|
Advanced Search Options
Case Laws
Showing 21 to 40 of 509 Records
-
1998 (8) TMI 629
Issues Involved:
1. Issue of additional shares.
2. Transfer of 680 shares to the third respondent.
3. Transfer of 1,015 shares from the first respondent to the second respondent.
4. Alleged vacation of the second petitioner as director u/s 283.
5. Removal of the first petitioner as director.
6. Failure to furnish copies of certain documents.
7. Appointment of respondents Nos. 2 and 3 as directors.
Summary:
1. Issue of Additional Shares:
The petitioners alleged that the issue of additional shares to the first respondent was an act of oppression aimed at converting the majority into a minority. The respondents contended that the allotment was necessary for additional funds as required by TIIC and was approved in a meeting attended by the first petitioner. However, it was found that no fresh cash was brought in, and the allotment was made against credits standing in the name of the first respondent. The Board concluded that the allotment was made with a view to gaining undue advantage and converting the majority into a minority, thus constituting an act of oppression.
2. Transfer of 680 Shares to the Third Respondent:
The petitioners argued that the transfer of shares to non-family members violated Article 17 of the articles of association. The respondents claimed the transfer was approved in a board meeting attended by the first petitioner. The Board found that the transfer without following the provisions of Article 17, especially without the presence of the second petitioner, was against the spirit of the article and thus invalid.
3. Transfer of 1,015 Shares from the First Respondent to the Second Respondent:
Similar to the transfer of 680 shares, this transfer was also found to be against the spirit of Article 17 and was set aside by the Board.
4. Alleged Vacation of the Second Petitioner as Director u/s 283:
The petitioners claimed they never received notices for the board meetings. The respondents argued that notices were sent to the registered address. The Board noted that considering the family nature of the company and the fact that the respondents were aware of the petitioners' actual addresses, proper notice was not served. Therefore, the second petitioner did not vacate his office by operation of law.
5. Removal of the First Petitioner as Director:
The first petitioner was removed in an extraordinary general meeting convened by the board consisting of the first respondent and respondents Nos. 2 and 3. The Board found this removal to be a grave act of oppression, especially considering the family nature of the company, and declared it invalid.
6. Failure to Furnish Copies of Certain Documents:
This issue was not specifically addressed in the judgment summary provided.
7. Appointment of Respondents Nos. 2 and 3 as Directors:
The petitioners contended that the co-option of respondents Nos. 2 and 3 was without proper quorum and was an act of oppression. The respondents claimed it was done with the consent of the first petitioner. The Board found that this co-option upset the equilibrium in the board and was an act of oppression, thus setting it aside.
Conclusion:
The Board concluded that the acts alleged were oppressive to the majority by the minority, justifying winding up of the company under the just and equitable ground. The following directions were given:
1. The additional share capital allotted to the first respondent shall either stand canceled or be transferred proportionately to the petitioners.
2. Respondents Nos. 2 and 3 shall cease to be directors.
3. Petitioners Nos. 1 and 2 will continue as directors.
4. The 680 shares transferred to respondent No. 3 shall be re-transferred to the original family shareholders.
5. The transfer of 1,015 shares from the first respondent to the second respondent stands canceled.
6. The board will meet to decide on these directions and allocate responsibilities.
7. The company's bank accounts will be frozen, and the bankers will act as per the new board's decisions.
The petition was disposed of with no order as to costs.
-
1998 (8) TMI 628
Issues:
1. Whether certain issues should have been decided as preliminary issues before deciding the suit.
Analysis:
The petitioners sought a writ of certiorari to quash orders rejecting their request to decide certain issues as preliminary issues before deciding the suit. The suit was filed by the Collector on behalf of Gaon Sabha, alleging the land belonged to Gaon Sabha and the petitioners had no right over it. The petitioners claimed they had a right over the land and argued that the suit was barred under Section 49 of the U.P. Consolidation of Holdings Act. The trial court framed various issues, including whether the suit was barred by Section 49, whether the Collector had the power to file the suit, and whether the court fee paid was sufficient. The petitioners' application to decide these issues as preliminary issues was rejected, leading to subsequent dismissals of their revisions. The petitioners contended that Section 49 barred the court's jurisdiction to adjudicate on matters already decided by consolidation authorities. However, the court held that it was not mandatory to decide issues of jurisdiction or maintainability as preliminary issues, and discretion was left to the court. The intention was to avoid prolonging the suit by deciding preliminary issues first. Previous judgments highlighted the discretionary nature of deciding issues as preliminary. Ultimately, the court found no manifest illegality in the lower courts' decisions to not decide the preliminary issues before taking evidence on all issues, leading to the dismissal of the writ petition.
-
1998 (8) TMI 627
Issues Involved:
1. Perpetual injunction against disparaging advertisements.
2. Temporary injunction application.
3. Alleged disparaging representations by the defendants.
4. Arguments for vacating the interim order.
5. Contentions regarding the nature of advertisements.
6. Legal principles on trade disparagement.
7. Analysis of the advertisements in question.
8. Defendant's affidavit-in-opposition.
9. Defendant's reliance on previous judgments.
10. Court's view on the legality of the advertisements.
Summary:
1. Perpetual Injunction Against Disparaging Advertisements:
The plaintiff sought a perpetual injunction to restrain the defendants from publishing advertisements that disparage the plaintiff's product, Robin Liquid Blue.
2. Temporary Injunction Application:
The plaintiff also applied for a temporary injunction of similar nature. An ex parte order was granted on 1st February 1996, restraining the defendants from publishing the disparaging advertisements.
