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2010 (9) TMI 1290
Issues involved:
The petition seeks to challenge a Circular dated 18-03-2009 and a letter dated 06-03-2008 issued by the State of Uttarakhand regarding the inclusion of market fee (Mandi Shulk) in the definition of Sale Price under the Uttarakhand Value Added Tax, 2005.
Judgment Details:
1. Background and Dispute: The petitioner, a registered dealer, raised concerns about the Circular stating that market fee is included in Sale Price, which is inconsistent with the definition. The petitioner is a commission agent registered with the Krishi Utpadan Mandi Samiti and pays market fee and development cess on specified agriculture produce transactions.
2. Petitioner's Grievance: The petitioner argued that market fee should not be part of Sale Price as per the definition. The respondents contended that market fee is covered under the definition of Sale Price as it includes any sum charged in the nature of tax, duty, or shulk.
3. Legal Arguments: The main question was whether market fee collected by the Commission Agent could be part of Sale Price. The petitioner cited legal cases to support the exclusion of market fee from Sale Price, emphasizing that it is not part of the turnover for sales tax purposes.
4. Interpretation of Sale Price: The State argued that the definition of Sale Price includes any other duty, which encompasses market fee collected by the dealer. The Court examined the English and Hindi versions of the definition to determine the inclusion of market fee.
5. Decision: The Court found that market fee falls under the category of any other duty in the definition of Sale Price, as per the amended Uttarakhand Value Added Tax Act, 2005. The Court dismissed the writ petition, stating that the petitioner's claim was not tenable based on the interpretation of Sale Price and the purpose of the market fee.
6. Conclusion: The petitioner's challenge to the Circular interpreting the inclusion of market fee in Sale Price was rejected, and the writ petition was dismissed based on the legal interpretation of the relevant provisions.
This summary provides a detailed overview of the legal judgment, including the issues raised, arguments presented, and the Court's decision regarding the inclusion of market fee in the definition of Sale Price under the Uttarakhand Value Added Tax, 2005.
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2010 (9) TMI 1289
Issues Involved:
1. Disallowance of expenses on abandoned project.
2. Claim of deduction for subsidy received.
3. Claim of depreciation on plant and machinery.
4. Income from sale of ammonia.
5. Forfeiture of share capital.
6. Release of water expenditure.
7. Expenditure on fire fighting equipment.
Summary:
1. Disallowance of Expenses on Abandoned Project:
The assessee claimed Rs. 20,51,000/- as revenue expenditure for an abandoned Acrylon Nitric project. The AO disallowed it, stating it was for a new project not commenced. The CIT(A) upheld this, noting it was not linked to existing units. The Tribunal, referencing cases like CIT vs. Escorts Auto Components Ltd. and Jay Engineering Works Ltd., held that if no new asset is created, the expenditure is revenue. The issue was remanded to the AO to verify if the expenditure was genuinely incurred by the assessee or Gujarat Acrylic Ltd.
2. Claim of Deduction for Subsidy Received:
The assessee's claim for deduction of Rs. 60.22 crores subsidy repaid to the government was not pressed and thus rejected.
3. Claim of Depreciation on Plant and Machinery:
The Tribunal allowed the assessee's claim for depreciation on plant and machinery used for trial production, referencing its own decision in ITA No.3228/Ahd/2003 and cases like V. Ramakrishna and Sons Ltd. vs. CIT and CIT vs. Union Carbide (I) Ltd. It was held that machinery used in trial production qualifies for depreciation u/s 32.
4. Income from Sale of Ammonia:
The Tribunal dismissed the Revenue's appeal regarding income from the sale of ammonia, following its earlier decision in ITA No.3358/Ahd/2003, which held that income during trial production reduces capital work in progress and is not taxable.
5. Forfeiture of Share Capital:
The Tribunal rejected the Revenue's appeal on forfeiture of share capital of Rs. 4,13,000/-, following the decision in DCIT vs. Brijlaxmi Leasing & Finance Ltd., which held such forfeiture as a capital receipt not chargeable to tax.
6. Release of Water Expenditure:
The Tribunal upheld the assessee's claim for Rs. 1,07,43,000/- spent on water supply, referencing its decision in ITA No.341/Ahd/2003, which treated such expenditure as revenue, not capital.
7. Expenditure on Fire Fighting Equipment:
The Tribunal rejected the Revenue's appeal on Rs. 93,25,000/- spent on fire fighting equipment, noting that similar issues in earlier years were decided in favor of the assessee and no appeal was filed by the Revenue.
Conclusion:
The assessee's appeal was partly allowed and partly for statistical purposes, while the Revenue's appeal was dismissed.
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2010 (9) TMI 1288
Issues Involved:
1. Legality of the Order dated 4.8.2010 passed by the learned Single Judge under Section 9 of the Arbitration & Conciliation Act, 1996.
2. Invocation and encashment of Bank Guarantees.
3. Applicability of the principles of fraud and irretrievable harm in restraining the encashment of Bank Guarantees.
Issue-wise Detailed Analysis:
1. Legality of the Order dated 4.8.2010:
The appellant challenged the order dated 4.8.2010, which directed the appellant to provide an additional bank guarantee of Rs. 7,60,80,000 within four weeks and kept the existing bank guarantee of Rs. 9 crores alive until further orders by the arbitral tribunal. The appellant argued that the earlier order dated 24.9.2009, which allowed substitution of the two bank guarantees with a fresh bank guarantee of Rs. 9 crores and restrained the respondent from encashing it, should not have been varied. The court rejected this argument, stating that the earlier order was not final and could be varied. The court directed the appellant to furnish a bank guarantee of Rs. 7.60 crores and ensure it remains current for ninety days post the arbitral award, maintaining the balance of equities between the parties.
