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2012 (1) TMI 392
Issues involved:
Challenge to ex-parte decree dated 05.02.2002
Plaintiff's Averments:
- Defendant No. 1 represented supply of mixed waste from USA
- Plaintiff placed order for 100 MT of mixed waste
- Defendant No. 1 assured good quality but goods were defective
- Plaintiff incurred expenses in transporting and clearing goods
Legal Interpretation - Section 230 of The Indian Contract Act, 1872:
- An agent cannot personally enforce contracts u/s 230
- Exceptions include cases where the principal cannot be sued
- Supreme Court interpretation in AIR 1962 SC 538 sets clear guidelines
Defendant No. 1's Role:
- Defendant No. 1 acted as agent of M/s.Espee Trading Corporation
- Principal disclosed in documents and not liable for breach
- Plaintiff did not sue M/s.Espee Trading Corporation
Defendant No. 2's Liability:
- No averment to lift corporate veil of defendant No. 1 to reach defendant No. 2
- Suit fails against defendant No. 1, hence no liability for defendant No. 2
Judgment and Conclusion:
- Appeal allowed, decree set aside, suit dismissed
- Principle of law in Section 230 may need legislative review
- Costs to be borne by respective parties
- Amount deposited by appellants to be returned with interest
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2012 (1) TMI 391
Issues Involved:
1. Enforcement of Foreign Arbitral Award
2. Territorial Jurisdiction of the Court
3. Application under Section 34 of the Arbitration and Conciliation Act
4. Public Policy and Ex-parte Award
Summary:
1. Enforcement of Foreign Arbitral Award:
The appellant obtained an arbitral award in the USA against the respondent and sought to enforce and execute it in India. The appellant filed an application u/s Order 21 Rule 22 of the Code of Civil Procedure 1908 for leave to execute the foreign award.
2. Territorial Jurisdiction of the Court:
The respondent challenged the foreign award under Section 34 of the Arbitration and Conciliation Act 1996 (the Act) in the High Court, which was returned due to lack of jurisdiction. The appellant argued that the court has jurisdiction as the respondent's bank account is within its territorial limits. The court concluded that the territorial jurisdiction of the Executing Court for enforcement of foreign awards under Section 48 of the Act must be considered where the respondent's property is located.
3. Application under Section 34 of the Arbitration and Conciliation Act:
The respondent's application u/s 34, initially filed in the High Court, was returned for lack of jurisdiction and is now pending in the Thane District Court. The appellant argued that enforcement should proceed as the respondent's bank account is within the jurisdiction of the High Court.
4. Public Policy and Ex-parte Award:
The respondent contended that the ex-parte award is against public policy in India and sought to set it aside u/s 34 of the Act. The court noted that the enforcement of the award could be refused if it is contrary to public policy u/s 48 of the Act. The Supreme Court's judgment in Venture Global Engineering Vs. Satyam was cited, establishing that Section 34 applies to foreign awards and that the respondent cannot be deprived of challenging the award on public policy grounds.
Conclusion:
The High Court held that it has territorial jurisdiction to enforce the award as the respondent's bank account is within its limits. The application u/s 34 pending in Thane District Court should be returned and re-presented to the High Court to be disposed of along with the execution application. The appeal was allowed, and the impugned order was set aside. The court declined the appellant's request to stay the judgment for further legal recourse.
