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2012 (9) TMI 1139
Issues involved: Appeal against levy of interest u/s 234D for AY 1996-97.
The appeal was initially dismissed by ITAT due to lack of COD approval, but later recalled for adjudicating the assessee's ground against the levy of interest u/s 234D. The only ground remaining for consideration was the levy of interest u/s 234D.
Interest u/s 234D is chargeable when refund is granted to the assessee u/s 143(1) and demand is raised on regular assessment. In this case, refund was granted by CIT(A) and then demand was raised due to partial reversal by ITAT, making Section 234D inapplicable.
The dispute arose regarding whether the refund was granted as per CIT(A)'s order or u/s 143(1), determining the applicability of interest u/s 234D. Section 234D specifies the conditions for charging interest on excess refund granted to the assessee.
The Tribunal observed that interest u/s 234D is chargeable only if refund is granted u/s 143(1) and later reduced on regular assessment. Due to ambiguity in the order, the matter was remanded to the Assessing Officer for factual verification and readjudication of interest under Section 234D.
The decision deemed the assessee's appeal partly allowed for statistical purposes, with the case remanded to the Assessing Officer for clarification on the charging of interest u/s 234D.
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2012 (9) TMI 1137
The Calcutta High Court dismissed an appeal in the case of Virgin Creation vs. ITO Ward-32(4), Kolkata as no appeal was preferred against the decision of the Income-Tax Appellate Tribunal A-Bench.
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2012 (9) TMI 1136
Issues Involved:
1. Addition of Rs. 5,00,000 as suppressed professional income for AY 1999-2000.
2. Addition of Rs. 32,45,485 as suppressed professional income for AY 2000-01.
3. Addition of Rs. 21,76,725 as suppressed professional income for AY 2001-02.
4. Addition of Rs. 14,30,225 as suppressed professional income and Rs. 10,33,850 towards suppression of investment for AY 2002-03.
5. Addition of Rs. 12,69,412 as suppressed professional income for AY 2003-04.
6. Addition of Rs. 11,04,743 as suppressed professional income for AY 2004-05.
Summary:
I. ITA No.87/PN/2011 (Asst. Year 1999-2000):
The issue revolves around the addition of Rs. 5 lakhs made by the Assessing Officer (AO) as suppressed professional income. The AO observed that an agreement between the assessee and Shri Doke indicated a cash payment of Rs. 5 lakhs, which was not recorded in the books of account. The assessee argued that the amount was received back and not recorded due to an inadvertent mistake. However, the tribunal upheld the addition, stating that the assessee failed to demonstrate consistent cash balance maintenance and the burden of proof was on the assessee.
II. ITA No.88/PN/2011 (Asst. Year 2000-01):
The AO made an addition of Rs. 32,45,485 as suppressed professional income, which included Rs. 5,04,600 and Rs. 27,40,885. The AO noted unrecorded transactions and estimated suppressed receipts at 25% of the disclosed income. The tribunal found that the addition should be restricted to Rs. 20 lakhs based on incriminating material, giving relief to the assessee by reducing the addition to Rs. 14,95,400 after considering the already offered Rs. 5,04,600. The tribunal dismissed the plea to bifurcate the receipts between the assessee and his wife.
III. ITA No.89/PN/2011 (Asst. Year 2001-02):
The AO estimated suppressed professional receipts at 20% of the total receipts, resulting in an addition of Rs. 21,76,725. The tribunal reduced the estimation to 10%, citing the lack of direct evidence and relying on precedents. The tribunal directed the AO to determine the income based on 10% estimated suppressed receipts.
IV. ITA No.90/PN/2011 (Asst. Year 2002-03):
The tribunal admitted additional grounds raised by the assessee and addressed two additions: Rs. 14,30,225 towards suppression of professional income and Rs. 10,33,850 towards suppression of investment. The tribunal upheld the addition of Rs. 10,22,850, rejecting the assessee's argument of available cash balance. For the addition of Rs. 14,30,225, the tribunal sustained the addition at 10%, considering the modus operandi and circumstantial evidence. The tribunal allowed the plea for set-off of 10% of the addition sustained for the period from 01-04-2001 to 30-06-2001.
V. ITA No.91/PN/2011 (Asst. Year 2003-04):
The AO estimated suppressed receipts at 20% of the total operation receipts, resulting in an addition of Rs. 12,96,412. The tribunal directed the AO to sustain the addition at 10% of the total accounted operation receipts, following the reasoning in AY 2001-02.
VI. ITA No.92/PN/2011 (Asst. Year 2004-05):
The AO made an addition of Rs. 11,04,743 towards suppressed professional receipts based on incriminating evidence found during the search. The tribunal upheld the estimation made by the AO, considering the substantial incriminating evidence and the admitted modus operandi of the assessee.
Conclusion:
Assessee's appeals for AYs 1999-2000 and 2004-05 are dismissed, while appeals for AYs 2000-01, 2001-02, 2002-03, and 2003-04 are partly allowed.