2. Invocation and Encashment of Bank Guarantees:
The court discussed the law regarding the invocation and encashment of bank guarantees, emphasizing that courts should not interfere with the performance of contractual obligations under a bank guarantee unless there is established fraud or irretrievable harm. The court cited several precedents, including Tarapore and Co., Madras v. V.O Tractors Export Moscow, United Commercial Bank v. Bank of India, and U.P. Coop. Federation v. Singh Consultants & Engineers (P) Ltd., which reiterated that a bank guarantee is an independent contract, and the beneficiary is entitled to realize it as per its terms, irrespective of any disputes between the buyer and the seller.
3. Applicability of Fraud and Irretrievable Harm:
The court examined whether the appellant had established fraud or irretrievable harm to justify restraining the encashment of the bank guarantee. It was noted that fraud must be of an egregious nature, vitiating the entire underlying transaction, and should be evident to the bank. The court found that the respondent's statement to its banker that the appellant had not fulfilled its contractual obligations was prima facie incorrect and fraudulent. The court concluded that the learned Single Judge erred in not recognizing the fraud of an egregious nature disclosed by the appellant, warranting the injunction prayed for.
Conclusion:
The appeal was disposed of with directions for the appellant to furnish a bank guarantee of Rs. 7.60 crores, ensuring it remains current for ninety days after the arbitral award. The arbitral tribunal was given the liberty to pass directions regarding the bank guarantee as deemed expedient, lawful, and just. The court maintained the balance of equities between the parties and clarified that the bank guarantee should await the orders of the arbitral tribunal. No order as to costs was made.
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2010 (9) TMI 1287
Issues Involved: Disallowance of interest expenditure u/s 36(1)(iii) for assessment years 2003-04 and 2004-05 based on diversion of borrowed funds into subsidiary companies.
Assessment Year 2004-05:
The assessee company filed its return declaring total income and debited its Profit & Loss Account with interest and finance charges. The Assessing Officer disallowed the interest claimed, alleging diversion of funds into subsidiary companies without charging interest. The assessee contended that the borrowed funds were utilized for business purposes and the interest paid was deductible u/s 36(1)(iii). The ld. CIT(A) allowed the deduction, citing commercial expediency and the S.A Builders case. The Revenue challenged this, arguing that the investment in subsidiary companies was not part of the assessee's business. The Tribunal found no diversion of funds, noted the nexus between expenditure and business purpose, and upheld the ld. CIT(A)'s decision based on the S.A Builders case.
Assessment Year 2003-04:
The ld. CIT(A) had followed the order for assessment year 2004-05. The Revenue's appeal for this year was dismissed based on the same reasoning as in the previous year. The Tribunal upheld the dismissal of the Revenue's appeal for assessment year 2003-04 as well.
Overall, the Tribunal confirmed the finding of no diversion of borrowed funds, emphasized the commercial expediency aspect, and dismissed the Revenue's appeals for both assessment years.
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2010 (9) TMI 1286
Issues involved: Petition under Section 482 Code of Criminal Procedure for setting aside order dismissing application under Section 45 of the Evidence Act for sending disputed cheque for examination by handwriting expert.
Summary:
The petitioner filed a petition under Section 482 of the Code of Criminal Procedure to challenge the order passed by the Additional Sessions Judge affirming the dismissal of the application under Section 45 of the Evidence Act by the JMFC. The petitioner, facing a criminal trial under the Negotiable Instruments Act, sought to send a disputed cheque for examination by a handwriting expert, alleging that the complainant had stolen the cheques and forged the signature. The trial court rejected the application, leading to the present petition.
The petitioner argued that there was a significant difference in the ink used in the signature and the writing on the cheque, warranting examination by a handwriting expert. Citing legal precedents, the petitioner contended that the right to prove the age of writings on the cheque was crucial for the defense. However, the respondent opposed the petition, asserting that the petitioner had admitted to signing the disputed cheque, invoking the presumption under Section 20 of the NI Act that the cheque was issued properly.
Upon review of the documents and arguments presented, the court found that since the petitioner admitted to signing the cheque, there was no need for further examination by a handwriting expert. Distinguishing the present case from the cited precedents where the signature was disputed, the court upheld the decisions of the lower courts as just and proper. Consequently, the petition was dismissed for lacking merit.
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2010 (9) TMI 1285
Issues Involved:
1. Condonation of delay in filing the appeal.
2. Deletion of addition by treating purchase of 'Rolls' as revenue expenditure instead of capital expenditure.
3. Deletion of additions on account of deemed dividend under section 2(22)(e) of the Income Tax Act.
Detailed Analysis:
1. Condonation of Delay in Filing the Appeal:
The appeal for the Assessment Year 2005-06 was time-barred by four days. The revenue filed a condonation petition explaining the delay. After hearing both parties and reviewing the petition, the delay was condoned, and the appeal was taken up for hearing on merits.