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2012 (1) TMI 390
Issues Involved:1. Power of official respondents over the fixation of salary payable to the employees of the Temple. 2. Validity and applicability of Government Orders regarding salary fixation. 3. Element of fairness in the petitioner's action regarding salary payment. Summary:Issue 1: Power of Official Respondents Over Fixation of SalaryThe controversy involves the power of the official respondents over the fixation of salary payable to the employees of the Temple. The Government of Tamil Nadu issued G.O.Ms. No. 257, Tamil Development Culture and Religious Department, dated 10.06.1998, fixing the scale of pay for temple employees. This was challenged by the priests, leading to a series of litigations. The Court directed the first respondent to consider the claim of the petitioners for salary as per the Government Order. The petitioner argued that respondents 1 and 2 lack the authority to fix salaries, relying on Section 55 of the H.R.&C.E. Act read with Rule 14 of the Tamil Nadu Hindu Religious Institutions (Officers and Servants) Service Rules, 1964. Issue 2: Validity and Applicability of Government OrdersThe respondents argued that the petitioner Temple, being a religious institution under Sections 6(20) and 6(18) of the H.R.&C.E. Act, is subject to directives under Section 27 of the Act. They contended that the Government Orders are valid, issued under Section 116(2) of the H.R.&C.E. Act. Rule 5-A of the Tamil Nadu Hindu Religious Institutions (Officers and Servants) Service Rules, 1964, mandates every religious institution to have a schedule of establishment approved by the Commissioner, limiting the expenditure on salaries within prescribed norms. The Court upheld the Government Orders and the percentage ratio fixed for different grades of Temples, stating that the Government has the power to fix norms for salary expenditure. Issue 3: Element of Fairness in Petitioner's ActionThe Court emphasized the need for fairness in the petitioner's action, noting that the salaries paid to the employees were meager. The petitioner had proposed appointing a retired Judge to ascertain income and fix reasonable pay scales. The Court found no fairness in the petitioner's action of paying low salaries and stressed that employees should not suffer in performing their duties. The Court directed the petitioner to submit a proposal for salary fixation within four weeks, considering the report of the learned Commissioner and relevant materials. The second respondent was instructed to pass appropriate orders within eight weeks, ensuring the interim arrangement continues until the final decision. Conclusion:The Writ Petition was disposed of with specific directions for the petitioner to submit a proposal for salary fixation, the second respondent to consider the proposal and pass orders, and the continuation of the interim arrangement until the final decision. No costs were awarded, and connected miscellaneous petitions were closed.
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2012 (1) TMI 389
Issues involved:
The issues involved in this case are related to the release of compensation amount without insisting on long term fixed deposit as directed by the Tribunal, the application of guidelines issued by the Supreme Court in the case of Susamma Thomas, and the failure of the Tribunal and High Court to consider the specific circumstances of the claimants in this case.
Release of Compensation Amount:
The Appellants, who were the legal heirs of the deceased victim of a motor accident, filed a claim petition seeking compensation. The Tribunal initially awarded a sum which was later enhanced by the High Court. The Insurance Company deposited the compensation amount with the Tribunal. The Appellants requested the release of the entire amount without investing in long term fixed deposit, citing their education, financial stability, and urgent need for the funds. However, the Tribunal rejected their application, and the High Court upheld this decision without considering the specific circumstances of the claimants.
Application of Supreme Court Guidelines:
The Supreme Court had issued guidelines in the case of Susamma Thomas to safeguard the interests of claimants, especially minors, illiterates, and widows, regarding the investment of compensation amount. The guidelines allowed discretion for the Tribunal to release the amount without long term fixed deposit in certain cases, such as literate persons who can manage their finances. However, the Tribunals were observed to mechanically order investment in fixed deposits without considering individual circumstances, leading to injustice and hardship for claimants.
Failure to Consider Claimants' Circumstances:
In this case, the claimants were educated and financially stable individuals, including a retired Superintendent and degree holders. They urgently needed the compensation for maintenance, construction, and providing shelter to family members. Despite these specific circumstances detailed in their application, the Tribunal and High Court did not consider these aspects while rejecting the request for withdrawal without long term fixed deposit. The Supreme Court found that the claimants' circumstances warranted the release of the entire compensation amount without delay.
Conclusion:
Considering the specific circumstances of the claimants and the failure of the Tribunal and High Court to properly assess the need for long term fixed deposit, the Supreme Court allowed the appeal. The impugned orders were set aside, and the entire compensation amount was directed to be withdrawn and paid to the Appellants without further delay. No costs were awarded in this matter.
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2012 (1) TMI 388
Issues involved: Appeal against order passed by CIT (A) for Assessment Year 2007-08 regarding disallowance of claimed losses due to absence of business activity.
Summary:
Issue 1: Absence of business activity
The Assessing Officer disallowed the loss claimed by the assessee of Rs. 12,28,782 as there was no business activity during the year. The assessee contended that it had engaged in various business activities such as employing staff, acquiring office premises, purchasing equipment, and setting up infrastructure, even though no sales or purchases were made. The assessee argued that setting up a business, not just commencing it, should allow for the claimed expenditure. The CIT (A) agreed with the assessee, stating that the business had commenced based on the activities undertaken, and allowed the loss claim. The department appealed against this decision.
Issue 2: Decision of the Appellate Tribunal
The Appellate Tribunal upheld the decision of the CIT (A) and dismissed the department's appeal. The Tribunal noted that the assessee had taken concrete steps towards setting up the business, such as employing staff, leasing premises, and creating infrastructure. The Tribunal found no fault in the CIT (A)'s decision to allow the loss claim, as the activities undertaken by the assessee indicated the commencement of the business, even without immediate sales or purchases. The Tribunal concluded that the assessee was entitled to the benefit of carry forward of business loss and depreciation, as per the Income-tax Act requirements.
