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2014 (9) TMI 1167 - ITAT DELHI
Charitable activities - eligible for exemption u/s 11(1) - unreasonable benefit having been given to persons referred to in S.13(3) - Held that:- There was no adverse inference on this issue and only a reference has been made to these salary payments. There is no allegation of unreasonable benefit having been given to persons referred to in S.13(3) by the Assessing Officer. Hence there is no violation which can lead to denial of exemption u/s 11. The assessee is definitely entitled to claim deduction u/s 11 of the Act as registration u/s 12AA is in force.
Filing a defective form no.10 - Held that:- There was a typographical error and the Ld.CIT(Appeals) held that, when form no.10 is read with the accompanied resolution, the question of anti dating does not arise. We agree with the Ld.Commissioner of Income Tax (Appeals) that this error in Form No.10 is a typographical error and that substance over form has to be the basis of decision. Hence we uphold these findings of the Ld.CIT(A) and dismiss this ground.
Accepting audit report in Form no.10B - assessee had, instead of filing Form No.10B, filed an audit report in form no.10BB, before the Assessing Officer - Held that:- Case of CIT vs. Trehan Enterprises [1999 (8) TMI 8 - JAMMU AND KASHMIR HIGH COURT] held that the requirement in question was merely directory and not mandatory. In any event all the details and audit report in some other form were already before the AO. We uphold this finding of the Ld.Commissioner of Income Tax (Appeals) that he has the power to admit audit report in form no.10B as in this case the Ld.AO has failed to bring to the notice of the assessee that there was a difficulty in the audit report filed in Form 10BB before him.- decided against revenue
Computation of taxable income of the appellant - short fall in the application of 85% of the income - Held that:- CIT (A) is right in holding that the society is entitled to exemption u/s 11(1) in respect of the capital gains arising from the sale of Dhorka land. In fact this land was purchased for educational activities. This is evident from the various evidences filed by the assessee in the form of a paper book. Hence the submissions of the revenue that this land was not held for educational purposes is factually incorrect. It was due to certain circumstances that the land was sold and the sale proceeds invested in another piece of land, with the sole purpose of using it for educational purposes.
On the computation of exemption u/s11 we uphold the contentions of the assesses that only capital gain on sale of land, which is income, has to be taken for the purpose of calculating the application of income as per the provisions of Sec.11(1)(A).
There is no short fall in the application of 85% of the income as required by the provisions of Sec.11. In any case the assesses has utilized the entire sale consideration arising out of sale of land, for the purchase of lands in another area as noted by the ld.CIT (A) in his order. - Decided in favour of assessee.
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2014 (9) TMI 1166 - ITAT DELHI
Validity of assessment order u/s 153A - Maintainability new issue raised - Maintainability of the cross-objections preferred by the assessee on the plea that the issue raised in Objections Nos. 1 to 3 is not the part of the first appellate order - Reasons and the bonafide of the assessee for not raising these issues before the authorities below - Held that:- Whole purpose of preferring the appeal and the objections and raising new ground for the first" time before the appellate authority is to correctly assess the tax liability of' an assessee.
When there is no need to consider the new facts outside the record for the adjudication of the above issue and undisputedly when those issues are necessary to consider to correctly assess the tax liability of an assessee, as per the ratios laid down by the Hon'ble Supreme Court in the case of NTPC [1996 (12) TMI 7 - SUPREME COURT], there is no reason why such a question should not be allowed to be raised.
