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2013 (4) TMI 890
Issues Involved:
1. Application under Order VII Rule 11 for rejection of plaint.
2. Application under Order XXXIX Rules 1 and 2 for temporary injunction.
3. Jurisdiction of the Court.
4. Passing off and trademark infringement claims.
Summary:
1. Application under Order VII Rule 11 for rejection of plaint:
The defendant filed an application under Order VII Rule 11 of the Civil Procedure Code (the Code) for rejection of the plaint. The Court noted that while considering such an application, it should restrict itself to the averments made in the plaint and not extend its consideration to the written statement. The Court found that the plaintiff's claim that the cause of action arose within the territorial limits of Delhi was based on precarious grounds. The plaintiff's reliance on a single bill from Batra Medical Hall to substantiate its claim was insufficient. The Court cited the case of "M/S Lakhan Pal Shyam Kumar vs M/S Ram Prasad Gupta" to emphasize that bald averments without cogent material cannot form the basis for jurisdiction. Consequently, the application under Order VII Rule 11 was allowed, and the plaint was rejected.
2. Application under Order XXXIX Rules 1 and 2 for temporary injunction:
Given the rejection of the plaint under Order VII Rule 11, the application under Order XXXIX Rules 1 and 2 for temporary injunction was consequentially dismissed.
3. Jurisdiction of the Court:
The plaintiff argued that the Court had jurisdiction because it had a branch office in Delhi and the defendant was supplying and selling infringing goods in Delhi. The plaintiff produced an invoice from Batra Medical Hall to support this claim. However, the defendant refuted any business connection with Batra Medical Hall and argued that the mere presence of the plaintiff's branch office in Delhi did not confer jurisdiction. The Court referred to Section 134 of the Trade Marks Act, 1999, which outlines the jurisdiction of courts in cases of infringement and passing off, and Section 20 of the Code, which confers jurisdiction based on the defendant's residence or place of business. The Court found the plaintiff's claim of jurisdiction to be on precarious grounds and insufficiently substantiated.
4. Passing off and trademark infringement claims:
The plaintiff sought a permanent injunction against passing off and damages u/s 27 of the Trade Marks Act, 1999, claiming that the defendant's use of the mark NEHACIL was deceptively similar to its mark NYCIL. The plaintiff had issued a Cease and Desist Notice and filed a criminal complaint, which was dismissed by the Chief Judicial Magistrate, Ahmedabad. The plaintiff also filed a Rectification Petition for the removal of the defendant's trademark registration. The defendant argued that it had been using the trademark NEHACIL openly and continuously since 1998 and was the registered proprietor of the mark. The defendant also submitted that the controversy was the subject of another suit pending before the City Civil Court, Ahmedabad.
Conclusion:
The Court allowed the application under Order VII Rule 11, rejecting the plaint, and consequentially dismissed the application under Order XXXIX Rules 1 and 2. The Court found that the plaintiff failed to substantiate its claim of jurisdiction and cause of action within the territorial limits of Delhi.
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2013 (4) TMI 889
Issues involved: Appeal against judgment and order of acquittal u/s 138 of Negotiable Instrument Act; Availability of alternative remedy u/s 372 Proviso and 378(4) of Code of Criminal Procedure.
Judgment Summary:
Issue 1: Appeal against acquittal u/s 138 of Negotiable Instrument Act
The appellant filed an appeal against the judgment and order of acquittal passed by the Judicial Magistrate First Class, Dhanbad in a case u/s 138 of the Negotiable Instrument Act. The appellant, being the complainant, sought special leave to prefer the appeal. The High Court, after hearing both sides, found no reason to grant special leave to appeal, as the appellant had an alternative statutory remedy available. The Court noted that the appellant, being both complainant and victim, had the right to prefer a statutory appeal u/s 372 Proviso of the Code of Criminal Procedure. The Court emphasized that the victim has a statutory right to appeal in such cases, and hence, special leave was not granted.
Issue 2: Availability of alternative remedy u/s 372 Proviso and 378(4) of CrPC
The Court considered the arguments presented by both parties regarding the availability of alternative remedies u/s 372 Proviso and 378(4) of the Code of Criminal Procedure. It was highlighted that the appellant, being the complainant and victim, had the right to prefer a statutory appeal. The Court rejected the contention that the provision of 378(4) of CrPC would be redundant, stating that both provisions operate in separate fields. It was clarified that when the complainant and victim are the same person, they must avail the statutory remedy of appeal rather than seeking special leave directly. The Court cited a previous judgment to support its decision that when a victim (who is also the complainant) has a statutory right to appeal, special leave under 378(4) of CrPC cannot be granted.
Conclusion:
In light of the facts, reasons, and legal precedents, the High Court dismissed the appeal, stating that the appellant had a statutory right to prefer an appeal as a victim. The Court emphasized that the appeal was not decided on its merits, and any delay in filing the appeal would be condoned by the Lower Appellate Court. The appellant was advised to pursue the statutory appeal in accordance with the law and evidence on record.
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2013 (4) TMI 888
Issues Involved:
1. Applicability of Section 10 of the Code of Civil Procedure, 1908.
2. Whether the matter in issue in the third suit is directly and substantially in issue in the previously instituted suits.