3. Alleged Disparaging Representations by the Defendants:
The defendant No. 1 allegedly made disparaging representations about Robin Liquid Blue through advertisements published by defendant No. 2, the advertising agent.
4. Arguments for Vacating the Interim Order:
On 19th February 1996, the defendant No. 1 requested to vacate the interim order, arguing that the plaintiff was not entitled to such an injunction based on the facts and law. The court retained the order, stating that the defendants' advertisements disparaged the plaintiff's product.
5. Contentions Regarding the Nature of Advertisements:
The defendants contended that their advertisements did not specifically target the plaintiff's product but the entire class of blue whiteners. They argued that the statements in the advertisements were true and based on scientific research, asserting their product's superiority.
6. Legal Principles on Trade Disparagement:
The court outlined the legal principles:
- A tradesman can claim his goods are the best or better than competitors, even if untrue.
- He can compare his goods' advantages over others.
- He cannot claim competitors' goods are bad, as it constitutes defamation.
- If defamation occurs, an action for damages and an injunction is permissible.
7. Analysis of the Advertisements in Question:
The court found that the advertisements specifically targeted the plaintiff's product by showing its container and price, implying it was uneconomical and technologically inferior. The advertisements suggested that the plaintiff's product left blue patches on clothes, effectively defaming it.
8. Defendant's Affidavit-in-Opposition:
The defendant No. 1 denied targeting the plaintiff's product, claiming the advertisements referred to the general class of blue whiteners. They argued that the bottle shown did not resemble the plaintiff's product and that their statements were factual and scientifically based.
9. Defendant's Reliance on Previous Judgments:
The defendant No. 1 cited judgments from the Monopolies and Restrictive Trade Practices Commission, which required proof of falsity for claims of disparagement. However, the court noted that such proof is not necessary in a civil suit for damages.
10. Court's View on the Legality of the Advertisements:
The court concluded that the advertisements defamed the plaintiff's product by implying it was inferior and harmful. The court confirmed the interim order, restraining the defendants from publishing the disparaging advertisements until the suit's disposal.
-
1998 (8) TMI 626
Issues Involved:
1. Mode of calculation of simple interest and appropriation of credits received.
2. Reopening of the charging of interest considering Section 21A of the Banking Regulation Act.
3. Justification of the bank in charging interest over and above the contractual rate.
4. Charging of interest on a quarterly compounding basis.
Detailed Analysis:
Issue 1: Mode of Calculation of Simple Interest and Appropriation of Credits Received
The judgment did not address this issue as there was no controversy raised before the Supreme Court regarding it.
Issue 2: Reopening of the Charging of Interest Considering Section 21A of the Banking Regulation Act
Similarly, this issue was not addressed by the Supreme Court due to the absence of controversy.
Issue 3: Justification of the Bank in Charging Interest Over and Above the Contractual Rate
The Banking Ombudsman concluded that the appellant bank failed to substantiate that the interest charged was in conformity with the Reserve Bank of India (RBI) directions, specifically RBI Circular No. DBOD.NO.BL.B.C.60/22.01.0003/94 dated 17.5.1994. According to this circular, the bank could charge interest only at the rate contracted at the time of loan sanction and was not entitled to vary the rate of interest for term loans. The Ombudsman held this point in favor of the complainant.
Issue 4: Charging of Interest on a Quarterly Compounding Basis
The Ombudsman observed that charging interest at quarterly rests was a violation of the principles laid down by the Supreme Court in the case of State Bank of Patiala Vs. Harbans Singh. The Supreme Court had held that in light of RBI directions, the liability to pay quarterly rests was illegal, and the bank could only charge simple interest at a rate not exceeding 15% per annum. Consequently, the Ombudsman held this point in favor of the complainant as well.
Arguments by Appellant Bank and Reserve Bank of India:
The appellant bank and the Reserve Bank of India (RBI) argued that the RBI's letter dated 13.3.1976 allowed scheduled banks to charge interest with quarterly rests. They emphasized that loans granted to landlords for construction/renovation of premises leased to banks should be treated as "Term Loans" and charged interest accordingly, as clarified by various RBI circulars, including those dated March 13, 1976, April 1, 1991, and April 18, 1991. They contended that the judgment in State Bank of Patiala Vs. Harbans Singh did not consider these circulars, which have statutory force.
Supreme Court's Analysis:
The Supreme Court noted that the circulars issued by the RBI under Sections 21 and 35 of the Banking Regulation Act are statutory and must be complied with by banks. The Ombudsman's interpretation that loans to landlords for construction/renovation of premises leased to banks could not be termed "term loans" was erroneous. The term "term loan" is well understood in banking parlance as a loan for a fixed term, irrespective of its purpose.
The Supreme Court observed that the judgment in Harbans Singh's case was based on incomplete material and did not consider relevant RBI circulars. Therefore, it should be confined to its specific facts and not be seen as an exposition of law regarding the meaning of "term loan" or the charging of interest with quarterly rests.
Conclusion:
The Supreme Court set aside the Ombudsman's award dated 26.2.1997 and remitted the complaint for fresh disposal in light of the RBI's circulars and directions regarding the charging of interest from landlords whose buildings are leased by banks. The Ombudsman is required to consider these circulars and provide the parties an opportunity to present their views.
Disposition:
The appeal was allowed, and the complaint was remanded to the Banking Ombudsman, Hyderabad, for fresh disposal. No costs were awarded.
