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2014 (7) TMI 1348 - KARNATAKA HIGH COURT
Claim for exemption u/s 10 - Agricultural income - processes undergone on hybrid seeds - whether the income derived by the assessee by sale of seeds constitutes agricultural income or business income? - HELD THAT:- Under the provisions of the Karnataka Land Reforms Act, lease of the agricultural land is totally prohibited, except to the extent provided in Section 5 of the Act. Though, each State has passed such Land Reforms Act, its provisions vary from State to State. The main policy before this agrarian reforms is to abolish absentee land lords and to confer tiller the ownership of the land. It is in this back ground, when we look at the provisions of the Income Tax Act and the exemption granted to agricultural income and the agricultural income having been defined specifically, the said provisions required to be interpreted in the light of the agrarian reforms. In case, where the assessee ploughs the land and in case, where the law permits taking agricultural leases of land and if the assessee cultivates the land, raises the crops and seeds and hence, income derived therefrom will fall within the definition of agricultural income and the assessee would be entitled to the benefit of Section 10(1)(a) of the Act.
If the assessee is not owning the land and in law, he cannot take the land on lease, but still he enters into contract with the land owners, gives them the monitory assistance and those land owners physically cultivate the land and grow the crops and when the assessee contends that crops grown belongs to him and he is selling them and therefore, it is an agricultural income, the question arises as to whether the exemption under Section 10(1) is attracted to such income?
Though, several judgments were cited contending that it is an agricultural income, we do not see in any of those judgments, they have taken note of this agrarian reforms. Most of the judgments are anterior to agrarian reforms. At any rate, the authorities have not applied their minds to these fundamental facts which are in the nature of jurisdictional facts before valid order is passed under the said Act. In the absence of the authorities applying their minds to these facts, it would be inappropriate for this Court to record any findings on the basis of the submissions made at the Bar or by looking into the documents, now being produced.
Therefore, we are of the view that the proper course would be to set-aside all the impugned orders, remit the matters back to the Assessing Authority, so that Assessing Authority would formulate proper points for consideration, give an opportunity to the assessee to produce evidence in support of their contention. The Assessing Authority would look into agrarian reforms passed in each State which is relevant for passing the assessment order and then, pass an order keeping in mind all the decisions relied by the parties. In our view, it would meet the ends of justice.
Assessing Authority shall record a finding on facts as What is the extent of land these assessees hold in the States where they are growing seeds and then looking into the relevant Land Reforms Act to find out whether they are entitled to hold such land or if so, under what provisions of the Act. Consequently, what would be the legal effect in respect of excess land held by them and in cases where there is a total prohibition of taking the land on lease, if the assessee has entered into an arrangement with the land owners irrespective of the nomenclature given, whether the income derived from such agricultural operation would be construed as an agricultural income as defined under Section 2(1)(A) of the Act to be eligible for exemption under Section 10(1) of the Act? - Also whether the processes undergone by hybrid seeds before it is sold in the market would in any way take away the character of an agricultural produce of the seeds to be kept away from the application of the provision of Section 2(1)(A) of the Act?
Entitled to deduction u/s.43B - belated remittance of employees contribution towards ESI - employees contribution is income of the assessee u/s.2(24)(x) of the Act and allowable as deduction u/s.36(1)(va) of the Act, if remitted within the due date prescribed under the ESI Act, and recorded a perverse finding - HELD THAT:- Issue decided in favour of assessee as relying on M/S ESSAE TERAOKA PVT LTD [2014 (3) TMI 386 - KARNATAKA HIGH COURT].
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2014 (7) TMI 1347 - BOMBAY HIGH COURT
Winding up of respondent company - company unable to pay its debts - HELD THAT:- It is prima facie established that an amount of ₹ 42,80,385/- along with interest as claimed is due and payable by the Company to the Petitioner. The Company has failed to respond to the statutory notice or make any payments to the Petitioner as called upon therein. A copy of the Petition is forwarded to the Company at its Registered Office on two occasions. However, the same has been returned with the remarks “unclaimed/left” respectively. Since the Company Petition has been served by the Petitioner at the registered address of the Company as shown in the records of the Registrar of Companies (ROC), the Petition is deemed to be served despite being returned with the remarks “unclaimed/left”.
The Company Petition is admitted and made returnable on 14th August, 2014.