3. Whether the trial court erred in staying the third suit till the disposal of the first two suits.
Summary:
1. Applicability of Section 10 of the Code of Civil Procedure, 1908:
The plaintiffs filed a Special Leave Petition u/s 136 of the Constitution of India against the order of the Bombay High Court, which affirmed the stay of proceedings in the third suit (R.A.E. Suit No. 173/256 of 2010) until the decision in the first two suits (R.A.E. Suit No. 1103/1976 of 2004 and R.A.E. Suit No. 1104/1977 of 2004). The trial court had stayed the third suit based on Section 10 of the Code of Civil Procedure, 1908, which mandates that no court shall proceed with the trial of any suit in which the matter in issue is also directly and substantially in issue in a previously instituted suit between the same parties.
2. Whether the matter in issue in the third suit is directly and substantially in issue in the previously instituted suits:
The trial court observed that both the second and third suits were filed on the ground of non-user, albeit for different periods. The High Court concurred, stating that the issues involved in both suits were similar, thus justifying the stay u/s 10 of the Code. However, the Supreme Court found substance in the plaintiffs' argument that the matter in issue in the third suit was non-user for a continuous period of six months immediately prior to the institution of the suit, which was different from the non-user period cited in the earlier suits. The Supreme Court emphasized that for Section 10 to apply, the entire subject matter in controversy must be the same, not just a few common issues.
3. Whether the trial court erred in staying the third suit till the disposal of the first two suits:
The Supreme Court held that the provisions of Section 10 were not attracted in this case because the ground of eviction in the third suit, though similar, was based on a different cause. The plaintiffs could potentially succeed in the third suit even if they failed in the earlier suits. The Court referenced its decision in Dunlop India Limited vrs. A.A.Rahna & Anr., where it was held that similar grounds based on different causes do not attract Section 10. Consequently, the Supreme Court set aside the orders of the trial court and the High Court, allowing the appeal without any order as to costs.
Conclusion:
The Supreme Court allowed the appeal, setting aside the orders of the trial court and the High Court, and clarified that Section 10 of the Code of Civil Procedure, 1908, was not applicable in this case due to the different periods of non-user cited in the suits. The Court also provided liberty to the parties to request the trial court to hear all suits together if they so choose.
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2013 (4) TMI 887
Issues involved: Contempt petition for non-compliance with court orders, appointment of provisional liquidator, failure to file reply, request for more time, offer of security, corporate debt restructuring scheme, costs imposed on respondent.
The High Court found that the Respondent failed to file a reply in a contempt petition despite being given an opportunity, leading to a request from the Respondent's counsel for more time to respond. The Court inquired about the willingness of the Respondent to offer unencumbered fixed assets as security due to an outstanding amount of over Rs. 32 crores owed to the Petitioner, but the Respondent's counsel was unable to confirm the status of the assets offered. The original order from November 2012 allowed the Petitioner to take action under contempt law in case of default, including the appointment of a provisional liquidator.
The Respondent's counsel requested a delay in appointing the provisional liquidator, citing a corporate debt restructuring (CDR) scheme with secured creditors, which did not address the liability to the Petitioner. Despite this, the Court found no valid reason for the Respondent's failure to file a reply to the contempt petition. The Respondent had not sought clarification or modification of the previous order as allowed by a Division Bench order from January 2013, further weakening their position.
Given the lack of progress and the need for adjournment, the Court decided not to grant further indulgence to the Respondent. As a result, the Respondent was directed to pay costs of Rs. 25,000 to the Petitioner by the next date, with the Managing Director instructed to appear in court on the following date. The case was listed for the next hearing on 22nd April 2013 at 10:30 am, with orders to be provided promptly to the counsels of both parties.
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2013 (4) TMI 886
Issues Involved:
1. Condonation of delay in filing the appeal.
2. Non-consideration of the Written Statement by the Appellant's Representative.
3. Addition of Rs. 8,94,550 as unexplained capital introduction u/s 68.
4. Addition of Rs. 9,80,015 as unsecured loans u/s 68.
5. Non-disposal of ground pertaining to addition of Rs. 34,249 out of labor charges.
6. Non-disposal of ground pertaining to addition of Rs. 3,858 out of telephone charges.
Summary:
1. Condonation of Delay in Filing the Appeal:
The assessee appealed against the CIT(A)'s order which dismissed the appeal due to a four-month delay in filing. The CIT(A) found the explanation for the delay, which involved the representative's assistant allegedly misplacing the papers, to be vague and unsupported by evidence. The ITAT upheld this decision, emphasizing that the explanation did not constitute "sufficient cause" and highlighted the importance of acting with reasonable diligence. The ITAT also noted the absence of a valid affidavit supporting the explanation, citing legal precedents that stress the need for proper verification in affidavits.
2. Non-consideration of Written Statement:
The ITAT did not specifically address this issue in detail, as the primary focus was on the condonation of delay and the merits of the additions made by the AO.
3. Addition of Rs. 8,94,550 as Unexplained Capital Introduction u/s 68:
The AO added Rs. 8,94,550 to the assessee's income as unexplained capital introduction u/s 68 due to the assessee's failure to provide details and sources of the capital despite multiple opportunities. The CIT(A) upheld this addition, and the ITAT found no reason to interfere with the AO's decision, noting the assessee's non-compliance and lack of explanation.