Referring to the reasons and the bona fide of the assessee for not raising these issues before the authorities below the assessee has been cooperating with the Department since 2009. The assessee for the last six years has been craving for supply of the copy of note of satisfaction which is sine qua non for assuming jurisdiction under sec. 153C of the Act. He pointed that lastly vide letter, dated-08.08.2014 the assessee deposited the requisite fee with the request to supply copy of the note of satisfaction in writing but he could not succeed. All these events would prove bona fide and good reasons for raising the above legal plea which goes to the root of the matter. We do no find reason to doubt these explanation of tie assessee. Under these circumstances, we are of the view that the legal issues raised in the cross objections for the first time objections before the ITAT have been validly raised by the assessee, hence it cannot be said that the cross objections raising those issues for the first time would be amounting to non-maintainability of the cross objections under consideration - decided in favour of assessee
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2014 (9) TMI 1165 - ITAT LUCKNOW
Eligibility for exemption u/s 11 - whether the assessee is engaged in the business of manufacturing, buying, selling, importing and exporting of Artificial Limbs accessories and constituents thereof and earning profit and is not charitable institution? - Held that:- We find that CIT(A) has given direction to AO that he should recompute the income of the assessee in terms of section 11 to 13 of the Act keeping in view that the CIT(A)-II, Kanpur has already granted registration u/s 12AA of the Act. Section 13(8) of the Act is part of section 13 which has to be considered by the AO while deciding the issue as per the directions of CIT(A).
No reason to interfere in the order of CIT(A) but we still observe for the sake of clarity that the Assessing Officer should also consider the provisions of sub section (8) of section 13 of the Act while deciding the issue as per the direction of CIT(A). - Decided against revenue
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2014 (9) TMI 1164 - SUPREME COURT
Cancellation of plot of land to M/s. Platinum Square for establishment of country club - Agreement of Lease was repudiated and rescinded - non-issuance of tender before making allotment - Section 23 of the Contract Act - whether the allotments of valuable land by CIDCO to one person in different capacity for the purposes mentioned, that too by entertaining private applications, are arbitrary, illegal and fraudulent and against the public policy as contemplated under Section 23 of the Indian Contract Act?
Held that:- Although allotment of plot for the purposes mentioned was either at a fixed price or by competitive bidding, but no procedure was adopted by the appellant for allotment of these plots either by tender or by competitive bidding. It has also come on record that as against these plots allotted to the respondents, no other application was either invited or received from interested persons. Obviously, when the tender was not advertised or any notice inviting applications were made then there was no occasion for any person to apply for allotment of these plots - no transparency has been maintained by the appellant-CIDCO in making these allotments of Government land.
It is well settled that whenever the Government dealt with the public establishment in entering into a contract or issuance of licence, the Government could not act arbitrarily on its sweet will but must act in accordance with law and the action of the Government should not give the smack of arbitrariness.
The High Court instead of looking into the matter, completely ignored the same on the ground that in the show cause notice none of the grounds were made basis of the order of cancellation of allotment. The High Court while exercising power of judicial review is supposed to have gone into the question as to how the three plots were allotted in favour of one group of persons. The High Court has lost sight of the admitted fact that by entertaining private applications of the same person three different valuable plots have been allotted in different names. The High Court fell in error in holding that the allotment of plots of land to the same person but in the names of trust is also justified.
The action of cancellation of allotment of plots, as tried to be justified by CIDCO, would show that the High Court failed to appreciate such cogent reasons in deciding the matter while exercising the power of judicial review. It is more evident and clear that arbitrariness had a role to play in the matter while allotting the three plots in favour of one group of persons which certainly would come within the meaning of arbitrariness on the part of CIDCO and against the public policy. Such an action on the part of CIDCO, is nothing but a favouritism based on nepotism and was irrational and unreasonable and functioning in a discriminatory manner.
The CIDCO was justified in cancelling all the allotments made in favour of the respondents - appeal allowed.
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2014 (9) TMI 1163 - ITAT MUMBAI
Adjustment to ALP of the international transactions - comparable selection criteria - Held that:- From the TPO report, we found that for the purpose of selection of comparables, the TPO had applied a filter of rejecting companies having employee costs less than 25% of revenues. However, the four companies as part of comparables selected by TPO fails the filter of 25% employee cost to the revenue. Since the employee cost to revenue ratio in case of these company is less than 25% of revenue, we restore the appeal back to the file of AO/TPO/DRP for considering afresh and applying the filter properly to the all comparables selected by TPO, keeping in view our above observation.