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2012 (9) TMI 1135
Validity of order passed by the Disciplinary Authority - Appellant remitted back to the Disciplinary Committee - disciplinary proceedings as vitiated due to the participation of the Principal, who was biased against the Appellant - Held that:- The order passed by the Disciplinary Committee cannot be sustained on the short ground that Smt. Neera Sharma was a member of the aforesaid Disciplinary Committee. In our opinion, she was clearly disqualified from participating in any deliberations of the Disciplinary Committee as she had appeared as Management Witness No. 2. It is well settled principle of law that no person can be a Judge in his own cause. Having supported the case of the management, it was not appropriate for Smt. Neera Sharma to participate in the proceedings of the Disciplinary Committee.
When the appeal was being decided by the Disciplinary Committee with regard to the legality or otherwise of the order passed by the Disciplinary Authority, the decision of the Disciplinary Committee not only had to be fair but it also had to appear, to be fair. This is in conformity with the principle that justice must not only be done, but must also appear to be done. Actual and demonstrable fair play must be the hallmark of the proceedings and the decisions of the administrative and quasi judicial tribunals. In particular, when the decisions taken by these bodies are likely to cause adverse civil consequences to the persons against whom such decisions are taken. For the aforesaid reasons, the order dated 18th/19th December, 2008 passed by the Disciplinary Committee is hereby quashed and set aside.
It would be inappropriate at this stage to relegate the Appellant back to the Disciplinary Committee. In the interest of justice, we permit the Appellant to challenge the order of the Disciplinary Authority dated 8th January, 2008 before Punjab School Education Tribunal, Mohali. The appeal shall be filed by the Appellant within thirty days from today. Since the order of the Disciplinary Authority was passed on 8th January, 2008, the appeal may well be beyond limitation period.
Keeping in view the peculiar facts and circumstances of this case, we direct that the appeal filed by the Appellant shall be decided by the aforesaid Education Tribunal on merits and the same shall not be rejected on the ground of limitation. If the appeal is filed by the Appellant within the period stipulated above, the Education Tribunal shall take final decision thereon within a period of three months.
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2012 (9) TMI 1134
Issues involved: Challenge to deletion of addition on account of low recovery of oil u/s Income Tax Act for assessment year 2007-2008.
Summary:
The appellant-revenue challenged the deletion of an addition of Rs. 52,44,064/- made on account of low recovery of oil by the Income-tax Appellate Tribunal. The assessee, engaged in the business of de-oiled cake powder, had shown a total loss of Rs. 53,79,000/- for the assessment year, with a gross profit of Rs. 35,72,930/-. The Assessing Officer recalculated the yield of oil at 38.94% instead of the declared 35.26%, resulting in the addition of Rs. 52,44,064/- to the income. The Commissioner (Appeals) allowed the appeal, noting that the Assessing Officer misdirected himself and directed the deletion of the addition. The Tribunal upheld this decision based on expert opinions and consistent methods of computing yield by the assessee.
The Tribunal, in its order, relied on previous decisions in the assessee's case and concurred with the Commissioner (Appeals)'s findings. The Commissioner (Appeals) had observed that the Assessing Officer had proceeded on an erroneous understanding of the oil extraction process and that the yield declared by the assessee was reasonable. No unaccounted production or sales were found during the survey. The Tribunal found no infirmity in the Commissioner (Appeals)'s reasoning and dismissed the appeal, as no substantial question of law arose from the concurrent findings of fact.
In conclusion, the Tribunal's order, based on the Commissioner (Appeals)'s findings, was upheld, and the appeal challenging the deletion of the addition on account of low recovery of oil was dismissed.
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2012 (9) TMI 1133
The right of the accused to a fair trial - examination of an accused u/s 313 Cr.P.C. - Inspection of certified copies or in the alternative for of certain unmarked and unexhibited documents - the examination of the appellant (accused No.2) u/s 313 Cr.P.C. is going on, While such examination of the appellant was midway and she had answered over 500 questions out of the contemplated double the number, an application was filed by the appellant before the learned trial court seeking certified copies of certain unmarked and unexhibited documents which were claimed to be in the custody of the court on being so forwarded alongwith the report of investigation under Section 173(5) Cr.P.C. the appellant filed application before the learned trial court, seeking an inspection of the said unmarked and unexhibited documents in respect of which the earlier application was filed but rejected.
