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2008 (4) TMI 532
Let out Immovable property - Income from house property OR business income? - Receipt being rent of "Infrastructure Facilities" installed in the property Let Out - Property let out to its group companies on fixed monthly rent basis - HELD THAT:- The activity of letting out the immovable property is always assessable under the head ‘Income from house property’ even though the object of the assessee is to carry on the business of real estate inasmuch as separate and specific head is provided for computing such income.
The word ‘business’ connotes some real, substantial and systematic or organised course of activity or conduct with a set purpose as held by the Hon’ble Supreme Court in the case of Narain Swadeshi Wvg. Mills v. CEPT[1954 (10) TMI 11 - SUPREME COURT]. If this test is satisfied then income earned would be computed as business income.
In the present case, the assessee has failed to prove that any business activity was carried on by the assessee. Mere statement of the assessee that it was running a business centre is not enough. No facility or services were provided by the assessee. It is mere case of letting out of furnished accommodation on long-term basis. In case of business centre, the purpose is to provide space to business people on short-term basis for holding conferences, exhibitions, etc., which is missing in the present case. The case of the assessee is akin to the case before the Apex Court in the case of Shambhu Investment (P.) Ltd. [2003 (1) TMI 99 - SC ORDER] and, therefore, income from letting out was rightly assessed as ‘income from house property’. The order of the CIT(A) is, therefore, upheld.
In the result, the appeal is dismissed.
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2008 (4) TMI 531
Issues Involved:1. Deletion of addition on account of foreign exchange fluctuation. Summary:Issue: Deletion of addition on account of foreign exchange fluctuationRevenue filed an appeal against the order of CIT (Appeals) which deleted the addition of Rs. 7,06,173 on account of foreign exchange fluctuation. The Assessing Officer had added this amount to the income of the assessee, considering it a notional loss due to reinstatement of foreign currency loans/transactions not retired during the financial year 2003-04. The CIT (Appeals) observed that the assessee had shown a net gain of Rs. 4,05,665 from exchange fluctuations on outstanding liabilities/current assets as on 31-3-2004. The Assessing Officer treated the gain as income but did not allow the loss, which was inconsistent. The CIT (Appeals) relied on the Special Bench decision in Oil & Natural Gas Corpn. v. Dy. CIT [2002] 83 ITD 151 (Delhi), which favored the assessee, and thus deleted the addition. The Tribunal noted that the issue was settled by various decisions, including the jurisdictional High Court. The learned DR for the Revenue could not provide any contrary case law. The Tribunal referred to several cases, including Oil & Natural Gas Corpn. Ltd., Dy. CIT v. Maruti Udyog Ltd. [2006] 99 ITD 666 (Delhi), and CIT v. Woodward Governor India (P.) Ltd. [2007] 294 ITR 451, which supported the assessee's claim for deduction of loss due to foreign exchange fluctuation. The Tribunal concluded that the CIT (Appeals) was correct in allowing the deduction, as the loss was not notional but a fait accompli. The order of CIT (Appeals) was upheld, and the appeal filed by the Revenue was dismissed.
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2008 (4) TMI 530
Deemed income under "House Property" - Allowability of vacancy allowance u/s 24(1)(ix) - Determining the ALV of residential house lying vacant during the year u/s 23 - HELD THAT:- On perusal of the Section 24(ix), it is clear that it has two limbs, If we apply the second limb of the provision, then it will be found that it applies in a case where the assessee is owner of a larger property comprising of various parts. For attracting the second limb, two conditions are to be satisfied : (1)That the assessee is owner of a property comprising of various parts; and (2)That out of the various parts, one or some part should be vacant.
If these two conditions are satisfied, then vacancy remission is to be allowed as per the provisions contained in section 24(1)(ix), i.e., proportionate to the period during which such part is wholly unoccupied.
The issue relating to the construction of the term ‘property is let’ came before the Mumbai Bench of the ITAT in the case of Premsudha Exports (P.) Ltd.[2007 (5) TMI 348 - ITAT MUMBAI]. In that case the assessee-company held property for the purpose of letting out. However, the property could not be let out despite efforts and the property remained vacant throughout the year. As the object of the company was to acquire the property from letting out and further since all efforts were made to let it out, the Bench found that the property was to be held as let out property. According to the Bench, therefore, the annual letting value of the property was to be worked out as per section 23(1)(c) and as per this clause, the rent received or receivable during the year was nil and as such the same is to be taken as annual value of the property. Thus, according to the Bench, expression ‘property is let’, appearing in clause (c) of section 23(1) does not mean that the property should have been actually let in the relevant previous year or any time during the relevant previous year.