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2014 (9) TMI 1162 - ALLAHABAD HIGH COURT
Reassessment of tax - year 2007-08 - evaded/unaccounted turn over - Held that:- From a perusal of the order of the Tribunal what emerges is that the Tribunal had arrived at a wholly new finding of fact which has absolutely no foundation and therefore the Tribunal was clearly in error in treating the value of evaded/unaccounted turn over at ₹ 25,00,000/- - The order of the Tribunal is wholly illegal and without jurisdiction and is accordingly quashed - Revision allowed.
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2014 (9) TMI 1161 - KARNATAKA HIGH COURT
Revision u/s 263 - assessee is not a Co-operative Bank and Section 80P(4) has no application - Tribunal set aside order u/s 263 denying benefit of exemption granted - Held that:- Order liable to be set aside and the matter requires to be reconsidered by respondent No.2 in the light of the judgment rendered by a Division Bench of this Court in [2015 (1) TMI 821 - KARNATAKA HIGH COURT]
The matter is remitted to respondent no.2-Commissioner of Income-Tax for reconsideration in accordance with law and in the light of the judgment of the Division Bench referred to above. All contentions of both the parties are kept open.
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2014 (9) TMI 1160 - ITAT HYDERABAD
Write-off of the outstanding unutilized CENVAT Credit available disallowed - allowable business expenditure - Held that:- As relying on M/s. Mohan Spinning Mills vs. ACIT [2013 (11) TMI 113 - ITAT CHANDIGARH] and Girdhar Fibres P. Ltd., vs. ACIT [2012 (11) TMI 161 - ITAT, AHMEDABAD] expenditure was incurred but that expenditure could not be adjusted against the CENVAT Rules because on the finished goods, i.e. texturised yarn only the basic duty is leviable. We, therefore, hold that the amount which is now written off being part of the business expenditure, hence allowable under the provisions of the Act. - AO and ld.CIT(A) was not right in disallowing the claim. AO is directed to allow the amount as claimed, subject to assessee furnishing the details of credit year wise and other excise registers/forms to establish that Cenvat credit was available to it, before writing off the same. Accordingly, grounds raised by the assessee are allowed.
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2014 (9) TMI 1159 - CALCUTTA HIGH COURT
Rectification of mistake - Held that:- There is a mistake in the order dated 10th September, 2014 as there is a corresponding mistake in the cause title at the back-sheet of the stay application as well as in the Memorandum of Appeal. It is prayed that leave may be granted to correct the cause title at the back-sheet of the stay application and of the Memorandum of Appeal and accordingly, the cause title of the order dated 10th September, 2014 be corrected.
Heard learned advocate for the appellant.
Leave is granted to the appellant to correct the cause title at the back sheet of the Stay Petition as well as of the Memorandum of Appeal. Accordingly, it is done.
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2014 (9) TMI 1158 - CALCUTTA HIGH COURT
The appeal is admitted on the following substantial question of law in relation to the assessment year 2000-2001:
“Whether the Tribunal erred in affirming the disallowance on ad hoc estimate @1% of the dividend income, out of the assessee’s overall expenditure, under Section 14A and failed to appreciate that Section 14A in relation to dividend income is not relevant, where the investment in securities is not for earning dividend but for the purpose of carrying on the business in compliance with the directions and regulatory control of the Reserve Bank of India over the business of the assessee as a Residuary Non-banking Financing Company?”
The appellant shall file requisite number of Paper Books within eight weeks from date. Let the matter appear as “For Hearing” in the Monthly List of February, 2015.
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2014 (9) TMI 1157 - ITAT BANGALORE
Exemption u/s 54 / 54EC - Long Term Capital Gains (LTCG) - The assessee has claimed exemption u/s 54EC by investing a sum in REC Bonds. He has further claimed exemption of a sum as invested in residential property and therefore, claimed exemption u/s 54 of the Income Tax Act - As per the AO, the window period for investment of capital gain, if any, accrued to an assessee on transfer of a property is of three years i.e. one year before the transfer of the property or two years after the transfer. Since the assessee had agreed to purchase the flat on 25.11.2006, which is much prior to the sale of the property i.e. 1.9.2008, therefore, it cannot be said that the flat was purchased just before one year of the sale of the property.