HELD THAT:- This Court do not see as to how the appellant (second accused) can be denied an access to the documents in respect of which prayers have been made in the applications. While the anxiety to bring the trial to its earliest conclusion has to be shared it is fundamental that in the process none of the well entrenched principles of law that have been laboriously built by illuminating judicial precedents is sacrificed or compromised. In no circumstance, the cause of justice can be made to suffer, though, undoubtedly, it is highly desirable that the finality of any trial is achieved in the quickest possible time. In view of what has been stated above and to balance the need to bring the prosecution in the present case to its earliest conclusion and at the same time to protect and preserve the right of the accused to a fair trial we are of the view that the following directions would take care of the conflicting interests that have surfaced in the present case:-
(1)The accused No.2, i.e. the appellant herein, be allowed an inspection of the unmarked and unexhibited documents referred to by her in the application filed in the Court of XXXVI Additional City Civil & Sessions Judge, Bangalore;
(2) Such inspection will be completed within a period of 21 days from the date of receipt of this order by the learned trial court. The venue of such inspection and also the persons who will be permitted to be present at the time of inspection will be decided by the learned trial court.
(3) The right of inspection conferred by this order will not affect the validity of any part of the trial till date, including, the examination of the accused No.1 under Section 313 Cr.P.C. which has since been completed or any part of such examination of the second accused that may have been completed in the meantime.
(4) In the event the third and the fourth accused also desire inspection of the unmarked and unexhibited documents such inspection will be allowed by the learned trial court. In such an event the process of inspection will also be simultaneously carried out and completed within the period of 21 days stipulated in the present order.
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2012 (9) TMI 1132
Issues involved:
The judgment involves the assessment of a foundation's income tax liability based on a corpus donation of Rs. 3 crores, the application of sections u/s.10(21), u/s.35(1)(ii), and u/s.12A of the Income Tax Act, and the treatment of capital expenditure.
Assessment of Corpus Donation:
The foundation, not registered u/s.12A, received a corpus donation of Rs. 3 crores. The AO held it as taxable income due to lack of u/s.35(1)(ii) approval. The CIT(A) upheld this decision, rejecting the argument that corpus donations are capital receipts not subject to tax. The Tribunal directed the AO to reconsider, emphasizing the gift nature of the donation and pending writ petition challenging the denial of u/s.35(1)(ii) approval.
Application of Income Tax Sections:
The foundation argued that since it was recognized u/s.35(1)(ii) until 31-03-2004, the corpus donation should not be taxed. The CIT(A) disagreed, citing lack of u/s.12A registration and scientific research organization status. The Tribunal directed a fresh examination considering the gift nature of the donation and pending writ petition outcome.
Treatment of Capital Expenditure:
The foundation claimed capital expenditure of Rs. 8,42,461 should reduce taxable income, but the AO and CIT(A) did not allow it. The Tribunal directed the AO to reevaluate the issue, considering the gift nature of the corpus donation and pending writ petition outcome.
The Tribunal allowed the appeal for statistical purposes, directing the AO to reconsider the taxability of the corpus donation as a gift and to consider the pending writ petition outcome.
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2012 (9) TMI 1131
Issues involved: Petition for winding up u/s 433(e) read with Section 434 of the Companies Act based on non-payment of debt amounting to Rs. 2,26,05,872/- along with interest.
Summary:
1. The petitioner sought winding up of the respondent company based on non-payment of a debt amounting to Rs. 2,26,05,872/- along with interest. The petitioner had rented premises from the respondent and deposited various sums as security and rent.
2. The petitioner deposited a total of Rs. 2 crores with the respondent for the rented premises, along with additional sums for rent. The petitioner later requested the return of the security deposit, which the respondent allegedly failed to refund despite reminders.
3. The respondent's defense was based on a claim that the payment made by the petitioner was part of an incentive scheme for a former CEO, Mr. Anshumaan Swami, and not related to the rented premises. The respondent argued that the sum of Rs. 2.5 crores was paid as part of profit incentives.
4. The court found the respondent's defense to be unreliable and in contrast to the documents on record. It was established that the debt was due and the respondent was unwilling or unable to pay. The petition for winding up was admitted, with a deferred publication of the citation for four weeks to allow the respondent to pay the debt.
5. The court referred to previous judgments emphasizing that defenses raised solely to avoid winding up proceedings should not be entertained. The respondent's failure to reply to the legal notice further supported the petitioner's case.
6. The court concluded that the debt was established within the meaning of Section 434 of the Companies Act, and the respondent's defense was deemed non-creditworthy. The petition for winding up was admitted, with a deadline set for payment of the debt, failing which publication of the winding up notice would proceed.
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2012 (9) TMI 1130
Issues Involved:
1. Rejection of application under Rule 46A of the Income Tax Rules.
2. Confirmation of addition of Rs. 1,39,45,384/- as deemed dividend u/s 2(22)(e).
3. Deletion of penalty u/s 271(1)(c) of the IT Act, 1961.
Summary:
Issue 1: Rejection of Application under Rule 46A
The assessee argued that the additional evidence under Rule 46A was withdrawn due to a misconception. The CIT(A) dismissed the fresh application, stating the document did not impact the applicability of section 2(22)(e). The Tribunal noted that the assessee had pledged properties to the bank for the company's benefit, which was not adequately considered by the CIT(A).