-
1998 (8) TMI 625
Issues Involved:
1. Determination of the correct sale proceeds for computing capital gains.
2. Timing and manner of recognizing capital gains.
3. Deductibility of certain expenses related to the sale.
Issue-wise Detailed Analysis:
1. Determination of the Correct Sale Proceeds for Computing Capital Gains:
The main objection raised by the appellant was that the Commissioner of Income-tax (Appeals) [CIT(Appeals)] erred by taking the sale proceeds of a property sold by the appellant for the purpose of working out the capital gains at Rs. 1,13,25,000 instead of Rs. 71,79,720. The appellant, a co-operative society, had filed a return declaring an income of Rs. 59,77,670, which included capital gains on the sale of Plot No. 1087. The sale consideration was based on an agreement dated 26-6-1992 with M/s. Marathon Combines, which stipulated a consideration of Rs. 1,13,25,000 for the development rights of the plot. However, the appellant argued that this amount was hypothetical and contingent upon the availability of Floor Space Index (FSI). The actual FSI obtained was less than the estimated 1,672 sq. meters, leading to a proportionate reduction in the sale consideration.
The Tribunal held that the sale consideration could not be taken at Rs. 1,13,25,000 since this amount was never received. The terms of the agreement made it clear that the consideration would be scaled down based on the actual FSI obtained, which was less than 1,672 sq. meters. Therefore, the appellant could not be taxed on an amount that was not received.
2. Timing and Manner of Recognizing Capital Gains:
The Assessing Officer (AO) and CIT(Appeals) contended that the entire capital gain should be recognized in one year, based on the stipulated sale consideration of Rs. 1,13,25,000. The appellant, however, offered capital gains on a proportionate basis over three years, corresponding to the actual FSI obtained and the consideration received in each year. The Tribunal agreed with the appellant's method, noting that the possession of the plot was given in stages and the consideration was received in different accounting years. The Tribunal emphasized that the transfer of development rights occurred in stages, and the capital gains should be levied in the relevant years as returned by the appellant.
3. Deductibility of Certain Expenses Related to the Sale:
The appellant claimed deductions for legal fees, expenditure on the construction of a compound wall, demolition of office structure, construction of a temporary office, and security salaries. The AO disallowed these expenses except for Rs. 4,500 paid for the demolition of the old structure. The CIT(Appeals) did not address these grounds, stating they were not pressed. The Tribunal remitted the matter to the CIT(Appeals) for considering the grounds raised by the appellant regarding these expenditures.
Conclusion:
The Tribunal concluded that the sale consideration should be based on the actual amount received, not the hypothetical figure of Rs. 1,13,25,000. The capital gains should be recognized in stages, corresponding to the actual FSI obtained and the consideration received in each year. The Tribunal also remitted the matter of deductibility of certain expenses to the CIT(Appeals) for further consideration. The appeal was partly allowed, subject to these remarks.
-
1998 (8) TMI 624
Issues Involved:
1. Quashing of complaint and proceedings under Section 482 of the Code of Criminal Procedure, 1973.
2. Allegations under Sections 138 and 142 of the Negotiable Instruments Act, 1881.
3. Service of statutory notice and its legal implications.
Issue-wise Detailed Analysis:
1. Quashing of Complaint and Proceedings:
This application was filed under Section 482 of the Code of Criminal Procedure, 1973, to quash the complaint and proceedings in CC.No.31/97. The petitioners were accused A-3, A-4, and A-7 in the criminal case. The court noted that the first petitioner was indeed the Managing Director at the time of the alleged offence, thus liable for the offence committed by the company. The court rejected the argument that the first petitioner was not liable due to his change in position before the complaint was filed.
2. Allegations under Sections 138 and 142 of the Negotiable Instruments Act, 1881:
The complaint alleged that the accused issued a cheque for Rs. 10.00 lakh, which was dishonored due to "exceeds arrangement." A statutory notice was issued, and a subsequent cheque was also dishonored with the endorsement "payment stopped by the drawer." The complaint specified dates for the cheque issuance, presentation, return, and legal notice. The court emphasized that the complaint contained specific allegations that all accused were jointly and severally liable and managing the business.
3. Service of Statutory Notice and Its Legal Implications:
The primary contention was whether the statutory notice was served. The petitioners argued that the complaint did not disclose proper service of notice, a mandatory requirement. However, the court noted that the complainant had sent the notice under registered post, and neither the postal cover nor the acknowledgment was returned. The presumption under Section 27 of the General Clauses Act, 1897, was applicable, deeming the notice served unless proven otherwise. The court referenced several precedents, including the Supreme Court's observations, supporting the presumption of service when a notice is sent by registered post and not returned.
The court highlighted that the presumption of service is rebuttable, and it would be open to the accused to prove non-receipt of the notice during trial. The court dismissed the petition to quash the proceedings, stating that the issues raised required factual determination during the trial.
Conclusion:
The court dismissed the petition to quash the proceedings, affirming that the complaint met the legal requirements for service of notice under the Negotiable Instruments Act. The petitioners were advised to file an application before the Trial Court to allow one Director to represent them during the trial, except on dates requiring their presence.
-
1998 (8) TMI 623
Issues involved: Addition of retention money in assessment year 1988-89.
