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2008 (3) TMI 504
Issues involved:
The appeal challenges the treatment of the order passed by the Assessing Officer u/s 143(3) as erroneous and prejudicial to the interest of the Revenue, specifically regarding the withdrawal of set off for unabsorbed depreciation against business income.
Details of the Judgment:
Issue 1: Treatment of order under section 143(3) as erroneous and prejudicial to Revenue
The CIT observed that the Assessing Officer allowed deduction under section 80-IA for both eligible and ineligible units, resulting in an incorrect total income calculation. The CIT revised the order, directing assessment of income at a different amount. The Appellate Tribunal noted that the CIT invoked section 263 of the IT Act based on differing views on the treatment of unabsorbed depreciation set off against profit. The Tribunal emphasized that the Commissioner can only revise an order if it is both erroneous and prejudicial to Revenue. It clarified that mere difference of opinion between the CIT and Assessing Officer does not render the original order erroneous. The Tribunal held that the Assessing Officer's order, made after due examination and consideration of relevant provisions, cannot be deemed erroneous solely due to differing interpretations. Therefore, the Tribunal quashed the CIT's order as not sustainable in law.
Conclusion:
The appeal of the assessee was allowed by the Appellate Tribunal, emphasizing the importance of meeting the dual criteria of error and prejudice to Revenue for invoking section 263 of the IT Act.
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2008 (3) TMI 503
Issues Involved:
1. Disallowance of interest on Bihar Jamindari Abolition Compensation Bonds.
2. Depreciation on steel furniture, counters, and electric fittings.
3. Estimation of expenses for earning dividend income.
4. Rebate on settlement of advances.
5. Bad debts written off.
6. Computation of book profits u/s 115JA.
Summary:
1. Disallowance of Interest on Bihar Jamindari Abolition Compensation Bonds:
The CIT (Appeals) upheld the disallowance of Rs. 3,71,500 made by the Assessing Officer regarding the inclusion of interest on accrual basis on the investment made in 2.5% Bihar Jamindari Abolition Compensation Bonds, 1973. The Tribunal restored the issue to the Assessing Officer for fresh decision after the outcome of the pending case in the Calcutta High Court, as the bonds were not transferred in the assessee's name and the interest was not received.
2. Depreciation on Steel Furniture, Counters, and Electric Fittings:
The CIT (Appeals) upheld the disallowance of depreciation by not treating steel furniture, counters, and electric fittings as plant and machinery. The Tribunal allowed the assessee's claim, following its earlier decision that such items constitute plant and machinery, thus eligible for higher depreciation.
3. Estimation of Expenses for Earning Dividend Income:
The CIT (Appeals) restricted the disallowance of expenses for earning dividend income to 10% of the dividend income, as opposed to 75% disallowed by the Assessing Officer. The Tribunal found no infirmity in this restriction, following its earlier decision.
4. Rebate on Settlement of Advances:
The CIT (Appeals) upheld the addition made by the Assessing Officer regarding rebates given on the settlement of advances. The Tribunal allowed the assessee's claim, noting that the rebate was granted in non-performing accounts and was an actual loss to the bank, not an unascertained liability. The Assessing Officer was directed to verify that the total claim, along with amounts allowed u/s 36(1)(viia), does not exceed the prescribed limit.
5. Bad Debts Written Off:
The CIT (Appeals) allowed the deduction of bad debts written off to the extent of Rs. 65.61 crores, reducing the amount claimed under section 36(1)(viia). The Tribunal restored the matter to the Assessing Officer for fresh computation, clarifying that the proviso to section 36(1)(vii) restricts deduction only to the extent of bad debts for which provision was made under section 36(1)(viia).
6. Computation of Book Profits u/s 115JA:
The CIT (Appeals) upheld the addition of provisions for bad and doubtful debts while computing book profits u/s 115JA. The Tribunal found these provisions to be neither ad hoc nor contingent and directed the Assessing Officer to exclude them from book profits. Other adjustments made by the Assessing Officer were also restored for fresh decision.
Conclusion:
The appeals were allowed in part, with several issues restored to the Assessing Officer for fresh consideration and decision.
