed by the Arbitrator SLP (C) No. 8482/2020 can only be if the order passed is so perverse that the only possible conclusion is that there is a patent lack in inherent jurisdiction. A patent lack of inherent jurisdiction requires no argument whatsoever - it must be the perversity of the order that must stare one in the face.
Unfortunately, parties are using this expression which is in our judgment in Deep Industries Ltd. [2019 (11) TMI 1632 - SUPREME COURT], to go to the 227 Court in matters which do not suffer from a patent lack of inherent jurisdiction. This is one of them. Instead of dismissing the writ petition on the ground stated, the High Court would have done well to have referred to our judgment in Deep Industries Ltd. and dismiss the 227 petition on the ground that there is no such perversity in the order which leads to a patent lack of inherent jurisdiction. The High Court ought to have discouraged similar litigation by imposing heavy costs. The High Court did not choose to do either of these two things.
In any case, now that Shri Vishwanathan has argued this matter and it is clear that this is not a case which falls under the extremely exceptional category, we dismiss this special leave petition with costs of Rs.50, 000/- to be paid to the Supreme Court Legal Services Committee within two weeks - Application disposed off.
-
2020 (9) TMI 1242
Reservation of Seats for admission in Educational Institutions for Socially and Educationally Backward Classes - High Court reduced the quantum of reservations provided therein from 16 per cent to 12 per cent in respect of the educational institutions and from 16 per cent to 13 per cent in respect of public employment - main contention of the Appellants before the High Court was that the Act is contrary to the law laid down by this Court in Indra Sawhney [1992 (11) TMI 277 - SUPREME COURT] as the reservations provided by the Act are in excess of 50 per cent - HELD THAT:- After observing that Article 16(4) should be balanced against the guarantee of equality enshrined in Article 16(1), which is a guarantee held out to every citizen, it was categorically held that reservations contemplated in Clause (4) of Article 16 should not exceed 50 per cent. The relaxation of the strict Rule of 50 per cent can be made in certain extraordinary situations. People living in far flung and remote areas not being in the mainstream of national life should be treated in a different way. In view of the conditions peculiar to them they are entitled to be given relaxation. It was made clear that extreme caution has to be exercised and a special case made out for relaxation of the Rule of 50 per cent.
Applying the law laid down by this Court in Indra Sawhney, it is opined that the State of Maharashtra has not shown any extraordinary situation for providing reservations to Marathas in excess of 50 per cent. Maratha community which comprises of 30 per cent of the population in the State of Maharashtra cannot be compared to marginalized Sections of the society living in far flung and remote areas. The State has failed to make out a special case for providing reservation in excess of 50 per cent. Neither has any caution been exercised by the State in doing so.
The factors termed as extraordinary and exceptional, justifying reservations in excess of 50 per cent are those required for the purpose of providing reservations. The social, educational and economic backwardness of a community, existence of quantifiable data relating to inadequacy of representation of the community in public services and deprivation of the benefits flowing from reservations to the community are not exceptional circumstances for providing reservations in excess of 50 per cent - Admittedly, reservations provided to the Maratha community were implemented in educational institutions for one academic year only. Implementation of the Act for admissions in educational institutions and appointments to public posts during the pendency of these Appeals will cause irreparable loss to the candidates belonging to the open category.
As the interpretation of the provisions inserted by the Constitution (102nd Amendment) Act, 2018 is a substantial question of law as to the interpretation of the Constitution of India, these Appeals are referred to a larger Bench. These matters shall be placed before Hon'ble The Chief Justice of India for suitable orders - Appointments to public services and posts under the Government shall be made without implementing the reservation as provided in the Act.
-
2020 (9) TMI 1240
Dishonor of Cheque - seeking transfer of the proceedings filed by the respondent under Section 138 of the Negotiable Instrument Act pending on the file of Additional Chief Judicial Magistrate, Agra, Uttar Pradesh to the competent Court at Siliguri, Darjeeling, West Bengal - HELD THAT:- If the delivery challan which states that all disputes will be subject to the jurisdiction of courts in Siliguri, is construed by the petitioners to constitute a bar for the courts in any other jurisdiction to entertain the proceedings, it is always open to the petitioners to raise this point before the Agra Court. This cannot be a ground for seeking transfer - the fact that the petitioners have made a prior complaint to the police about the loss that he sustained on account of the poor quality of feed supplied by the respondent herein cannot be a ground to seek the transfer of the proceedings under Section 138.
The fact that the respondent has its Head Office at Siliguri and that there is no reason why it chose to file a complaint in Agra except to harass the petitioners, cannot also be a ground for seeking transfer. Under Section 142(2)(a) of the Negotiable Instrument Act, the court within whose jurisdiction the branch of the bank where the payee maintains the account is situated, will have jurisdiction to try the offence, if the cheque is delivered for collection through an account. Therefore, all the grounds on which the petitioners seek transfer, are unsustainable.
The Transfer Petition is therefore dismissed.
-
2020 (9) TMI 1187
Dishonor of Cheque - acquittal of the accused - acquittal on suspicion, surmises and conjectures - the recovery of knife and rope at the instance of the Accused - appreciation of evidence on doubtful disclosure statements - non-examination of material witnesses - prosecution has to prove the complete chain of events - material contradictions and even the recovery of jeep, knife and rope, photographs from the jeep.
HELD THAT:- It is not in dispute that this is a case of circumstantial evidence. As held by this Court in catena of decisions that in case of a circumstantial evidence, the circumstances, taken cumulatively, should form a chain so complete that there is no escape from the conclusion that within all human probability the crime was committed by the Accused and none else and the circumstantial evidence in order to sustain conviction must be complete and incapable of explanation of any other hypothesis than that of the guilt of the Accused and such evidence should not only be consistent with the guilt of the Accused but should be inconsistent with his innocence.
