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2011 (9) TMI 1162
Addition u/s 68 - peak credit addition - Held that:- AO has allowed the peak credit in respect of a particular lender. The peak credit of each lender has been considered for arriving at the peak addition to be made in each year. It is not the case of the assessee that he himself is a lender. In case the assessee has given an admission that the money belonged to him then credits of the lenders should have been merged. The assessee in spite of filing the letter of disclosing the additional income, has not honoured such disclosure. The names of lenders are available in the diaries and the assessee has contended that he is getting 0.10% brokerage. AO was justified in considering the peak in respect of each lender and computing the undisclosed income for three years in view of Section 68 . We therefore, uphold the orders of the AO and the orders of the ld. CIT(A) are vacated.
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2011 (9) TMI 1161
Issues Involved:1. Whether the procedure adopted by the learned trial judge is in due process of law for passing an order of eviction or not? 2. Whether the decision of the learned trial judge that letting out of the said properties of the company (in liquidation) is void under the provisions of the Companies Act, 1956, is correct or not? Summary:Issue 1: Due Process of Law for Eviction Order19. The first point regarding the procedure was not agitated before the learned trial judge and is raised for the first time in this appeal. The letter written by the official liquidator to the Assistant Registrar of Companies was accepted by the learned trial judge as an application for direction. The appellant participated in the proceedings by filing an affidavit defending its claim of tenancy. Under section 446 of the Companies Act, once the order of winding up is passed, the company court has jurisdiction to decide all disputes. This is evident from sub-section (2) of section 446, which states that the court shall have jurisdiction to entertain or dispose of any suit or proceeding by or against the company, any claim made by or against the company, any application made u/s 391, and any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in the course of the winding up of the company. 20. The claim of the company made by the official liquidator and the defense of the appellant are adjudicatable under clause (b) of sub-section (2) of section 446. No regular suit is required to be filed, and the learned trial judge can pass an order on the application in any form. This procedure is well established by judicial pronouncements, as seen in the case of Vidhyadhar Upadhyay v. Sree Sree Madan Gopal Jew [1990] 67 Comp Cas 394 (Cal). 23. Section 446 is a special provision with a summary procedure, enabling the company court to take all legal measures to avoid multiplicity of judicial proceedings and conflicting decisions. All that is necessary is to give an opportunity of being heard to the third party before any judicial step is taken by the court. 24. Therefore, the contention that the procedure adopted by the learned trial judge is not in due process of law is not accepted. Issue 2: Validity of Letting Out Properties25. The findings of the learned trial judge that the creation of two leases by the company are void are legally flawless. The first lease was executed on November 24, 1998, when the prohibitory order of the Reserve Bank of India (RBI) was not in force. However, in July 1997, the company gave an undertaking to the RBI not to alienate its assets without RBI's approval. This undertaking is considered a solemn declaration and its breach amounts to betraying the confidence of the statutory authority. The company was estopped from committing breach of such undertaking. 26. The renewal of the lease on November 23, 2001, after the presentation of the winding up petition, is void u/s 536(2) of the Companies Act, 1956, which states that any disposition of the property of the company made after the commencement of the winding up shall be void unless the court orders otherwise. 27. The contention that the company became a monthly tenant under the Andhra Pradesh Rent Act, 1960, is not accepted. The Andhra Pradesh Rent Act, 1960, has no application in this case as per section 32(c) of the said Act. 28. The appeal is dismissed with no order as to costs. S.K. Chakraborty, J. 29. I agree.
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2011 (9) TMI 1160
Issues involved: Interpretation of Rule 26 of the Uttar Pradesh Ashaskiya Arabi Tatha Farsi Madarson Ki Manyata Niyamawali for deemed confirmation of service as an Assistant Teacher.
Facts: The Appellant was appointed as an Assistant Teacher on probation, with extensions granted based on performance evaluations. Despite opportunities to improve, the Appellant's service was terminated by the Respondent.
Contentions: Appellant argued for deemed confirmation post-probation based on previous court decisions. Respondents cited correspondences and legal precedents to support probation continuation until confirmation order.
Analysis: Rule 26 specified probation terms and conditions, allowing for termination before completion. Court found the decision in Akbar Ali Khan case more relevant, emphasizing the need for a specific confirmation order post-probation.
Conclusion: The court dismissed the appeals, stating that without a specific order confirming satisfactory service, automatic regularization post-probation was not applicable. Each party was directed to bear their own costs.
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2011 (9) TMI 1159
Issues Involved:
1. Appeal against the dismissal of appellant's application to be added as a party petitioner or respondent in Company Petition No. 252 of 1985.