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2014 (7) TMI 1346 - KARNATAKA HIGH COURT
Validity of reassessment order passed by the AA under Section 39(1) of KVAT Act - barred by time limitation or not - Validity of cross appeals of the State.
Whether, the FAA is correct in holding that the reassessment of the AA is not barred by time limitation as per Section 40 of the Act? - HELD THAT:- The issue is answered in the affirmative. The reading of the new substituted Section 40 clearly proves that the reassessment order dated 25th September, 2010 of the AA is not barred by time-limit.
Even otherwise, it is to be noted that the AA has passed order considering the entire turnover for the year 2005-2006 as the turnover for the month of March 2006 and reassessment is done for the tax period of March 2006 alone. Considering this fact and without giving any finding whether it is correct or not, as per Section 40 of the Act as it stood then also, the reassessment order is not barred by time-limit as prescribed therein - the FAA is correct in resolving the first issue against the appellant and thereby the first point is answered in the affirmative.
Whether, the cross appeals of the State are justified in view of the detailed findings of the FAA on each of the issues raised in the appeal which is being contested in these cross appeals? - HELD THAT:- The issue is answered partly in the affirmative. The tax period is defined under Section 2(33) of the Act and Rule 37 prescribes each calendar month as the tax period other than in the case of dealers who have opted for composition. In the case of the appellant, the tax period is a calendar month whereas, the AA has concluded reassessment order violating Rule 37 of the KVAT Rules, 2005 by determining the total turnover and the taxable turnover under KVAT Act and CST Act for the month of March 2006 only.
The FAA is correct in holding that the AA has erred in clubbing the turnovers and passing the order for the month of March 2006 alone. The FAA should have stopped at this stage only without going into the merits of the case as the reassessment order of the AA is improper and not sustainable as the same has been done in violation of statutory provisions - the reassessment order need to be set aside and the case has to be remanded back to the AA with the direction that the reassessment orders are to be passed tax period wise separately under the KVAT Act and so also under the CST Act. Consequently, the impugned appellate order is also liable to be set aside. Therefore, the second point is answered partly in the affirmative.
What order regarding the appeals and the cross appeals? - HELD THAT:- The matter need to be remitted back to the AA to pass orders afresh keeping in view of the time limitation and computation of time limitation as envisaged under Section 40 of the Act.
Appeal disposed off.
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2014 (7) TMI 1345 - SUPREME COURT
Offences punishable Under Section 498A of the Indian Penal Code and Section 4 of the Dowry Prohibition Act, 1961 - Compounding of offences - HELD THAT:- Section 498-A of the Indian Penal Code is non-compoundable. Section 4 of the Dowry Act is also non-compoundable. It is not necessary to state that non-compoundable offences cannot be compounded by a Court. While considering the request for compounding of offences the Court has to strictly follow the mandate of Section 320 of the Code. It is, therefore, not possible to permit compounding of offences Under Section 498-A of the Indian Penal Code and Section 4 of the Dowry Act. However, if there is a genuine compromise between husband and wife, criminal complaints arising out of matrimonial discord can be quashed, even if the offences alleged therein are non-compoundable, because such offences are personal in nature and do not have repercussions on the society unlike heinous offences like murder, rape etc.
In this case, the Appellant is convicted Under Section 498-A of the Indian Penal Code and sentenced to undergo six months imprisonment. He is convicted Under Section 4 of the Dowry Act and sentenced to undergo six months imprisonment. Substantive sentences are to run concurrently. Even though the Appellant and Respondent No. 2-wife have arrived at a compromise, the order of conviction cannot be quashed on that ground because the offences involved are non-compoundable. However, in such a situation if the court feels that the parties have a real desire to bury the hatchet in the interest of peace, it can reduce the sentence of the accused to the sentence already undergone - sentence of the Appellant can be reduced to sentence already undergone by him.
Whether a case for reduction of sentence is made out particularly when the Appellant has undergone only seven days sentence out of six months sentence imposed on him? - HELD THAT:- The Appellant has offered to pay a sum of ₹ 2,50,000/- to Respondent No. 2-wife as compensation. A demand draft drawn in the name of Respondent No. 2 is brought to the Court. As directed by us even litigation costs of ₹ 25,000/- has been deposited by the Appellant in the Court. Respondent No. 2-wife has appeared in this Court on more than one occasion and requested this Court to take compromise into consideration and pass appropriate orders - the trial court had acquitted the Appellant. Though the Sessions Court reversed the order and convicted the Appellant for two years, the High Court reduced the sentence to six months. The Appellant and Respondent No. 2 were married in 2007. About seven years have gone by. Considering all these circumstances, in the interest of peace and amity, the Appellant's sentence must be reduced to sentence already undergone by him.