In conclusion, the Appellate Tribunal affirmed the decision of the CIT (A) and dismissed the department's appeal, stating that the assessee's actions demonstrated the commencement of business activities, justifying the allowance of the claimed losses.
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2012 (1) TMI 386
Issues Involved:
1. Whether the order dated 19/12/1975 was obtained by practicing fraud.
2. Whether the order dated 19/12/1975 can be held to be a nullity.
Summary:
Issue 1: Fraud Allegation
The petitioner, Tukaram Chopade, filed an application u/s 32(O) r/w 32G of the B.T. & A.L. Act, 1948, which was granted on 19/12/1975 without issuing any notice. Late Andappa, the original landowner, later claimed the order was obtained by fraud, stating that the petitioner misled him and the Tahasildar. The court noted that fraud is a question of fact that must be pleaded and determined in a civil suit, not by tenancy authorities. The court held that authorities under the Act could not determine fraud in proceedings arising from an application u/s 32R. The remedy for heirs of Late Andappa to challenge the order on the ground of fraud remains open either by appeal, application for setting aside the order, or a civil suit.
Issue 2: Nullity of the Order
The court examined whether the order dated 19/12/1975 was a nullity due to inherent lack of jurisdiction. The court referenced several judgments, including Kiran Singh v/s. Chaman Paswan and Chiranjilal Shrilal Goenka v/s. Jasjit Singh, which established that orders passed without jurisdiction are nullities. However, the court concluded that the Mamlatdar & ALT, South Solapur, had jurisdiction under Section 70(b) of the Act to decide the tenancy status, and thus, the order did not suffer from inherent lack of jurisdiction. The question of whether the order was a nullity due to fraud remains open for appropriate proceedings.
Conclusion:
The court partly allowed the petition, setting aside the MRT's order to remand the matter for fresh proceedings u/s 32-O. It upheld the original order dated 19/12/1975, stating it did not suffer from lack of jurisdiction. The issue of fraud remains open for adjudication in appropriate proceedings.
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2012 (1) TMI 385
Issues Involved: Appeal against order of Ld. CIT (A)-IV, Ahmedabad regarding addition of stock short during survey and charging of interest u/s. 234B and 234C of the Income Tax Act for assessment year 2006-07.
Addition of Stock Short during Survey:
The assessee, engaged in manufacturing machinery, faced a stock shortage of &8377; 21,37,049/- during a survey u/s. 133A, where physical stock was less than stock as per books. The Assessing Officer (AO) applied a GP rate of 9.54% on the shortage amount, resulting in an addition of &8377; 2,03,875/-. The Ld. CIT (A) upheld the AO's decision, based on the statement of a senior citizen employee recorded during the survey, admitting to unaccounted stock. The appellant argued that the statement was unreliable due to the circumstances of its recording and subsequent clarifications made by the assessee. The appellant contended that the AO did not consider certain stock items lying in the open yard, and relied on the regular books of account and audit reports. The Tribunal noted that the AO heavily relied on the initial statement without considering the subsequent clarifications and evidence provided by the assessee. Referring to CBDT Circular No.286/2/2003, the Tribunal emphasized that no attempt should be made to obtain a confession during surveys. The Tribunal found that the AO did not investigate whether the shortage was due to sales outside the books or other factors. Therefore, the Tribunal concluded that the addition based on the profit rate applied to the stock shortage was not justified, and deleted the addition of &8377; 2,03,875/-.
Charging of Interest u/s. 234B and 234C:
The consequential ground in the appeal was regarding the charging of interest u/s. 234B and 234C of the Income Tax Act. However, detailed arguments or decisions related to this issue were not explicitly mentioned in the judgment. The Tribunal's decision focused on the primary issue of the addition of stock shortage during the survey, leading to the deletion of the addition amount.
Conclusion:
The Tribunal allowed the appeal of the assessee, setting aside the addition of &8377; 2,03,875/- made by the AO concerning the stock shortage during the survey. The decision was based on the inadequacy of evidence, failure to consider all relevant factors, and the inappropriateness of applying a profit rate without thorough examination. The order was pronounced in Open Court on 13-01-2012.
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2012 (1) TMI 384
Issues involved:
The issues involved in this case are related to the assessment completed by the Assessing Officer (AO) u/s.144 r.w.s. 147 of the Income Tax Act without supplying the reasons recorded for reopening the case, violation of principles of natural justice, and the subsequent appeal challenging the assessment.