2. Determination of whether the refusal to add the appellant as a party is just and proper.
3. Appealability of the trial court's order under Clause 15 of the Letters Patent.
Detailed Analysis:
1. Appeal Against Dismissal of Appellant's Application:
The appellant sought to be added as a party petitioner or respondent in Company Petition No. 252 of 1985. The original petition was filed by Amita Sen under sections 397 and 398 of the Companies Act, 1956, and after her death, her sons were substituted as petitioners. The appellant claimed to have acquired shares through inheritance and a deed of gift, entitling them to 33% of the company's shares. However, the company did not rectify the share register to reflect this. The appellant's application for addition and transposition of the petitioner was dismissed by the trial judge, who deemed the application premature and granted leave for future action post the decision of the Company Law Board.
2. Justification of Refusal to Add the Appellant:
The trial judge's refusal was based on the appellant's pending application before the Company Law Board for rectification of the share register. The judge observed that the appellant's right to bring a separate action was not destroyed. The appellant's argument that their predecessor held 2440 shares and that their shareholding was reduced from 11.91% to 0.17% despite a status quo order was noted. The appellant contended that the refusal to add them as a party would cause prejudice and render them remediless. However, the court found that the appellant's right to come into the proceedings or gain carriage of proceedings was not an enforceable right, especially since the appellant had already filed a comprehensive civil suit seeking similar reliefs.
3. Appealability of the Trial Court's Order:
The court first addressed whether the trial judge's order was appealable under Clause 15 of the Letters Patent. The Supreme Court's decision in Shah Babulal Khimji v. Jayaben D. Kania & Anr. was cited, which clarified that not every interlocutory order is a judgment; only those affecting vital or valuable rights and causing serious injustice are considered judgments. The court noted that the trial judge's order did not determine any rights or liabilities and kept the issues open for future action. The appellant's right to join the proceedings was contingent on the outcome of the pending application before the Company Law Board. The court concluded that the trial judge's order was not a judgment within the meaning of Clause 15 of the Letters Patent and thus not appealable.
Conclusion:
The court dismissed the appeal, holding that the trial judge had justified reasons for not adding the appellant as a party. The appellant's right to bring a separate action was preserved, and the pending proceedings before the Company Law Board would determine the requisite extent of shareholding. The court directed the Company Law Board to expedite the disposal of the pending application within two months. The appellant was advised to bring appropriate action in accordance with the law if so desired.
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2011 (9) TMI 1158
Issues Involved:
1. Allegations of misuse of funds and defalcation by the managing partner.
2. Expulsion of petitioners from the partnership firm.
3. Invocation of the arbitration clause and appointment of an arbitrator.
4. Objections by respondents regarding the arbitration and the nature of the dispute.
Summary:
1. Allegations of Misuse of Funds and Defalcation by the Managing Partner:
The petitioners alleged that the first respondent, who was the managing partner, along with other respondents, misused the funds of the firm, Shivgiri Associates. This misuse was willfully suppressed from the petitioners, who later called for a meeting to verify the true accounts. The respondents reluctantly called for meetings but did not allow verification of records and allegedly compelled the petitioners to sign blank papers, threatening them with false cases if they did not cooperate.
2. Expulsion of Petitioners from the Partnership Firm:
The first petitioner issued a legal notice to the respondents to furnish accounts, and in response, he was informed of his expulsion from the firm as of 21-10-2009. The second petitioner also issued a similar notice and invoked the arbitration clause under the partnership deed, naming an arbitrator, which the respondents did not consent to.
3. Invocation of the Arbitration Clause and Appointment of an Arbitrator:
The petitioners invoked the arbitration clause, but the respondents suggested an alternative arbitrator. The present petition was filed seeking the appointment of an arbitrator. The respondents contended that the petitioners were relieved from the firm's affairs in 2009 and that there was no live dispute, arguing that the allegations required detailed evidence suitable for a formal suit.
4. Objections by Respondents Regarding the Arbitration and the Nature of the Dispute:
The respondents argued that the allegations of fraud and mismanagement required detailed evidence and should be resolved by a civil court. They relied on several decisions, including Union of India v. Onkar Nath Bhalla, Abdul Kadir Shamsuddin Bubere v. Madhav Prabhakar Oak, and N. Radhakrishnan v. Maestro Engineers, to support their contention that the matter should not be referred to arbitration due to the serious nature of the allegations.
Judgment:
The court found the objections by the respondents untenable. It noted that the partnership deed containing the arbitration clause was not denied, and the respondents were not averse to arbitration but sought an arbitrator named by them. The court held that mere allegations of fraud do not necessarily require the matter to be tried in open court unless they are of a serious nature. The court referred to the decision in Abdul Kadir Shamsuddin Bubere, which emphasized that not every allegation of dishonesty in accounts warrants a trial in open court.