In the present case, the prosecution as well as the High Court considered the recovery of photographs; recovery of mobile phone belonging to PW7, recovery of the knife and rope at the instance of the Accused and on alleged disclosure statements of the Accused on 9.9.2010. The prosecution also relied upon the recovery of jeep in which the photographs of the Accused were found. The prosecution also relied upon the disclosure statement of the Accused Anwar Ali with respect to recovery of crates and for the aforesaid prosecution heavily relied upon the testimony of PW5, PW6 and PW7 - the prosecution and the IO suppressed the material facts. Even in the cross-examination, the IO has stated that the sniffer dog had done nothing on the spot. In the cross-examination, he has also specifically stated that "it is incorrect to suggest that the sniffer dog had traced the strings Ex. P52, knife Ex. P59 and vest Ex. P54. However, PW4 and PW5 in their deposition have categorically stated that the knife and rope were recovered on 2.9.2010. The aforesaid cannot be said to be minor contradictions. Therefore, the trial Court was justified in not believing the disclosure statements of the Accused and the recovery of the knife, rope etc. on 9.9.2010 as alleged by the prosecution. From evidence, it emerges that the knife, rope and vest were recovered on 2.9.2010 i.e., much prior to 8.9.2010 when the Accused were arrested.
The Investigating Officer did not follow the procedure as required to be followed Under Section 166(3 & 4), Code of Criminal Procedure Even he did not comply with the provisions of Section 100(4) Code of Criminal Procedure Non-following of the aforesaid provisions alone may not be a ground to acquit the Accused. However, considering the overall surrounding circumstances and in a case where recovery is seriously doubted, non-compliance of the aforesaid play an important role - Even the recovery of the mobile phone from the jeep belonging to PW7 also creates doubt. Though, PW7 has stated that his mobile was stolen or cheated, he never filed any complaint earlier. Even the IO has not tried to have the call details of the mobile. He has not tried to verify from the call details the conversation to or from the mobile.
The findings recorded by the learned trial Court, which were based on appreciation of the entire evidence on record cannot be said to be either perverse or contrary to the evidence on record and/or it cannot be said that the trial Court did not consider any material evidence on record. Trial Court was justified in recording the acquittal by observing that prosecution has failed to complete the entire chain of event - the High Court is not justified in reversing the order of acquittal passed by the learned trial Court.
Petition allowed.
-
2020 (9) TMI 1179
Maintainability of petition under Article 32 of the Constitution - HELD THAT:- The writ petition is accordingly dismissed. However, it shall be open for the petitioners to take appropriate remedy against the order impugned.
-
2020 (9) TMI 1178
Enforcement of Foreign Award - application Under Section 48 of the Arbitration and Conciliation Act, 1996 was dismissed - Limitation for filing an enforcement/ execution petition of a foreign award - condonation of delay in filing the execution petition by the Respondents - Scheme of the 1996 Act for enforcement of New York Convention awards - Malaysian law of public policy while deciding the challenge to the foreign award by Malaysian Courts - foreign award vis-a-vis Public Policy of India.
Limitation for filing an enforcement/execution petition of a foreign award Under Section 47 of the 1996 Act - HELD THAT:- On 10.07.2014, a show cause notice was issued to the Respondents, raising a demand of US $ 77 million, being the Government's share of Profit Petroleum under the PSC. It was contended that the cause of action for filing the enforcement petition Under Sections 47 and 49 arose on 10.07.2014. The enforcement petition was filed on 14.10.2014 i.e. within 3 months from the date when the right to apply accrued - the petition for enforcement of the foreign award was filed within the period of limitation prescribed by Article 137 of the Limitation Act, 1963.
Thus, there are sufficient grounds to condone the delay, if any, in filing the enforcement/execution petition Under Sections 47 and 49, on account of lack of clarity with respect to the period of limitation for enforcement of a foreign award.
Scheme of the 1996 Act for enforcement of New York Convention awards - HELD THAT:- The grounds for refusing enforcement of foreign awards contained in Section 48 are exhaustive, which is evident from the language of the Section, which provides that enforcement may be refused "only if" the Applicant furnishes proof of any of the conditions contained in that provision 12 - The enforcement court is not to correct the errors in the award Under Section 48, or undertake a review on the merits of the award, but is conferred with the limited power to "refuse" enforcement, if the grounds are made out.
If the Court is satisfied that the application Under Section 48 is without merit, and the foreign award is found to be enforceable, then Under Section 49, the award shall be deemed to be a decree of "that Court". The limited purpose of the legal fiction is for the purpose of the enforcement of the foreign award. The concerned High Court would then enforce the award by taking recourse to the provisions of Order XXI of the Code of Civil Procedure.
Whether the Malaysian Courts were justified in applying the Malaysian law of public policy while deciding the challenge to the foreign award? - HELD THAT:- The Malaysian Courts being the seat courts were justified in applying the Malaysian Act to the public policy challenge raised by the Government of India.
The enforcement court would, however, examine the challenge to the award in accordance with the grounds available Under Section 48 of the Act, without being constrained by the findings of the Malaysian Courts. Merely because the Malaysian Courts have upheld the award, it would not be an impediment for the Indian courts to examine whether the award was opposed to the public policy of India Under Section 48 of the Indian Arbitration Act, 1996. If the award is found to be violative of the public policy of India, it would not be enforced by the Indian courts. The enforcement court would however not second-guess or review the correctness of the judgment of the Seat Courts, while deciding the challenge to the award.
Whether the foreign award is in conflict with the Public Policy of India? - HELD THAT:- The enforcement of foreign award would be refused Under Section 48(2)(b) only if such enforcement would be contrary to (1) fundamental policy of Indian law; or (2) the interests of India; or (3) justice or morality. The wider meaning given to the expression "public policy of India" occurring in Section 34(2)(b)(ii) is not applicable where objection is raised to the enforcement of the foreign award Under Section 48(2)(b) - Moreover, Section 48 of the 1996 Act does not give an opportunity to have a 'second look' at the foreign award in the award-enforcement stage. The scope of inquiry Under Section 48 does not permit review of the foreign award on merits. Procedural defects (like taking into consideration inadmissible evidence or ignoring/rejecting the evidence which may be of binding nature) in the course of foreign arbitration do not lead necessarily to excuse an award from enforcement on the ground of public policy.