Assessment Proceedings:
The case pertains to the assessment year 1999-00, where the DCIT referred the case to the Assistant Valuation Officer u/s.131(1)(d) to determine the correct cost of construction of a property. The Valuation Officer provided a report stating a higher cost of construction than declared by the assessee, mentioning lack of cooperation from the assessee during inspection.
Initiation of Proceedings:
Based on the Valuation Officer's report, proceedings u/s.147 of the IT Act were initiated, and notices u/s.148 were issued for multiple assessment years. The AO proceeded with protective/substantive assessments for different entities involved in the project to safeguard revenue interests.
Grounds Raised by Assessee:
The assessee raised grounds challenging the assessment u/s.144 r.w.s 147, citing lack of reasons provided for reopening the case. The CIT(A) dismissed the ground, stating that the appellant was aware of discrepancies in construction costs from related proceedings and upheld the AO's actions.
Judgment and Directions:
The ITAT directed the AO to provide the reasons recorded for reopening the assessment, following the precedent set by the Supreme Court in GKN Driveshafts case. The AO was instructed to pass a speaking order after considering the assessee's objections. The ITAT also highlighted the need to address jurisdictional issues before deciding on quantum additions, as per legal precedents.
Conclusion:
The ITAT allowed the appeal of the assessee for statistical purposes, emphasizing the importance of following due process and providing reasons for reopening assessments. The matter was remanded back to the AO for further proceedings in compliance with the directions given by the ITAT.
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2012 (1) TMI 383
The High Court of Patna heard a case involving a loan taken by the complainant under the Sarfaesi Act. The court issued a notice to the opposite party and stayed further proceedings in the complaint case pending in the court of the Judicial Magistrate 1st Class, Bettiah.
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2012 (1) TMI 382
Issues Involved:
1. Permission to examine handwriting expert in rebuttal evidence.
2. Entitlement to recovery for malicious prosecution.
3. Burden of proof in malicious prosecution cases.
4. Rights of parties to lead evidence in rebuttal.
Summary:
1. Permission to Examine Handwriting Expert in Rebuttal Evidence:
The defendant challenged the order dated 9.8.2011, which allowed the plaintiff to examine a handwriting expert in rebuttal evidence. The plaintiff's evidence was closed on 6.4.2010, and the defendant had led his evidence thereafter. The plaintiff then sought to examine a handwriting expert to compare signatures on an alleged agreement to sell. The court held that the plaintiff could not be allowed to lead evidence in rebuttal as the onus to prove entitlement to recover Rs. 5,00,000/- for alleged malicious prosecution was on the plaintiff initially. The court cited precedents including Surjit Singh vs Jagtar Singh, Ram Rattan vs Anand Pandit, and Mohinder Singh vs Balbir Singh to support this view.
2. Entitlement to Recovery for Malicious Prosecution:
The plaintiff filed a suit for recovery of Rs. 5,00,000/- for alleged malicious prosecution by the defendant in FIR No. 118 dated 24.9.1994. The plaintiff was acquitted in the criminal case, which formed the basis for claiming compensation. The court noted that mere acquittal in a criminal case does not automatically entitle one to compensation for malicious prosecution. The plaintiff must prove that the proceedings were initiated without reasonable or probable cause. The court referred to Major Gian Singh vs S. P. Batra and other cases to emphasize that the burden of proof lies on the plaintiff.
3. Burden of Proof in Malicious Prosecution Cases:
The court reiterated that in malicious prosecution cases, the burden of proving that the proceedings were initiated without reasonable and probable cause lies on the plaintiff. The court cited Major Gian Singh's case and other judgments, including Sukhwinder Singh vs Ravinder Singh and Pawan Kumar vs Hans Raj, to underline that the plaintiff must establish both malice and lack of reasonable cause.
4. Rights of Parties to Lead Evidence in Rebuttal:
The court discussed the rights of parties to lead evidence in rebuttal, stating that a party cannot lead rebuttal evidence on issues where the initial burden of proof is on that party. The court referred to Surjit Singh's case and other judgments like Ram Rattan vs Anand Pandit and Mohinder Singh vs Balbir Singh to support this position. The court concluded that the plaintiff's request to lead rebuttal evidence was not permissible as the burden of proof was on the plaintiff from the beginning.
Conclusion:
The court allowed the petition, setting aside the impugned order that permitted the plaintiff to examine the handwriting expert in rebuttal evidence. The court emphasized that the plaintiff must prove the malicious prosecution claim independently and cannot rely on rebuttal evidence to discharge the initial burden of proof.