2. Deletion of Addition by Treating Purchase of 'Rolls' as Revenue Expenditure:
Assessment Year 2005-06:
- The Assessing Officer (AO) observed that the assessee claimed the purchase of 'Rolls' as revenue expenses under 'stores & spares'. According to the Income-Tax Rules, 'Rolls' in iron and steel industries are eligible for 80% depreciation.
- The AO allowed normal depreciation for purchases up to 30th September 2004 and for the period from 1st October 2004 to 31st March 2005, disallowing the balance claim, resulting in an addition of Rs. 1,35,48,466 to the income.
- The CIT(A) deleted the addition, and the revenue appealed against this decision.
Assessment Year 2006-07:
- Similar disallowance was made for an addition of Rs. 1,18,50,085 due to excess expenses claimed for the replacement of steel rolls.
- The CIT(A) deleted this addition as well, and the revenue appealed.
Arguments and Judgment:
- The revenue argued that the CIT(A) erred in deleting the additions without appreciating the fact that 80% depreciation is available on rolls.
- The assessee contended that 'Rolls' are parts of machinery replaced frequently and should be treated as revenue expenditure, not capital expenditure.
- The Tribunal found that the facts of the case were identical to CIT vs. Malhotra Industrial Corporation (2002) 254 ITR 635, where expenditure on replacement of rolls was treated as revenue expenditure.
- The Tribunal upheld the CIT(A)'s decision, confirming that the expenditure incurred on replacement of rolls was in the nature of current repairs and not capital in nature. Thus, the grounds of appeal of the revenue for both assessment years were dismissed.
3. Deletion of Additions on Account of Deemed Dividend under Section 2(22)(e):
Assessment Year 2005-06:
- The AO observed that the assessee took a loan of Rs. 5,45,00,000 from a sister concern and treated it as deemed dividend under section 2(22)(e).
- The AO argued that the company giving the loan was not a company in which the public are substantially interested, making the loan a deemed dividend.
- The CIT(A) deleted the addition, stating that the lending company was indeed a company in which the public are substantially interested, as more than 58% of its shares were held by widely held companies.
Assessment Year 2006-07:
- A similar addition of Rs. 18,32,228 was made and subsequently deleted by the CIT(A).
Arguments and Judgment:
- The revenue argued that the CIT(A) erred in deleting the additions.
- The assessee maintained that the lending company was a company in which the public are substantially interested, thus section 2(22)(e) did not apply.
- The Tribunal upheld the CIT(A)'s decision, confirming that the lending company was a company in which the public are substantially interested, and thus, the loans could not be treated as deemed dividends. Consequently, the grounds of appeal of the revenue for both assessment years were dismissed.
Conclusion:
The appeals of the revenue were dismissed, with the Tribunal upholding the CIT(A)'s decisions on both the deletion of additions by treating the purchase of 'Rolls' as revenue expenditure and the deletion of additions on account of deemed dividend under section 2(22)(e).
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2010 (9) TMI 1284
Issues involved:
The judgment involves issues related to violation of Regulation 10 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 by the appellant, leading to the imposition of a monetary penalty under Section 15H (ii) of the Securities and Exchange Board of India Act, 1992.
Details of the Judgment:
Issue 1: Violation of Regulation 10 of the takeover code
The appellant, a promoter group company, acquired 18.74% shares of the target company from another promoter group company in an off-market transaction. The Securities and Exchange Board of India (SEBI) found that this acquisition triggered the requirement for a public announcement under Regulation 10 of the takeover code. Despite the transfer not changing control over the target company, the appellant was penalized for not making the necessary public announcement.
Issue 2: Adjudication proceedings and penalty imposition
The appellant was issued a show cause notice for the violation of Regulation 10 of the takeover code. The appellant contended that the share transfer was an inter se transfer within the promoter group and that they were unaware of the need for an exemption from the takeover code provisions. After a personal hearing, a monetary penalty of &8377; 72,14,000 was imposed on the appellant under Section 15H (ii) of the Act. The appellant challenged this penalty through an appeal.
Issue 3: Appellate Tribunal's decision
The Securities Appellate Tribunal noted that the transfer of shares was between promoters and could have been exempted under Regulation 3 of the takeover code if certain conditions were met, which were not fulfilled in this case. While acknowledging the violation of Regulation 10, the Tribunal found that the interest of the shareholders was not prejudiced, and there was no change in control or management of the target company. Citing precedents, the Tribunal reduced the penalty imposed on the appellant from &8377; 72,14,000 to &8377; 5 lacs, stating that the reduced amount would meet the ends of justice.
The appeal was disposed of with no order as to costs.
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2010 (9) TMI 1283
Issues involved: Appeal against order imposing penalty and confiscating foreign currency u/s 63 of FERA Act for alleged contravention.
The judgment pertains to an appeal against an order confirming the penalty and confiscation of foreign currency imposed on the appellant u/s 63 of the FERA Act. The appellant's appeal was based on the argument that there was no variance between the statements made by him during the search and preparation of Panchanama. The appellant consistently maintained that the seized US $1,300 belonged to his mother, who had kept it in his bedroom cupboard during her visit to India. The appellant's defense highlighted that possession does not necessarily imply acquisition, especially when there is no evidence indicating how the foreign exchange was acquired. Citing a judgment of the Apex Court, it was argued that mere possession without positive material on acquisition cannot lead to culpability. The High Court agreed with the appellant's contentions, finding that the impugned orders suffered from a perverse appreciation of evidence and were unsustainable. Consequently, the orders were quashed, the appeal was allowed, and the confiscated amount was to be returned to the appellant within eight weeks, with provisions for interest if delayed.