4. Addition of Rs. 9,80,015 as Unsecured Loans u/s 68:
The AO added Rs. 9,80,015 as unsecured loans u/s 68, citing the assessee's failure to provide details, confirmations, and creditworthiness of the creditors. The CIT(A) upheld this addition, and the ITAT agreed, emphasizing the assessee's non-compliance and the absence of necessary documentation to substantiate the loans.
5. Non-disposal of Ground Pertaining to Addition of Rs. 34,249 out of Labor Charges:
The ITAT did not specifically address this issue, as the primary focus was on the condonation of delay and the merits of the major additions made by the AO.
6. Non-disposal of Ground Pertaining to Addition of Rs. 3,858 out of Telephone Charges:
Similar to the issue regarding labor charges, the ITAT did not specifically address this issue due to the focus on the condonation of delay and the major additions.
Conclusion:
The ITAT dismissed the appeal, upholding the CIT(A)'s decision to not condone the delay in filing the appeal and confirming the additions made by the AO due to the assessee's failure to provide necessary explanations and documentation. The ITAT emphasized the importance of acting with diligence and the requirement for proper verification in affidavits.
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2013 (4) TMI 885
Issues involved: Appeal against deletion of penalty u/s 271(1)(c) of the I.T. Act, 1961 by CIT(A) based on addition made u/s 68 of the Act.
Summary:
The Revenue appealed against the deletion of penalty of `5,00,000/- u/s 271(1)(c) by CIT(A) for treating gifts received as unexplained u/s 68 of the Act. The Assessing Officer added `8,00,000/- as unexplained income, initiating penalty proceedings. The CIT(A) deleted the penalty based on the genuineness of gifts, especially those received from NRIs and father-in-law through banking channels. The Tribunal upheld the addition but the CIT(A) found no conclusive evidence of concealment or inaccurate particulars. The Tribunal confirmed CIT(A)'s decision, emphasizing the independent nature of penalty proceedings requiring a separate enquiry. The onus of proof lies on the Assessing Officer, and failure to explain does not automatically imply falsity. The CIT(A) considered all aspects before deleting the penalty, leading to the dismissal of the Revenue's appeal.
The CIT(A) highlighted the divergence of views between authorities, emphasizing the need for conclusive evidence of concealed income for penalty imposition u/s 271(1)(c). The Assessing Officer's reliance on assessment findings for penalty imposition was deemed insufficient. The Tribunal's confirmation of the addition did not establish concealed income. The conditions in Explanation 1 to section 271(1)(c) were not satisfied, as the explanation, though unsatisfactory, was not proven false. The penalty cannot be justified solely based on the assessment findings, as penalty proceedings require separate scrutiny.
The Tribunal upheld CIT(A)'s decision, emphasizing the independent nature of penalty proceedings and the Assessing Officer's burden of proof. The genuineness of gifts, though disputed by the Assessing Officer, did not warrant penalty imposition. The failure to explain unexplained credits under section 68 does not automatically lead to penalty imposition u/s 271(1)(c). CIT(A) thoroughly examined the case before deleting the penalty, finding no fault in the decision.
In conclusion, the Tribunal dismissed the Revenue's appeal against the deletion of penalty u/s 271(1)(c), affirming CIT(A)'s decision based on the lack of conclusive evidence of concealed income or furnishing inaccurate particulars.
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2013 (4) TMI 884
Issues Involved:
1. Permanent injunction restraining the defendant from broadcasting, printing, and publishing advertisements.
2. Allegations of disparagement of the plaintiff's product.
3. Claims of misleading and false advertisements.
4. Applicability of the Food Safety and Standards Act and Rules.
Summary:
1. Permanent Injunction:
The plaintiff sought a permanent injunction to restrain the defendant from broadcasting, printing, and publishing advertisements for its cooking oil under the brand name FORTUNE, claiming that these advertisements disparaged the plaintiff's product, SAFFOLA. The court heard arguments from both parties and reserved orders on the applications for interim relief.
2. Allegations of Disparagement:
The plaintiff argued that the defendant's advertisements made false, unsubstantiated, and misleading claims about Fortune RBO being the "healthiest oil in the world" and healthier than SAFFOLA. The plaintiff contended that these advertisements were unfair, disparaging, and caused irreparable harm to its reputation. The defendant countered that the advertisements merely extolled the virtues of its own product without denigrating the plaintiff's product.
3. Claims of Misleading and False Advertisements:
The plaintiff alleged that the health claims made by the defendant were false and not based on scientific research, violating Section 24 of the Food Safety and Standards Act, 2006. The defendant argued that the claims were supported by scientific studies and that the plaintiff had not accurately portrayed the advertisements. The court noted that while comparative advertising is permissible, it should not be disparaging or misleading.
4. Applicability of the Food Safety and Standards Act and Rules:
The plaintiff argued that the defendant's advertisements violated the Food Safety and Standards Act and Rules by making false health claims. The defendant contended that their product complied with statutory requirements and that the plaintiff had not demonstrated any factual basis for its claims. The court found that the advertisements did not denigrate the plaintiff's product and that the claims made were not entirely untrue.
Conclusion:
The court held that the advertisements did not disparage the plaintiff's product and were permissible under the principles of comparative advertising. The applications for interim injunction were dismissed, with the court noting that the final adjudication of the suit would not be affected by this decision.