The court concluded that the allegations in the present case were vague and related to the accounts of the firm, not involving complicated fact situations. Therefore, the matter was suitable for arbitration. The petition was allowed, and Shri Justice Chandrashekariah, Former Judge, High Court of Karnataka, was appointed as the sole arbitrator to adjudicate the dispute.
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2011 (9) TMI 1157
Crime committed for killing two children - Judgment of conviction u/s 302 IPC - penalty of death sentence, delivered - High Court noted is the brutal, diabolical and dastardly nature of assault by the Appellant on the two innocent children - trauma produced on the mother of children - breach of trust - revenge of the Appellant towards the children, as the father of the children did not extend financial help to him - issued notice on the limited question of quantum of sentence - evolution of sentencing structure and the concept of mitigating circumstances in India relating to death penalty - effective opportunity of hearing contemplated under Section 235(2) of Code of Criminal Procedure provided or not?
HELD THAT:- This Court held in Jagmohan Singh [1972 (10) TMI 137 - SUPREME COURT] that the test of reasonableness cannot be applied by this Court in the same manner as is done by the United States Supreme Court in view of the existence of 'due process clause' in the United States Constitution. The learned Judges quoting from the commentary by Ratanlal's, Law of Crimes, (Twenty-second edition), referred to certain mitigating and aggravating circumstances, but opined that the said list is not exhaustive.
However, the aforesaid position substantially changed with the introduction of a changed sentencing structure under the present Code of Criminal Procedure, 1973. If we compare the 1898 Code with 1973 Code, we would discern lot of changes between the two Codes in sentencing structure.
The most significant change brought about by the incorporation of the recommendation of the 41st Law Commission (supra), is the giving of an opportunity of hearing to the accused on the question of sentence. This is the incorporation of the great humanizing principle of natural justice and fairness in procedure in the realm of penology. The trial of an accused culminating in an order of conviction essentially relates to the offence and the accused under 1898 Code did not get any statutory opportunity to establish and prove in such trial the mitigating and other extenuating circumstances relating to himself, his family and other relevant factors which are germane to a fair sentencing policy.
This opportunity of hearing at the post conviction stage, gives the accused an opportunity to raise fundamental issues for adjudication and effective determination by Court of its sentencing discretion in a fair and reasonable manner.
The importance of Section 235(2) of 1973 Code has been explained by this Court in several decisions and its importance can hardly be overemphasized in a case where prosecution demands the imposition of death penalty and the court awards the same.
Therefore, it is clear from the finding of the High Court that there is no evidence to show that the accused is incapable of being reformed or rehabilitated in society and the High Court has considered the same as a neutral circumstance. In our view the High Court was clearly in error. The very fact that the accused can be rehabilitated in society and is capable of being reformed, since the State has not given any evidence to the contrary, is certainly a mitigating circumstance and which the High Court has failed to take into consideration.
The High Court has also failed to take into consideration that the Appellant is not a continuing threat to society in the absence of any evidence to the contrary. The High Court has only considered that the Appellant is a first time offender and he has a family to look after. We are, therefore, constrained to observe that the High Court's view of mitigating circumstance has been very truncated and narrow in so far as the Appellant is concerned.
This Court observed that this was a dastardly murder of two helpless persons for no fault on their part. But this Court commuted the death sentence to life imprisonment taking into consideration following factors, firstly that there was no pre-meditation in the act of the accused. This was at the spur of the moment as accused did not come armed with any weapon. Secondly it is unknown under what circumstances accused entered the house of deceased and what prompted him to assault the boy. Thirdly the cruel manner in which the murder was committed cannot be the guiding factor in favour of death sentence. Fourthly the accused himself has two minor children.
In Smt. Triveniben v. State of Gujarat [1989 (2) TMI 404 - SUPREME COURT], the Constitution Bench of this Court, following the Bachan Singh ratio, held "death sentence cannot be given if there is any mitigating circumstance in favour of the accused. All circumstances of the case should be aggravating"
The concept of 'rarest of rare' which has been evolved in Bachan Singh by this Court is also the internationally accepted standard in cases of death penalty. The ratio in Bachan Singh [1980 (5) TMI 112 - SUPREME COURT] has received approval by the international legal community and has been very favourably referred to by David Pannick in 'Judicial Review of the Death Penalty: Duckworth'
We hold that death sentence cannot be inflicted on the Appellant since the dictum of Constitution Bench in Bachan Singh [1980 (5) TMI 112 - SUPREME COURT] is that the legislative policy in Section 354(3) of 1973 Code is that for person convicted of murder, life imprisonment is the rule and death sentence, an exception, and the mitigating circumstances must be given due consideration. Bachan Singh (supra) further mandates that in considering the question of sentence the Court must show a real and abiding concern for the dignity of human life which must postulates resistance to taking life through law's instrumentality. Except in 'rarest of rare cases' and for 'special reasons' death sentence cannot be imposed as an alternative option to the imposition of life sentence.