The conviction of the Appellant Under Section 498-A of the Indian Penal Code and Under Section 4 of the Dowry Act is maintained but the sentence awarded to the Appellant is reduced to sentence already undergone by him, subject to the condition that the Appellant pays a sum of ₹ 2,50,000/- to Respondent No. 2-wife as compensation - Appeal allowed in part.
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2014 (7) TMI 1344 - BOMBAY HIGH COURT
Taxability of non occupancy charges - contribution to common amenity fund/repairs and welfare fund being the first contribution made by the existing/new member - Principle of mutuality - HELD THAT:- Appeals do not raise any substantial question of law. The findings rendered by the Tribunal are in consonance with the functioning and administration of a cooperative housing society that has been recognized by a Division Bench of this Court and the decision to that effect in Mittal Court Premises Cooperative Housing Society Ltd. V/s. Income Tax Officer [2009 (7) TMI 689 - BOMBAY HIGH COURT] concludes the issue. In the light of this Division Bench order and which has been followed in the cases of Jai Hind Cooperative Housing Society Ltd., Suprabhat Cooperative Housing Society Ltd. that we are of the opinion that the appeals deserves to be dismissed. They are accordingly dismissed
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2014 (7) TMI 1343 - ANDHRA PRADESH HIGH COURT
Bogus LTCG - Addition u/s 68 - exemption u/s 10(38) denied - denial of LTCG computed on sale of shares, treating the same as penny stocks - HELD THAT:- Share transactions of the appellant are genuine.Appeal dismissed.
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2014 (7) TMI 1342 - GUJARAT HIGH COURT
Dishonor of Cheque - rebuttal of presumption u/s 139 of NI Act - whether complainant/respondent No. 2 can be said to be holder of a cheque that is received by him in discharge of any debt or other liability as envisaged under Section 139 of the Negotiable Instruments Act? - HELD THAT:- It is not possible to agree with the submission that presumption under Sec. 139 of the Negotiable Instruments Act, does arise in the case on hand or not, cannot be considered by the Court while exercising of powers under Sec. 482 of Cr.P.C. No absolute rule can be laid down. It depends upon the facts and circumstances of the case. The present case is a illustration of need for interference by this Court and quash the proceedings in exercise the powers under Sec. 482 of Cr.P.C. - it is not possible to say that cheques in the present case is issued in discharge of any liability or debt.
Once it is conceded that facts and circumstance of the case dominates and play decisive role, then it would not be difficult to accept the myth of might of presumption under Sec. 139 of the Act. At least in two ways, presumption becomes vulnerable to an attack by other side. One, fact may makes way for the accused and special facts or peculiar fact of the case may hold back the operation of presumption or in peculiar facts of the case, the Court may look into the material brought on record by the accused in support of his say that cheque is not issued in discharge of any debt or liability. In order to prevent injustice, the Court may look into such material - submission about rigours and all pervasive effect of presumption read with limitation of Court under Sec. 482 of Cr.P.C. is not possible to accept in the circumstances of the case.
Petition allowed.
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2014 (7) TMI 1341 - KARNATAKA HIGH COURT
Dishonor of Cheque - vicarious liability - Section 138 read with Section 141 of the Negotiable Instruments Act - HELD THAT:- In the instant case, there is a clear attempt on the part of the petitioners herein to escape the clutches of law. It appears, in the proceedings before Madras High Court, the same stand was taken as in the present case. The petitioners pleaded resignation from the post of Director without producing the relevant documents to support the same - in the instant case, when this Court went beyond the submission regarding representation that they have tendered their resignation through their venture capital company, it is clearly seen that there is nothing on record to show that their resignation being tendered and accepted. In a public limited company, whenever a person either appointed as a Director or subsequently tender his resignation, the same would be informed to ROC by filing prescribed form, which would indicate the date on which such appointment is made and the date on which resignation is tendered.
In the instant case, no such document is produced with regard to tendering of resignation prior to 30.07.2009. On the contrary a letter is sought to be produced to demonstrate that the resignation was much earlier to the date of dishonour of cheques. It is seen that an attempt is being made by the petitioners, their employers, namely M/s. ICICI Venture Funds Management Company Limited, in trying to rescue these two petitioners from facing the criminal trial. The documents which are produced does not either support the stand that they are not involved in day today business of the first accused and that their resignation was much prior to the cheques were dishonoured.