Summary:
The appeal was filed against the addition of retention money of Rs. 22,09,010 by the CIT(Appeals). The assessee's business involved inspecting gas pipe connections using NDT X-Ray machines as a sub-contractor for two main contractors. The agreements specified deductions of 5% and 10% as retention money to be released upon successful completion of work. The Assessing Officer held that the retention money accrued to the assessee in the relevant period, as the contractual obligations were fulfilled by the assessee. The CIT(Appeals) upheld this decision, stating that the retention money should be treated as income under the mercantile system of accounting.
The assessee contended that the retention money did not accrue in the assessment year 1988-89, as it was received in the next accounting year after certification of satisfactory work completion. Citing precedents like Simplex Concrete Piles (India) (P.) Ltd., the assessee argued that the right to receive retention money must accrue as per the contract terms. The Tribunal agreed, emphasizing that under the mercantile system of accounting, income accrual is based on contractual terms. The retention money was contingent on work completion and certification, thus not accruing in the assessment year under consideration.
The Revenue authorities wrongly emphasized the entries in the books of account, whereas income accrual is determined by the contract terms, not the accounting entries. Quoting the Supreme Court, the Tribunal clarified that failure to record a liability in the books does not affect the right to claim deduction. Ultimately, the Tribunal ruled in favor of the assessee, directing the deletion of the retention money from the assessment of the year under consideration, as it accrued in the subsequent year.
Therefore, the assessee's appeal against the addition of retention money for the assessment year 1988-89 was allowed.
-
1998 (8) TMI 622
The Supreme Court set aside the orders of the High Court, tribunal, and lower authorities in a tax rebate case. The Sales Tax authorities can reassess evidence provided by the appellants but may reject bills not complying with rules. The case is restored to the assessing authority for appropriate orders.
-
1998 (8) TMI 621
Issues:
Interpretation of liability to pay royalty on mineral extraction before or after processing.
Analysis:
The case involved a dispute regarding the liability to pay royalty on minerals extracted before or after processing. The respondent, a manufacturer of iron, steel, and allied products, had a lease agreement with the State Government for land to extract raw materials like limestone and dolomite. The disagreement arose on whether royalty should be paid on the quantity of mineral extracted as it is or after processing to remove waste and foreign matters. The High Court held that if minerals extracted undergo processing and a part is wasted and remains on the leased area, royalty cannot be levied on the wasted portion. The appellants argued against this distinction, citing a previous judgment by the same High Court. They contended that processing constitutes consumption, making the entire mineral subject to royalty. The Supreme Court analyzed Section 9(1) of the Mines and Minerals Act, which specifies royalty on minerals removed or consumed from the leased area. The Court disagreed with the High Court's distinction, stating that processing amounts to consumption, making the entire mineral liable to royalty.
Another case cited involved coal extraction for domestic consumption, where the High Court ruled in favor of royalty payment, a decision upheld by the Supreme Court. Additionally, a judgment on the constitutionality of royalty levy emphasized that royalty is payable on minerals extracted, not related to land valuation. Ultimately, the Supreme Court held that the High Court erred in quashing the royalty demands, setting aside the judgments and dismissing the respondent's appeals. The appeals were allowed with no order as to costs.
-
1998 (8) TMI 620
Issues Involved:
1. Classification of Cable Jointing Kits under Central Excise Tariff.
2. Determination of whether the process of assembling components into Cable Jointing Kits amounts to "manufacture" under Section 2(f) of the Central Excise Act, 1944.
3. Validity of the duty demand and penalty imposed.
4. Applicability of the CBEC Circular dated 27.3.1997.
5. Allegations of suppression of facts and evasion of duty.
6. Time-barred nature of the demand.
Detailed Analysis:
1. Classification of Cable Jointing Kits under Central Excise Tariff:
The Commissioner of Central Excise, Chennai, classified the Cable Jointing Kits under tariff sub-heading 8547.00 of the Central Excise Tariff Act, 1985, which pertains to insulating fittings for electrical machines, appliances, or equipment. This classification was based on the interpretation that the assembled kits constituted a new product.
2. Determination of whether the process of assembling components into Cable Jointing Kits amounts to "manufacture" under Section 2(f) of the Central Excise Act, 1944:
The core issue was whether the act of assembling various components into a Cable Jointing Kit constituted "manufacture" as defined under Section 2(f) of the Central Excise Act, 1944. The Department argued that the process of putting together duty-paid articles into a container resulted in a new commercially distinct product, thus amounting to manufacture. However, the appellants contended that merely packing components into a common carton did not transform them into a new product.
The Andhra Pradesh High Court's judgment in the case of Excel Telecom Ltd. was pivotal, concluding that such an activity did not amount to manufacture since no new and different article with a distinct name, character, or use emerged from the process. The Tribunal agreed with this view, stating that the process of assembling the components did not result in a new commercially distinct product.
3. Validity of the duty demand and penalty imposed:
The Commissioner confirmed the duty demand for the period 1993-94, 1994-95, and 1995-96, and imposed a penalty of Rs. 50,00,000 under Rule 173Q of the Central Excise Rules. The appellants argued that the demands were based on a CBEC Circular that had been struck down by the Andhra Pradesh High Court, making the duty demand and penalty invalid.
4. Applicability of the CBEC Circular dated 27.3.1997:
The CBEC Circular dated 27.3.1997, which formed the basis for the duty demand, was struck down by the Andhra Pradesh High Court. The High Court held that the circular had no authority of law and that the process described did not amount to manufacture. The Tribunal followed this judgment, rendering the circular inapplicable.