Held that:- CIT (A) has erred in restricting the benefit u/s 54 to the extent the payments made within a period of one year for purchase of the new asset. The purchase of the new asset is to be considered either as May, 2008 or 15.10.2009 on that date total investment in the new asset is to be taken into consideration. The assessee has computed the capital gain on this basis and therefore, he is entitled for the exemption to the extent of the investment made in the purchase of new asset. - Decided in favor of assessee.
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2014 (9) TMI 1156 - ITAT CHANDIGARH
Disallowance of interest u/s 36(1)(iii) - disallowance of expenditure us/ 14A related to exempted income - Rate of depreciation on Wind Turbine Generator - Held that:- The capital work-in-progress was with regards to the building at Ayali Kalan and the AO has not mentioned even once that this building was not being constructed by the appellant for his business. That being so, no disallowance on this account can be made u/s 36(l)(iii). The disallowance if at all in these circumstances can be made under proviso to section 36(l)(iii). However, for applying the proviso it has to be shown that the appellant had borrowed funds specifically for capital work-in-progress. The AO has not shown that any funds were borrowed for this purpose - Claim of interest paid allowed.
Additions u/s 14A r.w.r 8D - Held that:- Admittedly the order under appeal is assessment year 2009-10 to which the provisions of Rule 8D are clearly applicable. Similar issue of disallowance under section 14A of the Act read with Rule 8D of the Rules arose before the Tribunal in assessee's own case in assessment year 2008-09 (supra) and the applicability of the said provisions has been upheld.
AO directed to recompute the disallowance under section 14A read with Rule 8D(ii) of the IT Rules by following our directions in the order relating to assessment year 2008-09 and in respect of netting of interest - However, the disallowance under Rule 8D(iii) is to be computed in line with the provisions of the Act i.e. ½ % of the average of the value of investment and not at the closing value of the investments.
Rate of Depreciation on Wind Turbine Generator - Held that:- the power evacuation infrastructure facility is part and parcel of the windmill though partly owned by the assessee on which the assessee is entitled to the claim of depreciation at the same rate on which depreciation was allowed on the windmill. Further the assessee is also entitled to the claim of depreciation at higher rate on the transmission lines which again are part and parcel of the windmill.
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2014 (9) TMI 1155 - CESTAT NEW DELHI
Condonation of delay in filing appeal - evidence of receipt of the impugned order in appeal on 10.6.2003 - appellant claimed date of receipt of the certified copies on 25.2.2013 - Held that:- As per the acknowledgement of the receipt of the impugned order signed by Shri Dinesh Kumar Agarwal, Director the impugned order was duly received by him on 10.6.2003. Thus the appellants have clearly mis-represented the facts in their condonation of delay application claiming that they received the impugned order only on 25.2.2013 - delay cannot be condoned - COD Application dismissed.
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2014 (9) TMI 1154 - SECURITIES AND EXCHANGE BOARD OF INDIA
Consolidation of holdings - exemption from obligation to make public announcement - doubtful acquisitions of shares - collective shareholding of the noticees in the Target Company - Held that:- The noticee's who were already in control of the Target Company did not acquire 5% or more in the financial year 2008-2009 and 2009-2010 when the acquisitions described in the SCN took place. Further, both the conditions of the second proviso of 11(2) {i.e. the acquisitions were through open market purchase in normal segment on the stock exchange and post acquisition shareholding of the noticees remained below 75%} were complied with in this case. The most of the acquisitions had happened when the doubts and ambiguities as mentioned above were prevailing in the market and such acquisitions were under bona fide belief rather than as an attempt to consolidate their shareholding in violation of Takeover Regulations,1997. Further, the acquisition with regard to which fault is found in this case is only for 27,633 shares (0.40%) of share capital of the Target Company
The noticees are now entitled to avail the benefit of further creeping acquisition of 5% in every financial year. In this case, the noticees had acquired the shares which are found to be in violation of regulation 11(2) of the Takeover Regulations, 1997 at an average price of ₹ 97.14 per share. If the public announcement were to be directed under regulation 44 read with regulation 11(2) of the Takeover Regulations, 1997, the open offer would be at price of ₹ 129.05 per share (calculated in terms of regulation 20 of the Takeover Regulations, 1997 alongwith interest @ 10% per annum thereon) whereas the present average market price of the shares of the Target Company considering the trading on BSE and NSE in the last six months is ₹ 280/per share. Thus, the public announcement, if made now would be a mere formality.