We are of the view that in the facts of this case the death sentence imposed by the High Court cannot be sustained and the death sentence imposed upon the Appellant is substituted by the sentence of imprisonment for life.
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2011 (9) TMI 1156
Issues Involved:
1. Validity of the constitution of the Disciplinary Committee.
2. Allegation of institutional bias against the Disciplinary Committee members.
Detailed Analysis:
1. Validity of the Constitution of the Disciplinary Committee:
The petitioner challenged the constitution of the Disciplinary Committee on the grounds that it was not validly constituted as per Rule 1(q) of the BCCI rules, which mandates that the President must be a member of the Committee. The petitioner argued that since the President had recused himself, the Committee should either wait for a new President to be elected or be reconstituted with unbiased members acceptable to the petitioner.
The Court noted that Rule 1(q) states the Board shall appoint a Committee consisting of three persons, including the President. However, the rule does not explicitly prohibit substitution if the President recuses himself. The Court interpreted the word "shall" in the rule as "may," allowing for flexibility in situations where the President cannot serve. The Court emphasized that the doctrine of necessity justified the substitution of the President with another member, as the inquiry could not be delayed for a new President to be elected.
The Court upheld the validity of the Committee's constitution, stating that the rule is elastic enough to allow for such substitutions and that the petitioner cannot dictate the members of the Committee. The Court found no error in the Bombay High Court's judgment that accepted the substitution based on the doctrine of necessity.
2. Allegation of Institutional Bias:
The petitioner alleged institutional bias against the members of the Disciplinary Committee, arguing that they could not expect fair play from members who had already been part of the decision to initiate disciplinary action against him. The petitioner cited previous participation of the Committee members in meetings where decisions against him were made as a basis for his apprehension of bias.
The Court considered the principles of natural justice and the test of "real likelihood" or "real danger" of bias. The Court referred to the Constitution Bench judgment in M.P. Special Police Establishment vs. State of M.P., which established that mere apprehension of bias is not sufficient; there must be a real danger of bias. The Court also cited T.P. Daver vs. Lodge Victoria, which held that members of a society must abide by its rules and cannot demand an outside tribunal unless the inquiry discloses malafides or unfair treatment.
The Court found that the petitioner's allegations of bias were not substantiated by the material on record. The petitioner had previously stated that he had no personal allegations against two of the Committee members and only alleged institutional bias. The Court concluded that the petitioner's apprehension did not amount to a real danger of bias and that the Committee would afford him a fair hearing.
The Court dismissed the petitioner's claim of bias, stating that accepting such a view would lead to demands for interference in inquiries conducted by all other societies in similar situations, which is not permissible under the law.
Conclusion:
The Supreme Court upheld the validity of the Disciplinary Committee's constitution and rejected the allegations of institutional bias. The Court found no error in the Bombay High Court's judgments and dismissed all three petitions, with each party bearing its own litigation costs.
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2011 (9) TMI 1155
Issues Involved:
1. Whether the appellant is liable to pay ZP Cess?
2. Whether the appellant is liable to pay GP Cess?
Summary:
Re: Question No. (i) - Liability to Pay ZP Cess
The appellant, M/s Larsen & Toubro Ltd. (later M/s. Ultra Tech Cement Ltd.), obtained a mining lease for limestone from the Government of Maharashtra. The Collector demanded payment of surface rent, Zilla Parishad Cess (ZP Cess), and Gram Panchayat Cess (GP Cess). The appellant contested the liability to pay ZP Cess, citing section 151(1) of the Maharashtra Zilla Parishads and Panchayat Samitis Act, 1961, which exempts lessees from the state government from such payment. The respondents argued that the demand for ZP Cess is authorized by Rule 27(1)(d) of the Mining Concession Rules, 1960, and clause V(4) of the lease deed, stating that cesses assessable on the land are part of the surface rent.
The court noted that Rule 27(1)(d) and clause V(4) of the lease deed require the lessee to pay cesses assessable on the land if due under the Zilla Parishads Act. Section 151(1) of the Zilla Parishads Act exempts lessees from the state government from paying ZP Cess. Therefore, the state government cannot levy ZP Cess under a contract if the lessee is exempt under the Zilla Parishads Act. The court concluded that the appellant is not liable to pay ZP Cess under the lease deed.