5. Allegations of suppression of facts and evasion of duty:
The Department alleged that the appellants had suppressed facts about the manufacture of Cable Jointing Kits and cleared the goods without paying duty, intending to evade duty. However, the Tribunal found that the appellants had a bona fide belief that their activity did not constitute manufacture and that such kits were not commercially known as distinct goods.
6. Time-barred nature of the demand:
The show cause notice was issued on 9.5.1997 for the period 1.4.1993 to 31.3.1996, invoking the larger period. The Tribunal noted that the appellants held a bona fide belief that their activity did not amount to manufacture, supported by the fact that the Department itself was uncertain about the classification until the issuance of the circular on 27.3.1997. Consequently, the demands were deemed barred by time, referencing the Supreme Court judgments in Tamilnadu Housing Board v. CCE and Pushpam Pharmaceuticals Co. v. CCE.
Conclusion:
The Tribunal set aside the impugned order, agreeing with the Andhra Pradesh High Court's judgment that the process of assembling the components into Cable Jointing Kits did not amount to manufacture. The duty demand and penalty were invalidated, and the appeal was allowed, noting that the demands were also barred by time.
-
1998 (8) TMI 619
Issues Involved:
1. Prima facie addition of Rs. 38,219 to the returned income.
2. Deduction of Rs. 32,000 for expenses incurred to earn interest income.
3. Rebate on agricultural income of Rs. 54,000.
Issue-wise Detailed Analysis:
1. Prima Facie Addition of Rs. 38,219 to the Returned Income:
The assessee, an individual aged 70, filed an income tax return for the assessment year 1990-91, disclosing a business income, capital gains, income from other sources, and agricultural income. The return showed an income of Rs. 49,110 and agricultural income of Rs. 54,000. However, an intimation under section 143(1)(a) determined the income at Rs. 87,329, adding Rs. 38,219 as interest income from Kalpataru Enterprises and Suvidha Builders. The assessee contended that this amount was already included in the income from other sources and that a double addition of Rs. 6,219 had occurred. Despite rectificatory letters, the rectification petition was rejected by the ITO, and the DC(A) upheld the addition, stating that the expenses deducted for earning this income were not justified.
2. Deduction of Rs. 32,000 for Expenses Incurred to Earn Interest Income:
The assessee claimed that expenses totaling Rs. 32,000 were incurred to earn an interest income of Rs. 39,349, which included salaries, conveyance, professional fees, telephone expenses, and sundry expenses. The DC(A) held that these expenses did not pertain to the income earned under the head "Other sources" and dismissed the appeal. Upon further appeal, it was determined that the assessee failed to provide sufficient evidence to justify these expenses. The Tribunal allowed only a reasonable sum of Rs. 3,000 to be deducted while computing the income from other sources, rejecting the claim for Rs. 32,000.
3. Rebate on Agricultural Income of Rs. 54,000:
The assessee raised additional grounds in the second appeal, claiming that a rebate of Rs. 19,116 on agricultural income of Rs. 54,000 was not granted. The Tribunal considered the CBDT's Circular No. 126, which explains the scheme for partially integrated taxation on non-agricultural income with agricultural income. According to the circular, agricultural income is added to the total income for rate purposes, and the method for calculating the rebate was outlined. The Tribunal admitted the additional grounds and directed that the rebate of Rs. 19,116 be allowed, reducing the tax liability accordingly.
Conclusion:
The appeal was partly allowed. The Tribunal upheld the DC(A)'s decision to reject the full deduction of Rs. 32,000 for expenses incurred to earn interest income, allowing only Rs. 3,000. However, the Tribunal admitted the additional grounds regarding the rebate on agricultural income and directed that a rebate of Rs. 19,116 be granted, thereby reducing the tax demand.
-
1998 (8) TMI 618
The Appellate Tribunal CESTAT NEW DELHI heard appeals regarding the excisability of parts made by Haryana State Electricity Board for transmission towers. The Tribunal ruled that the processes of cutting, punching, and drilling do not amount to manufacture, and thus the products are not excisable under Tariff Item 68. The appeals were disposed of in favor of the assessees.
-
1998 (8) TMI 617
Issues Involved:
1. Validity of the detention order under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974.
2. Non-placement of the bail application before the detaining authority.
3. Non-supply of the bail application copy to the detenu.
Detailed Analysis:
1. Validity of the Detention Order:
The petitioner challenged the detention order dated 12th July 1995, issued under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974. The detaining authority was satisfied that the detenu was involved in unauthorized transactions violating the Foreign Exchange Regulation Act, 1973, adversely affecting the country's foreign exchange resources. The detenu was arrested and released on bail, but the detention order was issued to prevent future prejudicial activities.
2. Non-placement of the Bail Application Before the Detaining Authority:
The petitioner argued that the bail application filed on 7th April 1995 was not forwarded to the detaining authority, leading to non-application of mind and vitiating the subjective satisfaction required for issuing the detention order. The detaining authority, in its return, claimed that the allegations in the bail application were general and found in other documents placed before the authority. However, the court found that the non-placement of the bail application was significant and affected the validity of the detention order.
3. Non-supply of the Bail Application Copy to the Detenu:
The petitioner contended that the non-supply of the bail application copy to the detenu violated Article 22(5) of the Constitution of India, which ensures the right to make an effective representation. The court referred to the Supreme Court's decision in Abdul Sathar Ibrahim Manik vs. Union of India, which mandates that the bail application and order are vital documents that must be placed before the detaining authority and supplied to the detenu. The failure to do so trampled upon the detenu's fundamental rights.