Issue 2: Addition of Rs. 1,39,45,384/- as Deemed Dividend u/s 2(22)(e)
The AO treated the amount as deemed dividend based on the tax audit report and the peak debit balance in the assessee's account with the company. The assessee contended that the transactions were mutual deposits, not loans or advances, and were for the mutual benefit of the company and the assessee. The Tribunal agreed, stating the transactions were business-related and not gratuitous loans, thus not falling under section 2(22)(e). The Tribunal relied on the decision of the Hon'ble Calcutta High Court in Pradip Kumar Malhotra vs. CIT, which held that advances given in return for an advantage to the company are not deemed dividends.
Issue 3: Deletion of Penalty u/s 271(1)(c)
The CIT(A) deleted the penalty imposed by the AO, as the assessee substantiated that the money received was in the nature of deposits. The Tribunal upheld this decision, noting that since the addition was deleted, no penalty could be levied.
Conclusion:
The appeal of the assessee was allowed, and the appeal of the Revenue was dismissed. The Tribunal directed the deletion of the addition made u/s 2(22)(e) and the cancellation of the penalty u/s 271(1)(c).
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2012 (9) TMI 1129
Issues Involved:
1. Whether the manufacture, marketing, and sale of ERLOCIP by the defendant infringe the plaintiffs' Indian Patent 196774?
2. Whether the Indian Patent 196774 is liable to be revoked based on the grounds raised in the written statement and counter-claim of the defendant?
3. Whether the plaintiffs are entitled to permanent injunction as prayed for?
4. Whether the defendant/counter-claimant proves that the plaintiffs' subsequent US Patent 6900221 indicates that the compound of claim No. 1 of the suit patent is a mixture of two Polymorph A and B Compounds and needs to be separated to perform and get the claimed compound for acceptable efficacy, and its effect on the plaintiffs' patent?
5. Relief.
Summary of Judgment:
Issue 1: Infringement of Patent
The plaintiffs failed to establish that the defendant's product, ERLOCIP, infringes their patent IN'774. The plaintiffs did not provide sufficient evidence to show that the defendant's product corresponds exactly with the patented compound Erlotinib Hydrochloride. The court found that the plaintiffs' product, Tarceva, is a Polymorphic version B of the compound and not the same as the patented compound. The plaintiffs did not discharge their burden of proof to show infringement, and the court applied the Catnic approach, which considers the role of variants in determining infringement. The plaintiffs' indirect route of showing infringement through admissions and product labeling was insufficient. Therefore, the issue was decided in favor of the defendant.
Issue 2: Revocation of Patent
The defendant raised several grounds for revocation, including lack of inventive step, violation of Section 3(d), and non-disclosure under Section 8. The court found that the defendant did not discharge the burden of proof to show obviousness or lack of inventive step. The court also found that the defendant failed to establish that the suit patent was a new form of a known substance under Section 3(d). However, the court found that the plaintiffs violated Section 8 by not disclosing the subsequent US patent application. Despite this, the court exercised its discretion not to revoke the patent solely on this ground. Therefore, the issue was decided in favor of the plaintiffs.
Issue 3: Permanent Injunction
Given the findings on Issue 1, the plaintiffs were not entitled to a permanent injunction. The court found that the defendant did not infringe the plaintiffs' patent, and therefore, no injunction could be granted. The issue was decided against the plaintiffs.
Issue 4: Subsequent US Patent 6900221
The court found that the defendant proved that the plaintiffs' subsequent US Patent 6900221 indicated that the compound of claim No. 1 of the suit patent is a mixture of two Polymorph A and B Compounds. The court also found that there was a need for separation to achieve acceptable efficacy, and this had an effect on the plaintiffs' patent. The issue was decided in favor of the defendant.
Issue 5: Relief
In light of the findings on the other issues, the court dismissed both the suit and the counter-claim. The plaintiffs were not entitled to any relief, including damages or a permanent injunction. The issue was decided against the plaintiffs.
Conclusion:
The suit (CS(OS) No. 89/2008) and the counter-claim (C.C. No. 52/2008) were both dismissed, with no order as to costs.
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2012 (9) TMI 1128
Issues involved: Claim for dishonored cheques, winding-up petition, cancellation of conveyance, maintainability of winding-up petition alongside civil suit.
Summary:
Claim for Dishonored Cheques:
The appeal pertains to a claim for the value of two dishonored cheques amounting to Rs. 43.4 Lacs issued by the respondent in favor of the appellant as part consideration for a flat at Picnic Garden. The respondent claimed they had sold and conveyed the flat for a total of Rs. 48.4 Lacs, with three account payee cheques. Two cheques of Rs. 25 Lacs and Rs. 18.4 Lacs were dishonored, leading to a winding-up petition and subsequent legal actions.
Winding-Up Petition and Cancellation of Conveyance:
The respondent filed a winding-up petition and a suit on the same cause of action, claiming cancellation of the conveyance. The appellant contended that the cheques were not for presentation but as part of a guarantor arrangement for another company. The court rejected the appellant's defense as not bona fide, leading to the admission of the winding-up petition.