This Court find it difficult to accept that the complaint as against them is required to be quashed. In any event, this Court would observe that the petitioners have right to produce all the documents in the trial to be conducted by the learned Magistrate to demonstrate that they were not incharge of the day today affairs of the business and also demonstrate with appropriate documents that as on the date of the dishonour of cheques, they were not on the Board of the Company - Petition dismissed.
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2014 (7) TMI 1340 - SC ORDER
Penalty on Customs House Agent - Fraud - penalties under Section 112(a) and/or 112(b) - It was held by High Court that If the importers had misused the facility by obtaining a duplicate license by misrepresentation and fraud, so also, manipulation of documents and with a view to avoid customs duty, then, it cannot be said that the Customs House Agent and its Director were totally innocent or unaware of these acts - HELD THAT:- Special leave petitions are dismissed.
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2014 (7) TMI 1339 - ITAT DELHI
Exemption u/s 11 denied - AO felt that the assessee was engaged in the business of running cafeteria and coffee shop with profit motive - HELD THAT:- The assessee is registered as a charitable institution u/s 12A with the Commissioner of Income tax.
It is not in dispute that the aims and objects of the society are objects of general public utility inasmuch as they attempt to promote better understanding amongst various sections of the society. Establishing communal harmony and better understanding between various sections of the society are purely in the nature of objects of general public utility.
The assessee had generated profit from cafeteria and coffee shop but the fact of the matter is that these facilities were created for the members of the assessee-society. The profit so generated from cafeteria and coffee shop was utilized for achieving the aims and objects of the society. The society had no overall profit in the year under appeal. Profits so generated from cafeteria and coffee shop were ultimately used for achieving aims and objects of the institution. Therefore, such profits generated from a few activities of the institution cannot be used to convert a purely charitable institution into non-charitable institution. The view that we are taking in the matter is supported by the order passed by a Coordinate Bench of this tribunal referred to by the ld. AR for the assessee at the time of hearing. Appeal filed by the Revenue is dismissed.
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2014 (7) TMI 1338 - ITAT JAIPUR
Disallowance of prior period expenses - difference between the Members - Third member nominated u/s. 255(4) - HELD THAT:- The deductibility of expenses needs to be tested on the touchstone of the principle laid down by the Tribunal in its order for the A.Y. 1995-96 in respect of each item of expenditure claimed under the head 'prior period expenses'. As the Assessing Officer has failed to examine the details of expenses, in my considered opinion, the view taken by the learned J.M. needs to be upheld with a direction to the AO to consider the deductibility of expenses as per the view taken by the Tribunal for A.Y. 1995-96. Therefore, answer the question in negative by holding that the learned CIT(A) was not justified in sustaining the disallowance of prior period expenses. As such agree with the view taken by the learned J.M. in restoring the matter to the file of the Assessing Officer instead of the ld. AM upholding the disallowance.
Disallowance of extra ordinary items - HELD THAT:- As both the learned Members have agreed on the point than there can be no bar on allowing deduction of expenses in respect of a closed business against the income of other businesses, when it is a case of composite business Both the learned Members have also agreed that it was a case of composite business and hence the deductibility of expenses could not be marred by such considerations. It is observed that the Assessing Officer has based the disallowance of expenditure simply on the ground that it was in respect of written off amounts of a closed business and hence not deductible. In view of the above decision of the tribunal, the foundation for the AO's view, does not stand. The AO did not examine the details of such expenses as to whether these were capital or revenue.
Since the stand taken by the Assessing Officer has been rejected by both the learned Members, in my considered opinion, the proper course should be to restore the matter to the file of the Assessing Officer for considering the deductibility or otherwise of such amounts as per law. It is simple and plain that the Appellate Authorities are required to adjudicate upon the orders of the authorities having original jurisdiction which appreciate the material and then decide about the point. Adverting to the facts of the instant case, I find that since the Assessing Officer did not have any occasion to apply his mind from the perspective as discussed above, it would be more appropriate to send the matter back to the file of the Assessing Officer for considering deductibility of expenses or otherwise as per law, instead of taking up the details of such expenses and rendering decision at the Tribunal's end. therefore, agree with the view taken by the learned J.M. on this point and hold that the learned CIT(A) was not justified in confirming the disallowance on account of disallowance of extraordinary items.