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2008 (3) TMI 502
Issues Involved:
1. Deduction under section 80HHC on foreign exchange gains.
2. Disallowance of Rs. 57,049 being the contribution to EPF.
Detailed Analysis:
1. Deduction under Section 80HHC on Foreign Exchange Gains:
The primary issue revolves around whether the assessee is entitled to a deduction under section 80HHC for foreign exchange gains received in the relevant assessment year 2003-04 for exports made in earlier years.
- Facts of the Case: The assessee, engaged in the business of manufacturing and exporting fabrics, did not make any exports during the year under consideration but received foreign exchange gains related to exports made in the previous year. The assessee claimed a deduction under section 80HHC, which was rejected by the Assessing Officer (AO) and confirmed by the Commissioner of Income-tax (Appeals) [CIT(A)].
- Assessing Officer's Decision: The AO rejected the claim based on the fact that there was no export turnover during the year, referencing the ITAT Delhi Bench decision in Sanjeev Malhotra v. Dy. CIT [2004] 270 ITR (AT) 148, which held that deduction under section 80HHC is not permissible without actual exports during the year.
- CIT(A)'s Decision: The CIT(A) upheld the AO's decision, citing the ITAT decision in Sanjeev Malhotra and the Gujarat High Court decision in CIT v. Amba Impex [2006] 282 ITR 144, which stated that exchange difference should relate to the year of exports, not the year when the difference is accounted for.
- Assessee's Argument: The assessee argued that the foreign exchange gains were part of the export sale proceeds realized in convertible foreign exchange during the year under consideration and should qualify for deduction under section 80HHC. The assessee also distinguished their case from Sanjeev Malhotra, where the export sales were not genuine.
- Tribunal's Analysis: The Tribunal analyzed section 80HHC(3) and concluded that the computation of export profits requires actual export turnover during the relevant assessment year. With zero export turnover, the export profits computation results in either zero or negative profits, making the assessee ineligible for the deduction. The Tribunal also noted that the sale proceeds realized in convertible foreign exchange in the succeeding year cannot be treated as export turnover for that year, aligning with the Gujarat High Court's decision in Amba Impex.
- Final Decision: The Tribunal held that the assessee is not entitled to the deduction under section 80HHC(1) for foreign exchange fluctuation gains, affirming the decisions of the lower authorities.
2. Disallowance of Rs. 57,049 Being the Contribution to EPF:
The second issue concerns the disallowance of Rs. 57,049 related to the employer's contribution to the Employees' Provident Fund (EPF).
- Assessing Officer's Decision: The AO disallowed the claim on the grounds that the employees' contribution received by the assessee was not paid within the due time, adding the amount under section 43B of the Act.
- CIT(A)'s Decision: On appeal, the CIT(A) upheld the disallowance, referencing the decision of the Madras High Court in CIT v. Synergy Financial Exchange Ltd. [2007] 288 ITR 366, which held that the amendment to section 43B was prospective.
- Assessee's Argument: The assessee argued that the disallowance pertained to employees' contributions and that post-amendment, all payments made before the due date of filing the return should be allowed as deductions. The assessee cited the Delhi High Court decision in CIT v. Dharmender Sharma [2008] 297 ITR 320.
- Tribunal's Analysis: The Tribunal noted the discrepancy between the AO's and CIT(A)'s treatments of the disallowance and emphasized that section 43B does not apply to employees' contributions. The Tribunal decided to set aside this issue to the AO for re-examination under section 36(1)(va) of the Act.
- Final Decision: The Tribunal set aside the issue to the AO to examine the matter in light of section 36(1)(va) and decide on the merits.
Conclusion:
The appeal was partly allowed for statistical purposes, with the Tribunal denying the section 80HHC deduction on foreign exchange gains and remanding the EPF contribution disallowance issue back to the AO for further examination.
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2008 (3) TMI 501
Grant for exemption under section 11 - Approval u/s 10(23C)(vi) of the Act - Educational institution - registered under section 12A - Whether AO has exceeded his jurisdiction in saying that the assessee is not entitled to exemption under section 11? -HELD THAT:- Merely because section 10(23C) provides for exemption of the income of an educational institution, it does not follow that such institution cannot avail exemption under section 11/12 subject to conditions being fulfilled. The 8th Edition of the treatise "The Law and Practice of Income-tax" by Kanga and Palkhivala mentions that exemption under section 10(22) is separate from or in addition to the exemption under section 11. Therefore, it further says, in respect of income covered by section 10(22), trust, association or institution would be entitled to exemption even if the same income also falls under section 11 and conditions under that section are not fulfilled.