Maintainability of Winding-Up Petition Alongside Civil Suit:
The appellant argued that the winding-up petition was premature as the suit for cancellation of the conveyance was pending. The respondent contended that both proceedings could proceed simultaneously as the reliefs sought were distinct. Legal precedents were cited by both parties to support their arguments.
Court's Decision:
After considering the facts and legal arguments, the court upheld the decision to admit the winding-up petition, stating that a mere pending civil suit on the same cause of action does not render a winding-up petition not maintainable. The court found that the dishonored cheques were an admitted fact, leading to the dismissal of the appeal and rejection of the stay application.
In conclusion, the court dismissed the appeal, stating that the winding-up petition was rightly admitted and did not warrant interference. No costs were awarded, and the stay application was rejected.
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2012 (9) TMI 1127
Issues involved: Interpretation of Section 6(3) of the Right to Information Act regarding transfer of RTI application to other public authorities, appointment of CPIO in Ministry of Finance, legality of presenting garland made of currency notes to public functionary, and actions to be taken if such act is found to be irregular/illegal.
Interpretation of Section 6(3) of RTI Act:
The Appellant filed an RTI application to the Ministry of Finance of Central Government, which was initially returned on the grounds of lack of CPIO. The CIC directed the Ministry to respond, but the CPIO of the Department of Economic Affairs advised the Appellant to approach other public authorities for certain information. The Appellate Authority upheld this decision, stating that the CPIO was not obliged to transfer the RTI application to other public authorities as per Section 6(3) of the RTI Act.
Legality of presenting garland made of currency notes:
The Appellant sought information regarding the legality of presenting a garland made of currency notes to a public functionary and the possible actions the Government might take if such act was irregular/illegal. The Commission noted that while some queries may not lead to identifiable information, given the public attention and implications, a more categorical reply should have been provided to the Appellant.
Appointment of CPIO in Ministry of Finance:
The Commission found it odd that the Ministry of Finance did not have a designated CPIO despite having a Finance Secretary. It directed the CPIO of the Economic Affairs to ensure the appointment of a CPIO for the Ministry within one month and to provide the Appellant with relevant RBI guidelines within 10 working days.
Clarification on Public Authorities for remaining queries:
The Commission acknowledged the uncertainty regarding the relevant public authority for the remaining queries but did not fault the CPIO for suggesting the Department of Revenue and the Ministry of Home Affairs. The appeal was disposed of accordingly, with copies of the order provided to the parties free of cost.
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2012 (9) TMI 1126
Issues Involved:
The issues involved in this judgment are the validity of possession notice issued by a bank without considering the borrower's representations u/s 13(3A) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and the jurisdictional error committed by the bank in taking possession before disposing of the borrower's representations.
Issue 1: Validity of Possession Notice
The petitioner received a demand notice u/s 13(2) of the Act and submitted representations on 19th March, 2012, and 30th April, 2012, u/s 13(3A). The bank, without considering and disposing of these representations, issued a possession notice. The petitioner challenged this action through a writ petition, claiming that possession could not be taken without disposing of the representations. The Court found that the bank dispatched a response to the representations after the writ petition was filed, indicating an attempt to frustrate the petition. The response lacked an official memo number, raising doubts about its authenticity. The Court held that the bank's actions were questionable and set aside the response, directing the bank to reconsider the representations.
Issue 2: Jurisdictional Error
The bank issued the possession notice on 20th June, 2012, before disposing of the borrower's representations submitted on 19th March and 30th April, 2012. This premature action was deemed a gross jurisdictional error by the Court. The Act mandates that the bank must decide on any representations or objections from the borrower before taking measures u/s 13(4). Since the bank failed to follow this procedure, the possession notice was deemed invalid. The Court directed the bank to reconsider the borrower's representations and communicate its decision promptly. Until then, the possession notice was to have no further effect, ensuring the petitioner's possession remained undisturbed.
Conclusion
The Court set aside the response sent by the bank, instructing the bank to reconsider the borrower's representations and communicate a fresh decision. The possession notice was deemed invalid due to the bank's failure to dispose of the representations before taking possession. The petitioner's possession was protected until the bank's decision was communicated. The writ petition was disposed of with no costs awarded.
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2012 (9) TMI 1125
Issues Involved:
1. Liability of the appellant post-amalgamation with KFL.
2. Alleged price manipulation and undue advantage by the appellant.
3. Delay in the completion of proceedings.
Summary:
1. Liability of the appellant post-amalgamation with KFL:
The appellant argued that it should not be liable for the actions of KFL, which merged with the appellant in 2002, as the alleged wrongdoing occurred before the merger. The appellant emphasized clause 14(iii) and (iv) of the explanatory statement u/s 393 of the Companies Act, 1956, and clause 5 of the amalgamation scheme, arguing that only pending legal proceedings at the time of amalgamation would bind the appellant. The respondent countered that all pending dues and obligations of KFL survive post-amalgamation. The Tribunal concluded that the liabilities and obligations of KFL continue against the appellant post-amalgamation, supported by an undertaking from the appellant to SEBI on March 8, 2002, agreeing to respond to all prospective actions regarding KFL.