The ITAT Delhi Bench ‘I’ in the case of Kamal Mishra v. ITO [2007 (8) TMI 484 - ITAT DELHI] has also considered a similar case. In that case also the assessee was owning certain property which was let out till December 2000 and after that the property was lying vacant till April 2002. Hence, the property was vacant. The assessee computed annual letting value of the property as per provisions of section 23(1)(c). The issue was as to whether the assessee was justified in adopting the ALV of the property as per the provisions of section 23(1)(c). The Bench upheld the claim of the assessee.
In view of the above two authorities and on the facts and circumstances of this case, the claim of the assessee is maintainable. In the instant case, there is no dispute that the building held by the assessee was one building having common ‘in’ and ‘exit’ points and several common facilities and services. Thus, in our considered opinion, the vacancy remission claimed by the under section 24(1)(ix) is to be allowed.
Therefore, the order of the learned CIT(Appeals) on the issue in question is set aside and the matter is decided in favour of the assessee. Accordingly, grounds taken by the assessee are allowed.
In the result, assessee’s appeal is allowed.
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2008 (4) TMI 529
Issues:
1. Whether the value of a residential flat at NCPA Apartment is chargeable to wealth tax.
2. Whether the assessee is entitled to exemption under the Wealth-tax Act for the assessment year 2001-02.
Analysis:
1. The main issue in this case revolved around the addition of Rs. 3.01 crore for the value of a flat at NCPA, Mumbai, to the assessee's net wealth for the assessment year 2001-02. The assessee argued that since the flat was used for business purposes in preceding years and let out for residential purposes in subsequent years, it should be exempt from wealth tax. However, the flat was not let out for a minimum of 300 days in the relevant previous year, making it ineligible for exemption under section 2(ea) of the Wealth-tax Act.
2. The tribunal found that each assessment year is independent, and the levy of wealth tax on a specific asset must align with the facts and laws applicable for that year. Despite the assessee's argument that the flat was used partly for business and partly let out for residential purposes, the conditions for exemption were not met for the relevant assessment year. The tribunal emphasized that the Wealth-tax Act charges tax based on net wealth as of the valuation date, not the entire previous year, and assets must meet specific criteria for exemption.
3. The tribunal highlighted the definitions under section 2(ea) of the Act, which exclude residential properties let out for 300 days and those used for business or profession from the definition of "assets." The tribunal rejected the argument that the flat should be exempt due to its usage pattern, emphasizing that assets falling under the Act's definition are chargeable unless specific exemptions apply. The tribunal also clarified that past non-taxation of the flat does not preclude its taxation in the relevant year.
4. The tribunal distinguished previous cases cited by the assessee, noting that the issues addressed in those cases were different from the present case. It emphasized that to claim exemption from wealth tax, the assessee must fulfill all conditions specified in the relevant exemption clause on the valuation date. As the flat did not meet the criteria for either exemption under section 2(ea)(i)(3) or (4), the tribunal upheld the denial of exemption by the CWT(A) and dismissed the grounds of appeal related to the flat at NCPA, Mumbai.
5. Additionally, the tribunal addressed a separate issue regarding the value of motor cars in the assessee's net wealth, which was set aside for verification by the Assessing Officer. The tribunal directed the Assessing Officer to decide the issue in accordance with the law and granted the assessee an opportunity to be heard on this matter. The appeal was partly allowed for statistical purposes, favoring the revenue on the main issue related to wealth tax exemption for the flat.
In conclusion, the tribunal's judgment upheld the denial of exemption for the residential flat at NCPA, Mumbai, under the Wealth-tax Act for the assessment year 2001-02, emphasizing the specific criteria assets must meet for exemption and the independent nature of each assessment year in tax matters.
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2008 (4) TMI 528
Issues involved:
The assessee filed a miscellaneous petition under rule 34A of the ITAT Rules, 1963 to rectify the order of ITAT dated 31-7-2007 passed in TDS Appeal No. I.T.A.No. 2684/Delhi/06 for the financial year 2005-06.