Conversely, income not covered by section 10(22) would still be exempt under section 11 if conditions of that section are not fulfilled. Similarly, the 10th Edition of ‘Law of Income-tax’ by Sampath Iyengar that institutions which are exempt under section 10(22) may also be exempt under section 11 of the Act. In fact, it is difficult to conceive the idea of availability of exemption on the ground that one is activity oriented and the other is institution oriented.
Further, the Tribunal in the case of Vodithala Education Society [2007 (10) TMI 437 - ITAT HYDERABAD] did not grant exemption under section 11, not on this ground but because of the factual position in that case insofar as that there was a clear violation of the provisions of section 13(1)(c) of the Act.
Therefore, there is no gainsaying that the Division Bench of the Tribunal has held that where an institution is eligible for exemption under section 10(23C), it cannot claim exemption under section 11 of the Act. And how can the Tribunal hold so when the judgment of the Supreme Court in the case of Bar Council of Maharashtra[1981 (4) TMI 8 - SUPREME COURT] stares in its face : "We may point out that there are other allied provisions like, for instance, sub-section (23C) in section 10 which clearly indicate that the Legislature did not intend to rule out section 11 when exemption was claimable under such specific provisions of section 10."
There cannot be a more eloquent expression of law and hence it is absolutely futile to argue that institutions falling under section 10(23C) cannot claim exemption under section 11. The above is the law of the land.
There is another dimension to the issue. It is the Commissioner who grants registration under section 12AA of the Act. Once when registration is granted by the Commissioner, it implies that the trust or the institution is established for charitable purpose. Then it is for the Assessing Officer to examine ever year whether the income has been applied for charitable purpose or not. If the income is not so applied, it means that though the trust or institution is established for charitable purpose, it has carried out activities other than charitable and in that case it will be the duty of the Assessing Officer to tax such income. The role of the Assessing Officer in such cases stops here. But he cannot go further overruling a superior authority to hold that the trust or institution is not established for charitable purpose.
Therefore in my opinion, the Assessing Officer has exceeded his jurisdiction in saying that the assessee is not entitled to exemption under section 11. He can say so, I may repeat, only when the income is not applied for the stated purpose, but not otherwise. Thus, I uphold the order of the CIT(A) granting exemption to the assessee under section 11 of the Act.
In the result, both the appeals of the department are dismissed.
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2008 (3) TMI 500
Reassessment proceedings u/s 147 - assessment orders are time-barred by limitation - liable to deduct TDS u/s 195 - Commission paid to foreign agents chargeable to tax in India? - Claim of bad debts written off.
Reassessment proceedings u/s 147 - assessment orders are time-barred by limitation - notice u/s 148 issued - payment of commission in the past after obtaining necessary approval from the RBI - mere change of opinion - assessment order passed under section 143(3) merged with the block assessment order and therefore, no reassessment proceedings could be initiated - HELD THAT:- Assessee has disclosed full evidences for the payments. All the details relating to these payments have been the subject-matter of total and full disclosure before the AO during the proceedings u/s 143(3) of the Act, There was no material coming to the possession of the AO on the basis of which he could say that there was such a failure on the part of the assessee to disclose fully and truly all material facts necessary for making the assessment.
It is a clear case of change of opinion and therefore a wrong initiation of the proceedings us 148 of the Act. We agree with the reasons given by the CIT(A) and the conclusions arrived at in respect of the disputed issue. He correctly held that the proceedings u/s 147 was clearly time-barred and illegal. We decline to interfere with his order.
Although reference has been made to several case law on both the sides during the course of proceedings, the decision of the Hon’ble Supreme Court in the case of Indian Oil Corpn. v. ITO[1986 (5) TMI 1 - SUPREME COURT], which is placed at the assessee’s paper book, is more relevant to the facts of this case.