Re: Question No. (ii) - Liability to Pay GP Cess
Section 127(1) of the Bombay Gram Panchayats Act, 1958, imposes a cess on every rupee of land revenue payable to the state government. Section 64 of the Maharashtra Land Revenue Code, 1966, exempts certain lands from land revenue. Clause VII(1) of the lease deed exempts the appellant from paying land revenue. Consequently, the appellant is not liable to pay GP Cess, as it is only payable on the amount of land revenue due. Clause V(4) of the lease deed requires payment of GP Cess only if it is payable under the Panchayats Act. The court held that the appellant is not liable to pay GP Cess under the lease deed.
Conclusion
The court clarified that clause V(4) of the lease deed requires the lessee to pay ZP Cess and GP Cess only if they are leviable under the respective enactments. The appellant is not liable to pay ZP Cess or GP Cess under the lease deed. The appeal was allowed, the High Court's judgment was set aside, and the demand notices for ZP Cess and GP Cess were quashed.
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2011 (9) TMI 1154
The Bombay High Court dismissed the appeal by the Revenue in a case, stating that similar questions raised in another case were rejected by the court earlier. The appeal was dismissed with no order as to costs.
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2011 (9) TMI 1153
Issues Involved:
1. Interpretation of tender conditions, specifically Clause 2.7 regarding outstanding liabilities.
2. Liability of the purchaser for statutory dues such as Central Excise and State Sales Tax.
3. Priority of crown debts over secured creditors.
4. Validity of contractual obligations in the absence of statutory provisions.
Detailed Analysis:
1. Interpretation of Tender Conditions:
The assets of M/s. Punjab Fibres Ltd. were auctioned by IFCI Ltd. under the SARFAESI Act. The tender conditions included Clause 2.7, which stated that the purchaser would be responsible for any outstanding liabilities over and above the purchase consideration. The petitioner, being the highest bidder, was subject to these conditions.
The Debt Recovery Tribunal (DRT) addressed whether IFCI failed to disclose statutory dues in the sale notice, which is mandatory under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002. The Tribunal concluded that the tender conditions explicitly required the purchaser to meet any outstanding liabilities, and this was accepted by the auction purchasers. Therefore, the Tribunal directed IFCI to ensure all outstanding liabilities were settled before issuing the final sale certificate.
2. Liability of the Purchaser for Statutory Dues:
The petitioner challenged the communications demanding Central Excise dues and State Sales Tax dues. The petitioner argued that crown debts were not the first charge on the property and could not be claimed from the purchaser. However, the court found that the tender conditions, specifically Clause 2.7, made the purchaser liable for these dues.
The court emphasized that Clause 2.7 required the purchaser to conduct due diligence regarding the unit's liabilities before submitting the tender. The petitioner was presumed to have examined the unit's financial documents and accepted the liabilities, including Central Excise and Sales Tax dues.
3. Priority of Crown Debts:
The petitioner cited several judgments to argue that crown debts have priority only among unsecured creditors after satisfying secured creditors. However, the court noted that this principle was not relevant to the present case. The issue was whether the petitioner was contractually bound to pay the outstanding liabilities as per the tender conditions.
The court referenced the Supreme Court's decision in AI Champdany Industries Limited v. Official Liquidator, which held that a purchaser is bound to discharge encumbrances notified in the sale notice. In this case, Clause 2.7 of the tender conditions explicitly made the purchaser liable for outstanding liabilities, irrespective of whether they were the first charge.
4. Validity of Contractual Obligations:
The court rejected the petitioner's reliance on cases such as M/s. D. Cawasji & Company and Orissa State Financial Corporation, which dealt with statutory liabilities. The court clarified that even in the absence of a statutory provision, parties could contractually agree on the payment of dues. Clause 2.7 was a valid contractual obligation, and the petitioner, having participated in the tender process, was bound by it.
Conclusion:
The court dismissed the petitions, holding that the petitioner was contractually obligated to satisfy the outstanding liabilities of Central Excise and State Sales Tax as per Clause 2.7 of the tender conditions. The court left open the question of whether penalties for non-deposit of these dues could be imposed on the petitioner, allowing the petitioner to dispute such claims before the relevant authorities.
Final Judgment:
The petitions were dismissed, and the petitioner was held liable for the outstanding statutory dues. The court allowed the petitioner to challenge any penalties imposed for non-payment separately.
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2011 (9) TMI 1152
Issues:
Review of judgment dismissing writ petition challenging orders of Commissioner of Customs and Central Excise and Customs, Excise & Gold (Control) Appellate Tribunal (CEGAT).