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2013 (4) TMI 883
Issues Involved:
1. Legality of the detention order dated 16/4/2012.
2. Delay in considering the detenu's representation by the State Government.
3. Independent consideration of the detenu's representation by the detaining authority.
Summary:
Legality of the Detention Order:
The appellant challenged the detention order dated 16/4/2012 issued u/s 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, aimed at preventing future smuggling activities. The detenu was found carrying concealed gold upon arrival from Dubai, leading to the detention order.
Delay in Considering the Representation:
The appellant argued that the delay in considering his representation violated his right u/s Article 22(5) of the Constitution. The representation dated 23/6/2012 was rejected on 24/7/2012, indicating a delay. The Court emphasized that any unexplained delay in considering the representation would render the continued detention illegal. The State Government's explanation for the delay was found reasonable, except for the unexplained delay by the jail authority in forwarding the representation.
Independent Consideration of the Representation:
The appellant contended that the detaining authority did not consider the representation independently. This point was not raised in the petition or before the High Court. The Court noted that the detaining authority processed the representation through the concerned officials and rejected it within four days. The procedure followed was deemed appropriate, and the submission regarding lack of independent consideration was rejected.
Conclusion:
The Court held that the detention order dated 16/4/2012 is valid. However, due to the unexplained delay by the jail authority in forwarding the representation, the continued detention of the detenu is rendered illegal. The Court directed the immediate release of the detenu if not already released and not required in any other case. The appeal was disposed of accordingly.
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2013 (4) TMI 882
Issues Involved:
1. Rejection of Books of Account u/s 145(3)
2. Estimation of Net Profit Rate
3. Charging of Interest u/s 234C and 234D
4. Initiation of Penalty Proceedings u/s 271(1)(c)
Summary:
1. Rejection of Books of Account u/s 145(3):
The Assessing Officer (AO) found various discrepancies in the books of account maintained by the assessee, including the non-maintenance of a stock register, unverified valuation of closing stock, and improper documentation of material purchases and labor expenses. Consequently, the AO invoked the provisions of section 145(3) of the Act, rejecting the books of account and estimating the net profit at 8% on own work and 6% on work done by sub-contractors.
2. Estimation of Net Profit Rate:
The CIT(A) confirmed the rejection of books of account but estimated the net profit at 5.75%, considering various factors such as the substantial decline in expenditure, the proportion of sub-contract work, and the overall increase in turnover. The Tribunal, referencing its decision in the immediately preceding year (2007-08), modified the net profit rate to 6.25%, acknowledging the increase in turnover and the quantum of work undertaken by the assessee as both main contractor and sub-contractor.
3. Charging of Interest u/s 234C and 234D:
The assessee contested the charging of interest u/s 234C and 234D, but the judgment does not provide specific details on the resolution of this issue.
4. Initiation of Penalty Proceedings u/s 271(1)(c):
The assessee also challenged the initiation of penalty proceedings u/s 271(1)(c), but the judgment does not elaborate on the outcome of this contention.
Conclusion:
The Tribunal upheld the rejection of the books of account and modified the net profit rate to 6.25%, directing the AO to compute the profit accordingly. The appeal of the assessee was dismissed, and the appeal of the Revenue was partly allowed.
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2013 (4) TMI 881
Issues involved: Application u/s 391 and 394 of the Companies Act, 1956 for Scheme of Amalgamation of two companies.
Details of the Judgment:
Issue 1: Compliance with Company Law
The joint application was filed u/s 391 and 394 of the Companies Act, 1956 for the Scheme of Amalgamation of two companies. The registered offices of the Applicant companies are in Delhi. Details of their incorporation dates and capital were provided. No pending proceedings u/s 235 to 251 of the Act against the Applicant companies. Board resolutions approving the Scheme were enclosed.
Issue 2: Shareholders and Creditors Consents
Consents of equity shareholders and secured creditors were obtained and meetings were dispensed with. The Transferor company had 30 unsecured creditors, and the Transferee company had 843 unsecured creditors. A prayer was made to dispense with the requirement of convening meetings of unsecured creditors, which was granted based on the companies being part of the Sony Group and having positive net worth.
Issue 3: Unsecured Creditors' Approval
Although consents of unsecured creditors were not obtained, the Court dispensed with the requirement of convening their meetings due to the positive net worth of the companies, assurance of regular payment cycles, and the majority of unsecured creditors being related to the Sony Group companies.
The Court was satisfied with the application and decisions cited, allowing it in the terms presented. The requirement of separate meetings of unsecured trade creditors was dispensed with. The order was given dasti.
Separate Judgment: No separate judgment was delivered by the judges in this case.
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2013 (4) TMI 880
Issues involved: Appeal against order allowing amendment of plaint in a property dispute.
Summary:
The appeal was filed against the High Court's order setting aside the City Civil Court's decision to dismiss the Chamber Summons seeking to amend the plaint in a property dispute. The plaintiffs, allegedly members of a Co-operative Housing Society, challenged the re-development of the Society's property in various courts but were unsuccessful. They then filed a suit in the City Civil Court challenging the amalgamation of plots and seeking various directions regarding the property development. The City Civil Court rejected their Notice of Motion and Chamber Summons for amendment of the plaint, stating that the proposed amendments were within the plaintiffs' knowledge at the time of filing the suit and that they failed to challenge certain aspects earlier. The High Court set aside this decision, allowing the plaintiffs to amend the plaint. The Supreme Court, however, found that the High Court erred in its decision, as the plaintiffs were aware of the relevant facts before filing the suit, and the proposed amendments were belated and an afterthought. Therefore, the Supreme Court allowed the appeal, setting aside the High Court's order and restoring the trial court's decision.