Details of the Judgment:
1. Assessee's Allegations and Submissions:
The assessee claimed that there were mistakes in the ITAT order that needed rectification under section 254(2) of the Act. It was alleged that certain decisions and agreements were not properly considered by the Bench. The assessee argued that the order should be recalled to provide a fair opportunity to present its case. Various judgments were cited to support the contention that not considering all relevant information amounts to a mistake apparent from the record.
2. Contention of the Learned AR and DR:
The learned DR argued that all issues were thoroughly discussed by the ITAT, and there were no apparent mistakes in the order that could be rectified under section 254(2) of the Act.
3. ITAT's Analysis and Decision:
After reviewing the arguments and submissions, the ITAT found that the order passed on 31-7-2007 did not contain any apparent mistakes. The ITAT emphasized that rectification under section 254(2) is limited to correcting obvious and patent errors, not re-evaluating the merits of the case. The ITAT clarified that it had considered all relevant material on record and made necessary findings to support its decision. The Bench's reliance on decisions of the Supreme Court and High Court was deemed appropriate in reaching a conclusion.
4. Comparison with Precedent:
The ITAT distinguished the case cited by the assessee regarding failure to consider a decision of a co-ordinate Bench, as no such situation was present in the current case. The ITAT concluded that the arguments and case laws presented did not reveal any mistakes in the ITAT's order that warranted rectification under section 254(2) of the Act.
5. Final Decision:
Based on the above analysis, the ITAT dismissed the miscellaneous application filed by the assessee, stating that no mistake apparent from the record was found in the ITAT's order that would justify rectification under section 254(2) of the Act.
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2008 (4) TMI 527
Issues:
- Treatment of income from sale of shares as long-term capital gains or business income.
- Claim of deduction under section 54F.
Analysis:
1. Treatment of income from sale of shares:
The case involved appeals filed by the revenue against the orders of the ld. CIT(A) regarding the treatment of income from the sale of shares by an individual share-broker. The Assessing Officer had denied the claim of long-term capital gains and deduction under section 54F on the grounds that the assessee was unable to produce the books of account destroyed in a fire. The revenue contended that the decision of the ld. CIT(A) should be reversed, citing a previous Tribunal case as distinguishable. However, the assessee argued that the books of account destruction was accepted by the Assessing Officer for a prior year and provided evidence of holding shares as capital assets. The assessee maintained separate books of account for business and personal investments, with clear records of share transactions. The Tribunal noted that the Assessing Officer had previously accepted similar transactions as long-term capital gains, and the assessee's intention to hold personal investments separately was evident. The Tribunal relied on a previous case to uphold the CIT(A)'s decision, concluding that the income from the sale of shares held for more than one year should be treated as long-term capital gains.
2. Claim of deduction under section 54F:
The Tribunal further addressed the claim of deduction under section 54F, which allows for exemptions on capital gains if invested in specified assets. The Tribunal upheld the CIT(A)'s direction to tax the income generated from the sale of shares held as personal investments for over a year as long-term capital gains, thereby allowing the deduction under section 54F. The Tribunal found no evidence presented by the revenue to dispute the factual findings of the CIT(A) and upheld the decision in favor of the assessee. Consequently, the appeals of the revenue were dismissed, affirming the treatment of income from share sales as long-term capital gains and allowing the deduction under section 54F as per the law.
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2008 (4) TMI 526
Issues Involved:
1. Treatment of maintenance payments as perquisites.
2. Levy of interest under section 234B of the Income-tax Act.
Issue-wise Detailed Analysis:
1. Treatment of Maintenance Payments as Perquisites:
The primary issue revolves around whether the payments made by the employer for the maintenance of the premises provided to the assessee as residential accommodation should be treated as perquisites in the hands of the assessee. The assessee was employed as Vice-President with M/s. Hutchison Max Telecom (P.) Ltd. and was provided rent-free residential accommodation. The employer entered into two agreements: a 'Leave and License Agreement' with M/s. Sterling and Wilson Property Developers (P.) Ltd. for the premises, and an 'Amenities Agreement' with M/s. Shapoorji Palloonji and Co. Ltd. for additional services.
The Assessing Officer applied rule 3(1) of the Income-tax Rules for valuing the residential accommodation and rule 3(8) for valuing the amenities. The residential accommodation was valued at Rs. 1,80,000, and the amenities provided were valued at Rs. 9,60,000, which was added to the salary of the assessee as perquisites.