2. Alleged price manipulation and undue advantage by the appellant:
The appellant allegedly manipulated the price of Kopran shares by purchasing shares at a lower price before issuing a "Strong Buy" recommendation and then selling them at a higher price through cross deals. The appellant denied any wrongdoing, claiming the purchases were made in the ordinary course of business without knowledge of the research report. However, the Tribunal found that the appellant had clear knowledge of the research report and that the purchases were influenced by it. The Tribunal noted that the appellant engaged in 45 cross deals, contributing significantly to the volume increase and subsequent price rise of the scrip. The Tribunal held that the appellant's actions were contrary to the ethics of a broker and derived undue profit by manipulating the market.
3. Delay in the completion of proceedings:
The appellant raised strong objections to the prolonged delay in the proceedings, arguing that the initial notice was issued six years after the investigation period, and the hearing took place nine years later. The Tribunal acknowledged the delay and its impact on the appellant's ability to trace relevant documents. While upholding the violation of FUTP Regulations and the code of conduct for stock brokers, the Tribunal found the punishment of suspending the certificate of registration for one month to be disproportionate. Considering the mitigating factors, including the delay, the Tribunal decided that a warning to the appellant to be careful in the future would be reasonable and meet the ends of justice.
Conclusion:
The appeal was disposed of with a warning to the appellant to be careful in the future, and no costs were awarded.
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2012 (9) TMI 1124
The judgment by the Appellate Tribunal dismissed the appeal for waiver of predeposit of cenvat duty and penalty amounting to Rs. 68,50,892. The applicant, a public sector undertaking, failed to provide required clearance from the Committee on Disputes. The appeal was filed on 17.09.2010, and without the necessary evidence, it was dismissed.
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2012 (9) TMI 1123
Issues Involved:
1. Jurisdiction of Civil Court to restrain International Commercial Arbitration.
2. Validity and enforceability of the arbitration clause in the contract.
3. Limitation period for referring disputes to arbitration under GAFTA Rules.
4. Applicability of GAFTA Rules and English Arbitration Act to the arbitration proceedings.
5. Justification for granting or vacating interim injunction.
Summary:
Jurisdiction of Civil Court to restrain International Commercial Arbitration:
The primary issue was whether a Civil Court has the power and jurisdiction to restrain a party from making reference to an International Commercial Arbitration and resolving the dispute through such arbitration. The court noted that the contract containing the arbitration clause was duly executed by the parties. The court emphasized that a Civil Court retains jurisdiction unless an application for referring the parties to arbitration is made u/s 45 of the Arbitration and Conciliation Act, 1996, which was not done in this case.
Validity and enforceability of the arbitration clause in the contract:
The appellant contested the enforceability of the arbitration clause, arguing that there was no agreement to refer disputes to arbitration under GAFTA Rules. The court found that the contract explicitly contained an arbitration clause, and both parties had agreed to resolve disputes through GAFTA arbitration. The court held that the arbitration clause was valid and enforceable.
Limitation period for referring disputes to arbitration under GAFTA Rules:
The appellant argued that the reference to arbitration was time-barred according to GAFTA Rules, specifically clause 2.2(d), which requires disputes to be referred within 60 days from the notice of a dispute. The court noted that the dispute arose on 22nd March 2011, and the notice for arbitration was issued on 28th July 2011, which was beyond the stipulated time limit. However, the court stated that the arbitral tribunal has the discretion to extend the time limit under Rule 21(a) of GAFTA Rules.
Applicability of GAFTA Rules and English Arbitration Act to the arbitration proceedings:
The court highlighted that the GAFTA Arbitration Rules designate England as the juridical seat of arbitration and that the provisions of the English Arbitration Act, 1996, apply. The court referred to various Supreme Court judgments, including Bharat Aluminium Co. vs. Kaiser Aluminium Technical Service, Inc., to support the view that Part I of the Arbitration and Conciliation Act, 1996, does not apply to arbitrations seated outside India unless explicitly agreed otherwise by the parties.
Justification for granting or vacating interim injunction:
The court examined whether the learned single Judge was justified in vacating the interim injunction that restrained the respondent from proceeding with the arbitration. The court held that the parties had agreed to resolve disputes through GAFTA arbitration, and the arbitration clause was valid. The court also noted that the arbitration proceedings were not oppressive or vexatious and that the appellant was aware of the arbitration clause at the time of executing the contract. Consequently, the court found no valid grounds to grant an interim injunction and upheld the decision to vacate it.
Conclusion:
The court dismissed the appeal and the cross-objection, holding that the arbitration clause was valid and enforceable, the reference to arbitration was not time-barred, and the interim injunction was rightly vacated. The court emphasized the importance of respecting the agreed arbitration process and the jurisdiction of the arbitral tribunal under GAFTA Rules and the English Arbitration Act, 1996.