In the amendment petition, the plaintiffs claimed they were unaware of a conveyance deed dated 08.02.1989 until 2009, alleging forgery and manipulation. However, it was found that the plaintiff was an office-bearer of the Society at the time and was authorized to complete the transaction. The plaintiffs allegedly became aware of the deed in 2009 but did not seek relief in the plaint filed in 2010. The Supreme Court held that the High Court erred in allowing the belated and after-thought amendments, as the plaintiffs were aware of the transaction before filing the suit. The trial court's decision to dismiss the Chamber Summons seeking amendment was upheld, and the High Court's order was set aside.
The main ground for seeking relief through amendment was the plaintiffs' alleged lack of awareness of the conveyance deed dated 08.02.1989 until 2009. The plaintiffs claimed forgery and manipulation in the deed, stating it was impossible for the deceased individual to execute the deed posthumously. However, it was established that the plaintiff, as an office-bearer of the Society, was aware of and authorized to complete the transaction. The Supreme Court found the plaintiffs' claims in the amendment petition to be incorrect and belated, leading to the dismissal of the Chamber Summons seeking amendment.
The City Civil Court initially dismissed the Chamber Summons seeking to amend the plaint, stating that the proposed amendments were within the plaintiffs' knowledge at the time of filing the suit. The court found that the plaintiffs failed to challenge certain aspects earlier and that the proposed amendments were not necessary for determining the real controversy between the parties. The High Court, however, set aside this decision, allowing the plaintiffs to amend the plaint. The Supreme Court, upon review, found the High Court's decision to be erroneous, as the proposed amendments were belated and did not serve the purpose of determining the real dispute. Therefore, the Supreme Court allowed the appeal, setting aside the High Court's order and restoring the trial court's decision.
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2013 (4) TMI 879
Issues Involved:1. Whether VSNL (now TCL) is a "State" or "other authority" under Article 12 of the Constitution of India. 2. Whether VSNL/TCL is performing a public function and thus amenable to writ jurisdiction under Article 226 of the Constitution of India. Issue 1: Whether VSNL (now TCL) is a "State" or "other authority" under Article 12 of the Constitution of India:3. The Bombay High Court dismissed Writ Petition No.2139 of 2007 and Writ Petition No.2652 of 2007 in limine, leading to appeals before the Supreme Court. 4. The Delhi High Court dismissed ten writ petitions filed by former VSNL employees, questioning the maintainability of writ petitions against VSNL, as it was neither a State within the meaning of Article 12 nor performing any public function. 21. The appellants argued that VSNL, despite disinvestment, remained under substantial government control and thus should be considered a State under Article 12. 38. The Supreme Court stated that for TCL to be declared as a State or other authority under Article 12, it must meet the well-recognized parameters laid down in previous judgments. 39. The Court concluded that TCL does not fall within the definition of State or other authority under Article 12, as the Government of India holds only 26.12% shares, which does not indicate deep and pervasive control. 43. The Court found that TCL does not enjoy a monopoly status and the government does not exercise deep and pervasive control over its management or policy-making. Issue 2: Whether VSNL/TCL is performing a public function and thus amenable to writ jurisdiction under Article 226 of the Constitution of India:45. The Court noted that functions performed by VSNL/TCL are not of such nature that could be considered a public function. The services provided are commercial and available upon payment of charges. 47. The Court held that merely performing functions initially carried out by a government department does not make VSNL/TCL's functions public. 50. The Court examined the functions of VSNL/TCL against factors from the Human Rights Act, 1998, and concluded that they do not constitute a public function. 52. The Court stated that in order for a body to be performing a public function, it must seek to achieve some collective benefit for the public or a section of the public, which is not the case with VSNL/TCL. 53. The Court suggested that appellants could seek redress through normal remedies available under law if their services were terminated in breach of assurances. Conclusion:55. The Supreme Court dismissed the appeals, holding that VSNL/TCL is neither a State nor performing a public function, and thus, not amenable to writ jurisdiction under Article 226. 57. The writ petition by VSNL Scheduled Castes/Tribes employees was also dismissed as not maintainable.
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2013 (4) TMI 878
Issues involved: Reopening of assessment u/s. 148 r.w.s 147 of the Income-tax Act, 1961 and deduction of Export Rebate u/s. 80HHC(3)(a) and u/s. 80HHC (3)(b).
Reopening of assessment u/s. 148 r.w.s 147:
The appeals by assessee arose from separate orders of CIT(A)-XXX, Kolkata confirming the reopening of assessment u/s. 147 by DCIT, Circle-43, Kolkata for Assessment Years 2004-05 and Assessment Years 2001-02 to 2003-04. The primary contention was the correctness of the reopening of assessment u/s. 147, with the appellant challenging the validity of the notice issued u/s. 148 as being barred by limitation and void. The AO recomputed the income by considering the provisions of section 80HHC(3)(a) at a figure of &8377; 5,96,392/- instead of the claim of &8377; 15,58,496/- by the assessee. The CIT(A) upheld the reopening, citing that the deduction u/s. 80HHC is available to manufacturing concerns under section 80HHC(3)(a), not as claimed by the appellant under section 80HHC(3)(b).