Disallowance on account of mine development expenses - HELD THAT:- On perusal of the Tribunal order for A.Y. 1996-97, it is seen that the Tribunal did not delete the disallowance as made by the Assessing Officer but restored the matter to the file of the Assessing Officer for taking a fresh decision in conformity with the directions given by it. As the learned A.M. has also restored the matter to the file of learned CIT(A)/Assessing Officer, I find myself in agreement with the view taken by the learned A.M. in restoring the matter to the authorities below. The obvious reason is that for the immediately preceding two years, the Tribunal has restored the matter and the ld. AM has followed such view. There can be no question of deviating from the opinion expressed by the Tribunal on this issue in earlier years. As the orders of the tribunal for earlier two years have not been modified by the Hon'ble High Court, would prefer to go with the wisdom of the Division bench for the earlier two years.
In the final analysis, we agree with the view taken by the learned A.M. and hold that the learned CIT(A) was not justified in deleting the disallowance on account of mine development expenses.
Addition of welfare expenses u/s. 40A(9) - HELD THAT:- Tribunal for the immediately two preceding assessment years has restored the matter with the necessary direction. It is also seen that such disallowance came up for consideration by the Hon'ble High Court in assessee's own case for A.Y. 1994-95. The Hon'ble High Court also remitted the matter for fresh consideration. In view of the fact, that the Hon'ble High Court for the A.Y. 1994-95 and the Tribunal for the A.Ys. 1996-97 and 1997-98 have sent the matter back the learned A.M. was justified in following the precedents by remitting the matter for fresh decision to be decided in conformity with the view expressed by the Tribunal for immediately two preceding assessment years.
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2014 (7) TMI 1337 - COMPANY LAW BOARD, NEW DELHI
Oppression and Mismanagement - Siphoning of funds - Ownership of 3000 shares with the shareholding in his own name - attachment of 3260 shares by the income tax department - The Petitioner was allotted 10 shares of the Respondent Company in the name of Lt. Col. Sawai Bhawani Singh as per Minutes dated 15.7.1972 and further allotment of 3250 shares in his name as per Minutes dated 17.3.1976. However, 3000 shares were allotted vide the said Minutes dated 17.3.1976 in the name of His Highness Maharaja Sawai Bhawani Singh of Jaipur.
HELD THAT:- The contention of the Petitioner Advocate that the Petitioner held 6260 shares under two different Folios, out of the issued 33260 equity shares is correct to the extent that 3260 shares were owned by the Petitioner in his individual capacity and the balance 3000 shares were held as Karta of HUF. It is also factually true that there are allegations in the Company Petition that the Respondent Company has committed serious acts of Oppression and Mismanagement including dilution of shareholding of the Petitioner and siphoning of funds of the company. But, the Respondents/Applicants Advocate has challenged the maintainability of the aforesaid Company Petition on the ground of law u/s. 399 of the Companies Act, 1956 on the argument that the Petitioner does not fulfill the mandatory provisions of Section 399 of the Companies Act, 1956 to entitle the Petitioner to file the Petition - in terms of Section 159 of the Companies Act, 1956, the Annual Returns are prima facie evidence of any matter stated therein and the Annual Returns clearly show that the Petitioner is the owner/member holding 6260 fully paid shares of Respondent Company under two different folios. In addition, it has also been highlighted that the shares cannot be held in the name of HUF which is not a legal entity.
After perusal of the contentions of the Petitioner Advocate and Respondents Advocate, it is observed that while looking into the maintainability of the Petition, only averments made in the Petition and documents filed by the Petitioners are to be looked into and the same is assumed to be correct and no defense or new facts not alleged in the Petition and the documents could be looked into. In fact, it was in this spirit only when the matter was initially heard on 25.9.2008 and on the same day, status quo as of date in regard to shareholding was allowed against the company. However, at the same time, it does not debar the Respondents to challenge the maintainability by way of moving separate Company Application and hence, the instant Company Application being No. 49/2009 has been filed challenging the maintainability on the ground of suppression of facts and non-fulfillment of the mandatory provisions of Section 399 of the Companies Act, 1956. Therefore, the present Company Application needs to be decided on merits.