Direction to sell 27,633 shares of the Target Company in small lots on the concerned stock exchange and transfer of the entire proceeds of such sale of shares to the Investor Protection and Education Fund established under the Securities and Exchange Board of India (Investor Protection and Education Fund) Regulations, 2009 would be commensurate with the violation as found in this case. Since the Investor Protection and Education Fund is utilised for the purpose of protection of investors and promotion of investor education and awareness, this case the above directions would be in the interest of investors.
In exercise of powers conferred upon under sections 19, 11 and 11B of the SEBI Act, 1992 and regulations 44 and 45 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 read with regulation 32(1)(h) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, hereby issue following directions to the noticees:-
i. The noticees shall, jointly and severally, disinvest 27,633 shares of Sarla Performance Fibres Ltd. through sale to parties not connected/ related to them in small lots in trenches on the BSE and NSE ensuring that such sale does not disturb the market equilibrium; and transfer of the entire proceeds of such sale of shares to the Investor Protection and Education Fund established under the Securities and Exchange Board of India (Investor Protection and Education Fund) Regulations, 2009.
ii. The noticees shall complete the sale of shares as directed above within 3 months from the date of this order and file a report to the SEBI detailing the compliance of the above directions within two weeks from the date of such compliance.
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2014 (9) TMI 1153 - ITAT JODHPUR
Additions made to trading profit - rejection of books of account - Held that:- gross profit rate declared by the assessee for the year under consideration was at 13.61% in comparison to the gross profit rate in the immediately preceding year at 13.32% - thus the GP rate for the year under consideration was better in comparison to the immediately preceding year - hence the trading addition sustained by the Ld. CIT(A) on account of gross profit rate was not justified, accordingly, the same is deleted - Decided in favor of assessee.
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2014 (9) TMI 1152 - CESTAT BANGALORE
Refund claim - rejection on the ground that appellant failed to substantiate the CENVAT credit details and the lower authorities also have taken the view that it is not possible to verify the refund claims - Held that: - At present, there is no statutory requirement or format for maintenance of CENVAT credit account and therefore it becomes necessary for the authority to say what exactly the omission and why he is not able to verify the correctness of the claim. In the absence of any clear cut conclusion that CENVAT credit was availed wrongly or taken wrongly or the claim that it could not be used was not correct, rejection on this ground is not valid and this matter requires reconsideration - appeal allowed by way of remand.
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2014 (9) TMI 1151 - CALCUTTA HIGH COURT
Termination of pregnancy - abortion resulting to death - Rape Offence - legality of evidences - Section 10 of the Evidence Act - Held that: - there must be prima facie evidence to give rise to reasonable believe that conspiracy existed between the accused persons in the first place before any act done or said by a conspirator would bind the other. Secondly, such act must be done or words spoken by the conspirator in the course of conspiracy and not after the same had been snapped, e.g., a conspirator having been caught and is in the custody of the police.
No charge of conspiracy has been framed against the appellant. Even if such charge is presumed (as he is charged with the substantive offence while others having been charged with conspiracy to commit such offence) there is absolutely no independent evidence on record (except the purported aforesaid statement of the other accused persons) to show that the appellant had met the other accused persons or there was any agreement halted amongst them and the appellant to commit the crime. In the absence of such evidence it cannot be said that the first condition, namely, there are reasons to believe that there was a conspiracy between the appellant and other accused persons is established.