In conclusion, the High Court allowed the appeal, directing the Revenue to return the confiscated foreign currency to the appellant within eight weeks, failing which interest at the rate of 10% per annum would be applicable. The appellant was granted the right to deal with the foreign exchange in accordance with the law upon its return. No costs were awarded in this matter.
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2010 (9) TMI 1282
Issues involved:
The issue involves the entitlement to exemption u/s 11 of the Income Tax Act for an assessee trust for assessment years 2004-05 and 2005-06.
Summary:
Entitlement to Exemption u/s 11:
The Director of Income Tax (Exemption) filed tax appeals u/s 260A of the Income Tax Act, proposing the question of law on whether the assessee trust is entitled to exemption u/s 11. The assessment for both years resulted in additions due to disallowance of exemption u/s 11. The C.I.T. (Appeals) allowed the assessee's appeals, holding the trust entitled to exemption u/s 11. The Tribunal upheld the C.I.T. (Appeals) decision. The revenue contended that the Tribunal overlooked a judgment by the Apex Court regarding the trust's purpose being the propagation of the Jain religion. The respondent argued that once registered u/s 12AA, the Assessing Officer cannot deny exemption u/s 11. The Court noted that when registration is granted u/s 12AA, exemption cannot be denied u/s 11. The trust's activities were found to benefit the public at large, including charitable and religious endeavors. The Tribunal observed the trust's engagement in charitable activities and spreading Jain philosophy. The Court found no substantial question of law and dismissed the appeals.
Conclusion:
The High Court of Gujarat dismissed the appeals as no substantial question of law arose from the Tribunal's order regarding the entitlement to exemption u/s 11 for the assessee trust.
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2010 (9) TMI 1281
Issues involved:
The main issue in this case is the disallowance of expenses under Sec.40(a)(ia) of the Income Tax Act, 1961 and the denial of exemption u/s 10A on the same amount.
Disallowance of expenses under Sec.40(a)(ia) and denial of exemption u/s 10A:
The appellant, a subsidiary of a US corporation, claimed deduction u/s 10A but the assessing officer disallowed expenses of &8377; 63,48,012 due to non-deduction of TDS on interest payment, invoking Sec.40(a)(ia). The CIT(A) upheld the disallowance. However, the ITAT held that the disallowance u/s 40(a)(ia) does not change the character or source of income, which remains the same - export of articles or software. The ITAT emphasized that the income under the head 'profits and gains of business or profession' is determined after all deductions and disallowances u/s 30 to 43D, including Sec.40(a)(ia). Therefore, the income after such disallowances still qualifies for deduction u/s 10A. The ITAT concluded that the assessee is entitled to exemption/deduction u/s 10A on the additional income resulting from the disallowance u/s 40(a)(ia).
This judgment clarifies the interplay between Sec.40(a)(ia) and Sec.10A of the Income Tax Act, ensuring that disallowances under Sec.40(a)(ia) do not affect the eligibility for deductions under Sec.10A, provided the income remains derived from the same original source.
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2010 (9) TMI 1280
Issues Involved:
1. Deletion of addition of Rs. 27,76,039/- being rental income for 1/4th cycle not credited in Profit & Loss Account.
2. The correctness of the accounting method followed by the assessee.
3. Applicability of the matching principle in accounting.
4. Consistency in the method of accounting from year to year.
Issue-wise Detailed Analysis:
1. Deletion of Addition of Rs. 27,76,039/-:
The department appealed against the deletion of Rs. 27,76,039/- rental income for 1/4th cycle not credited in the Profit & Loss Account. The AO observed that the assessee debited expenses related to loading and fuel for the period January 2005 to March 2005 without crediting the corresponding income. The AO added back the rental income proportionate to the expenses incurred during this period, arguing that the assessee should have recognized this income on a mercantile basis. The CIT(A) deleted this addition, emphasizing that the assessee consistently followed the completed contract method, recognizing revenue at the point of upliftment of potatoes.
2. Correctness of the Accounting Method:
The AO contended that the assessee's claim of following the mercantile system was incorrect because expenses were debited without recognizing matching income. The AO argued that the business of cold storage involves multiple acts, including loading, storage, and upliftment, and thus should follow the proportionate completion contract method. The CIT(A) upheld the assessee's method, noting that it had been consistently accepted by the department in previous years, and any change would require adjustments across multiple years.
3. Applicability of the Matching Principle:
The AO applied the matching principle, stating that expenses and income should be shown simultaneously to give a correct picture of taxable profits. The AO rejected the assessee's completed contract method, arguing that the cold storage business does not involve a single act but multiple stages. The CIT(A) countered that applying the matching principle in isolation without adjusting prior and subsequent years' accounts would distort the income measurement. The CIT(A) emphasized the rule of consistency and found the AO's addition uncalled for.
4. Consistency in the Method of Accounting:
The CIT(A) highlighted that the assessee's accounting method had been accepted in earlier and subsequent years, and changing it based on the AO's interpretation would disrupt the consistency. The CIT(A) noted that the department had dropped similar proceedings in previous years and that the principle of consistency should prevail. The Tribunal agreed, stressing that each assessment year is separate and independent, and the true and correct taxable income must be shown for each year.