The amended Section 48 would not be applicable to the present case, since the court proceedings for enforcement were filed by the Respondents-Claimants on 14.10.2014 i.e. prior to the 2016 Amendment having come into force on 23.10.2015.
The enforcement of the foreign award does not contravene the public policy of India, or that it is contrary to the basic notions of justice.
Application disposed off.
-
2020 (9) TMI 1175
Permission for withdrawal of SLP - the petitioner seeks permission to withdraw the petition - HELD THAT:- The Special Leave Petition is dismissed as withdrawn.
-
2020 (9) TMI 1174
Forgery - debit notes created by the Respondents were totally fraudulent - amounts owed by the Appellants to the Respondents or not - applicability of Section 195(1)(b)(i) as well as Section 195(1)(b)(ii) of the CrPC. - HELD THAT:- There is no doubt that realising the difficulties in their way, the Appellants suddenly changed course, and applied to the Magistrate vide application dated 09.05.2011 to convert what was a properly drafted application under Section 195 read with section 340 of the CrPC, into a private complaint. A reading of the two complaints leaves no manner of doubt that they have been drafted keeping the ingredients of Sections 191 and 192 of the IPC alone in mind – the only argument from the Appellants now being that since certain debit notes were forged prior to their being introduced in the court proceedings, not only would the ratio in IQBAL SINGH MARWAH & ANR. VERSUS MEENAKSHI MARWAH & ANR. [2005 (3) TMI 750 - SUPREME COURT] apply, but also that the ingredients of the “forgery” sections of the IPC have now been made out. While it is important to bear in mind that in genuine cases where the ingredients of forgery as defined in Section 463 of the IPC have been made out, and that therefore, a private complainant should not be left remediless, yet it is equally important to bear in mind the admonition laid down in an early judgment of this Court.
Whether the “forging” of the debit notes, so strongly relied upon by Shri Mishra as being offences under Sections 463 and 464 of the IPC, can at all be said to attract the provisions of these Sections? - HELD THAT:- Even if we are to put aside all the averments made in the two complaints (which clearly attract the provisions of Sections 191 and 192 of the Penal Code), and were to concentrate only on the debit notes that are said to have been “created” by the Respondents, it is clear that the debit notes were not “false documents” under Section 464 of the IPC, inasmuch they had not been made with the intention of causing it to be believed that they were made by or under the authority of some other person. Since this basic ingredient of forgery itself is not made out, none of the sections that are sought to be relied upon in Chapter XVIII of the IPC can thus be said to be even prima facie attracted in the facts of this case.
Writ petitions that were filed against this order have been dismissed by the impugned judgment - Appeal disposed off.
-
2020 (9) TMI 1150
Sanction under Section 197 Cr.P.C. - Allegation is that is said to be the kingpin involved in this crime and is since absconding - finding that there was a prima facie case made out against the appellant, the Special Judge refused to discharge the appellant from the offences under the IPC - HELD THAT:- A number of judgments have held that the standard of proof in a departmental proceeding, being based on preponderance of probability is somewhat lower than the standard of proof in a criminal proceeding where the case has to be proved beyond reasonable doubt.
In view of the detailed CVC order dated 22.12.2011, the chances of conviction in a criminal trial involving the same facts appear to be bleak. We, therefore, set aside the judgment of the High Court and that of the Special Judge and discharge the appellant from the offences under the Penal Code.
Appeal allowed - decided n favor of appellant.
-
2020 (9) TMI 903
AS PER JUSTICE DR DHANANJAYA Y CHANDRACHUD
Enhancement of Customs Duty - post-Pulwama Attack - Time and date from which enhanced duty comes into effect - issuance of notification under Section 8A of the Customs Tariff Act 1975 introducing a tariff entry by which all goods originating in or exported from the Islamic Republic of Pakistan were subjected to an enhanced customs duty of 200% - the contention of the Union government before the High Court was that under Section 15 of the Customs Act, 1962 the relevant date for determining the rate of duty is the date of the presentation of the bill of entry - submission was that the amended rate of duty under notification 5/2019 came into force on 16 February 2019; hence, the importers were liable to pay duty on the basis of the amended rate. The submission was that the customs authorities were entitled to re-assess the bills of entry under Section 17(4).
HELD THAT:- The purpose of the notification being to discourage the import of goods from Pakistan, it has prospective effect: the object and purpose is not to penalize Indian importers who had completed their imports, presented bills of entry for home consumption and had completed self-assessment in terms of the provisions of the Customs Act and the Regulations, prior to the issuance of the notification.
Determination of the rate under Section 15 of the Customs Act 1962 - HELD THAT:- Section 15(1)(a) uses two expressions (i) the rate and valuation “in force”; and (ii) “on the date” of the presentation of the bill of entry for home consumption under Section 46. The provisions of Section 15(1)(a) have to be read in conjunction with the provisions of Section 46 which are referred to in the former provision. Section 46 has incorporated a regime which encompasses the submission of the bill of entry for home consumption or warehousing in an electronic format, on the customs automated system in the manner which is prescribed. The Regulations of 2018 stipulate the manner in which the bill of entry has to be presented. The deeming fiction in Regulation 4(2) specifies when presentation of the bill of entry and ‘selfassessment’ are complete. The rate of duty stands crystallized under Section 15(1)(a) once the deeming fiction under Regulation 4(2) comes into existence. The regulations have to be read together with the statutory provisions contained in Section 15(1)(a) and Section 46, while determining the rate of duty.
Precedent - HELD THAT:- In Bharat Surfactants (Private) Limited vs. Union of India [1989 (5) TMI 66 - SUPREME COURT], customs duty was imposed on the import of edible oil by the petitioners at the rate of 150 per cent on the basis that the import was made on the date of the inward entry, which was 31 July 1981. The vessel arrived and registered in the Port of Bombay on 11 July 1981 but since a berth was not available, the cargo could not be unloaded. The vessel left Bombay and proceeded to Karachi and returned towards the end of July 1981. The rate of customs duty prevailing on 11 July 1981 was 12.5 per cent and the contention of the importer was that but for the fact that the vessel was unable to secure a berth, it would have delivered the cargo - The Constitution Bench held that the date of entry inwards of the vessel in the Customs’ register was mentioned as 31 July 1981 and the rate of import duty and tariff valuation would be that which was in force on that day.