3000 shares in the name of His Highness Maharaja Bhawani Singh as Karta of HUF are in the custody of the Receiver appointed by the Supreme Court of India and the Receiver appointed is in the custody of the shares as officer of the Court to determine the entitlement thereto. Under these circumstances, the Petitioner cannot claim that he is entitled to all the 3000 shares of the Respondent Company till the Partition Suit is so decided by the Competent Court in his favour. At the same time, there is no consent/no objection from the Co-parceners of HUF to initiate the present legal proceedings u/s. 397 and 398 of the Companies Act, 1956. At the most, the Petitioner may be entitled to his share in these 3000 shares presently in the name of His Highness Maharaja Bhawani Singh as Karta of HUF only when the Partition Suit is finally disposed of in his favour and based on the said Order, the shares are recorded in the Register of Members in his individual capacity.
In the instant case, the 3260 shares have been attached by the Income Tax Department u/s. 226(3) of the Income Tax Act, and the said shares can be sold in the process of recovery under provisions of Sections 226(ix) and (x) and Sec. 281 of the Income Tax Act, 1961. Therefore, these 3260 shares cannot be considered for the fulfillment of the mandatory requirement u/s. 399 of the Companies Act, 1956. Consequently, the Petitioner has not fulfilled the requirements of Section 399 of the Companies Act, 1956 due to the Partition Suit in respect of 3000 shares held in the name of His Highness Sawai Bhawani Singh and 3260 shares held by the Petitioner in his own name but the said shares have been attached by the Income Tax Department. Thus, due to non compliance of the statutory requirements of Section 399 of the Companies Act, 1956, the Company Petition is not maintainable.
Due to non compliance of the statutory requirements of Section 399 of the Companies Act, 1956, the Company Petition is not maintainable. As such, the present Company Application is hereby allowed and consequently, the Company Petition is dismissed.
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2014 (7) TMI 1336 - SUPREME COURT
Interpretation of statute - Race Club - would fall within the scope of word 'shop', for the purposes of notification issued under Sub-section (5) of Section 1 of the Employees' State Insurance Act, 1948 or not? - whether the judgment in the EMPLOYEES STATE INSURANCE CORPORATION VERSUS HYDERABAD RACE CLUB [2004 (7) TMI 654 - SUPREME COURT] was correct in holding that a 'race-club' is an "establishment" for the purposes of the ESI Act? - HELD THAT:- The matter is referred to three-Judge Bench of this Court as two-Judge Bench of this Court is of the view that the decision of two-Judge Bench of this Court in the case of Employees State Insurance Corporation v. Hyderabad Race Club may require reconsideration. By the aforesaid judgment, it was observed by this Court that 'race-club' is an 'establishment' within the meaning of the said expression as used Under Section 1(5) of the ESI Act.
The ESI Act is a welfare legislation enacted by the Central Government as a consequence of the urgent need for a scheme of health insurance for workers - A 'shop' is a place of business or an establishment where goods are sold for retail. However, it may be noted that the definitions as given in the dictionaries are very old and may not reflect, with complete accuracy, what a shop may be referred as in the present day.
The word 'shop' is not defined either in the ESI Act or in the notification. The ESI Act being a Social Welfare Legislation intended to benefit as far as possible workers belonging to all categories, one has to be liberal in interpreting the words in such a welfare legislation. The definition of a shop which meant a house or building where goods are sold or purchased has now undergone a great change. The word 'shop' occurring in the notification is used in the larger sense than its ordinary meaning. What is now required is a systematic economic or commercial activity and that is sufficient to bring that place within the sphere of a 'shop' - In view of the fact that an 'establishment' has been found to be a place of business and further that a 'shop' is a business establishment, it can be said that a 'shop' is indeed covered under, and may be called a sub-set of, the term 'establishment'.
Whether the activities of a race-club are 'entertainment'? - HELD THAT:- The 'entertainment' is an activity that provides with amusement or gratification. Further, it would include public performances, including games and sports - the said race-clubs also provide the viewers with the facilities to indulge in betting activities, which may even be said to be an integral part of the sport. The race-clubs further even charge a fixed commission on the said betting. "Commission" in common parlance has duly been understood to mean a fixed charge payable to an agent or a broker for providing services for facilitating a transaction.