Analysis:
The petitioner sought a review of the judgment dismissing their writ petition challenging the orders of the Commissioner of Customs and Central Excise and the CEGAT. The petitioner contended that the Court wrongly mentioned in its judgment that the challenge was only regarding the imposition of penalty, not the confiscation of silver. The petitioner argued that the Tribunal erred in not considering the challenge to the confiscation. The petitioner also raised concerns about not availing remedies against certain orders and the right to approach the Settlement Commissioner under Section 127B. However, upon review, the Court found that all arguments raised by the petitioner were thoroughly considered in the original judgment. The Court noted that the petitioner opted to challenge only the imposition of penalty before the Tribunal, as evident from the Tribunal's judgment reducing the penalty amount. The Court also highlighted that certain orders had become final as the petitioner did not challenge them further. Therefore, the Court concluded that there was no basis to grant liberty to the petitioner for additional challenges under different provisions.
Regarding the argument that the observations in the Court's order might affect the petitioner's ability to file future petitions or approaches, the Court clarified that all arguments were duly considered, even if not accepted. The Court emphasized that the reasons for its conclusions were provided, and any impact on future proceedings could not be considered as an error justifying a review under the relevant procedural rules. Ultimately, the Court found no merit in the review petition and dismissed it accordingly.
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2011 (9) TMI 1151
Monetary limit - maintainability of appeal - Circular No.5 of 2008 dated 15.5.2008 of CBDT applicability - Held that:- It is clear that tax, as per the definition, would include super-tax and also fringe benefit tax but not surcharge. Admittedly, here, the tax was only ₹ 2,90,250/- which is below the limit of ₹ 3 lakhs prescribed in the Circular for filing appeals before this Tribunal. Resultantly, we do not find any mistake in the order of this Tribunal much less any mistake apparent on record. Miscellaneous Petition filed by the Revenue stands dismissed.
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2011 (9) TMI 1150
Whether the Debts Recovery Appellate Tribunal has power to condone the delay in filing of Appeal before it under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002? - Held that:- Appellate Tribunal has no power to condone the delay in filing of Appeal before it under Section 18 of the SARFAESI Act and answer the question in negative.
Since, Appeal before the appellate Tribunal was filed admittedly after the expiry of the prescribed period of 30 days the same has rightly been dismissed.
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2011 (9) TMI 1149
The Karnataka High Court upheld the tribunal's decision to set aside the penalty imposed under section 78 of the Finance Act, 1994. The court ruled that once the service tax and interest were paid before the show cause notice, authorities cannot issue any notice for penalty recovery. The appeal by the revenue was dismissed, and the judgment favored the assessee.
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2011 (9) TMI 1148
Issues Involved:
1. Approval of set-off amount.
2. Condonation of delay in communicating the set-off amount.
Detailed Analysis:
1. Approval of Set-Off Amount:
The Official Liquidator sought approval for a set-off amount of Rs. 5,47,28,34,538/- as computed under Rule 154 of the Companies (Court) Rules, 1959, read with Section 529A of the Companies Act, 1956. The company in liquidation had borrowed money from ICICI Bank, which was a secured creditor and debenture trustee. The Court decreed the debenture trustees' claim in the sum of Rs. 6,85,82,98,695/-. The properties of the company were sold to Metropolitan Infrahousing Ltd. for Rs. 6,01,00,00,000/- and Rs. 1,25,01,00,000/-, respectively. The Official Liquidator appointed S.M. Pradhan & Co., Chartered Accountants, to calculate the set-off amount. They reported that the principal amount of non-convertible debentures issued by the company was Rs. 1,36,79,22,640/- and the interest up to the winding-up date amounted to Rs. 4,35,14,15,366/-, totaling Rs. 5,71,93,38,006/-. Metropolitan held 95.69% of these debentures, equating to Rs. 5,47,28,34,538/-. The Chartered Accountants also noted that Metropolitan claimed interest up to February 2011, amounting to Rs. 12,83,85,44,059/-, inclusive of compounded interest. However, the Official Liquidator argued that under Rule 154, claims should be considered only up to the winding-up date, i.e., 26th September 2005.
Metropolitan contended that the full set-off amount as per the decree should be awarded, as the decree was passed after the winding-up order with the liquidator as a party. They argued that Rule 156, which limits interest to 4%, was inapplicable as the interest was part of the agreement and decreed. The Official Liquidator, however, maintained that the Rules did not permit granting interest beyond the stipulated rate and relied on Rule 154 and the judgment in IDBI Ltd. vs. Official Liquidator.
The Court noted that Rule 154 requires the value of debts and claims to be estimated as of the winding-up order date. Rule 156 allows creditors to prove for interest at a rate not exceeding 4% per annum up to the winding-up date if interest is not reserved or agreed upon. Rule 179 deals with subsequent interest, stating that creditors whose proofs have been admitted shall be paid interest from the winding-up order date to the final dividend declaration date at a rate not exceeding 4%.
The Court held that the liquidator's computation of the set-off amount was correct, as it adhered to the Rules. The liquidator could not grant full set-off as claimed by Metropolitan, as the computation had to be in terms of the Companies (Court) Rules, 1959. The Court also noted that Metropolitan's claim for set-off was based on their successful bid for the company's property and that the Rules should not be held inapplicable merely because Metropolitan was the auction purchaser.