Judgment:
The court concluded that the non-placement of the bail application before the detaining authority and the non-supply of its copy to the detenu vitiated the detention order. The detaining authority's subjective satisfaction was impaired, and the detenu's fundamental right to make an effective representation was violated. Consequently, the detention order was quashed, and the petition was allowed. The court directed that a certified copy of the judgment be issued within four weeks upon request.
-
1998 (8) TMI 616
Issues:
The issue involves determining whether the market fee payable to the Market Committee constituted u/s 6 of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964, shall be paid by the seller or purchaser when agricultural produce is sold by a trader to the Government.
Summary:
The appellants, traders in rice milling, challenged demands by the Market Committee to remit market fee as per Section 17(iii) (b) (3) of the Act. The High Court rejected their contentions, leading to Special Leave Petitions and subsequent appeals. The main contention was whether selling rice to the Government under the Levy Order constitutes a transaction of sale. A three-Judge Bench clarified that such transactions are sales. The appeals were then referred to a larger Bench to address the remaining question.
During the hearing, arguments were presented regarding the liability to pay market fee. The Market Committee contended that the primary liability lies with the purchaser to ensure fee collection. Conversely, the appellants argued that the trader's liability should be linked to the purchaser, especially when the purchaser is the Government. The Court analyzed the provisions of the Act and emphasized that the seller must pay the market fee to the Committee, regardless of fee realization from the purchaser.
Referring to previous judgments, the Court highlighted the distinction between the rights of the seller to collect fee from the purchaser and the obligation to pay the fee to the Committee. The Constitution Bench's decision reinforced that the Market Committee is entitled to collect the fee from the seller, who can then recover it from the purchaser. Ultimately, the Court dismissed the appeals, affirming the responsibility of the appellants to pay the market fee to the Market Committee in relevant transactions.
This judgment clarifies the interpretation of the Act regarding market fee payment obligations in transactions involving agricultural produce sold to the Government, providing guidance on the roles of sellers, purchasers, and the Market Committee in fee collection.
-
1998 (8) TMI 615
Issues:
Allegations of offences under Central Excises and Salt Act, 1944 against petitioners - Quashing of proceedings under S. 482 Cr.P.C.
Detailed Analysis:
1. Allegations of Offences under Central Excises and Salt Act, 1944:
The respondent lodged a complaint against the petitioners and others for offences under Ss. 4, 9 & 9A of the Central Excises and Salt Act, 1944, along with other related provisions. The complaint alleged violations related to the design and approval of cigarette packets, leading to the evasion of excise duty. The complaint implicated the company, its directors, and other officials for their roles in the alleged offences.
2. Quashing of Proceedings under S. 482 Cr.P.C.:
The petitioners sought quashing of the proceedings under S. 482 Cr.P.C., arguing that the allegations did not constitute any offence against them. They contended that continuing the proceedings would amount to harassment and miscarriage of justice. The petitioners relied on legal precedents to support their argument that mere bald statements of responsibility were insufficient to proceed against directors. However, the respondent maintained that the allegations clearly established the petitioners' involvement in the offences and emphasized that the trial court should decide the case on merits.
3. Role of Petitioners in Alleged Offences:
The respondent argued that the petitioners, as directors and officials of the company, were in charge and responsible for the commission of the alleged offences. The complaint detailed how the petitioners, through guidance, control, and supervision, contravened provisions related to excise duty payment. The respondent contended that the petitioners' active connivance and direct supervision led to the violations, making them liable for the offences alleged.
4. Interference by High Court:
The High Court deliberated on the scope and purpose of relevant provisions of the Central Excises and Salt Act, emphasizing the need for specific allegations against individuals to establish guilt. The Court noted that each case should be decided on its merits based on the allegations in the complaint. It refrained from delving into the probable defences of the accused and reiterated that the trial court should determine guilt during the trial.
5. Dismissal of Petition:
After considering the arguments and submissions from both sides, the Court dismissed the petition, holding that there was no merit in the petitioners' contentions. The Court granted liberty to the petitioners to present their arguments before the Magistrate at the appropriate stage. The decision to dismiss the petition was based on the finding that the allegations were sufficient to constitute offences against all accused persons, subject to establishment of guilt during trial.
In conclusion, the High Court upheld the allegations of offences under the Central Excises and Salt Act, 1944 against the petitioners and dismissed their petition seeking quashing of the proceedings, emphasizing that the trial court should determine guilt based on the merits of the case.