Disallowance of commission paid to foreign agents - No services rendered by ABC DSL - HELD THAT:- AO failed to appreciate that the extent of services rendered by the foreign agents could be ascertained from the correspondences exchanged between the two parties and also the increase in the volume of business of the assessee. The role of the foreign agents in the matter of fixation of rates of stevedoring work was also not appreciated by the Assessing Officer. The Assessing Officer also ignored the certificate given by Mr. Barry Miller, Vice President of APL Lines Ltd., acknowledging that Mr. A.B.C. Dubash and his other associates, viz. Capt. Surty of ABC DSL, who were marketing and liasoning agents for the assessee negotiated with them in respect of the stevedoring contracts in India since 1993. Similarly, the Assessing Officer ignored the certificate given by the managing director of Marco Shipping Co. (PTE) Ltd., Singapore confirming that Mr. A.B.C. Dubash and his other associates of ABC DSL were negotiating and liasoning with him in Singapore, UK and USA for stevedoring and other services provided by the assessee in India to Watermen Steamship, USA from 1993.
We would like to refer decision of the Hon’ble Supreme Court in Union of India v. Azadi Bachao Andolan [2003 (10) TMI 5 - SUPREME COURT], wherein it was held that "An act which is otherwise valid in law cannot be treated as non est'' merely on the basis of some underlying motive supposedly resulting in some economic detriment or prejudice to the national interest, not only is the principle in Duke of Westminister alive and kicking in England but it also seems to have acquired judicial benediction of the Constitutional Bench in India, notwithstanding the temporary turbulence created in the wake of McDowell".
The learned CIT(A) in the light of these principles have correctly appreciated the facts of the case and rejected the stand of the Assessing Officer and has rightly deleted the addition made by the Assessing Officer. We agree with his findings and uphold his order.
TDS u/s 195 - Disallowance by invoking the provisions of section 40(a)(i) - Whether the commission paid by the appellant to the foreign agent is chargeable to tax in India in the hands of the recipient has to be examined with reference to the provisions of section 5 and section 9 of the Act - The case of the foreign agent, ABC DSL, is also not covered by any of the clauses of section 9 of the Act. Both the Assessing Officer and the learned CIT(A) contemplated that there was business connection between the appellant and the foreign agent. The appellant company and the foreign company, ABC DSL are two distinct and different entities with two different sets of management. If the provisions of section 9(1)(i ) are analysed carefully, it will transpire that there is no business connection between the two within the meaning of that section.
The term ‘business connection’ has been explained clearly in the case of Blue Star Engg. Co. (Bombay) (P.) Ltd. v. CIT[1968 (12) TMI 3 - BOMBAY HIGH COURT] held that in order to constitute a ‘business connection’ there must be an activity of the non-resident in the taxable territories having an intimate and real relation of a continuous character with the business of the non-resident and contributing to the earning of profits by the non-resident in his business.
In the present case, the foreign agent rendered no service in India. Therefore, no income accrued or arose in India. The question of deduction of tax at source under section 195 of the Act thus did not arise. The Assessing Officer oversimplified the issue by saying that in the matter of deduction of tax it would be immaterial as to whether the payment was made outside India or within India. He overlooked the expression ‘any other sum chargeable under the provisions of this Act’ embedded in the section. Unless the payment made to a non-resident (not being a company) or a foreign company is chargeable to tax under the provisions of the Act, deduction of tax under section 195 is totally ruled out. The matter was clarified by CBDT in some of the instructions issued by them from time to time.
AO failed to explain under what circumstances he made the disallowance ignoring the CBDT circulars. All instructions/circulars are issued under section 119 of the Act. These instructions/circulars are binding on the Assessing Officers, as held by the apex Court and different High Courts on different occasions.
We are strongly of the view that the learned CIT(A) wrongly interpreted the provisions of section 40(a)(i) and section 195 of the Act. Therefore, we hold that the order of the CIT(A) confirming the addition made by the AO is unjustified and uncalled for. Accordingly the addition is deleted.
Claim of bad debts written off - No dispute that the debt arose in the course of the assessee’s normal and regular business transactions. These are parts of the advances made against hiring of barges/tugs from Concord Barges, which became irrecoverable because of the winding up of the debtor’s business. The amounts were written off to the P&L a/c during the relevant previous year and there was no chance of recovery of the disputed amount. In our view, such write off are clearly allowable under section 36(1)(iii) of the Act. We accept the claim of the assessee and delete the disallowance.
In the result, the appeal of the assessee is allowed and the revenue’s appeals are dismissed.