The assessee contended that both agreements should be read together, and the payments made under the Amenities Agreement should be considered as part of the lease rental under rule 3(1). However, the CIT(A) rejected this submission, stating that maintenance of the premises was the landlord's responsibility under the Leave and License Agreement, and the amenities provided were separate and should be valued under rule 3(8).
Upon appeal, it was held that the payments made under the Amenities Agreement could not be treated as lease rental. The compensation paid to the service provider for amenities does not qualify as 'lease rental' and thus cannot be included in the valuation of residential accommodation under rule 3(1). The CIT(A) correctly invoked rule 3(8) for valuing the amenities provided, and the appeal on this ground was dismissed.
2. Levy of Interest under Section 234B:
The second issue pertains to the levy of interest under section 234B of the Income-tax Act. The assessee contested the levy of interest, but the learned Counsel for the assessee conceded that the levy of interest under section 234B is consequential and linked with the assessed tax. Consequently, this ground was dismissed.
Conclusion:
The appeal filed by the assessee was dismissed on both grounds. The payments made under the Amenities Agreement were rightly treated as perquisites and valued under rule 3(8) of the Income-tax Rules, and the levy of interest under section 234B was upheld as consequential.
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2008 (4) TMI 525
Issues Involved:
1. Taxability of the ex gratia payment received by the assessee from the erstwhile employer under section 17(3)(i) of the Income-tax Act, 1961.
2. Levy of interest under section 234B of the Income-tax Act, 1961.
Issue-wise Detailed Analysis:
1. Taxability of the Ex Gratia Payment:
The primary issue in this appeal is whether the ex gratia payment of Rs. 35,00,000 received by the assessee from HT-CGU Project Services (P.) Ltd. (HTCGU) is chargeable to tax under section 17(3)(i) of the Income-tax Act, 1961, as "profits in lieu of salary." The assessee contends that the payment was voluntary and not connected to the employment, while the Assessing Officer argues it was compensation for termination of employment.
The assessee was employed with Hindustan Times until 31-5-2000 and then deputed as CEO of HTCGU from 1-6-2000 to 31-1-2001. Upon resignation effective from 1-2-2001, HTCGU offered an ex gratia payment of Rs. 35,00,000. The Assessing Officer considered this amount as taxable income under the head 'salary,' asserting it was compensation for termination of employment.
The learned CIT(A) upheld the Assessing Officer's view, noting that the right to receive the amount came into existence while the assessee was still in service. However, the assessee's counsel argued that the payment was discretionary and voluntary, with no vested right under the employment contract. The counsel cited several judicial precedents, including Supreme Court and High Court decisions, to support the claim that voluntary payments without a vested right are capital receipts and not taxable as 'salary.'
The Tribunal analyzed the definition of 'salary' under section 17(1) and 'profits in lieu of salary' under section 17(3). It emphasized that 'compensation' under section 17(3)(i) implies an obligation to pay and a vested right to claim. Since the payment was ex gratia, voluntary, and at the discretion of the employer, it did not qualify as 'compensation' under section 17(3). The Tribunal noted that the assessee had no vested right to the payment, and it was not related to past services rendered. The Tribunal referred to several judicial decisions, including Mahesh Anantrai Pattani v. CIT, CIT v. L.W. Russel, and Lachman Das v. CIT, which held that voluntary payments without a vested right are capital receipts.
The Tribunal concluded that the ex gratia payment was a capital receipt, not taxable as 'profits in lieu of salary' under section 17(3)(i). It also noted that the amendment to section 17(3) to include payments received after cessation of employment, effective from 1-4-2002, did not apply to the assessment year in question.
2. Levy of Interest under Section 234B:
The Tribunal held that the levy of interest under section 234B is consequential in nature. Since the primary issue of taxability of the ex gratia payment was decided in favor of the assessee, the interest under section 234B would also be adjusted accordingly.
Conclusion:
The appeal was allowed, and the addition of Rs. 35 lakhs was deleted. The ex gratia payment was held to be a capital receipt, not liable to tax under section 17(3)(i) of the Income-tax Act, 1961. The levy of interest under section 234B was deemed consequential and would be adjusted based on the primary decision.
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2008 (4) TMI 524
Issues Involved:
1. Legality of the CIT (Appeals) order.
2. Addition of Rs. 21.75 lakhs as undisclosed income.
3. Addition of Rs. 30,000 as undisclosed income.
Issue-wise Detailed Analysis:
1. Legality of the CIT (Appeals) order:
The assessee contested that the order passed by the CIT (Appeals) is "bad in law." However, the judgment did not provide detailed reasoning or analysis specifically addressing this issue. The focus was primarily on the substantive grounds of additions made by the Assessing Officer and confirmed by the CIT (Appeals).