2. Condonation of Delay:
The Official Liquidator requested condonation of the delay in communicating the set-off amount to the Court Receiver, citing a one-month delay. The Court acknowledged the delay but did not find it to be a significant issue affecting the overall proceedings.
Conclusion:
The Court approved the set-off amount of Rs. 5,47,28,34,538/- as computed by the Official Liquidator and Chartered Accountants, adhering to Rule 154 of the Companies (Court) Rules, 1959. The request for condonation of the delay in communication was also granted. The judgment emphasized the importance of adhering to the statutory rules and procedures in winding-up proceedings and set-off calculations.
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2011 (9) TMI 1147
Interest on refund of excess electricity charges - Whether the tariff determination u/s 62 of the Electricity Act was in any way legislative or quasi-judicial - The Central Commission while determining the tariff, had determined the final tariff at a rate lesser than the pre-existing tariff, as a result of which NTPC was found to have collected excess amounts during this intervening period, and the Electricity Boards became entitled to get the refund/adjustment of these differential amounts. Thus, the amount overcharged in respect of Gandhar power station is to the tune of ₹ 460.52 crores and the one in respect of Kawas power station is ₹ 254.47 crores. The Central Commission had however disallowed the claim of the Electricity Boards for payment of interest on the differential amounts between (i) the tariff finally determined by the Central Commission and (ii) the pre-existing tariff continued by the Central Commission until the final determination of the tariff. There is no dispute that thereafter NTPC has duly and immediately adjusted the excess amounts in favour of the purchaser Electricity Boards in their subsequent bills.
HELD THAT:- NTPC had filed the tariff petitions duly as required by the Central Commission. The delay in the case of Kawas and Gandhar Power Stations was because of the Commission requiring them to appropriately devise norms and parameters. As far as Rihand Station is concerned, one of the beneficiaries, namely Rajasthan Rajya Vidyut Vitaran Nigam Limited had obtained stay of proceedings before the Commission from the High Court of Rajasthan. NTPC was not in any way responsible for these factors. Ultimately, the tariff was reduced, but the tariff charged by the NTPC in the meanwhile was in accordance with the rates permitted under the notifications issued by the Commission. It cannot, therefore, be said that NTPC had held on to the excess amount in an unjust way to call it unjust enrichment on the part of NTPC, so as to justify the claim of the Electricity Boards for interest on this amount. In the circumstances, it is not possible to accept the submission that the Appellate Tribunal erred in any way in declining to award interest under Section 62 (6) of the Act. There was however, an error on its part in granting the same under the concept of equity, justice and fair-play.
Hence, we allow the appeals filed by the NTPC and dismiss those which are filed by the Electricity Boards.As held by the Constitution Bench, PTC India Ltd. Vs. Central Electricity Regulatory Commission [2010 (3) TMI 1209 - SUPREME COURT] , price fixation is really legislative in character, but since an appeal is provided under Section 111 of the Act, it takes a quasi-judicial colour. That by itself cannot justify the claim for interest during the period when the proceedings were pending for the tariff fixation. The tariff that was being charged at the relevant time was as per the previous notifications. Once the tariff was finalized subsequently, NTPC has adjusted the excess amount which it has received. It cannot be said that during this period the NTPC was claiming the charges in an unjust way, to make a case in equity. Our attention has been drawn to the industry practice which also shows that on all such occasions interest has never been either demanded or paid when the price fixation takes place. As held by us hereinabove, claim for interest could not be covered under Section 62 (6). The provision for interest has been introduced by regulations subsequent to the period which was under consideration before the Commission.
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2011 (9) TMI 1146
Issues involved: Appeal against order of CIT(A) restricting G.P. at 1% instead of 1.6% u/s.143(3) of the Income Tax Act, 1961 for Assessment Year 2007-08.
Issue 1: Estimation of Gross Profit
The Assessing Officer (AO) estimated profit ratio at 1.60% due to a difference in transportation income and charges. The CIT(A) restricted the profit at 1% based on the appellant's turnover increase of 5.73 times from the previous year. The CIT(A) found the AO's application of last year's profit ratio on current year's turnover unreasonable. The appellant provided reasons for the rate difference in hire charges, which the AO failed to consider. The CIT(A) upheld the appellant's profit estimation at 1%, resulting in relief of Rs. 30,22,285.
Issue 2: Admissibility of CIT(A) Decision
The AO did not find fault in the appellant's books of account but applied the NP rate from the previous year. The CIT(A) justified the 1% profit rate based on the significant increase in turnover. During the hearing, the Departmental Representative (DR) could not challenge the CIT(A)'s decision or support the AO's order. The appellant provided detailed statistics explaining the hire charge differences. As the books were not rejected, the Tribunal upheld the CIT(A)'s decision, dismissing the revenue's appeal.