Conclusion:
The Tribunal upheld the CIT(A)'s decision, emphasizing the importance of consistency in the accounting method. The Tribunal directed that the income for the period January to March 2005 should be accounted for on an accrual basis for the assessment year 2005-06, with the assessee entitled to set off the income relating to the previous period. The appeal was partly allowed, aligning with the principles of mercantile accounting and consistency.
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2010 (9) TMI 1279
Issues Involved:
1. Direction for convening meetings of creditors and other stakeholders for considering the Scheme of Arrangement/Compromise.
2. Validity and feasibility of the proposed Schemes by the applicants.
3. Interest of the applicants in purchasing the land of the company in liquidation.
4. Compliance with the Supreme Court's interim order regarding the revival of the company.
5. Objections raised by other parties including co-owners and lessors.
Detailed Analysis:
1. Direction for Convening Meetings:
The applicants sought the Court's direction to convene meetings of Secured Creditors, Statutory Creditors, Workmen, Unsecured Creditors, and other Creditors of Omex Investors Private Limited (in Liquidation) to consider and approve a Scheme of Arrangement/Compromise. The Court noted that such applications are typically decided ex-parte and without delving into the merits of the Scheme at this preliminary stage. However, the Court also recognized that in certain cases, it may refuse to issue such directions if it deems it inappropriate or not in the public interest.
2. Validity and Feasibility of the Proposed Schemes:
The Court observed that the Company had been in liquidation since 1989, with all movables, plant, machinery, and building structures already disposed of. The remaining asset was the land, which the applicants were interested in acquiring. The Court found that the applicants had no genuine interest in reviving the Company but were instead interested in acquiring the land at a throwaway price. The Schemes proposed by the applicants were deemed neither real, genuine, nor bona fide. The Court emphasized that the applicants' primary interest was in the land, not in the revival of the Company.
3. Interest of the Applicants in Purchasing the Land:
The Court noted that the applicants were primarily interested in purchasing the land of the Company in liquidation. The applicant in Company Application No.97/2010, being the sponsor of the Scheme, wanted the land for expanding its existing business of manufacturing industrial valves. The applicant in Company Application No.191/2010 wanted the land for ready-made garment business and construction activities, including developing an Industrial Park. The Court found that the applicants' interest in the land was the main driving force behind the proposed Schemes.
4. Compliance with the Supreme Court's Interim Order:
The applicant in Company Application No.191/2010 cited an interim order by the Supreme Court, which suggested that an attempt should be made to revive the defunct Company. However, the Court noted that the Supreme Court's order was passed on 18.11.2009, while the present application was filed in July 2010, indicating a delay. The Court also highlighted that the applicant had not disclosed the sponsor's name and lacked the necessary funds to implement the Scheme.
5. Objections Raised by Other Parties:
The Scheme proposed by the applicant in Company Application No.97/2010 was opposed by the applicant in Company Application No.191/2010 and other co-owners. The objections included the lack of feasibility and genuineness of the Scheme, as well as the applicant's lack of resources and the opposition from other lessors. The Court found that the objections were valid and that the Scheme proposed by the applicant in Company Application No.191/2010 was not workable.
Conclusion:
The Court concluded that no directions were required for convening the meetings of creditors/shareholders/workers of the Company (in liquidation) as prayed for in the respective Company Applications. The Court found that the Schemes proposed by the applicants were not genuine and were merely a ruse to acquire the land at a throwaway price. The Court directed the Official Liquidator to put the freehold land of the Company to sale, fixing the upset price at Rs. 150 Crores and issuing public advertisements to invite offers from intending purchasers. The applications were disposed of as rejected.
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2010 (9) TMI 1278
Issues Involved:
1. Conviction and sentence u/s 138 of the Negotiable Instruments Act.
2. Rebuttal of presumption u/s 139 of the Negotiable Instruments Act.
3. Denial of opportunity to the accused to substantiate his defense.
4. Legality of the trial court's and appellate court's findings.
Summary:
1. Conviction and Sentence u/s 138 of the Negotiable Instruments Act:
The revision petitioner was convicted and sentenced for the offence punishable u/s 138 of the N.I. Act by the Judicial First Class Magistrate Court-IV Kozhikode. The trial court found that the cheque issued by the accused was dishonoured due to insufficient funds. The accused was sentenced to six months of simple imprisonment and ordered to pay Rs. 2,50,000 as compensation u/s 357(3) Cr.P.C. The appellate court modified the sentence to imprisonment till the rising of the court but upheld the compensation order.
2. Rebuttal of Presumption u/s 139 of the Negotiable Instruments Act:
The revision petitioner argued that the complainant failed to prove the offence beyond reasonable doubt and that the courts below failed to appreciate the falsity of the complainant's case. The petitioner contended that the cheque was dishonoured due to "stop payment" and "signature incomplete," thus rebutting the presumption u/s 139 of the N.I. Act. However, the court found that the petitioner did not effectively challenge the complainant's evidence or provide a plausible explanation for the cheque's dishonour.
3. Denial of Opportunity to the Accused to Substantiate His Defense:
The petitioner claimed that the trial court denied him the opportunity to summon bank officials to prove the "stop payment" instruction, thereby prejudicing his defense. The court noted that the petitioner failed to pay the necessary batta in time, leading to the closure of defense evidence. The court found no merit in the argument that the petitioner was denied an opportunity to substantiate his defense.