Deduction of Export Rebate u/s. 80HHC(3)(a) and u/s. 80HHC (3)(b):
The AO observed discrepancies in the nature of business mentioned in the audit report as 'trading, manufacturing and export' while the appellant claimed to be solely a manufacturer. The AO reopened the assessment based on this discrepancy, leading to a dispute over the correct deduction under section 80HHC. The Tribunal noted that the AO's decision lacked tangible material for reopening the assessment and did not provide substantial evidence to support the claim that the appellant was engaged in 'trading, manufacturing, and export'. The Tribunal, following a precedent set by the Hon'ble Delhi High Court, ruled in favor of the appellant, reversing the lower authorities' orders and allowing the appeals.
Separate Judgement:
No separate judgment was delivered by the judges in this case.
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2013 (4) TMI 877
Issues involved: Application for stay of impugned order passed by Company Law Board, Mumbai Bench in Company Petition No. 65 of 2012.
Summary:
The High Court of Gujarat, in an oral order by Mr. Ravi R.Tripathi, granted interim relief to the original appellants who sought to stay the effect of the impugned order dated 4th March, 2013 passed by the Company Law Board. The Court found the order passed by the Company Law Board to be too wide in terms, particularly noting the authorization given to Shri Hari Sankar Acharya to attend all Board Meetings and AGM/EOGM, and the requirement for detailed recording and communication of decisions. The applicants argued that certain observations by the Company Law Board indicated a mission to collect evidence against the R-I Company. Consequently, the Court granted ad-interim relief to operate until the final disposal of the appeal, and further proceedings of Company Petition No. 65 of 2012 were stayed. The Civil Application was disposed of accordingly with direct service permitted.
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2013 (4) TMI 876
Issues Involved:
1. Legality of the sale deed executed during the currency of an injunction order.
2. Whether the suit is barred by law of limitation, estoppel, waiver, and lis pendens.
3. Validity of the decree passed in Title Suit No. 13 of 1977.
4. Whether the plaintiff acquired title based on the sale deed dated 9.11.1973.
5. Entitlement of the plaintiff to any decree or relief.
Summary:
1. Legality of the Sale Deed Executed During the Currency of an Injunction Order:
The trial court dismissed the suit, holding that Bhuneshwar Tanti was not entitled to execute the sale deed in favor of the plaintiffs due to the injunction order dated 6.5.1971 in Suit No. 49 of 1970. The lower appellate court, however, held that the injunction did not survive once the suit was returned for presentation in the competent court, and thus the sale deed dated 9.11.1973 was valid. The Supreme Court, referencing Tayabbhai M. Bagasarwalla and Vidur Impex and Traders (P) Ltd., concluded that the sale deed executed during the operative period of the injunction was unlawful.
2. Whether the Suit is Barred by Law of Limitation, Estoppel, Waiver, and Lis Pendens:
The lower appellate court found that the sale deed dated 9.11.1973 was not hit by the doctrine of lis pendens. The Supreme Court did not specifically address this issue in detail but implied that the lower appellate court's findings were incorrect due to the unlawful nature of the sale deed.
3. Validity of the Decree Passed in Title Suit No. 13 of 1977:
The lower appellate court held that the decrees in Title Suit No. 13 of 1977 were fraudulent and not binding on the plaintiffs. The Supreme Court did not explicitly overturn this finding but focused on the legality of the sale deed under the injunction order.
4. Whether the Plaintiff Acquired Title Based on the Sale Deed Dated 9.11.1973:
The trial court ruled against the plaintiffs, stating they were aware of the injunction order, which was binding. The lower appellate court disagreed, but the Supreme Court upheld the trial court's view, emphasizing that the sale deed executed during the injunction was unlawful.
5. Entitlement of the Plaintiff to Any Decree or Relief:
The Supreme Court concluded that the learned Single Judge of the High Court erred in dismissing the second appeal without recognizing the substantial question of law regarding the legality of the sale deed executed during the injunction. The case was remitted to the High Court for fresh disposal with directions to frame appropriate substantial questions of law and decide the appeal accordingly.
Conclusion:
The appeal was allowed, the impugned order was set aside, and the case was remitted to the High Court for fresh disposal, emphasizing the need to address the substantial question of law regarding the legality of the sale deed executed during the injunction period.