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2012 (9) TMI 1122
The Supreme Court dismissed a civil appeal due to the appellant's failure to deposit Rs. 2,000 to the Supreme Court Employees Mutual Fund despite sufficient time granted. The citation is 2012 (9) TMI 1122 - SC Order.
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2012 (9) TMI 1121
Issues Involved:
1. Validity of the impugned regulations and statutory order under the Food Safety and Standards Act, 2006.
2. Whether the Cigarettes Act, 2003 occupies the entire field or if the Food Safety Act, 2006 is the comprehensive law on the subject.
3. Violation of petitioners' fundamental rights under Articles 14, 19(1)(g), 301, and 304 of the Constitution.
4. Requirement of following principles of natural justice by the Food Safety Commissioner.
5. Position prior to 19 July 2012.
Summary:
Issue 1: Validity of the Impugned Regulations and Statutory Order
The petitioners, companies engaged in manufacturing and distributing pan masala and gutka, challenged the validity of Regulation 2.3.4 and Regulation 3.1.7 of the Food Safety and Standards (Prohibition & Restrictions on Sales) Regulations, 2011 and the statutory order dated 19 July 2012 issued by the Commissioner of Food Safety, Maharashtra State, u/s 30(2)(a) of the Food Safety Act. The regulations prohibit the use of tobacco and nicotine in any food products and restrict the use of anticaking agents.
Issue 2: Cigarettes Act, 2003 vs. Food Safety Act, 2006
The petitioners argued that the Cigarettes and other Tobacco Products (Prohibition of Advertisements) and Regulation of Trade & Commerce, Production, Supply & Distribution Act, 2003 (COTPA) is a "comprehensive law on tobacco" and that the Food Safety Act, 2006 does not cover tobacco products. However, the court held that the Food Safety Act, 2006 is a comprehensive legislation on food safety, which includes gutka and pan masala, and that the 2011 Regulations under the Food Safety Act prevail over the COTPA Act, 2003.
Issue 3: Violation of Fundamental Rights
The petitioners claimed that the impugned order violated their fundamental rights under Articles 14 and 19(1)(g) of the Constitution. The court referred to the Supreme Court's judgment in Ghodawat, which held that a total ban on gutka was unreasonable. However, the court noted that the harmful effects of gutka and pan masala were now well-documented, and the Food Safety Act, 2006, along with the 2011 Regulations, aimed to ensure safe and wholesome food. The court found that the prohibition was a reasonable restriction in the interest of public health.
Issue 4: Principles of Natural Justice
The petitioners contended that the Food Safety Commissioner should have given them an opportunity to be heard before issuing the impugned order. The court held that the Food Safety Commissioner, acting as a delegate of Parliament, issued a legislative order under section 30(2)(a) of the Food Safety Act, 2006. Therefore, the principles of natural justice did not apply.
Issue 5: Position Prior to 19 July 2012
The petitioners argued that there was no total ban on gutka and pan masala prior to the impugned order. The court noted that the 2011 Regulations were laid before Parliament and not modified, indicating legislative intent to include gutka and pan masala within the scope of the Food Safety Act, 2006.
Conclusion:
The court rejected all prayers for interim reliefs, including the prayer for interim stay against the implementation of the impugned statutory order dated 19 July 2012. The court found that the Food Safety Act, 2006 is a comprehensive legislation on food safety, and the impugned regulations and order were in the interest of public health and did not violate the petitioners' fundamental rights.
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2012 (9) TMI 1120
Issues Involved:
1. Addition of MODVAT credit to closing stock u/s 145A.
2. Disallowance of warranty provision.
3. Exclusion of 90% of scrap sales from profit for deduction u/s 80HHC.
4. Inclusion of Sales Tax and Excise Duty in total turnover for deduction u/s 80HHC.
5. Disallowance of depreciation on motor car.
6. Disallowance of club membership payments.
7. Prepayment of deferment of sales tax loan.
8. Reduction of 90% of gross commission from business income u/s 80HHC.
9. Reduction of 90% of compensation received on termination of agency from business income.
10. Reduction of 90% of gross interest from business income.
11. Levy of interests u/s 234A, 234B, 234C & 234D.
Summary:
1. Addition of MODVAT credit to closing stock u/s 145A:
The AO added Rs. 67,27,141 to the closing stock valuation as per section 145A, which was deleted by CIT(A). ITAT upheld the AO's application of the inclusive method but remanded the issue back to the AO for recomputation as per ICAI guidelines. The ground was allowed for statistical purposes.
2. Disallowance of warranty provision:
The AO disallowed Rs. 43,97,184 as a contingent liability, which was deleted by CIT(A) based on precedents. ITAT upheld CIT(A)'s decision, recognizing warranty provision as an ascertainable liability. The ground was rejected.