-
1998 (8) TMI 614
Issues Involved:1. Deductibility of expenditure for hire of music rights under section 35A of the IT Act. 2. Deductibility of payment to retiring partners as capital expenditure. Issue 1: Deductibility of Expenditure for Hire of Music RightsThe first ground of appeal concerns the CIT(Appeals) upholding the Assessing Officer's finding that the expenditure of Rs. 2,75,400 incurred by the assessee for the hire of music rights was covered by section 35A of the IT Act. The assessee, engaged in selling books, records, cassettes, and magazines, acquired music rights for the film 'Jalwa' from M/s. PLA Productions. The transaction was described in a letter dated 18-6-1986, confirming the sale of world rights of the audio soundtrack for Rs. 1,50,000 for five years, with an option for extended exploitation on a royalty basis. The total expenditure debited was Rs. 2,75,400. The Assessing Officer disallowed the deduction under rule 9A(2)(b) of the I.T. Rules, stating it applied only to film producers, and instead allowed 1/14th of the expenditure under section 35A. The CIT(Appeals) upheld this decision, rejecting the claim under section 37. Before the Tribunal, the assessee argued the transaction was a royalty payment, deductible as revenue expenditure in the year paid. The Tribunal agreed the expenditure was of a revenue nature but held it should be deductible over five years, not entirely in one year, citing the principle from Madras Industrial Investment Corpn. Ltd. v. CIT (1997) 225 ITR 802. Consequently, 1/5th of the amount was deductible in the assessment year 1987-88, partly allowing the ground. Issue 2: Deductibility of Payment to Retiring PartnersThe second ground of appeal concerns the CIT(Appeals) upholding the disallowance of Rs. 3,75,000 paid to retiring partners as capital expenditure. The assessee took over a business previously run as a partnership firm, which was dissolved on 31-12-1985. The deed of dissolution dated 22-1-1986 determined the goodwill at Rs. 5,00,000, with the retiring partners' share computed at Rs. 3,75,000. The assessee argued the payment was for the retiring partners' share in future profits, claiming it as deferred revenue expenditure. The revenue authorities treated it as a capital expenditure for goodwill acquisition, denying the deduction. Before the Tribunal, the assessee relied on the Supreme Court decision in Devidas Vithaldas & Co. v. CIT (1972) 84 ITR 277 and other cases, arguing the expenditure was revenue in nature. The Tribunal distinguished these cases, noting the firm was dissolved, and the payment was for goodwill acquisition. The Tribunal cited the Andhra Pradesh High Court decision in CIT v. Puran Das Ranchoddas & Sons (1988) 169 ITR 480, supporting the view that the payment was for acquiring a capital asset, thus capital expenditure. The ground was rejected. Conclusion:The appeal was partly allowed, with the Tribunal holding the expenditure for music rights deductible over five years and the payment to retiring partners as capital expenditure, not deductible.
-
1998 (8) TMI 613
Issues Involved: Allegations of offences u/s 406, 420, 468, and 120-B IPC, quashing of cognizance order u/s 482 CrPC, determination of prima facie case, abuse of court process, involvement of company officials in share transfer.
Judgment Summary:
The appellants were accused in a complaint petition alleging offences u/s 406, 420, 468, and 120-B IPC related to share transfer by a public limited company. The Magistrate took cognizance of the offences and issued process against the accused. The appellants moved the High Court to quash the cognizance, arguing no offence was made out against them. The High Court, finding a prima facie case due to alleged forged signatures, refused to quash the cognizance under Section 482 CrPC.
The appellants contended that being company officials, no specific allegations were made against them, and the dispute was civil in nature as evidenced by a claim filed before the Consumer Forum. The High Court's decision not to quash cognizance was challenged. The Supreme Court rejected the argument that the dispute was purely civil based on the Consumer Forum claim.
The Court analyzed the complaint, statements, and evidence, concluding that the offences u/s 406, 420, 467, 468, and 120-B IPC were not established against the appellants. The complaint lacked substance beyond vague allegations of forged signatures, with no evidence linking the appellants to the alleged forgery. Thus, the Magistrate's cognizance order and the High Court's decision were quashed under Section 482 CrPC.
While only 7 of the 9 accused officials filed the special leave petition, the Court found no offence established against any company officers, including the two who did not file the petition. Consequently, the criminal proceedings against all accused officials were quashed.
In conclusion, the Supreme Court allowed the appeal, quashing the cognizance order against the appellants and the two unrepresented company officers, finding no prima facie case for the alleged offences based on the evidence presented.
-
1998 (8) TMI 612
Issues Involved:
1. Deletion of addition of interest income of Rs. 62,100.
2. Restoration of the issue of addition of Rs. 3 lakhs on account of cash credits.
Issue-wise Detailed Analysis:
1. Deletion of Addition of Interest Income of Rs. 62,100:
The department appealed against the deletion of an addition of Rs. 62,100 in interest income by the CIT(A). The assessee-company had not accounted for this interest on advances given to a borrower, M/s. Rampratap Bansidhar, due to the borrower's inability to pay and a dispute over the interest rate. The Assessing Officer (AO) added the interest income, arguing that it had accrued under the mercantile system of accounting, regardless of the borrower's payment ability.
The CIT(A) deleted this addition, noting that the interest rate was eventually reduced from 15% to 9% after negotiations, and this reduction was a commercial decision altering the original contract. The CIT(A) held that this alteration, though agreed upon after the accounting year, should reflect in the current year.
The department contended that since the dispute was settled after the accounting year, the income of Rs. 62,100 had accrued for the year ending on 31-3-1987. The assessee argued that income accrual should be based on real income, citing several precedents, including the Supreme Court's decision in State Bank of Travancore v. CIT.
The Tribunal considered the concept of real income and relevant Supreme Court decisions, emphasizing that income must be judged in light of the reality of the situation. The Tribunal noted that the agreement to reduce the interest rate occurred after the income had accrued, thus failing to meet the conditions for non-taxability. Consequently, the Tribunal restored the addition of Rs. 62,100 deleted by the CIT(A).
2. Restoration of the Issue of Addition of Rs. 3 Lakhs on Account of Cash Credits:
The second issue involved the addition of Rs. 3 lakhs as cash credits. The assessee obtained loans from various entities, including M/s. Ganpati Udyog Ltd. The AO added Rs. 3 lakhs to the assessee's income, suspecting the genuineness of the loan due to the assessee's substantial interest in Ganpati Udyog Ltd. and the failure to produce the lender's accountant.