4. Legality of the Trial Court's and Appellate Court's Findings:
The court upheld the findings of the trial court and the appellate court, stating that the complainant had complied with all requirements to initiate prosecution u/s 138 of the N.I. Act. The court found that the cheque was issued to discharge a legally enforceable debt and was dishonoured due to insufficient funds. The court also noted that the petitioner failed to rebut the presumption u/s 139 of the N.I. Act and did not provide any evidence to support his defense.
Conclusion:
The revision petition was disposed of by confirming the conviction u/s 138 of the N.I. Act. The court modified the sentence, imposing a fine of Rs. 2,80,000 instead of imprisonment, with three months granted to deposit the fine. In case of default, the petitioner would undergo six months of simple imprisonment. The fine amount was directed to be paid as compensation to the complainant, with the remaining amount deposited in the State Exchequer. Coercive steps against the petitioner were deferred till 30.12.2010.
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2010 (9) TMI 1277
Issues involved: Levy of penalty u/s 271(1)(c) of the Income-tax Act for the assessment years 1982-83 and 1983-84.
For the assessment year 1982-83:
The appeals involved the confirmation of penalty levied on the assessee, a partnership firm engaged in abkari business, for unaccounted sales and inflation of expenditure. The Tribunal found that penalty was levied only on the income found concealed by the assessee, which was significantly higher than the income returned in the original return. The Tribunal upheld the penalty, considering evidence from bank deposits and employee statements, establishing a clear case of concealment. The Tribunal's lenient view on estimated income in the penalty proceedings was deemed appropriate, leading to the dismissal of appeals filed by both the assessee and the department for the year 1982-83.
For the assessment year 1983-84:
In this year, the assessee's appeal contested the penalty levied based on the additional income offered for assessment, which was significantly higher than the income originally returned. The Tribunal found that the materials seized during search justified the higher addition to the returned income, leading the assessee to offer an additional income of &8377; 41 lakhs to avoid further consequences. Despite the assessee's argument that penalty should not apply to the additional income offered, the Tribunal and authorities considered it as concealed income, as the disclosure was made after the department had collected evidence and determined the evasion. The penalty was upheld as the income offered after detection was treated as concealed income u/s 271(1)(c) of the Act. Since the penalty was not the maximum, no relief in quantum was granted, resulting in the dismissal of the appeal filed by the assessee for the year 1983-84.
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2010 (9) TMI 1276
Issues involved: Petition under Section 560(6) of the Companies Act, 1956 seeking restoration of the name of the petitioner company to the Register of Companies maintained by the Registrar of Companies due to defaults in statutory compliances.
Details of the Judgment:
1. The petitioner company, incorporated under the Companies Act, 1956, had its name struck off the Register by the Registrar of Companies for failure to file annual returns and balance sheets from 1999-2000 to 2006-2007. The procedure under Section 560 of the Companies Act, 1956 was followed, including issuance of notices and publication in the Official Gazette. There was a discrepancy in the name published in the Gazette, which was clarified as an error in the electronic records. The petitioner alleged not receiving any show cause notice but the address on record indicated proper service.
2. The petitioner contended that it had been active since incorporation, providing evidence of operational activities through receipts of factory license fees and insurance premiums. The statutory documentation, including audited accounts, was maintained, but the filing responsibility was entrusted to a Chartered Accountant firm which failed to submit the necessary documents. The petitioner became aware of its name being struck off only in March 2009.
3. The respondent did not object to the revival of the company, subject to the petitioner filing all outstanding statutory documents and paying applicable fees. Certificates of 'No Objection' from the Directors were submitted. Reference was made to a Bombay High Court case emphasizing the purpose of Section 560(6) to revive companies within 20 years for the interests of justice.
4. Despite the lapse in ensuring statutory compliances, the Court acknowledged the functional status of the company, the timely filing of the petition, and the precedent set by the Bombay High Court. The Court deemed the petition deserving of allowance based on these factors.
5. The Court highlighted Rule 94 of the Companies (Court) Rules, 1959, regarding costs to be paid to the Registrar of Companies. It noted the discretion of the Court to deviate from the norm in cost allocation based on the circumstances of the case. In this instance, the Court imposed exemplary costs of Rs. 75,000 to the common pool fund of the Official Liquidator and an additional Rs. 25,000 to the respondent, with a deadline for payment within three weeks.
6. The restoration of the petitioner company's name to the Register was contingent upon fulfilling all legal requirements, including payment of outstanding fees and completion of formalities. The company, its directors, and members would be reinstated as if the name had not been struck off, in accordance with Section 560(6) of the Companies Act, 1956. The respondent was granted liberty to take penal action against the company for non-compliance with Section 162 of the Companies Act, 1956.
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2010 (9) TMI 1275
Issues Involved:
1. Addition of Rs. 1,03,88,000/- on account of unexplained investment under Section 69B of the I.T. Act.
2. Reliance on various evidences and cases of other persons not applicable to the appellant's facts.
3. Denial of cash payments by the appellant company.
4. Use of loose papers as evidence for unexplained payments.
5. Lack of corroborative evidence for the alleged cash payments.
6. Opportunity for cross-examination not provided.
7. Applicability of Section 69B.
Issue-wise Detailed Analysis:
1. Addition of Rs. 1,03,88,000/- on account of unexplained investment under Section 69B of the I.T. Act:
The Assessing Officer (AO) added Rs. 1,03,88,000/- as unexplained investment based on seized documents (Annexure A-10 and A-11) during a search on Dharmadev Builders Group. The AO correlated entries in these documents with the assessee's ledger, concluding that the assessee made cash payments totaling Rs. 1,30,88,000/- for purchasing shops/offices. The assessee denied making any cash payments and argued that the addition was unjustified.