The presentation of a bill of entry for home consumption under Section 46 is hence the definitive event with reference to which the customs’ duty payable for import is determined. The duty in force on the day when the bill of entry for home consumption is presented is the duty which is applicable under Section 15(1)(a) - It is in view of this principle that the entry of the vessel into territorial waters, before the presentation of the bill of entry, has been held not to fix the rate of duty where the rate of duty has undergone a change.
Interpreting ‘day’ and ‘date’ - HELD THAT:- The submission of the ASG, simply put, is that because notification 5/2019 was issued on 16 February 2019, the court must regardless of the time at which it was uploaded on the e-Gazette treat it as being in existence with effect from midnight or 0000 hours on 16 February 2019. The consequence of this interpretation would be to do violence to the language of Section 8A(1) of the Customs Tariff Act, and to disregard the meaning, intent and purpose underlying the adoption of provisions in the Customs Act in regard to the electronic filing of the bill of entry and the completion of self-assessment.
Notification under Section 8A of the Customs Tariff Act - HELD THAT:- A notification which is issued in terms of the provisions of Sub-section (1) of Section 8A is akin to the exercise of a delegated legislative power. The Central government is empowered to issue a notification enhancing the rate of duty where it is satisfied that immediate action is necessary to increase the rate of customs duty on an article specified in the First schedule. The effect of the notification is to amend the First schedule to the Customs Tariff Act in respect of the import duty leviable on an article under Section 12 of the Customs Act. In issuing a notification under Sub-section (1) of Section 8A, the Central government exercises power as a delegate of the legislature. The issue now to be considered is whether the notification that was issued by the Central government under Section 8A(1) at 20:46:58 hours on 16 February 2019 took effect commencing from 0000 hours on that day.
The rate of customs duty is determined on the date on which the bill of entry for home consumption is presented (Section 15). The presentation of the bill of entry has to be made electronically (Section 46 read with the 2018 Regulations). The presentation is required to be made on the customs automated system. The provisions in the Customs Act for the electronic presentation of the bill of entry for home consumption and for self-assessment have to be read in the context of Section 13 of the Information Technology Act which recognizes “the dispatch of an electronic record” and “the time of receipt of an electronic record” - The presentation of the bill of entry under Section 46 is made electronically and is captured with time stamps in terms of the requirements of the Information Technology Act read with Rule 5(1) of the Information Technology (Electronic Service Delivery) Rules 2011.
Notification 5/2019 was uploaded in the e-gazette at a specific time and date and cannot apply to bills of entry which were presented on the customs automated EDI system prior to it, attracting the legal fiction set out in Regulation 4(2) of the 2018 Regulations.
Retrospectivity - HELD THAT:- For the purpose of the present decision the point which needs emphasis is that in empowering the Central Government to exercise power under Section 8A of the Customs Tariff Act, Parliament has not either expressly or by necessary implication indicated that a notification once issued will have force and effect anterior in time. The provisions of sub-sections (3) and (4) of Section 7 of the Customs Tariff Act bring to bear legislative oversight and supervision over the power which is entrusted to the Central Government under Section 8A. That however does not lead to the inference that a notification under Section 8A has retrospective effect. Plainly, a notification enhancing the rate of duty under Section 8A has prospective effect.
In the present case the twin conditions of Section 15 stood determined prior to the issuance of Notification 5/2019 on 16 February 2019 at 20:46:58 hours. The rate of duty was determined by the presentation of the bills of entry for home consumption in the electronic form under Section 46. Self-assessment was on the basis of rate of duty which was in force on the date and at the time of presentation of the bills of entry for home consumption. This could not have been altered in the purported exercise of the power of re-assessment under Section 17 or at the time of the clearance of the goods for home consumption under Section 47. The rate of duty which was applicable was crystallized at the time and on the date of the presentation of the bills of entry in terms of the provisions of Section 15 read with Regulation 4(2) of the Regulations of 2018. The power of reassessment under Section 17(4) could not have been exercised since this is not a case where there was an incorrect self-assessment of duty. The duty was correctly assessed at the time of self-assessment in terms of the duty which was in force on that date and at the time. The subsequent publication of the notification bearing 5/2019 did not furnish a valid basis for re-assessment.
Appeal dismissed.
AS PER K.M. JOSEPH, J.
Does a notification under Section 8A of the Customs Tariff Act, 1975 increasing the import duty published late in the evening of 16th Feb 2019, date back to the midnight of the previous day? Does a day include its fractions? - HELD THAT:- The Customs Act is a consolidating Act. It is intended, inter alia, to deal with the menace of smuggling. It contains various sanctions. It also provides for the levy of Customs duty on import and export. It is a law which provides revenue to the State. It is also an important tool in the hands of the nation to arrange its economic affairs to make it best suited to the welfare of the people otherwise. Indisputably, the charging Section is Section 12. The taxable event is import into or export of goods from India. Ordinarily, the Tariff Act provides the rates at which duty is imposed on imports and exports. There is no dispute that India and Pakistan being S.A.A.R.C. Countries they were parties to an agreement under which the trade between the countries was subjected only to duty on concessional rates. It is while so, following the unfortunate incident of Pulwama that the Government of India in exercise of its powers under Section 8A of the Tariff Act decided to increase the rate of import duty on all goods in the manner done. The Notification was issued on 16.02.2019. It was published at about 20:46:58 hrs. In the meantime, during the course of the day, the writ petitioners before us who imported goods had filed Bills of Entry electronically. The goods were present in the Customs Station.