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2008 (3) TMI 499
Whether the assessee-industry was eligible for exemption in respect of purchase tax leviable under section 6 of the Act on the value of arecanut purchased from member-growers and consignment of arecanut outside the State for sale, as also the levy of turnover tax under section 6B and cess under section 6D of the Act by virtue of the notification issued by the State Government pursuant to the Government Order No. CI.30 SPC.96(I) dated March 15, 1996 as amended by Government Order No. CI.30. SPC.96(I) dated May 14, 1999?
Held that:- Appeal dismissed. The new industrial policy of the State Government for the years 1993-98 and the exemption notification is looked into, the only conclusion that can be drawn is, what is exempted under the notification issued by the State Government is tax leviable under section 5 of the Act on the goods manufactured and sold by an industrial unit. Therefore, the notification is in no way in variance or contrary to the industrial policy for the years 1993-98.
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2008 (3) TMI 498
Sales tax laibilty - Held that:- Appeal dismissed. It is not a case where, this court, while exercising its jurisdiction under article 136 of the Constitution of India should interfere with the impugned judgment. Since there is a transfer of ownership of properties of the transferee, as noticed in terms of section 100 of the Transfer of Property Act, the charged property may be sold.
Thus in law the appellant is liable to pay the amount of sales tax assessed by the assessing authority.
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2008 (3) TMI 497
Registration under section 12A - Exemption - As per the judgment of the Punjab and Haryana High Court in CIT v. Market Committee [2007 -TMI - 2128 - HIGH COURT, PUNJAB AND HARYANA] and CIT v. Agricultural Produce & Market Committee - Held that: the entire amount received by the samiti is required to be spent for the purposes mentioned therein, which obviously include advancement of "any other object of general public utility". - Hence, In the samiti is entitled to be registered under section 12A
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2008 (3) TMI 495
Return Rectification of mistake - non-signing of the return of income by the managing director - technical and curable defect in view of the provisions of section 139(9) of the Act Held that: - if the return of income is not signed by the person mentioned in section 140, it is only a curable defect and a notice for curing the defect has to be given and the return not be treated as invalid Appeal allowed
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2008 (3) TMI 494
Registration Question of law - Whether the Income-tax Appellate Tribunal was justified in directing the Commissioner of Income-tax (Administration) to extend the benefit of registration under sections 12A and 12AA of the Act to the assessees - In U. P. Forest Corporation v. Deputy CIT [2007 -TMI - 40389 - SUPREME Court], the apex court expressed the opinion that for claiming the benefit under section 11(1)(a) of the Act, registration under section 12A is a condition precedent - Under the scheme of section 11(1) of the 1961 Act, the source of income must be held under trust or under other legal obligation - In fact, it has been held by the apex court in the case of Gujarat Maritime Board (2007 -TMI - 2489 - SUPREME COURT OF INDIA) that section 12A and section 12AA are in the nature of Explanation to section 11 - Held that the respondent-assessee was a charitable trust and held that it is entitled to registration The appeal stand dismissed without any order as to costs
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2008 (3) TMI 492
Search and seizure Undisclosed income - Tribunal found that the loans were disclosed by the assessee not only in the audit reports and balance-sheets but were also mentioned in the regular returns of income with the assessee giving details of the names, addresses and amount of loan from each depositor Finding of fact cannot be interfered with
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2008 (3) TMI 491
Non return of money by bank - communication to the petitioner that the amount is kept in sundry deposit account
Held that:- Action of the bank is found without authority, more particularly when the money held by it was as the trustees. The lawful obligation was created to return money, but if not returned, the interest by way of compensatory measure is required to be awarded. The fact remains that bank has retained money and has enjoyed money, and the petitioners are deprived of the legitimate amount of interest at the rate prevailing for the minimum investment of one year in all nationalised banks. Hence, I find that by way of compensatory measures, the interest can be awarded at the rate of 8 per cent per annum. Therefore, the said contention of learned counsel for the respondent-bank cannot be accepted.
The action of the bank of not returning amount of ₹ 16,75,890.75 ps. and of retaining the same can be said as without right, or authority and consequently the bank will be required to return amount of ₹ 16,75,890.75 ps. with interest at the rate of 8 per cent per annum, which is prevailing rate of interest on the FDR investment.
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2008 (3) TMI 490
Whether the Board for Industrial and Financial Reconstruction (BIFR for Short) was legally justified in declining to recognize a change in the management of respondent No. 3 on the ground that the said change was contrary to the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 having been introduced by the sick company without the permission of the Board?