2. Reliance on various evidences and cases of other persons not applicable to the appellant's facts:
The AO relied on admissions by other purchasers in the same complex who acknowledged making cash payments. The AO argued that the same treatment should apply to the assessee. The assessee contended that these cases were not relevant to its facts and that no evidence showed the appellant company paid any unaccounted amount.
3. Denial of cash payments by the appellant company:
The assessee denied making any cash payments, asserting that the amount paid through cheques was the true price. The assessee provided a Memorandum of Understanding (MOU) dated 05-05-2004, stating the purchase price was Rs. 60.40 lakhs, and argued that no subsequent cash payments were made.
4. Use of loose papers as evidence for unexplained payments:
The AO considered the loose papers as crucial evidence for the addition. The assessee argued that these papers did not mention any cash payment by Trident Creation Pvt. Ltd. and that the documents were not sufficient to justify the addition. The assessee cited various legal precedents to argue that loose papers alone, without corroborative evidence, could not form the basis for such an addition.
5. Lack of corroborative evidence for the alleged cash payments:
The assessee highlighted that no corroborative evidence was found during a survey at its premises. The AO did not produce any statement from the builder or other parties confirming the receipt of cash payments from the assessee. The assessee argued that the addition was based on assumptions and lacked concrete evidence.
6. Opportunity for cross-examination not provided:
The assessee contended that it was not given the opportunity to cross-examine the builder or other persons whose cases were used as comparables. The CIT(A) concluded that the principles of natural justice were met as the assessee was given the opportunity to rebut the documents relied upon, and personal cross-examination was not necessary.
7. Applicability of Section 69B:
The CIT(A) upheld the addition under Section 69B, stating that the conditions for invoking this section were met. The assessee had not satisfactorily explained why the cost of its properties was significantly lower than similar properties in the same building. The CIT(A) applied the principle of preponderance of probability, considering the practice of paying "on money" in real estate transactions.
Conclusion:
The Tribunal found that the AO had not brought sufficient and cogent material to prove that the assessee made cash payments over and above the stated consideration. The seized papers were deemed "dumb documents" without corroborative evidence. The Tribunal noted that no search was conducted on the assessee, and no incriminating evidence was found during the survey. The Tribunal concluded that the addition was based on assumptions and set aside the orders of the authorities below, deleting the entire addition. The appeal of the assessee was allowed.
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2010 (9) TMI 1274
Issues Involved:
1. Conviction under Section 302 IPC read with Section 120B IPC.
2. Illicit relationship and conspiracy.
3. Evidence of last seen.
4. Recovery of bloodstained clothes.
5. Bloodstains in the auto-rickshaw.
6. Circumstantial evidence and its sufficiency.
Issue-wise Detailed Analysis:
1. Conviction under Section 302 IPC read with Section 120B IPC:
Both appeals were against the judgment convicting Mahender Kumar under Section 302 IPC read with Section 120B and Ramshree under Section 120B IPC, sentencing them to life imprisonment and a fine of Rs. 2000 each.
2. Illicit relationship and conspiracy:
The prosecution's case was based on an alleged illicit relationship between the appellants, leading to a conspiracy to murder the deceased. However, the court found it difficult to accept the alleged illicit relationship. Despite claims of knowing about the relationship, the family did not report it to the police until much later, which cast doubt on the credibility of this claim. The court noted that if the deceased knew about the illicit relationship, he would not have allowed Mahender to ply his auto-rickshaw regularly, providing him daily access to his home.
3. Evidence of last seen:
The prosecution relied on the testimony of PW-1 and PW-6, who stated that the deceased was last seen with Mahender Kumar and his accomplices on the evening of 7th February 1988. However, the court found inconsistencies in their statements, particularly the delay in reporting the deceased's absence and the murder to the police. The court also questioned the plausibility of Mahender Kumar taking the deceased in the presence of his family and then returning alone, knowing he would be a prime suspect.
4. Recovery of bloodstained clothes:
The prosecution claimed that Mahender Kumar's bloodstained clothes were recovered from Raju's jhuggi based on Mahender's disclosure statement. The court noted that while the recovery of clothes was admissible under Section 27 of the Evidence Act, there was no evidence proving these clothes belonged to Mahender Kumar or that he wore them on the night of the murder. The prosecution failed to show the clothes to key witnesses or establish their connection to Mahender.
5. Bloodstains in the auto-rickshaw:
Bloodstains were found in the deceased's auto-rickshaw, which Mahender Kumar used to ply. The court noted the delay in seizing the auto-rickshaw despite the investigating officer knowing its significance. This delay created doubt about the prosecution's claim. Even if bloodstains were found, it was insufficient to prove Mahender Kumar's guilt in the murder.
6. Circumstantial evidence and its sufficiency:
The court emphasized that in cases based solely on circumstantial evidence, the prosecution must firmly establish the circumstances, which should be consistent only with the accused's guilt and exclude any reasonable hypothesis of innocence. The court found that the prosecution failed to establish a consistent and conclusive chain of evidence. The possibility of the 'last seen' story being concocted due to suspicion of an illicit relationship could not be ruled out.