The Tariff Act and whether the notification is a form of Delegated Legislation - HELD THAT:- A Notification issued under Section 8A, increasing the import duty, is a species of delegated legislation. It must be remembered that Article 265 of the Constitution of India declares that no tax shall be levied except by the authority of Law. An increase in the rate of duty cannot obviously be affected by an Executive Order. That is not to say that when the Executive is empowered to increase the rate of duty by way of delegated legislation, it would not fulfill the requirement of Article 265 and there can be no hesitation in holding that it is law within the meaning of Article 13 of the Constitution of India and it is a species of delegated legislation.
The Scheme of the Customs Act Qua Rate of Duty on imports and assessment to duty - HELD THAT:- There is no dispute that the imported goods were very much in the Customs Station and the Bills of Entry were presented under Section 46(1) on 16.2.2019. It is clear that the rate of duty, for the purpose of the cases before the Court, is to be determined with reference to the presentation of the Bills of Entry. The law does not take into consideration even the time of payment of the duty which is self-assessed by the importer. This is noted for the reason that the importer, who presents a Bill of Entry under Section 46 and who carries out self-assessment, is duty-bound to pay such duty on the very same date. The consequence of failure is only the liability to pay interest under Section 47 besides disabling him from clearing the goods. It does not postpone the point of time at which the rate of duty is to be determined.
As far as the Notification issued under Section 8A of the Tariff Act is concerned, the Notification would come into force on the date on which it is published in the Gazette. The question, however, which arises in this case is, as far as this Court is concerned, res integra, viz., whether having regard to the time at which it was published, whether Notification would come into force on 16.02.2019, by including the whole of the day or will it operate from the time of its publication, or whether the Notification is to be enforced only after excluding 16.02.2019 - The question would pointedly arise whether it was to have effect for the whole of the day, viz., 16.02.2019, which means, since the day 16.02.2019 was born, immediately after the midnight on 15.02.2019, does a day mean the first moment after the midnight? If that were the effect, what would be its impact on the Bills of Entry which were electronically presented under Section 46(1) of the Customs Act read with Rule 4(2) of the 2018 Regulations. It is here that it becomes necessary to notice the provisions of Section 9 of the General Clauses Act, 1897.
Section 9 of the General Clauses Act, 1897 - HELD THAT:- Section 9 of the General Clauses Act enunciates the principle, that for, excluding the first in a series of days or any other period of time, it suffices to use the word “from”. It also provides, likewise, for the devise of using the word “to”, for the purpose of including the last in the series of days or other period of time. It is clear from Section 9 that it contemplates a period, or a series of days which is marked by both terminus aquo and terminus ad quem. Section 9 is expressly intended to apply to a Central Act or Regulation.
Cases under Contracts of Insurance - HELD THAT:- It is clear that the situation which is presented before us, is not covered by the principle which is embedded in Section 9 of General Clauses Act, 1897. In other words, having regard to the terms of the Notification, which is a form of delegated legislation, by which the Central Government has increased the rate of import duties of goods imported from Pakistan, though the notification is gazetted on 16.02.2018 at 20:46:58 hrs., there is no period for which it is to last as already noticed, and in that sense, it can be argued that there would be no occasion for exclusion of the date on which it was issued.
Whether Section 5(3) of the General Clauses Act applies to the Notification - HELD THAT:- It is quite clear that the notification which is issued is one which is issued under Section 8A of the Tariff Act. The notification is not one which is made by Central Legislature, namely, the Parliament. It therefore is not a Central Law as defined in the Act. We have also noticed the definition of the word ‘Regulation’. The notification is not a regulation as defined in General Clauses Act. There is no merit in the contention of the Union of India that by virtue of Section of 5(3) of the General Clauses Act, the notification must be treated as effective from the point of time immediately after mid night on 15/16 February, 2019.
Existence of possible views - HELD THAT:- Having regard to the Scheme, which, in the case of import duty, consists of filing of Bill of Entry for home consumption, self-assessment and payment of duty on the basis of the same and the rate being clearly fixed with reference to the particular point of time when the Bill of Entry is presented and there is a deemed presentation and even a deemed assessment, which is otherwise in order, and bearing in mind the principle that Section 8A does not provide power for increase of rate of duty with retrospective effect, the Notification must be treated as having coming into force not before its publication which is at 20:46:58 hrs. on 16.02.2019. This would necessarily mean that the Notification cannot be used to alter the rate of duty on the basis of which, in fact, there was presentation of Bill of Entry several hours ago, the self-assessment was done and what is more, the self-assessment was completed under Regulation 4(2) of the 2018 Regulations. There cannot be reassessment. The interpretation based on time of publication is in harmony with a view that accords respect for vested rights.
Two inconsistent rates at the same point of time - HELD THAT:- There is no merit in the submission of the appellants in this regard. Once it is found that the notification upon publication would take effect from the time of its publication then in regard to the bills of entries which stand presented within the meaning of Section 46 of the Customs Act read with 4(2) of the 2018 Regulations, earlier to such publication, the rate of duty in regard to the same would be only the rate of duty which prevailed at the time of the deemed presentation under Regulation 4(2) of the 2018 Regulations.
Effect of the Word ''Otherwise'' in section 17(4) of the Customs Act, 1962 - HELD THAT:- The expression “otherwise” in Section 17(4), will not come to the rescue of the appellants, in the facts of the instant case. While the word “otherwise” may be capable of taking care of situations which are not covered by the preceding expressions, viz., verification, examination, attesting of the goods, it cannot mean that it will empower the Officer to alter the rate of duty which is prevalent at the time of the self-assessment following the due presentation of the Bill of Entry. If it is otherwise, it will be open to the Department to reopen cases of concluded assessments by virtue of the deemed completion of assessment under Regulation 4(2) without any legal justification. That would be plainly impermissible being illegal. This is not a case where the assessment is assailed on any other ground except by insisting on a rate of duty which is in applicable.