In the instant case as prosecution had failed to establish prima facie existence of conspiracy between the appellant and the other accused persons, namely, Premananda & Jashomati, the statement of such accused persons before villagers after being caught cannot be admissible under Section 10 of the Evidence Act against the appellant.
It is settled law that confessions of a co-accused is a corroborative piece of evidence and cannot be the sole basis of conviction - There is no evidence on record connecting the appellant to the abortion of the victim resulting in her death. Hence, he cannot be convicted on the basis of statement of a co-accused which has been retracted by them during trial.
The prosecution case has not been proved at all on the basis of legally admissible evidence. No doubt there exists a strong suspicion against the appellant but suspicion howsoever strong cannot take the place of proof - the appellant acquitted of the charges levelled against him due to lack of cogent evidence - appeal allowed.
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2014 (9) TMI 1150 - ITAT BANGALORE
Levy of penalty u/s 271(1)(c) - Suppression of closing stock - Held that:- Assessee made the AO sweat, to compile the correct quantity of production, sale and closing stock, while all along it gave only workings based on tin numbers. Even if we consider the whole of the opening stock of 11696 tins as consisting of 11.34 Kgs, the closing stock was grossly understated by he assesee. It is not a question of any arithmetical mistake. Assessee agreed to the addition, finding no other way before it.
Furnishing insufficient particulars, in a manner calculated to put the revenue at a disadvantage and gain out of it, is nothing but furnishing inaccurate particulars. Giving a break-up of number of tins with different quantities, so as to fit its valuation of closing stock, is nothing but an after thought. In our opinion, it was only an effort to suppress the income which it otherwise had.
Assessee had concealed its true income and levy of penalty was justified. However, we have in the quantum appeal filed by the assessee, reduced the addition due to stock valuation to ₹ 70,75,882,36 against ₹ 1,03,23,724/- considered by the AO. Hence, the penalty leviable has to be re-worked. AO is directed to re-work the penalty. But for the quantification aspect against penalty order is sustained. - Decided against assessee.
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2014 (9) TMI 1149 - ITAT KOLKATA
Validity of assessment - notice u/s 143(2) not been served on the assessee within the specified time - revenue submitted for hand delivery of notice - Held that:- A perusal of the tear of acknowledgment slip which was shown at page 23 of the paper book shows that there is no signature to identify as to who has served the said notice. The Revenue has also not been able to place before us any record or register to prove the hand delivery of the said notice. Admittedly when a notice under section 143(2) is prepared, there is the original and the carbon copy. The original is sent to the assessee.
The assessee has placed before us the copy of the original 143(2) notice served on the assessee through the Postal Authorities through Speed Post. If this notice has been served through the Speed Post , where is the second copy which could have been served through the tear of acknowledgment , because there is only one original and one copy which is in the assessment records. This clearly shows that no notice under section 143(2) has been served on the assessee on 30.09.2009 through the tear of acknowledgment slip.
Even on merits, it is not iced that the Assessing Officer has blindly disallowed the figures from the Balance sheet and the Prof it & Loss Account without giving any specified reason. The assessee has specifically vide a letter dated 16.12.2010 served on 22.12.2010 intimated that the notice under section 143(2) had been served beyond the prescribed time. Still the Assessing Officer had proceeded with the assessment fully knowing that the assessment would get quashed. As no reasons have been given by the Assessing Officer for disallowing the various figures in the Balance-sheet and the expenses claimed in the Profit & Loss A/c - Decided in favour of assessee
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2014 (9) TMI 1148 - BOMBAY HIGH COURT
Benefits of original license by legal heirs of deceased - petitioner (legal heir) stepping into the shoes of deceased - Held that: - The benefit of the order of the Tribunal was available to the deceased Mr. Prakash Gawde. There is no material on record to indicate that he has availed of the same. Unfortunately, after his demise, the heir has to comply with the requirement of the regulations and only then, will he get an independent licence.
We cannot in our writ jurisdiction displace the regulations and direct that a licence which was not operative could be revived in the manner sought by the petitioners.
Petition dismissed.
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