Judgment:
The court concluded that the prosecution's evidence did not conclusively prove the appellants' involvement in the murder. The appellants were given the benefit of doubt and were acquitted. Their bail bonds were discharged.
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2010 (9) TMI 1273
Issues Involved:
1. Legitimacy of the High Court's acquittal of the accused.
2. Evaluation of evidence and witness credibility.
3. Determination of the aggressor in the incident.
4. Procedural conduct of the Investigation Officer.
Summary:
1. Legitimacy of the High Court's Acquittal of the Accused:
The appeals challenge the High Court's judgment dated 01.05.2001, which acquitted all eleven accused and dismissed the Criminal Revision Petition filed by the appellant. The Supreme Court examined whether there were grounds for interfering with the High Court's order of acquittal. The principles for appellate courts in dealing with appeals against acquittal include the ability to review evidence and conclusions of both facts and law, and interference is warranted only for "compelling and substantial reasons."
2. Evaluation of Evidence and Witness Credibility:
The prosecution's case involved a dispute over the payment of crackers, leading to a violent altercation on 25.10.1992. Key witnesses included Ganpat (PW-12), Mohinder Singh (PW-13), the Investigation Officer (PW-14), and Dr. Sanjiv Grover (PW-3). The trial court convicted the accused based on their testimonies. However, the High Court found inconsistencies, such as Ganpat's omission of seven accused names in his initial police statement and Mohinder Singh's intoxication, which cast doubt on their credibility.
3. Determination of the Aggressor in the Incident:
The accused claimed self-defense, asserting that the complainant party was the aggressor. Evidence showed that both parties sustained injuries, with some accused suffering grievous harm. The High Court concluded that the complainant party initiated the conflict, supported by the lack of prosecution explanation for the accused's injuries and the statement of Satpal (A-2) under Section 313 Cr.P.C., detailing the complainant's aggressive actions.
4. Procedural Conduct of the Investigation Officer:
The Investigation Officer (PW-14) failed to record the statements of injured accused persons present in the hospital, which was a significant procedural lapse. This omission weakened the prosecution's case and supported the High Court's finding that the complainant party was the aggressor.
Conclusion:
The Supreme Court found no merit in the appeals and agreed with the High Court's conclusion, affirming the acquittal of all accused. The appeals were dismissed, upholding the High Court's judgment.
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2010 (9) TMI 1272
Issues involved: Appeal against order u/s. 115JB for assessment year 2005-06.
Grounds of appeal:
1. CIT(A) erred in confirming order u/s. 115JB.
2. CIT(A) erred in determining taxable income as &8377; 46,28,986 instead of NIL.
3. CIT(A) erred in rejecting Auditor's Report related to Sec 115JB.
4. CIT(A) erred in interpreting proviso to Sec. 115JB.
5. CIT(A) erred in not setting aside order u/s. 115JB.
Details of Judgment:
The assessee filed return showing NIL income for AY 2005-06. AO invoked Sec. 115JB due to gross total income being NIL. Assessee cited ITAT's decision but AO disagreed. AO computed book profit, leading to appeal before CIT(A).
Assessee argued Sec. 115JB not applicable without positive gross total income and tax payable. CIT(A) referenced ITAT Mumbai Bench's decision to uphold AO's view.
Regarding book profit computation, CIT(A) disallowed certain deductions claimed by assessee. CIT(A) upheld AO's book profit calculation based on Apollo Tyres Ltd case.
Assessee appealed to Tribunal, reiterating previous submissions. DR supported AO and CIT(A) orders, citing Apollo Tyres Ltd case.
Tribunal reviewed arguments and case laws, including Apollo Tyres Ltd. Upheld CIT(A) order, confirming Sec. 115JB applicability and disallowance of deductions. Assessee's appeal was dismissed on 30-09-2010.
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2010 (9) TMI 1271
Issues involved: Appeal against penalty u/s 271(1)(C) for alleged furnishing of inaccurate particulars of income regarding under valuation of stocks and disallowance of sales tax u/s 43B for A.Y 2004-05.
Summary:
Issue 1 - Disallowance of sales tax and service tax u/s 43B:
The AO disallowed &8377; 2,81,533 for non-payment of statutory dues as per the tax audit report, which the assessee had not added back to the total income. The AO initiated penalty proceedings u/s 271(1)(C) for alleged concealment of income. The CIT(A) upheld the penalty, stating the assessee's failure to include these amounts in the income return constituted inaccurate particulars. However, the ITAT Pune held that when relevant information is disclosed in the return and its enclosures, the concealment of income cannot be attributed to the assessee. Citing a previous Pune Bench decision, the ITAT allowed the appeal on this issue.
Issue 2 - Valuation of inventories:
The AO added &8377; 10,108 to the total income due to the assessee's failure to consider excise duty and freight in the closing stock valuation. The penalty u/s 271(1)(C) was imposed for alleged inaccurate particulars. The CIT(A) confirmed the penalty, rejecting the assessee's explanation that the omission was due to clerical errors. The ITAT noted that the assessee had disclosed relevant information in the return, and the clerical mistake did not warrant a penalty. Relying on the principle that disclosure in the return precludes concealment, the ITAT allowed the appeal on this issue.
Conclusion:
The ITAT Pune allowed the assessee's appeal against the penalty u/s 271(1)(C) for both issues, emphasizing that disclosure of relevant information in the return prevents the imposition of penalties for alleged concealment of income.
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