By its very nature, delegated legislation is legislative in character but if it is to be a Central Act within the meaning of Section 5 of General Clauses Act, it must be made by the legislature. Delegated legislation which is called administrative legislation in England, is exercise of legislative power by the executive. It is to be further noticed the fact that the notification issued under Section 8A is in the exercise of its legislative power or that it may have to be read in the same manner as if it is a part of the Act, will not detract the Court from ascertaining as to who is the author of the exercise of the legislative power, namely, whether it is an exercise of power by the legislature or by its delegate. Upon answer to the question, namely, that the author of the legislative effort is the executive, the question would necessarily arise as to whether there is publication. In the scheme of the Customs Act, the Tariff Act and the 2018 Regulations, the time at which the notification under Section 8A is published would indeed have relevance as already found.
Appeal dismissed.
-
2020 (9) TMI 857
Permission for withdrawal of appeal - Sabka Vishwas (Legacy Dispute Resolution) (SVLDR) Scheme, 2019 - HELD THAT:- The respondent cannot object to the appellant withdrawing any portion of the appeal, provided the appellant is not seeking any benefit from Court on account of the withdrawal.
The appeal shall be treated as withdrawn only in respect of the dispute arising out of the excise component - Application allowed.
-
2020 (9) TMI 713
Condonation of delay in filing appeal - power to condone the delay beyond a period of 45 days - appellants admittedly received the certified copy of the order on 19.12.2019, they chose to file the statutory appeal before NCLAT on 20.07.2020 - Winding up of Company - contentions raised by the learned counsel for the appellants are twofold namely (i) that the Appellate Tribunal erred in computing the period of limitation from the date of the order of the NCLT, contrary to Section 421(3) of the Companies Act, 2013, and (ii) that the Appellate Tribunal failed to take note of the lockdown as well as the order passed by this Court on 23.03.2020, extending the period of limitation for filing any proceeding with effect from 15.03.2020 until further orders - Section 420(3) of the Companies Act, 2013.
Computation of period of limitation from the date of the order of the NCLT - Section 421(3) of the Companies Act, 2013 - HELD THAT:- From 19.12.2019, the date on which the counsel for the appellants received the copy of the order, the appellants had a period of 45 days to file an appeal. This period expired on 02.02.2020 - By virtue of the proviso to Section 421(3), the Appellate Tribunal was empowered to condone the delay upto a period of period of 45 days. This period of 45 days started running from 02.02.2020 and it expired even according to the appellants on 18.03.2020. The appellants did not file the appeal on or before 18.03.2020, but filed it on 20.07.2020. It is relevant to note that the lock down was imposed only on 24.03.2020 and there was no impediment for the appellants to file the appeal on or before 18.03.2020. To overcome this difficulty, the appellants rely upon the order of this Court dated 23.03.2020.
Failure to take note of the lockdown as well as the order passed by this Court on 23.03.2020, extending the period of limitation for filing any proceeding with effect from 15.03.2020 until further orders - HELD THAT:- What was extended by the order of this Court was only “the period of limitation” and not the period upto which delay can be condoned in exercise of discretion conferred by the statute. The above order passed by this Court was intended to benefit vigilant litigants who were prevented due to the pandemic and the lockdown, from initiating proceedings within the period of limitation prescribed by general or special law. It is needless to point out that the law of limitation finds its root in two latin maxims, one of which is Vigilantibus Non Dormientibus Jura Subveniunt which means that the law will assist only those who are vigilant about their rights and not those who sleep over them.
The expression “prescribed period” appearing in Section 4 cannot be construed to mean anything other than the period of limitation. Any period beyond the prescribed period, during which the Court or Tribunal has the discretion to allow a person to institute the proceedings, cannot be taken to be “prescribed period”.
The appellants cannot claim the benefit of the order passed by this Court on 23.03.2020, for enlarging, even the period up to which delay can be condoned - The second contention is thus untenable.
Appeal dismissed - decided against appellant.
-
2020 (9) TMI 595
Appointment of sole arbitrator - Section 11(6) read with Seciton 11(12)(a) of the Arbitration and Conciliation Act, 1996 - HELD THAT:- The parties having entered into a business transaction; certain disputes have arisen between them which is to be resolved through arbitration. To that extent the parties are also in agreement. The issue for consideration however, is with regard to the appropriate clause that will operate providing for arbitration and will be applicable in the factual matrix herein. Since the applicant is before this Court invoking the arbitration clause in the purchase order (37 separate purchase orders), it is necessary to take note of the arbitration clause relied upon.
Since the transaction entered into between the parties and the dispute having arisen not being in dispute; further the above extracted arbitration clause being explicit; in a normal circumstance no other consideration would have been necessary in the limited scope for consideration in an application under Section 11 of the Act, 1996. However, in the case on hand the fact remains that undisputedly an Agreement dated 31.03.2018 is also entered into between the parties relating to the very same transaction which is referred to as the “Umbrella Agreement” by the respondent and as “Pricing Agreement” by the applicant. The said agreement also makes provision for resolution of disputes through arbitration in the manner as indicated therein.
When both, the purchase order as also the Pricing Agreement subsists and both the said documents contain the arbitration clauses which are not similar to one another, in order to determine the nature of the arbitral proceedings the said two documents will have to be read in harmony or reconciled so as to take note of the nature of the dispute that had arisen between the parties which would require resolution through arbitration and thereafter arrive at the conclusion as to whether the instant application filed under Section 11 of the Act, 1996 would be sustainable so as to appoint an arbitrator by invoking Clause7 of the purchase order; more particularly in a situation where the Arbitral Tribunal has already been constituted in terms of Clause23 of the agreement dated 31.03.2018.