3. Exclusion of 90% of scrap sales from profit for deduction u/s 80HHC:
The AO excluded Rs. 26,74,969 from total turnover, which CIT(A) included based on precedents. ITAT remanded the issue back to the AO due to conflicting precedents in the assessee's own case. The ground was allowed for statistical purposes.
4. Inclusion of Sales Tax and Excise Duty in total turnover for deduction u/s 80HHC:
The AO included Rs. 5,11,38,743 in total turnover, which CIT(A) excluded based on relevant decisions. ITAT upheld CIT(A)'s decision, following the Supreme Court's ruling in Catapharma (India) P. Ltd. The ground was rejected.
5. Disallowance of depreciation on motor car:
The AO restricted depreciation to 20%, which was upheld by CIT(A). ITAT reversed CIT(A)'s decision, allowing 40% depreciation based on consistency in previous years. The ground was allowed.
6. Disallowance of club membership payments:
The AO disallowed Rs. 2,17,007 as personal expenses, which was upheld by CIT(A). ITAT reversed CIT(A)'s decision, recognizing the expenses as legitimate business expenses. The ground was allowed.
7. Prepayment of deferment of sales tax loan:
The AO's decision was reversed by CIT(A) based on precedents. ITAT upheld CIT(A)'s decision, recognizing the amount as a capital reserve. The ground was allowed.
8. Reduction of 90% of gross commission from business income u/s 80HHC:
The AO excluded the commission, which was upheld by CIT(A). ITAT remanded the issue back to the AO to examine the nexus between commission income and direct expenses. The ground was allowed for statistical purposes.
9. Reduction of 90% of compensation received on termination of agency from business income:
The AO excluded the compensation, which was upheld by CIT(A). ITAT remanded the issue back to the AO for fresh consideration. The ground was allowed for statistical purposes.
10. Reduction of 90% of gross interest from business income:
The issue was not adjudicated by CIT(A). ITAT remanded the issue back to CIT(A) for adjudication. The ground was allowed for statistical purposes.
11. Levy of interests u/s 234A, 234B, 234C & 234D:
The CIT(A) directed the AO to charge interest as per law after verification. ITAT endorsed CIT(A)'s direction. The ground was allowed.
Conclusion:
Both the appeals filed by the revenue and the assessee were partly allowed. Order pronounced in the open court on 7th September, 2012.
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2012 (9) TMI 1119
Issues Involved:
1. Applicability of Clause 16 of the MoU.
2. Alleged breaches of the MoU by the petitioners.
3. Suppression of material facts by the petitioners.
4. Existence of an arbitration agreement among minority shareholders.
5. Balance of convenience for granting an injunction.
Summary:
1. Applicability of Clause 16 of the MoU:
The court examined whether Clause 16, which restricts the sale, alienation, or transfer of shares until the company goes public, applies to all parties, including Godrej. The court concluded that the term "parties hereto" in Clause 16 includes all signatories to the MoU, thus binding Godrej as well. The court found that the negative covenant in Clause 16 operates against Godrej and prevents it from dealing with the shares until the company is listed on a recognized stock exchange.
2. Alleged breaches of the MoU by the petitioners:
Godrej contended that the petitioners breached Clauses 9 and 21 of the MoU by opposing the company's public listing, obstructing the transfer of shares, and not paying dividends. The court found no evidence that the petitioners opposed the listing of the company on a stock exchange. The opposition to the transfer of 3199 shares was deemed justified as it was to prevent Godrej from gaining control of the company. The non-payment of dividends was not considered a breach since Godrej never demanded dividends for 22 years. The court concluded that the petitioners did not breach the MoU.
3. Suppression of material facts by the petitioners:
Godrej argued that the petitioners suppressed the loan-cum-pledge agreement and power of attorney documents. The court noted that these documents were referenced in the arbitration petition and were known to Godrej. The court found no suppression of material facts by the petitioners and noted that Godrej itself did not disclose a letter from Adi Godrej, which stated that loans would not be enforced.
4. Existence of an arbitration agreement among minority shareholders:
Percy and Aban Kavasmaneck contended that there was no arbitration agreement among minority shareholders inter se. The court examined Clause 28 of the MoU, which provides for arbitration of disputes between "parties hereto." The court interpreted "parties hereto" to include all signatories, including minority shareholders. The court concluded that the arbitration clause covers disputes among minority shareholders as well.
5. Balance of convenience for granting an injunction:
The court considered the balance of convenience and found that the shares in question were not ordinary commodities but crucial for retaining control of the company. The court noted that Godrej's actions indicated an intention to side with Dr. Gharda and gain control of the company. The court concluded that maintaining the status quo of the shares until arbitration was in the interest of justice and granted the injunction.
Conclusion:
The court dismissed the appeals, upheld the injunction granted by the single judge, and allowed the arbitration applications for the appointment of an arbitrator. The petitioners were found to have a strong prima facie case, and the balance of convenience was in their favor.
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