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2013 (4) TMI 875
Issues Involved:1. Whether the claim of the petitioner is time-barred. 2. Whether the E-mail dated 1.4.2008 constitutes an acknowledgment of liability u/s 18 of the Limitation Act, 1963. 3. Whether the promissory note is admissible in evidence. 4. Whether the winding-up petition u/s 433(e) of the Companies Act, 1956 is maintainable. Summary:Issue 1: Time-Barred ClaimThe learned single Judge dismissed the petition on the grounds that the claim was time-barred. The Judge held that the E-mail dated 1.4.2008 was not an acknowledgment of liability as it was given after the expiration of the limitation period. However, the appellate court found that the period of limitation should start from 31.10.2005, the date agreed upon in the promissory note, rather than 28.3.2005, the date of resignation. The E-mail dated 1.4.2008 was sent within the limitation period, hence the claim is not time-barred. Issue 2: Acknowledgment of LiabilityThe appellate court noted that the E-mail dated 1.4.2008 from the Managing Director of the respondent company acknowledged the debt and the issuance of the promissory note, thus constituting an acknowledgment of liability u/s 18 of the Limitation Act, 1963. This acknowledgment renewed the limitation period, making the filing of the petition on 24.11.2008 within the permissible time frame. Issue 3: Admissibility of Promissory NoteThe learned single Judge initially held that the promissory note was insufficiently stamped and thus inadmissible in evidence. However, the appellate court clarified that the requirement for the original promissory note with appropriate stamp duty arises only in a suit for recovery of money, not in a company petition for winding up. Hence, the promissory note, even if a copy, was admissible for the purpose of the winding-up petition. Issue 4: Maintainability of Winding-Up PetitionThe appellate court found that the respondent company had admitted its indebtedness and failed to pay the amount due, rendering it commercially insolvent. Therefore, the winding-up petition u/s 433(e) of the Companies Act, 1956, was maintainable. The appellate court set aside the order of the learned single Judge and remitted the matter back for disposal on merits. Conclusion:The appellate court allowed the original side appeal, setting aside the order of the learned single Judge and remitting the matter for disposal on merits, holding that the claim was not time-barred, the E-mail constituted an acknowledgment of liability, the promissory note was admissible, and the winding-up petition was maintainable.
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2013 (4) TMI 874
Issues involved: Failure to fulfil export obligation against advance licences leading to demand of duty, interest, and penalty.
Summary:
The appeal before the Appellate Tribunal CESTAT CHENNAI involved the issue of the appellant's failure to fulfil export obligations against advance licences, resulting in a demand for duty, interest, and penalty. The appellants, engaged in the manufacture of bulk drugs and drug intermediates, had imported raw materials under the Advance Licence scheme but did not meet the export obligation. The Ld. Commissioner imposed the duty, interest, and penalty due to this non-compliance.
During the hearing, the appellant's advocate highlighted that the DGFT authorities had ordered the clubbing of advance licences through a letter dated 19.5.2011, which was subsequently communicated to the Commissioner of Customs via another letter dated 20.5.2011. The Joint Director General of Foreign Trade's letter dated 19.5.2011 informed about the clubbing of export obligations as per the relevant policy provisions. The Tribunal noted the importance of examining the matter in light of the DGFT's letter.
Consequently, the Tribunal set aside the impugned order and remanded the matter back to the Commissioner of Customs for fresh adjudication in accordance with the law. The adjudicating authority was directed to provide the appellants with an opportunity for a hearing before making a decision. The appeal was allowed by way of remand, and the stay application was disposed of. The decision was dictated and pronounced in open court by the Tribunal.
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2013 (4) TMI 873
bogus LTCG - denying the long term capital gain exemption claimed by the assessee u/s. 10(38) - shares which the assessee sold was a “penny stock” - manipulation of share stocks - bogus claim - additions made u/s. 153A - Liability of tax on assessee for gift amount credited from a person who is not a relative of the assessee nor he has any business connections - the assessee brother has already offered receipt of such gift from a non relative as his own income - HELD THAT:- according to the assessee since shares were held for a period of more than 12 months, therefore, the income from sale of such shares is long term capital gain and the same is exempt u/s.10(38). It is the case of the revenue that the income so claimed as exempt u/s.10(38) is not long term capital gain and has to be treated as “income from other sources” since the shares so sold are penny stocks and the assessee, neither in the past nor in subsequent years, has traded in such shares and earned such huge income. Further, Arun Agrawal family, who originally had claimed such long term capital gain as exempt had subsequently offered such income as business income in the returns filed and earning of such huge income is against all human probabilities.
Identical facts and circumstances we are of the considered opinion that the assessee is entitled to claim exemption u/s.10(38) of long term capital gain on account of sale of shares of Fast Tract Entertainment Ltd. decided by him. Accordingly, the order passed by the Ld. CIT(A) is set-aside and the AO is directed to allow the claim of the assessee.
Application of section 056(v) of income tax on the facts of the case, admittedly the provision was introduced by the Finance Act, 2004 and is applicable to any sum of money exceeding ₹ 25,000/- received from any person other than the persons specified in the said provision on or after 01-09-2004. In the instant case the assessee has received the gift on 24-05-2004 which was credited in the bank account of the firm “Siva Agro Industries” in which the assessee is a partner. Therefore, the provisions of section 56(v) are not applicable to the facts of the present case. Merely because the amount was credited to the capital account of the partner on 31-03-2005 cannot be a ground to apply the provisions of section 56(v) when the gift was received on 29-05- 2004 by the assessee and the same was credited to the bank account in the firm wherein he is a partner. In this view of the matter, we set-aside the order of the CIT(A) and direct the AO to delete the addition. This ground by the assessee is accordingly allowed.