2. Addition of Rs. 21.75 lakhs as undisclosed income:
The core of the dispute revolved around a table diary (Annexure A-59) seized during search and seizure operations, which contained various entries related to the business transactions of the assessee-company. The assessee argued that these entries were related to normal business transactions and were duly recorded in the company's books. However, the Assessing Officer and CIT (Appeals) found discrepancies in the dates and amounts recorded in the diary versus the books of account. The CIT (Appeals) noted that the assessee's explanations lacked consistency and failed to establish a clear nexus between the diary entries and the books of account.
The Tribunal, after examining the diary and the explanations provided, found that the notings in the diary were primarily for memory and follow-up purposes, and there was no evidence of cash transactions. The Tribunal emphasized that discrepancies in dates (e.g., cheques noted on one date but recorded in the books on another) do not justify additions unless there is concrete evidence of unaccounted income. The Tribunal concluded that the assessee had satisfactorily explained the entries and that the amounts noted in the diary were accounted for in the regular books. Therefore, the addition of Rs. 21.75 lakhs was not justified and was deleted.
3. Addition of Rs. 30,000 as undisclosed income:
The Assessing Officer added Rs. 30,000 as undisclosed income based on entries in the seized diary indicating cash payments to Mr. Malhotra and Mr. Ranjeet. The assessee explained that these were temporary advances given to customer representatives for urgent expenses and were subsequently refunded. The CIT (Appeals) confirmed the addition, stating that the assessee failed to prove that the payments were made from disclosed sources.
The Tribunal found merit in the assessee's explanation and noted that the Assessing Officer did not examine the assessee's contentions or bring any contrary material on record. The Tribunal emphasized the need for a fair examination and restored the matter to the Assessing Officer for fresh consideration, directing that due opportunity be given to the assessee to substantiate their claims.
Conclusion:
The appeal was allowed in part. The Tribunal deleted the addition of Rs. 21.75 lakhs, finding that the entries in the seized diary were satisfactorily explained and accounted for in the regular books. The addition of Rs. 30,000 was remanded back to the Assessing Officer for fresh examination, with directions to provide the assessee an opportunity to present evidence supporting their explanation.
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2008 (4) TMI 523
Exemption under section 11(2) of the Act - Assessing Officer noticed that the assessee was carrying over 75 per cent. of the income from year to year for 10 years every year on a regular basis and the assessee was only engaged in creation of assets - Held that:- section 11(2) of the Act providing for carry over up to 75 per cent. is an exception and if it is followed from year to year, then the genuineness of the activities of the trust itself should be examined by the Assessing Officer. Matter remanded back to the Assessing Officer for fresh consideration, appeal is disposed of.
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2008 (4) TMI 521
Month and year is affixed by a separate sticker - Rule 2(m) and sub-rule (1) of Rule 6 - Rule 2(m) and 6 would indicate the manner in which the display is to be made - Considering the nature of the said Rule and since violation of such Rule would visit the violator with penal consequences as well, the authorities should have been more specific in clearly bringing out the violation committed by the petitioner since a sticker is permissible unless it is not in conformity in any other manner which should have been specified - Therefore, without advertising to the other details of the matter, on the facts of this case the notices impugned in this petition cannot be sustained for want of clarity and not being specific with regard to the violation - Hence, the notices issued to the petitioner is not sustainable.
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2008 (4) TMI 519
Protective assessment - Income assessed under block assessment cannot be assessed again under regular assessment Business expenditure – Bad and doubtful debts - Tribunal remanded matter to assessing authority – Justified Business expenditure – Borrowing in foreign exchange – finding that loan used for purchase of plant and machinery and increased liability of assessee by reason of fluctuation of foreign exchange rate is capital in nature – Tribunal reversing finding without giving reasons – Order of set aside
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2008 (4) TMI 518
Issues Involved:
1. Valuation of closing stock of two transformers.
2. Justification of market value adopted by the assessee.
3. Authority of the Assessing Officer to modify the valuation.
4. Impact of valuation on subsequent accounting periods.
Detailed Analysis:
1. Valuation of closing stock of two transformers:
The core issue revolves around the valuation of two transformers that were part of the closing stock of the assessee for the assessment year 1984-85. The assessee, a manufacturer of power transformers, had valued these transformers at Rs. 4,99,999 based on a quotation from M/s. Manish Electricals. The Assessing Officer, however, rejected this valuation and instead adopted a figure of Rs. 16,40,000, which was the tendered price at which the transformers were eventually sold to the Punjab State Electricity Board (PSEB).