Whether the Appellant-Turf Clubs fall under the definition of the term 'shop' for the purposes of the ESI Act? - HELD THAT:- The Appellant-Turf Clubs conduct the activity of horse racing, which is an entertainment. The Appellant-Turf Clubs provide various services to the viewers, ranging from providing facilities to enjoy viewer ship of the said entertainment, to the facilitating of betting activities, and that too for a consideration- either in the form of admission fee or as commission. An argument may be advanced that not all persons who come to the race would avail the services as provided by the Appellant-Turf Clubs, however the same would fail as even in the case of a shop in the traditional meaning, that is to say, one where tangible goods are put for sale, a customer may or may not purchase the said goods. What is relevant is that the establishment must only offer the clients or customers with goods or services. In this light, it is found that a race-club, of the nature of the Appellants, would fall under the scope of the term 'shop' and thereby the provisions of the ESI Act would extend upon them by virtue of the respective impugned notifications issued under Sub-section (5) of Section 1 of the ESI Act.
The Appellant-herein would fall within the meaning of the word 'shop' as mentioned in the notification issued under the ESI Act. Therefore, the provisions of the ESI Act would extend to the Appellant also - Appeal disposed off.
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2014 (7) TMI 1335 - ITAT HYDERABAD
Rectification of mistake u/s 254 - applicability of provisions of s. 50C in determining the deemed full value of consideration received - AO was directed to recompute the capital gains applying the provisions of s. 50C and the assessee is objecting to the same - HELD THAT:- We wish to point out that it is well settled that the Tribunal is the final fact finding body. The findings of the Tribunal are not liable to be interfered with, unless the Tribunal has taken into consideration any irrelevant material or has failed to take into consideration any relevant material or the conclusion arrived at by the Tribunal is perverse in the sense that no reasonable person, on the basis of the facts before the Tribunal, could have come to the conclusion to which it has come. In the present case, we have to point out that in the absence of both the lower authorities not considering the provisions of s. 50C, Tribunal in its inherent powers was right in setting aside the issue to the file of the Assessing Officer to follow the procedure prescribed u/s. 50C of the Act.
The legal principal that while giving effect to the order of the Tribunal assessed income cannot be enhanced is implicit in each order of the Tribunal. However, since the same has not been explicitly stated in the order of the Tribunal dated 4.4.2014 at para 13, now we amend para 13 of the Tribunal order dated 4.4.2014 and the following sentence is added to para 13 which reads as under:
"Further, the Assessing Officer while giving effect to the order of the Tribunal shall compute the capital gains by applying the provisions of s. 50C and ensure that the finally decided capital gain does not exceed the capital gains originally assessed in the assessment order." MAs are partly allowed.
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2014 (7) TMI 1334 - SC ORDER
Product Development Cost - Capital or Revenue - The development was on account of scientific research - evidence on record shows most of the money is spent towards cost of the employees, who had developed the product, multi channel customer relationship management solution, which provides sales, marketing, services, human resources and finance through the medium of e-mail, chat, wireless, fax, phone, etc. to the end users - The expenditure in respect of the scientific research, even if it is capital in nature as it was incurred in relation to the business carried on by the assessee under Section 35(1)(iv) - HELD THAT:- SLP Dismissed.
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2014 (7) TMI 1333 - ITAT JODHPUR
Estimation of income - Rejection of books of accounts - AO directing to apply net profit rate of 8.48% before allowing claim for depreciation, interest & remuneration to partners and interest paid to third parties as against net profit rate applied by the A.O. at 10.5% subject to depreciation and interest and remuneration paid to the partners when provisions of sec. 145 - HELD THAT:- Assessee is a partnership firm deriving its income from execution of contract work undertaken from Government department. The books of account were rejected u/s 145(3) and net profit rate was applied. The Tribunal has also confirmed the application of provisions of section 145(3) of the Act but the assessee had claimed interest paid to third parties while estimating profit under this section.
This issue was stated to be covered by the decision of this very Bench rendered in the case of M/s Ganesh Garhia Construction Co. Vs. ACIT [2014 (5) TMI 1202 - ITAT JODHPUR] - The issue of payment of interest to third parties being clearly covered by the Tribunal order and their consistent view, we modify the order accordingly by making observation that after invoking provisions of section 145(3) of the Act in this case, interest paid to third parties is also allowable.
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2014 (7) TMI 1332 - SUPREME COURT
Time Limitation - suit for declaration that the three settlement deeds, all dated 27.3.1978 and registered as Document Nos. 248, 249 and 443 of 1978 with the Sub Registrar's Office, Royapuram, is barred by limitation of time - whether an issue of limitation could at all have been taken up as a preliminary issue?