When admittedly the parties had entered into the agreement dated 31.03.2018 and there was consensus adidem to the terms and conditions contained therein which is comprehensive and encompassing all terms of the transaction and such agreement also contains an arbitration clause which is different from the arbitration clause provided in the purchase order which is for the limited purpose of supply of the produce with more specific details which arises out of Agreement dated 31.03.2018; the arbitration clause contained in Clause23 in the main agreement dated 31.03.2018 would govern the parties insofar as the present nature of dispute that has been raised by them with regard to the price and the terms of payment including recovery etc. In that view, it would not be appropriate for the applicant to invoke Clause7 of the purchase orders more particularly when the arbitration clause contained in the Agreement dated 31.03.2018 has been invoked and the Arbitral Tribunal comprising of Mr. Jonathan Jacob Gass, Mr. Gourab Banerji and Ms. Lucy Greenwood has already been appointed on 22.06.2020.
he petitioner claiming to be aggrieved by the constitution of the Arbitral Tribunal has filed the suit seeking a decree of declaration that the arbitration clause23 of the Pricing Agreement dated 31.03.2018 is null and void and in that context has sought for the ancillary relief in the suit. In the said suit the petitioner has moved the ‘Notice of Motion’ seeking for an interlocutory order of injunction against the Arbitral Tribunal constituted by the ICC. The learned Single Judge through a detailed judgment dated 12.08.2020 has rejected the prayer for interim order and the ‘Notice of Motion’ has been dismissed. The petitioner claiming to be aggrieved by the said order had preferred an appeal to the Division Bench, which on consideration has declined grant of interim order though the appeal has been admitted for consideration.
Application dismissed.
-
2020 (9) TMI 556
Maintainability of CIRP application - Corporate Debtor failed to make repayment of dues - NCLT allowed the application - NCLAT set aside the order of NCLT on the ground that applicant failed to prove that there was an outstanding amount - HELD THAT:- A bare reading of the NCLT order shows that it is only after a perusal of the documents, pleadings, and the supplementary affidavit of 03.08.2018, including the counter affidavit in the earlier section 7 application, that the NCLT came to the conclusion that a loan amount remained outstanding. The NCLAT, when it dealt with the NCLT order, wrongly recorded that documents which were already rejected by the adjudicating authority could not have been the basis of the order of admission. The NCLAT also wrongly recorded that there was no further evidence in support of the fact that any amount was outstanding. Further, the NCLAT also held that a ‘document’ filed in the earlier petition that was dismissed as withdrawn could not have been relied upon by the adjudicating authority. The NCLAT is wrong on all these counts.
The NCLAT order is set aside and that of the NCLT is restored. The resolution proceedings will continue from the stage at which they were interrupted.
-
2020 (9) TMI 549
Smuggling - Charas - acquittal of accused - accused was acquitted by recording a finding that the case of prosecution was not free from doubt and there were many infirmities in the case of the prosecution to hold that the accused was found to be in possession of charas, as alleged by the prosecution - Section 20 of Narcotic Drugs and Psychotropic Substances Act, 1985 - HELD THAT:- There are no substance in any of the contentions advanced by the learned counsel for the appellant, except the submission on the quantum of sentence.
It is mainly contended by learned counsel for the appellant that the High Court / appellate Court was not justified in interfering with the judgment of acquittal passed by the trial court merely because another view is possible. As noted earlier, in support of his argument that merely because another view is possible, same is no ground to interfere with the judgment of acquittal by the appellate court.
It is clear from the evidence on record that the appellant was on the counter of the dhaba which was constructed on the land owned by his wife near the temple and the charas was found in the counter of the dhaba in a gunny bag. The facts of the case show that accused not only had direct physical control over charas, he had the knowledge of its presence and character. As rightly contended by Sri Aman Lekhi, learned Additional Solicitor General in the case of Mohan Lal (2015) 6 SCC 222 this Court had held that a functional and flexible approach in defining and understanding possession as a concept has to be adopted and the word has to be understood keeping in mind the purpose and object of the enactment. In the statement recorded under Section 313 of Code of Criminal Procedure, though the appellant has referred to Brij Lal and Mantu in support of a version, contrary to that presented by prosecution but he has not chosen to examine either Brij Lal or Mantu. No defence witness has deposed to the chain of events, as has been stated by the appellant in the statement under Section 313, Cr.PC. It is also fairly well settled that where accused offers false answers in examination under Section 313 Cr.PC, same also can be used against him. Further onus was on the appellant to explain the possession and in absence of the same being discharged, presumption under Section 54 of the NDPS Act also will kick in.
The judgment of the High Court does not suffer from any infirmity so as to interfere with the judgment of conviction - there are force in the submission of the learned counsel for the appellant in sentencing the appellant for 15 years’ rigorous imprisonment with a fine of ₹ 2,00,000/-.
In view of the fact that the incident occurred in the year 2001 and as the appellant claimed to be a priest in the temple, who is now aged about 65 years, we deem it appropriate that it is a fit case to modify the sentence imposed on the appellant - the sentence awarded on the appellant is reduced to a period of 10 (ten) years, while maintaining the conviction and the penalty as imposed by the High Court. The order of sentence dated 31.12.2012 passed by the High Court stands modified.
Appeal allowed in part.
-
2020 (9) TMI 496
Interest income of the appellant-Corporation - whether would fall within the category of income from other sources under Section 56 for which allowable deductions are enumerated under Section 57 of the IT Act OR income from business - High Court opined that since the business of the appellant-Corporation was to receive funds and to then advance them as loans or grants, the interest income earned which was so applied would also fall under the head ‘D’ of Section 14 of Chapter IV of the IT Act under the head of ‘profits and gains of business or profession’ being a part of its normal business activity - HELD THAT:- We are in agreement with this view taken by the High Court, as the only business of the appellant-Corporation is to receive funds and then to advance them as loans or grants. The interest income arose on account of the fund so received and it may not have been utilised for a certain period of time, being put in fixed deposits so that the amount does not lie idle. That the income generated was again applied to the disbursement of grants and loans. The income generated from interest is necessarily inter- linked to the business of the appellant-Corporation and would, thus, fall under the head of ‘profits and gains of business or profession’. There would, therefore, be no requirement of taking recourse to Section 56 of the IT Act for taxing the interest income under this residuary clause as income from other sources.
To decide the question as to whether a particular source of income is business income, one would have to look to the notions of what is the business activity. The activity from which the income is derived must have a set purpose. The business activity of the appellant-Corporation is really that of an intermediary to lend money or give grants. Thus, the generation of interest income in support of this only business (not even primary) for a period of time when the funds are lying idle, and utilised for the same purpose would ultimately be taxable as business income. The fact that the appellant- Corporation does not carry on business activity for profit motive is not material as profit making is not an essential ingredient on account of self- imposed and innate restriction arising from the very statute which creates the appellant-Corporation and the very purpose for which the appellant- Corporation has been set up.