2. Justification of market value adopted by the assessee:
The Tribunal found that the assessee had been following the correct method of accounting for valuation of closing stock but held that the manner in which the market value was determined was not justified. The Tribunal noted that there was no reliable and convincing market price for the transformers, as the quotation from M/s. Manish Electricals could not be considered a general market indicator. The Tribunal emphasized that the transformers were neither outdated nor damaged and thus their value being one-third of the sale price could not be justified.
3. Authority of the Assessing Officer to modify the valuation:
The Tribunal and the Commissioner (Appeals) both concluded that the value of the closing stock should be determined at cost price rather than the market value provided by the assessee. The Tribunal upheld the Commissioner (Appeals)'s direction to determine the value of the transformers at cost price, particularly because the writ petition was still pending, and negotiations for the sale of the transformers were ongoing. The Tribunal's stance was that the Assessing Officer is entitled to disturb the valuation if it does not reflect the correct cost or market value based on evidence. This principle was supported by the apex court's decision in CIT v. British Paints India Ltd., which allows the Assessing Officer to ensure that the taxable income reflects the correct trading profits.
4. Impact of valuation on subsequent accounting periods:
The Tribunal failed to appreciate that any disturbance in the valuation of the closing stock for the year under consideration would be reflected in the opening stock of the subsequent year. The Tribunal did not consider whether this adjustment would have any real effect on the profits, given that the same valuation would carry over to the next accounting period. The judgment emphasized that the purpose of valuing the closing stock is to balance the cost of unsold goods entered at the time of purchase, not to bring into charge any appreciation in value.
Conclusion:
The Tribunal's approach in disturbing the valuation of the closing stock was deemed unsustainable. The correct principle, as stated by the apex court, is that the valuation of unsold stock at the close of an accounting period is necessary to determine the trading results of that period. The question referred to the High Court was answered in the affirmative, in favor of the assessee, and against the Revenue. The reference was disposed of with no order as to costs.
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2008 (4) TMI 517
Transfer of appeal - request for transfer was made to Hon'ble President - High Court's decision in the case of Vijay Stereophonic Sound Studio v. CEGAT - High Court has observed that request for transfer was made on 15-11-96 and the importer had right to get the appeals transferred to other benches under the jurisdiction of which they are doing business
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2008 (4) TMI 515
Valuation of house property - difference on the value of the property assessed by the assessee and by the District Valuation Officer - addition was made in the income of the assessee - Held that: - report of the Valuation Officer is not reliable and the addition made on the basis of the valuation were deleted - appeal being without any merit, is dismissed
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2008 (4) TMI 514
Assessee not filed return - called upon to file return on account of investment in the construction of a building - assessee filed a return and along with it a valuation report of construction - Assessing Officer referred the valuation of the building constructed by the assessee to the Department's valuer - valuation was made by the Assessing Officer when the assessment stood remanded under the orders of the Commissioner of Income-tax (Appeals), counsel for the assessee contended that the Commissioner of Income-tax (Appeals) remanded the matter only for the limited purpose of considering certain cash credits and assessment as such was not pending before the Assessing Officer for reconsideration - authorities have not considered the impact of amendment with retrospective effect we leave open both the issues to the Commissioner of Income-tax (Appeals) for consideration, i.e., whether reopening is justified on account of retrospective amendment through introduction of section 142A and if so, to consider the assessee's challenge against the quantum of assessment - set aside the impugned orders of the Tribunal and remand the matter to the Commissioner of Income-tax (Appeals) for rehearing the assessee and for disposal of the case afresh
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2008 (4) TMI 513
Issues:
Confirmation of scheme of arrangement under section 391/394 of the Companies Act, 1956.
Analysis:
The petition was filed seeking confirmation of a scheme of arrangement under section 391/394 of the Companies Act, 1956 by three companies - the Demerged Company, and two others. The Court had earlier appointed a Chairman for a creditors meeting, where it was unanimously resolved to approve the proposed Scheme of Demerger without modification. Following this, the Court directed publication in two newspapers and served notices to the Official Liquidator and the Regional Director. The Official Liquidator had no objections, but the Regional Director objected to the undisclosed ratio of exchange of shares.