HELD THAT:- In Ramrameshwari Devi and Ors. v. Nirmala Devi and Ors. [2011 (7) TMI 1305 - SUPREME COURT], while dealing with Order 14, Rule 2, observed that Sub-rule (2) of Order 14 refers to the discretion given to the court where the court may try an issue relating to the jurisdiction of the court or the bar to the suit created by any law for the time being in force as a preliminary issue - In Ramesh D. Desai and Ors. v. Bipin Vadilal Mehta and Ors. [2006 (7) TMI 325 - SUPREME COURT], while dealing with the issue of limitation, the Court opined that a plea of limitation cannot be decided as an abstract principle of law divorced from facts as in every case the starting point of limitation has to be ascertained which is entirely a question of fact. The Court further proceeded to state that a plea of limitation is a mixed question of fact and law. On a plain consideration of the language employed in Sub-rule (2) of Order 14 it can be stated with certitude that when an issue requires an inquiry into facts it cannot be tried as a preliminary issue.
In the case at hand, we find that unless there is determination of the fact which would not protect the Plaintiff Under Section 10 of the Limitation Act the suit cannot be dismissed on the ground of limitation. It is not a case which will come within the ambit and sweep of Order 14, Rule 2 which would enable the court to frame a preliminary issue to adjudicate thereof. The learned single Judge, as it appears, has remained totally oblivious of the said facet and adjudicated the issue as if it falls under Order 14, Rule 2. We repeat that on the scheme of Section 10 of the Limitation Act we find certain facts are to be established to throw the lis from the sphere of the said provision so that it would come within the concept of limitation.
The issue of consideration has not yet emerged. This settlement made by the father was whether for consideration or not has to be gone into and similarly whether the property belongs to the trust as trust is understood within the meaning of Section 10 of the Limitation Act has also to be gone into. Ergo, there can be no shadow of doubt that the issue No. 1 that was framed by the learned single Judge was an issue that pertained to fact and law and hence, could not have been adjudicated as a preliminary issue. Therefore, the impugned order is wholly unsustainable.
Appeal allowed - decided in favor of appellant.
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2014 (7) TMI 1331 - DELHI HIGH COURT
Fee for technical services under Section 9(i)(vii) - Whether the ITAT was right in holding that the commission paid to M/s. Agenta World Trading and Consulting Establishment for procuring export orders, is not fee for technical services under Section 9(i)(vii) of the Income Tax Act, 1961? - HELD THAT:- With the consent of the learned counsel for the parties, arguments have been heard and judgment has been reserved.
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2014 (7) TMI 1330 - SUPREME COURT
Dishonor of Cheque - insufficiency of funds - legally enforceable debt or not - Section 25(3) of the Indian Contract Act, 1872 - HELD THAT:- The High Court erred in quashing the complaint on the ground that the debt or liability was barred by limitation and, therefore, there was no legally enforceable debt or liability against the accused. The case before the High Court was not of such a nature which could have persuaded the High Court to draw such a definite conclusion at this stage. Whether the debt was time barred or not can be decided only after the evidence is adduced, it being a mixed question of law and fact.
The High Court could not have quashed the proceedings on the ground that at the time of issuance of cheque, the debt had become time barred and therefore, the complaint was not maintainable. The High Court, therefore, fell into a grave error in quashing the proceedings.
Appeal allowed.
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2014 (7) TMI 1329 - ITAT CHENNAI
Penalty u/s 271D - loan in cash and violation is intentional and purposeful - contravention of the provisions of section 269SS - HELD THAT:- The genuineness of the loan creditors and the loan transactions were never doubted by the Department. Moreover, the Department has not taxed these amounts in the hand of the lender i.e. Shri A. Kannan. He also observed that the assessee satisfies the existence of the reasonable cause for contravention of the provisions of section 269SS. When the assessee had shown reasonable cause and the reasonable cause is essentially a finding of fact, no question of law much less substantial question of law would arise. The alleged contravention did not result in any unaccounted transaction and that said transactions were made only to meet the sudden demand in the business activities.
As decided in own case [2013 (10) TMI 1327 - ITAT CHENNAI] the factum of loan and repayments are beyond doubt. The genuineness of the transactions is also not in doubt. It is also established by the assessees that there existed similar emergency for repaying the loan in cash, as the emergency which prompted them to take loans in cash. Therefore, this is a case where there is a reasonable cause for the assessees to repay the loans in cash. In such circumstances, it is to be seen that the violation of Section 269T is technical. - Decided in favour of assessee.
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