Whether the amounts advanced as grants from this income generated could be adjusted against the income to reduce the impact of taxation as a revenue expense? - The logical conclusion is that every application of income towards business objective of the appellant-Corporation is a business expenditure and nothing else. The endeavour of the Revenue Department to rely on the judgment in the Sitaldas Tirathdas case [1960 (11) TMI 17 - SUPREME COURT] is not appreciable since that was a case dealing with the obligation of an individual who was compelled to apply a portion of his income for the maintenance of persons whom he was under a personal and legal obligation to maintain. The IT Act does not permit any deduction from the total income in such circumstances.
No force in the submission of the Revenue Department that the direct nexus of monies given as outright grants from the taxable interest income cannot be distinctly identified. This is a question of fact. The plea of the respondents is based on a pure conjecture. It is the case of the appellant-Corporation throughout that it can easily demonstrate the direct and proximate nexus of interest earned through grants made, as its accounts were duly audited. In fact, CIT(A) allowed the business expenditure only to a certain amount on the basis of the facts and figures as emerged from the balance sheet. This is a burden which was to be discharged by the appellant-Corporation and the CIT(A) had been satisfied with the nexus of interest income with the disbursement of grants made, as having been established.
The amount agreed to be given should be given as a loan or grant, or both is entirely at the business discretion of the appellant-Corporation. No grantee has a superior title to the funds. Hence, this is not a case of diversion of income by overriding title.
We may record here that income has to be determined on the principles of commercial accountancy. There is, thus, a distinction between ‘real profits’ ascertained on principles of commercial accountancy.The scheme of the IT Act requires the determination of ‘real income’ on the basis of ordinary commercial principles of accountancy. To determine the ‘real income’, permissible expenses are required to be set off.
As prior to insertion of this sub-clause, such expenses would be permissible under the general Section 37(1) of the IT Act, which provides for deduction of permissible expenses on principles of commercial accountancy. Post amendment, such expenses get allowed under the specific section, viz. Section 36(1)(xii) after the amendment by the Finance Act, 2003.
We would, thus, like to conclude that we are unable to agree with the findings arrived at by the AO, ITAT and the High Court albeit for different reasons and concur with the view taken by the CIT(A) for the reasons set out hereinbefore. It is, thus, left to this Court as stated above to strike the final blow and allow the appeals, leaving the parties to bear their own costs, while noticing with regret the inordinately long passage of time and the wastage of judicial time on deciding, who is principally right when in either eventuality it benefits the Central Government.
-
2020 (9) TMI 430
Wealth Tax Liability - Whether Club can be treated as "Association of Person"? - ITAT said No - HC said Yes - What is the meaning of the expression “association of persons” which occurs in Section 21AA? - Whether Bangalore Club is an association of persons and not the creation, by a person who is otherwise assessable, of one among a large number of associations of persons without defining the shares of the members so as to escape tax liability? - HELD THAT:- For the first time from 1st April, 1981, an association of persons other than a company or cooperative society has been brought into the tax net so far as wealth tax is concerned with the rider that the individual shares of the members of such association in the income or assets or both on the date of its formation or at any time thereafter must be indeterminate or unknown. It is only then that the section gets attracted.
After 1st April, 2002, as income tax is concerned. It is well-settled that when Parliament used the expression “association of persons” in Section 21AA of the Wealth Tax Act, it must be presumed to know that this expression had been the subject matter of comment in a cognate allied legislation, namely, the Income Tax Act, as referring to persons banding together for a common purpose, being a business purpose in the context of a taxation statute in order to earn income or profits.
In order to be an association of persons attracting Section 21AA of the Wealth Tax Act, it is necessary that persons band together with some business or commercial object in view in order to make income or profits. The presumption gets strengthened by the language of Sec. 21AA (2), which speaks of a business or profession carried on by an association of persons which then gets discontinued or dissolved. The thrust of the provision therefore, is to rope in associations of persons whose common object is a business or professional object, namely, to earn income or profits. Bangalore Club being a social club whose objects have been referred to by the Appellate Tribunal in this case make it clear that persons who are banded together do not band together for any business purpose or commercial purpose in order to make income or profits.
Whether the club has been created to escape tax liability - Held that:- A perusal of the judgment in ELLIS BRIDGE GYMKHANA AND OTHERS [1997 (10) TMI 2 - SUPREME COURT] would show that Section 21AA has been introduced in order to prevent tax evasion. The reason why it was enacted was not to rope in association of persons per se as “one more taxable person” to whom the Act would apply. The object was to rope in certain assessees who have resorted to the creation of a large number of association of persons without specifically defining the shares of the members of such associations of persons so as to evade tax. In construing Section 21AA, it is important to have regard to this object.
The Bangalore Club is an association of persons and not the creation, by a person who is otherwise assessable, of one among a large number of associations of persons without defining the shares of the members so as to escape tax liability. - It is clear that Section 21AA of the Wealth Tax Act does not get attracted to the facts of the present case.
Charging provisions under the Income Tax versus under the Wealth Tax - Held that:- For all the reasons, we cannot accede to Shri Banerjee’s argument that being taxed as an association of persons under the Income Tax Act, the Bangalore Club must be regarded to be an ‘association of persons’ for the purpose of a tax evasion provision in the Wealth Tax Act as opposed to a charging provision in the Income Tax Act.
Effect of Dissolution / liquidation clause as per section 21AA(2) - Held that:- What has to be seen in the facts of the present case is the list of members on the date of liquidation as per Rule 35 cited hereinabove. Given that as on that particular date, there would be a fixed list of members belonging to the various classes mentioned in the rules, it is clear that, applying the ratio of Trustees of H.E.H. Nizam's Family [1977 (5) TMI 1 - SUPREME COURT] such list of members not being a fluctuating body, but a fixed body as on the date of liquidation would again make the members ‘determinate’ as a result of which, Sec. 21AA would have no application.
|