Further Analysis:
The Court directed the petitioner's counsel to disclose the relationship between the Chartered Accountant and the Directors of the Demerged Company. A supplementary affidavit clarified that the Directors had no relationship with the Chartered Accountant. After hearing the petitioner's counsel and reviewing the petition and the Scheme of Arrangement, the Court noted the absence of objections despite advertisements and explanations provided to the authorities. Satisfied that the Scheme was in the interest of shareholders/creditors, the Court approved the Scheme of Arrangement of demerger.
Conclusion:
The Court approved the Scheme of Arrangement of demerger, as filed with the petition, and directed the issuance of a formal order within three weeks. The petition was disposed of, with the petitioners instructed to comply with all statutory requirements within a month.
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2008 (4) TMI 512
Arbitral proceedings - Held that:- The very fact that the appellants contend that there is an arbitral agreement evidenced by communication upto 10.3.2006 must negate the contention of the appellants that there was a concluded agreement on 8.5.2006. We, therefore, hold that there was no concluded agreement and if there being no concluded agreement merely because there was an arbitral clause in the documents exchanged and there was no dispute about the arbitral clause would not result in holding that there was an contract containing an arbitral clause. The arbitral clause was not independent of the agreement to be entered into.
The very fact that the appellants contend that there is an arbitral agreement evidenced by communication upto 10.3.2006 must negate the contention of the appellants that there was a concluded agreement on 8.5.2006. We, therefore, hold that there was no concluded agreement and if there being no concluded agreement merely because there was an arbitral clause in the documents exchanged and there was no dispute about the arbitral clause would not result in holding that there was an contract containing an arbitral clause. The arbitral clause was not independent of the agreement to be entered into.
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2008 (4) TMI 511
Winding-up - Exercise and control of liquidator’s powers - Held that:- The applicant is permitted to assist the official liquidator or his advocate in any proceedings which are filed by or against the company at his own cost. The applicant is also permitted to address any court, authority or forum as a representative of the official liquidator, to protect the interest of the company in liquidation. It is, however, clarified that wherever the official liquidator has filed any matter or initiated any proceedings before any court, authority or forum against the applicant or where the applicant’s interest and the interest of the company in liquidation are in conflict with each other, the applicant will not have any say for the company in that particular matter. It is also made clear that the assistance that may be rendered by the applicant to the official liquidator shall be at his own cost and consequences.
The applicant is further permitted to point out to the official liquidator all such matters which are disposed of either ex parte or in absence of any representation on behalf of the official liquidator and any further action is required to be taken in those matters. On pointing out such matters by the applicant to the official liquidator, the official liquidator shall take prompt and immediate action in the best interest of the company in liquidation. The applicant shall be allowed to represent the official liquidator at his own cost.
The applicant shall not have any access to the records of the company in liquidation. He has to make a request in writing to the official liquidator, which shall be examined by the official liquidator on its merits and if he finds such request to be acceptable, he shall provide necessary inspection to such records.The applicant’s prayer for initiating contempt proceedings against the official liquidator is hereby rejected.
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2008 (4) TMI 510
Whether the consent order, dated 8-9-2006, has rendered the Company Law Board "functus officio" ?
Whether the Company Law Board has exceeded its powers under regulation 44 of the Company Law Board Regulations, 1991, by issuing the order, dated 28-11-2007 ?
Whether the civil miscellaneous appeal has to be allowed, on the aforesaid grounds raised by the appellants herein ?
Held that:- It is clear that the consent order, dated 8-9-2006, has direct nexus with the earlier order, dated 18-8-2005, whereby the directors belonging to the respondents group were given proper protection. However, under the guise of the order, dated 8-9-2006, cleverly bypassing the direction given by the Board on 18-8-2005, the annual general body meeting has been conducted on 24-8-2005. From the impugned order, it is clear that the intention of the Company Law Board is only to prevent the said abuse of process of the Bench and to meet the ends of justice and therefore, considering the facts and circumstances, answer all the substantial questions of law raised by learned counsel for the appellants against the appellants, holding that there is no error or infirmity in the impugned order passed by the Company Law Board, so as to exercise its power under regulation 44 of the Company Law Board Regulations, 1991. Appeal dismissed.
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9911796707