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2012 (1) TMI 381
Issues Involved:
1. Legality of reopening assessments u/s 10 of the Interest Tax Act.
2. Whether the reopening was barred by limitation.
3. Whether the reopening constituted a change of opinion.
4. Determination of chargeable interest from hire purchase transactions.
Summary:
1. Legality of Reopening Assessments u/s 10 of the Interest Tax Act:
The revenue appealed against the reopening of assessments for the years 1992-93 to 1996-97 under Section 21H of the Interest Tax Act, 1974, read with Section 260A of the Income Tax Act, 1961. The Assessing Authority reopened the assessments based on the premise that the interest attributable to hire purchase transactions had escaped assessment due to non-disclosure by the assessee. The assessee contended that it had made full and true disclosure in the returns filed, and the reopening was not in consonance with Section 10 of the Act. The High Court held that the reopening was justified under Section 10(a) of the Act as there was a failure to disclose fully and truly all material facts necessary for the assessment.
2. Whether the Reopening was Barred by Limitation:
The Appellate Commissioner and the Tribunal held that the reopening was barred by limitation, assuming it was under Section 10(b) of the Act, which allows reopening within four years. The High Court, however, clarified that the reopening was under Section 10(a) and not Section 10(b), making the limitation period inapplicable. Therefore, the reopening was not barred by limitation.
3. Whether the Reopening Constituted a Change of Opinion:
The Appellate Authorities opined that the reopening constituted a change of opinion, which is not permissible. The High Court disagreed, stating that the concept of change of opinion is relevant only under Section 10(b) and not Section 10(a). The reopening was based on the failure to disclose fully and truly all material facts, and hence, the concept of change of opinion was not applicable.
4. Determination of Chargeable Interest from Hire Purchase Transactions:
The assessee argued that the income from hire purchase transactions was not chargeable interest under the Act. The High Court did not delve into the merits of this argument, focusing instead on the procedural aspects of reopening the assessments. The court noted that the assessee had offered the amount attributable to hire purchase transactions to tax in later years, which undermined its argument.
Conclusion:
The High Court allowed the revenue's appeals, holding that the reopening of assessments was justified under Section 10(a) of the Interest Tax Act, not barred by limitation, and did not constitute a change of opinion. The court did not address the substantive issue of whether the income from hire purchase transactions was chargeable interest.
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2012 (1) TMI 380
Issues Involved:1. Whether the activities carried on by the Institute of Chartered Accountants of India (ICAI) fall within the purview of "Education" u/s 2(15) of the Income Tax Act. 2. Whether the income from coaching classes conducted by ICAI should be treated as business income. Summary:Issue 1: Definition of "Education" u/s 2(15) of the Income Tax ActThe Department contended that ICAI's activities, including conducting courses, coaching classes, and seminars, do not constitute "Education" within the meaning of section 2(15) of the Income Tax Act. The Assessing Officer (AO) determined ICAI's income at Rs. 33,47,92,000/- against NIL income declared by ICAI, arguing that ICAI did not provide systematic instruction or training. The learned CIT(A) reversed the AO's decision, stating that ICAI's activities, including various professional courses and training programs, fall within the definition of "Education" as per section 2(15). The CIT(A) referred to the Supreme Court judgment in Sole Trustee Lok Shikshana Trust 101 ITR 234, which defines "education" as the process of training and developing knowledge, skill, mind, and character of students. The CIT(A) also cited the Gujarat High Court's decision in Saurashtra Education Foundation 273 ITR 139, which supported the broader interpretation of "education" to include ICAI's activities. Issue 2: Treatment of Income from Coaching ClassesThe CIT(A) relied on the ITAT Delhi Bench's decision for the Assessment Year 2005-06, which held that income from coaching fees is towards ICAI's objectives and not a commercial activity. The Tribunal stated that ICAI's coaching classes are educational activities covered u/s 2(15) and thus, the income is exempt u/s 11 of the Act. The Tribunal also noted that ICAI is not required to maintain separate books of accounts for coaching fees as it is not carrying on a business. The Tribunal upheld the CIT(A)'s order, confirming that ICAI's activities are educational and not commercial. The Tribunal referenced the Delhi High Court's decision in "Director of Income Tax (Exemptions) v. The Institute of Chartered Accountants of India," which supported the view that ICAI's activities do not constitute business. Conclusion:The Tribunal found no error in the CIT(A)'s order and dismissed the Department's appeal, confirming that ICAI's activities fall within the definition of "Education" u/s 2(15) and that the income from coaching classes is not business income but is exempt u/s 11 of the Income Tax Act. Order pronounced in the open court on 09.01.2012.