In conclusion, the Appellate Tribunal upheld the CIT(A)'s decision to restrict the gross profit at 1% instead of 1.6%, considering the significant increase in turnover and the appellant's explanations for the hire charge differences. The revenue's appeal was dismissed, and the order was pronounced in open court.
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2011 (9) TMI 1145
Issues involved: Revenue's appeals against CIT(A)'s orders for A.Y. 2000-01, 01-02, 02-03, 03-04 & 2005-06 challenging eligibility of Unit II for deduction u/s 80-IA and depreciation allowance on computer peripherals.
Deduction u/s 80-IA for Unit II:
The appellant contended that Unit II was independently functioning and fulfilled conditions for deduction u/s 80-IA, citing the Textile Machinery Corporation Ltd. case. CIT(A) allowed the deduction, emphasizing the unit's independent status. The revenue argued that Unit I's job work for Unit II was a tax avoidance mechanism. However, the counsel defended the legitimate business arrangement, supported by the ITAT's observations in the Associated Capsules (P) Ltd. case. The Tribunal upheld CIT(A)'s decision, noting that Unit II's independent nature was not compromised by job work from Unit I.
Depreciation on computer peripherals:
The counsel asserted that the issue was settled in favor of the assessee by various courts, which the revenue did not dispute. The Tribunal found no fault in CIT(A)'s decision to allow depreciation at 60% on computer peripherals and accessories for the relevant assessment years.
In conclusion, the Tribunal dismissed the revenue's appeals for both assessment years, upholding CIT(A)'s orders.
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2011 (9) TMI 1144
Issues Involved:
1. Deletion of addition on account of inadequate household withdrawal.
2. Deletion of addition on account of gift received.
Summary:
Issue 1: Deletion of addition on account of inadequate household withdrawal
The Revenue challenged the deletion of an addition of Rs. 1,08,000 made by the AO u/s 69C of the IT Act, 1961, on account of inadequate household withdrawals. The AO had estimated household expenses at Rs. 3,00,000 based on the assessee's social status and standard of living, while the assessee had shown withdrawals of Rs. 1,92,000 and additional expenses of Rs. 3,37,857 for electricity and education. The CIT(A) deleted the addition, stating that the AO had not provided any material evidence to justify the higher estimate. The Tribunal upheld the CIT(A)'s decision, noting that the AO failed to bring sufficient material on record and did not discuss the past history of the case or cite any comparable cases.
Issue 2: Deletion of addition on account of gift received
The Revenue also contested the deletion of an addition of Rs. 10,00,000 made by the AO, who treated the cash gifts received by the assessee from his brother-in-law as non-genuine. The AO's reasons included the failure to produce the donor, the donor's limited financial capacity, and the lack of a valid occasion for the gift. The CIT(A) deleted the addition, noting that the assessee had provided sufficient evidence, including an affidavit from the donor, confirmation letters, and bank statements showing the source of the funds. The Tribunal upheld the CIT(A)'s decision, emphasizing that the assessee had proved the identity, capacity, and genuineness of the transaction, and the AO had not provided material evidence to the contrary.
Cross-Objection:
The assessee's cross-objection was dismissed as not pressed.
Conclusion:
The appeal by the Revenue and the cross-objection by the assessee were both dismissed.
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2011 (9) TMI 1143
Prevention of Money-Laundering Act, 2002 - Held that:- If the appellants were eventually entitled for return of the deposit on the conclusion of the trial against the accused persons concerning the Scheduled Offence. The fact that the appellants are likely to suffer financial loss because of the difference of rate of interest cannot be the basis to hold that the Appropriate Authority could not have proceeded to provisionally attach the subject property, which, it had reason to believe, was proceeds of crime. Indeed, whether the appellants ought to be compensated and by whom is a matter which can be addressed at the appropriate stage; but, certainly, because the appellants are likely to suffer loss of interest to some extent cannot be the basis to doubt the action of the Appropriate Authority, which action is in conformity with the scheme of the PMLA.
That takes us to the argument that the order of provisional attachment does not disclose the satisfaction of the Authority that it has reason to believe that the properties were derived from proceeds of crime. This argument deserves to be stated to be rejected. In the earlier part of the judgment, we have already reproduced the provisional attachment order as well as the notice to show cause in its entirety. On conjoint reading thereof, it is amply clear that the Appropriate Authority has recorded satisfaction of having reason to believe that the properties were involved in money laundering and may have to be eventually confiscated, for which, were required to be provisionally attached. Hence, there is no substance even in this submission.
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