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2013 (4) TMI 872
Issues Involved:
1. Deletion of addition on account of Arm's Length Price (ALP).
2. Deletion of addition on account of royalty paid to SEC Korea.
3. Deletion of addition on account of provision for warranty/after sale service compensation.
4. Deletion of addition on account of advertisement and sale promotion expenses (brand promotion).
5. Deletion of addition on account of advertisement and sale promotion expenses (capital in nature).
6. Deletion of addition on account of purchase of computer software.
7. Deletion of addition on account of deemed dividend u/s 2(22)(e).
8. Deletion of addition on account of recruitment and training expenses.
Summary:
1. Deletion of addition on account of Arm's Length Price (ALP):
The revenue questioned the deletion of Rs. 24,03,22,940/- by the CIT(A) on account of ALP. The TPO had adjusted the transfer prices of Class I transactions and accepted the arm's length price in respect of other transactions. The CIT(A) deleted the addition, applying current year data for comparability analysis. The Tribunal upheld the CIT(A)'s decision, noting that the CIT(A) had correctly used current year data and OP/Sales as the profit level indicator for better comparability analysis. The Tribunal also rejected the revenue's contention regarding the use of multiple year data.
2. Deletion of addition on account of royalty paid to SEC Korea:
The revenue questioned the deletion of Rs. 11,92,75,955/- by the CIT(A) on account of royalty. The AO had treated the royalty payment as capital expenditure. The CIT(A) accepted the royalty payment as revenue expenditure, noting that it was a running royalty linked to sales for technical assistance provided in the course of production. The Tribunal upheld the CIT(A)'s decision, finding that the royalty payment was deductible as revenue expenditure based on established legal principles.
3. Deletion of addition on account of provision for warranty/after sale service compensation:
The revenue questioned the deletion of Rs. 68,68,216/- by the CIT(A) on account of provision for warranty/after sale service compensation. The CIT(A) deleted the addition, noting that the reimbursement received from overseas AEs was under prior agreement and directly connected with the corresponding expenditure incurred. The Tribunal upheld the CIT(A)'s decision, treating the reimbursement as part of operating profit.
4. Deletion of addition on account of advertisement and sale promotion expenses (brand promotion):
The revenue questioned the deletion of Rs. 4,56,75,050/- by the CIT(A) on account of advertisement and sale promotion expenses (brand promotion). The AO had made an ad hoc disallowance, alleging that the expenses promoted the 'Samsung' brand in India. The CIT(A) deleted the addition, following the decision of the Tribunal in the case of Sony India (P) Ltd. The Tribunal upheld the CIT(A)'s decision, noting that the expenses were incurred for promoting the sales of the assessee's products in India.
5. Deletion of addition on account of advertisement and sale promotion expenses (capital in nature):
The revenue questioned the deletion of Rs. 4,56,75,050/- by the CIT(A) on account of advertisement and sale promotion expenses (capital in nature). The AO had treated the expenses as capital expenditure resulting in an enduring benefit. The CIT(A) deleted the addition, following the decision of the Tribunal in the assessee's own case for earlier years. The Tribunal upheld the CIT(A)'s decision, noting that the expenses were revenue in nature.
6. Deletion of addition on account of purchase of computer software:
The revenue questioned the deletion of Rs. 35,36,485/- by the CIT(A) on account of purchase of computer software. The AO had treated the software expenses as capital expenditure. The CIT(A) deleted the addition, accepting the assessee's claim that the expenses were revenue in nature. The Tribunal upheld the CIT(A)'s decision, noting that the software did not result in an enduring benefit and had a short utility shelf life.
7. Deletion of addition on account of deemed dividend u/s 2(22)(e):
The revenue questioned the deletion of Rs. 4,40,92,460/- by the CIT(A) on account of deemed dividend u/s 2(22)(e). The AO had made the addition, treating inter-corporate deposits from SEIIT as deemed dividend. The CIT(A) deleted the addition, noting that the assessee was not a shareholder of SEIIT and that SEIIT was a subsidiary of SEC Korea, a widely held company. The Tribunal upheld the CIT(A)'s decision, following the decision in the case of Bhaumik Color Pvt. Ltd.
8. Deletion of addition on account of recruitment and training expenses:
The revenue questioned the deletion of Rs. 12,40,743/- by the CIT(A) on account of recruitment and training expenses. The AO had treated the expenses as capital expenditure. The CIT(A) deleted the addition, noting that the expenses were ongoing and fully deductible in the year of incurring. The Tribunal upheld the CIT(A)'s decision, following the Tribunal's order in the assessee's own case for earlier years.
Conclusion:
The Tribunal upheld the CIT(A)'s decision on all issues, rejecting the revenue's grounds of appeal and dismissing the appeal. The Tribunal found that the CIT(A)'s decisions were based on relevant legal principles and established precedents.
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2013 (4) TMI 871
Issues involved: Levy of penalty u/s. 271(1)(c) for Assessment Years 2003-04 and 2004-05.
For Assessment Year 2003-04:
The assessee, a partnership firm, filed its return declaring 'NIL' income after claiming deduction u/s.80IB(10). The Assessing Officer disallowed the deduction in the assessment u/s.143(3) r.w.s.153A, leading to penalty proceedings u/s.271(1)(c). The assessee contended that the assessment was final and no incriminating material was found during the search. The High Court's decision supported the assessee's argument. The Tribunal held that the penalty was not justified as the assessment had attained finality before the search, and the disallowances were not based on any new findings.
For Assessment Year 2004-05:
The grounds raised were identical to the previous year. The Tribunal, following the same reasoning, allowed the appeal and cancelled the penalty.
In conclusion, both appeals filed by the assessee were allowed, and the penalties u/s.271(1)(c) for both assessment years were cancelled.
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