The CIT(A) restored the matter for further enquiry, criticizing the AO for not conducting thorough investigations. The Tribunal noted that the AO repeated the addition even after the CIT(A) had restored the matter twice. The CIT(A) eventually deleted the addition in a subsequent order. The Tribunal agreed with the CIT(A)'s decision to restore the matter initially, emphasizing that the AO should have conducted further enquiries rather than concluding it was the assessee's income without sufficient evidence.
Conclusion:
The appeal of the department was partly allowed. The Tribunal restored the addition of Rs. 62,100 in interest income but upheld the CIT(A)'s decision to restore the matter of the Rs. 3 lakhs cash credits for further enquiry.
-
1998 (8) TMI 611
Issues:
1. Determination of perquisites related to the use of a company car and driver for an individual appointed as Managing Director.
2. Allowability of interest on loans taken to repay earlier loans used for advancing loans.
Analysis:
Issue 1: Determination of Perquisites:
The appeal pertains to the assessment year 1986-87, involving an individual appointed as Managing Director of a company. The individual was provided with a company car and allowed to reimburse the salary of a driver instead of providing a driver directly. The Assessing Officer treated the entire reimbursement of the driver's salary as a perquisite under section 17(2)(iv) of the Income Tax Act. However, the Tribunal disagreed, emphasizing that the employer's obligation was to provide a car with a driver to the individual. The Tribunal cited Rule 3(c)(ii) of the Income-tax Rules, which outlines the determination of the value of a motor-car provided by the employer for both office and personal purposes. The Tribunal concluded that the salary reimbursement for the driver should be bifurcated, with the portion related to office use not being added to the individual's income. The decision was supported by a Bombay High Court case, highlighting the importance of following statutorily recognized methods for assessing perquisites.
Issue 2: Allowability of Interest on Loans:
The second aspect of the dispute involved the allowability of interest on loans taken to repay earlier loans utilized for advancing loans. The Assessing Officer disallowed the interest claim, stating it could not be directly correlated to the loans from which interest was earned. However, the Tribunal referred to a Circular by the Central Board of Direct Taxes, indicating that if a second borrowing is used solely to repay the original loan, the interest on the second loan should be allowed as a deduction. Therefore, the Tribunal directed the Assessing Officer to allow the interest deduction if it was proven that the second borrowing was solely used to repay the original loans used for purchasing preference shares.
In conclusion, the Tribunal allowed the appeal for statistical purposes, ruling in favor of the individual on both issues regarding the determination of perquisites related to the company car and driver, as well as the allowability of interest on loans taken to repay earlier loans used for advancing loans.
-
1998 (8) TMI 610
Issues Involved:
1. Enhancement of income under the head "Capital gains" from Rs. 39,399 to Rs. 1,27,568.
2. Scope of prima facie adjustments under section 143(1)(a).
3. Compliance with section 54F of the IT Act, 1961.
4. Validity of the deposit in a savings bank account versus the Capital Gains Account Scheme, 1988.
5. Justification for enhancement by CIT(A).
6. Proof of utilization of sale proceeds for the purchase or construction of a new residential house.
Issue-wise Detailed Analysis:
1. Enhancement of Income under the Head "Capital Gains":
The primary issue was the enhancement of the assessee's income under the head "Capital gains" from Rs. 39,399 to Rs. 1,27,568 by the CIT(A). The CIT(A) held that the entire amount of Rs. 1,84,284, being the difference between the investment and the sale price of Rs. 2,03,000, should have been deposited as per section 54F(4). Since this was not complied with, the entire amount was taxed.
2. Scope of Prima Facie Adjustments under Section 143(1)(a):
The assessee contended that the adjustments made by the Assessing Officer (AO) were beyond the scope of section 143(1)(a). The AO made prima facie adjustments based on the information provided, which the CIT(A) upheld. However, the assessee argued that the adjustments were not justified as the amount was used for constructing a new house.
3. Compliance with Section 54F of the IT Act, 1961:
The assessee claimed exemption under section 54F, asserting that the capital gains were invested in constructing a new house. The CIT(A) found that the amount was deposited in an ordinary savings account, not as per section 54F(4), which mandates depositing the amount in a specified account if not immediately utilized for purchasing or constructing a new house.
4. Validity of the Deposit in a Savings Bank Account versus the Capital Gains Account Scheme, 1988:
The CIT(A) noted that the deposit was in a savings bank account, not as required under the Capital Gains Account Scheme, 1988. The assessee argued that the amount was eventually used for constructing a house, and hence, the deposit in a savings account should suffice.
5. Justification for Enhancement by CIT(A):
The CIT(A) justified the enhancement by stating that the entire sale proceeds should have been deposited in a specified account as per section 54F(4). The assessee's claim of using the amount for constructing a house was not substantiated by appropriate deposit evidence as required by the section.
6. Proof of Utilization of Sale Proceeds for the Purchase or Construction of a New Residential House:
The assessee contended that the amount was used for constructing a new house, thus qualifying for exemption under section 54F. However, there was no evidence that the exact sale proceeds were used for this purpose. The Tribunal noted that the section requires appropriation of the sale proceeds towards the purchase of a new asset within stipulated timeframes.
Conclusion:
The Tribunal remanded the matter back to the AO for fresh consideration, allowing the assessee to provide evidence that the sale proceeds were appropriated towards acquiring the new asset. The appeal was allowed for statistical purposes, and the related appeal under section 154 was dismissed as infructuous.
........
|
9911796707