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2012 (1) TMI 379
Issues involved: Appeal against deletion of aggregate additions of Rs. 50,00,000 made by AO on account of Non Compete fees treated as revenue expenditure.
Summary:
Issue 1: Treatment of Non Compete fees as revenue or capital receipt
The appeal pertains to the deletion of aggregate additions of Rs. 50,00,000 made by the AO on account of Non Compete fees treated as revenue expenditure. The AO treated the amount as a revenue receipt under section 28(va) of the IT Act. The assessee claimed that the amount was received as a lump sum in lieu of stopping the manufacture and sale of a product due to a non-competition agreement with another company. The CIT(A) noted that the amount in question could not be brought to tax u/s.28(va) before 01/04/2003. Referring to a Supreme Court decision, it was held that prior to April 1, 2003, such payments were in the nature of a capital receipt. The Tribunal affirmed the CIT(A)'s findings and dismissed the Revenue's appeal.
Conclusion:
The Tribunal upheld the CIT(A)'s decision to delete the aggregate additions of Rs. 50,00,000 made by the AO on account of Non Compete fees, considering them as capital receipts before the relevant amendment in the IT Act.
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2012 (1) TMI 378
Issues Involved:
1. Validity of the sale of properties u/s 537(1)(b) of the Companies Act, 1956.
2. Direction to the purchaser to hand over properties to the Official Liquidator.
3. Direction to secured creditors to bring back money taken along with accrued interest for dividend declaration to workers u/s 529A of the Companies Act, 1956.
Summary:
Issue 1: Validity of the Sale of Properties u/s 537(1)(b) of the Companies Act, 1956
The Official Liquidator sought to declare the sale of properties as null and void, arguing it violated section 537(1)(b) of the Companies Act, 1956. The purchaser, M/s. Ajanta Pharma Ltd, contended that the sale was valid, binding, and subsisting. The Court noted that the winding-up process commenced with the presentation of the winding-up petition on 10th September 1999, but the sale deed was executed on 7th July 2009, before the winding-up order on 7th July 2010. The Court emphasized that the transaction was bonafide, for consideration, and aimed at settling the dues of secured creditors, workers, and unsecured creditors. The Court held that the sale was valid and should not be set aside.
Issue 2: Direction to the Purchaser to Hand Over Properties to the Official Liquidator
The Official Liquidator requested the Court to direct M/s. Ajanta Pharma Ltd to hand over the properties. The Court found that the sale was executed with bonafide intention and the dues of secured creditors and workers were settled. The Court exercised its discretion to protect the transaction, noting that the company and the purchaser acted in good faith. Consequently, the Court did not direct the purchaser to hand over the properties to the Official Liquidator.
Issue 3: Direction to Secured Creditors to Bring Back Money Taken Along with Accrued Interest for Dividend Declaration to Workers u/s 529A of the Companies Act, 1956
The Official Liquidator sought directions for secured creditors to bring back the money taken along with accrued interest to declare dividends to workers u/s 529A of the Companies Act, 1956. The Court allowed the Official Liquidator to determine the dues of workers and seek appropriate directions against the secured creditors. The Court left open the course for the Official Liquidator to adjudicate the claims of workers and obtain undertakings from secured creditors to bring back the amounts.
Conclusion
The Court validated the sale of properties, dismissed the Official Liquidator's prayer to declare the sale null and void, and allowed the Official Liquidator to determine workers' dues and seek directions against secured creditors. The company application was made absolute in terms of prayers (a) and (b), and the Official Liquidator's report was rejected.
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2012 (1) TMI 377
Issues Involved: Appeals against orders of Ld. C.I.T.(A)-XII, Kolkata for assessment years 2006-07 & 2007-08 regarding deductions u/s. 80-IA and deletion of addition on prior period expenses.
Deductions u/s. 80-IA:
The revenue challenged the deductions allowed by Ld. C.I.T.(A) for development of bus shelters, toilet blocks, and foot over-bridges, contending they do not qualify as infrastructure facilities u/s. 80IA(4) of the Act. However, based on precedent decisions, the Tribunal upheld the orders of Ld. C.I.T.(A) as the facilities were deemed functionally necessary and part of highway infrastructure, deciding the issue against the revenue and in favor of the assessee for both assessment years.
Deletion of Addition on Prior Period Expenses (2006-07):
Regarding the deletion of addition on account of prior period expenses for assessment year 2006-07, the Tribunal found that the matter should be remanded to the file of ld. A.O. for proper adjudication on merits and in accordance with law. The Tribunal allowed the second issue for assessment year 2006-07 to be treated as allowed for statistical purposes, providing the assessee an opportunity to justify the claim with relevant material. Consequently, the revenue's appeal for 2006-07 was partly allowed for statistical purposes, while the appeal for 2007-08 was dismissed.