Held that:- BIFR was justified in ignoring the arrangement sought to be introduced without its approval which arrangement has, at any rate, proved more problematic than useful to the parties. If the ultimate object of the proceedings before the BIFR was to revive the company and draw it out of the financial difficulties that it had landed in, the said object could not be achieved by thrusting upon it an arrangement which has, from the very inception, landed in rough waters. There is in that view, therefore, no room for interference with the order made by the BIFR.
The incidental question, whether an appeal was maintainable before the AAIFR, need not detain us for long. We say so, because even if the appeal filed by the petitioners was held to be maintainable, the same would be inconsequential having regard to the fact that the order passed by the BIFR was in the facts and circumstances justified. Writ petition dismissed.
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2008 (3) TMI 489
Lifting of a corporate veil - The single economic unit argument - Can, in India, a subsidiary of a subsidiary of a holding company be treated as the subsidiary of the holding company even if the holding company is not registered in India and functions in India, through its subsidiary, which is not registered in India, as a company under the Companies Act, 1956, but which, in turn, functions through its subsidiary, which is registered in India, as a company under the Companies Act, 1956 ?
Held that:- From the observations made on the concept of single economic unit by Professor Gower, it clearly follows that a facade, concealing the true state of affairs, is not a condition precedent for lifting of a corporate veil. In a given case, the principle of single economic unit can be taken into account in determining the economic reality in the expanding horizon of global economy. There is a presumption that a subsidiary will act in accordance with law, but according to the conscience of its parents. Unless, therefore, this presumption is rebutted, it is proper for the parent and the subsidiary to be treated as single economic unit. Considered thus, there can be no escape from the conclusion that the conditions, stipulated by the NIT, made respondent No. 4 eligible to offer the products of its parent company.
What crystallises from the discussions held, as a whole, is that this writ petition suffers from suppression of materials facts, contain consciously made incorrect, false and misleading statements in order to persuade the court to interfere with the selection process and even when the writ petitioners were pointed out to have suppressed material facts, made incorrect, colourised, false and misleading statements, the writ petitioners remained unrepentant and continued to pursue their line of action by offering explanations, which the materials on record do not support ; rather, clearly belie. The writ petitioners were also ineligible to participate inasmuch as the pacemaker, which they claim to have offered, did not meet the specifications contained in the NIT. No deviation, going to the root of the selection process, could be shown to have taken place in the act of selecting the pacemaker, in question. The writ petitioners have also failed to show that in the context of the facts and circumstances of the present case, respondent No. 4 was not manufacturer of the pacemaker, which has been selected. Even if one were to assume, for a moment, that respondent No. 4 is not a manufacturer of the pacemaker aforementioned, the writ petitioners failed to show that in the light of the terms and conditions, specified in the NIT, respondent No. 4 was not eligible to bid in the tender process as a subsidiary of its holding company. W.P. dismissed.
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2008 (3) TMI 488
Amalgamation - Held that:- There are no grounds or circumstances which require this Court to refuse approval to the scheme of amalgamation. On going through the scheme, it appears that the requirement of the provisions of sections 391 to 394 of the Companies Act, 1956, are satisfied. The scheme is genuine and bona fide and in the interest of shareholders and creditors of the petitioner-company. The Court, therefore, allows this petition and approves the arrangement embodied in the scheme of amalgamation. The scheme of amalgamation is, accordingly, sanctioned.