Separate Judgement: Sri S.V.Mehrotra, Accountant Member And Sri N.Vijayakumaran, Judicial Member delivered the judgment.
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2012 (1) TMI 376
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Allegations are regarding procurement of the Time Scoring Results (TSR) - Award tender to Swiss Timing Omega - Seeking grant of regular bail - criminal conspiracy - Prevention of Corruption Act, 1988 (in short “PC Act‟) - the allegation qua forgery relates to insertion of an advertisement wherein instead of the words "Timing, Scoring or/and Result", the words "Timing, Scoring and Result" were used, the cost of which advertisement was only ₹ 69,603/- which was not cleared by the Petitioner.
HELD THAT:- In the instant case, this court have already noticed that the "pointing finger of accusation" against the Appellants is 'the seriousness of the charge'. The offences alleged are economic offences which has resulted in loss to the State exchequer. Though, they contend that there is possibility of the Appellants tampering witnesses, they have not placed any material in support of the allegation. In our view, seriousness of the charge is, no doubt, one of the relevant considerations while considering bail applications but that is not the only test or the factor: The other factor that also requires to be taken note of is the punishment that could be imposed after trial and conviction, both under the Indian Penal Code and Prevention of Corruption Act. Otherwise, if the former is the only test, we would not be balancing the Constitutional Rights but rather "recalibration of the scales of justice." The provisions of Cr.P.C. confer discretionary jurisdiction on Criminal Courts to grant bail to accused pending trial or in appeal against convictions, since the jurisdiction is discretionary, it has to be exercised with great care and caution by balancing valuable right of liberty of an individual and the interest of the society in general. It transcends respect for the requirement that a man shall be considered innocent until he is found guilty. If such power is recognized, then it may lead to chaotic situation and would jeopardize the personal liberty of an individual.
In the facts and circumstances of the case, Court is inclined to bail to the Petitioners. It is, therefore, directed that the Petitioners be released on bail on their furnishing a personal bond in the sum of ₹ 5 lakhs with two sureties of the like amount each, subject to the satisfaction of the learned Trial Court. The Petitioners will not leave the Country without the prior permission of the learned Trial Court.
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2012 (1) TMI 375
Issues Involved:
The judgment involves the consideration of whether interest payable to Citi Bank for part financing investments in 54EC Bonds is allowable as a deduction u/s 57(iii) of the Income Tax Act, and whether the assessee's own certification regarding the loan funds could have been ignored in deciding the allowability of interest on such loan bonds.
Issue 1 - Deduction u/s 57(iii) for interest paid on loan for investments in Bonds:
The case pertains to the deduction under sec. 57(iii) of the Act on account of interest paid to Citi Bank for part financing investments in Bonds specified in sec. 54EC of the Act. The assessee sold shares and earned capital gains, out of which a portion was held back for payment in a subsequent year. The assessee claimed deduction under sec. 54EC and invested in designated bonds, for which a loan was taken from Citi Bank due to nonavailability of funds. The Assessing Officer disallowed the interest expense on the ground of lack of nexus between interest earned and interest paid. However, the CIT(A) allowed the interest paid on the loan for the purchase of bonds, considering the income earned on bonds as offered for tax and thus allowing the expenditure under sec. 57(iii) of the Act.
Issue 2 - Nexus between borrowed funds and interest paid:
The contention was whether the interest paid on funds borrowed for investment in bonds should be allowed as a deduction. The Revenue argued that since the funds were borrowed for capital gain exemption under sec. 54EC, the interest paid cannot be allowed as a deduction. On the other hand, the assessee's representative highlighted that the borrowed funds were used to invest in bonds and earn interest, establishing a direct nexus between the borrowed funds and interest paid. The Tribunal observed that the borrowed funds were indeed utilized for acquiring bonds and earning interest, and thus held that the interest payable on borrowed capital should be allowed as a deduction based on the interest earned on such investments.
Conclusion:
The Tribunal dismissed the appeal filed by the Revenue and directed the Assessing Officer to verify and allow the claim of the assessee for deduction of interest based on the interest earned on the investments made with borrowed funds. The decision was pronounced in the Open Court on 25th January, 2012.