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2008 (3) TMI 487
Winding up - Circumstances in which a company may be wound up - Held that:- In view of disputed question arising with regard to settlement of the accounts between the parties, this Court considers that the dispute raised by the opposite party-company with regard to the claim of the petitioner-company is a bona fide one and no order of winding up of the opposite party-company can be passed in such circumstances. The claim of the opposite party-company with regard to the price of the goods such as dual desks and benches supplied by it, against the petitioner-company, if any, can be recovered by the opposite party-company under the common law forum. It is also open to the petitioner-company to approach the common law forum, if it has any dues against the opposite party-company. No merit in this company petition, which is, accordingly, dismissed
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2008 (3) TMI 486
Winding up - Custody of companys property - Held that:- The Official Liquidator shall examine the claim of each of the applicant herein and other security agencies whose claims are pending before him, keeping in mind the observations made hitherto;
The Official Liquidator shall ensure that the assets (movable and immovable) of company in liquidation in respect of which there is no claim of any secured creditor and there is no impediment for sale of such assets, shall take steps to sell those assets forthwith by following necessary procedure and sale proceeds recovered from such sale shall be disbursed in accordance with law;
In cases where the secured creditors have set up claims in respect of the assets of company in liquidation, the Official Liquidator shall call upon the secured creditors to deposit suitable commensurate amount towards security charges to be paid to the concerned security agency after due verification of its claim. In addition, if there is no impediment to sell the assets (movable/immovable) of such company in liquidation, the Official Liquidator may simultaneously ensure that the assets are put up for sale forthwith by following necessary procedure;
In cases where the secured creditors of any company have instituted recovery proceedings before the DRT, the Official Liquidator shall forthwith move the concerned DRT praying for sale of the assets of the company and to invest the sale proceeds in suitable fixed deposit scheme to derive best returns thereon, which amount can be disbursed subject to such orders to be passed by the competent Court;
Copy of this order be forwarded forthwith to the Secretary, Ministry of Company Affairs, Government of India for information and taking necessary action as may be advised in the light of observations made hereinbefore.
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2008 (3) TMI 485
Oppression and mismanagement - ask of selling the landed properties of the first respondent-company - Held that:- It is wholly inappropriate for this court to take upon itself the task of selling the landed properties of the first respondent-company, and in distributing the sale proceeds, as this court, in proceedings under section 10F of the Companies Act, 1956, can neither substitute itself for that of the Company Law Board nor can it exercise the powers conferred on the Company Law Board under section 402 of the Companies Act. The interlocutory orders passed by this court during the pendency of the appeal, including those appointing Advocates Commissioner for the sale of the landed property of the first respondent-company, inviting bids by prescribing the earnest money deposit, receiving the bid amounts etc., would not survive disposal of the appeal.
Since bids have been received by the Advocates Commissioner from several persons, and the money received has been deposited in the High Court Registry, pursuant to the interim orders passed during the pendency of this appeal it is but appropriate that the amount received either from the highest bidders, or from the unsuccessful bidders, be returned to them. The High Court Registry shall, or such persons being identified by their respective counsel, return the money received from them by way of an account payee cheque drawn in their favour.
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2008 (3) TMI 484
Amalgamation - Held that:- The scheme is neither prejudicial to the interests of members and creditors nor to the public at large. The legal issue raised by the Registrar of Companies is concluded by earlier judgment of this court which is already referred to hereinabove. The court therefore sanctions the scheme of amalgamation at annexure "C" to the petitioner.
The cost of Central Government standing counsel is quantified at ₹ 3,500 per petition. Liberty is given to the transferee company to pay the amount of cost directly by drawing a cheque in favour of Central Government standing counsel Mr. Iqbal Sheikh.
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2008 (3) TMI 483
Winding up - Powers of liquidator - Held that:- Since the State Government has discharged the liability of the Mills Company towards secured creditors and labourers and there is still surplus fund with the Official Liquidator in the account of GSTC and since the State Government has undertaken to discharge the liabilities, if any, that may arise in future, there may not be any objection on the part of the Official Liquidator in handing over possession of the immovable properties in question to the State Government and even if the objections raised by the Official Liquidator in his report, they are not sustainable either on facts or in law.
The Official Liquidator is directed to hand over possession of the properties in question of Priyalaxmi Mill, Vadodara as well as Monogram Mill, Ahmedabad to the State Government as the State Gov-ernment is the only secured creditor and sole shareholder/contributory of the Company in liquidation. The Court is further taking note of the fact that purpose for which the possession of the land is claimed by the State Government is also public purpose as on the land of Priyalaxmi Mill, Vadodara, the State Government has decided to develop the Information Technology Park whereas on the land of Monogram Mill, Ahmedabad, the State Government has decided to establish a health centre.
So far as surplus fund available with the Official Liquidator in GSTC Account is concerned, the Official Liquidator was earlier directed by this Court to return the amount of the funds available with him till this date. As per the say of the State Government the Official Liquidator is having funds of more than ₹ 60 crores as on today in GSTC account. A part of the said funds may be retained by him for discharging the liabilities or to meet with any exigency that may arise in future. The balance amount shall have to be handed over to the State Government and the appropriate order in this regard will be passed after submission of accounts before the Court under separate report.
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9911796707