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2012 (1) TMI 374
Issues Involved:
1. Validity of lease termination by Gwalior Development Authority (GDA).
2. Authority of GDA to lease land not transferred by the State.
3. Applicability of promissory estoppel against the State.
Summary:
Validity of Lease Termination by GDA:
The Supreme Court examined the defensibility of the High Court's judgment, which overturned the Single Judge's decision that upheld the GDA's termination of the lease. The Single Judge had found the termination valid due to the cancellation of the cinema hall's license, while the Division Bench ruled that no notice of termination was given and no breach of lease conditions occurred, thus making the cancellation unsustainable.
Authority of GDA to Lease Land Not Transferred by the State:
The core issue was whether the GDA had the authority to lease the land, which was recorded as 'Nazul' land meant for the Public Works Department and not transferred to the GDA. The Supreme Court emphasized that Nazul land does not automatically vest in any authority without a specific notification by the State Government. The Court found no evidence of such a transfer, rendering the GDA's lease to the Respondent-company invalid and ultra vires.
Applicability of Promissory Estoppel Against the State:
The Division Bench had applied the doctrine of promissory estoppel, arguing that the State was estopped from contesting the lease after thirty years. However, the Supreme Court clarified that promissory estoppel cannot be invoked to enforce a promise or representation that is contrary to law or outside the authority of the public body. The Court cited precedents to establish that estoppel does not apply when the public authority acts beyond its legal power.
Conclusion:
The Supreme Court allowed the appeals, setting aside the High Court's orders and affirming that the GDA had no authority to lease the land. The State Government is entitled to proceed with the eviction of the Respondent, who may seek arbitration for any other relief against the GDA. The judgment underscores the principles of legal authority and public policy in the management of public lands.
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2012 (1) TMI 373
Issues involved: Appeal against cancellation of registration granted u/s.12AA of the IT Act.
Summary:
The appeal before the Appellate Tribunal ITAT Ahmedabad arose from the Commissioner's order cancelling the registration granted u/s.12AA of the IT Act. The Commissioner found that the activities of the appellant, related to charging fees from users of port facilities, were more akin to a business activity rather than charitable. The Commissioner noted that the aggregate value of receipts exceeded the prescribed limit of Rs. 10 lakhs, leading to the cancellation of registration. The appellant contended that despite the amended provisions, they should still be considered a charitable institution. The Commissioner, however, denied the registration, citing the amended definition of "charitable purpose" u/s.2(15) of the IT Act. The Commissioner invoked section 12AA(3) to cancel the registration, as it empowers the Commissioner to examine if the activities align with the definition of charitable purpose. The Tribunal, after considering relevant precedents, reversed the Commissioner's decision and directed not to cancel the registration u/s.12AA(3) of the IT Act, allowing the appeal.
Key Points:
- Commissioner observed appellant's activities resembled a business, not charitable.
- Registration cancelled due to exceeding prescribed limit of receipts.
- Appellant claimed continued charitable status despite amendments.
- Commissioner invoked section 12AA(3) to cancel registration.
- Tribunal reversed decision based on specific conditions under section 12AA(3) and relevant precedents.
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2012 (1) TMI 372
Issues involved: The judgment deals with the disallowance of exemption u/s.10B on the profits of the Pune Unit and the issue of whether the exemption u/s.10B should be allowed on the Pune Unit after setting off the losses of the Nasik Unit.
Summary:
Issue 1 - Disallowance of exemption u/s.10B on Pune Unit profits:
The assessee contended that both the Pune and Nasik units are independent and separately eligible for the exemption u/s.10B, emphasizing that each unit should be treated as an independent entity for the purpose of exemption. The AO, however, argued that the deduction u/s.10B should be claimed on the total income of both units and set off against each other. The Tribunal found that the assessee had two manufacturing units, Pune and Nasik, with separate accounts for each. While the Pune unit showed a net profit, the Nasik unit incurred a loss. The AO's position was that the deduction should be claimed on the combined income of both units. The assessee's argument that each unit's profits should be exempted u/s.10B without setting off losses was not accepted by the AO and the CIT(A), leading to the dismissal of the appeal.
Issue 2 - Interpretation of Section 10B and relevant case laws:
The Special Bench of the Tribunal and the Hon'ble Kerala High Court had differing views on the interpretation of Section 10B. The Special Bench held that deduction of a profitable unit was allowable without adjusting it against the loss of other units, while the Kerala High Court emphasized that the total income of all units should be considered for the purpose of exemption u/s.10B. The Kerala High Court's decision was deemed applicable to the case at hand, leading to the dismissal of the assessee's appeal.
In conclusion, the Tribunal upheld the disallowance of exemption u/s.10B on the profits of the Pune Unit, emphasizing the need to consider the total income of all units for such deductions. The judgment was pronounced on January 27, 2012.
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