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2010 (12) TMI 1328
Issues Involved:
1. Investigation and progress of cases handled by SIT (CBI).
2. Allegations against various advocates.
3. Confidentiality and progress of Special Income Tax Investigation Committee.
4. Application for setting aside ex parte order and cross FIR assignment to CBI.
5. Legal position on the application of the Code of Civil Procedure in writ matters.
6. Complaints and issues raised by the petitioner.
7. Measures to address criminal activities within the legal profession.
8. Suggestions by the Law Commission of India.
9. Proposals for regulating the realty sector to curb black money and illegal activities.
10. Directions for framing rules and legislative measures.
Detailed Analysis:
1. Investigation and Progress of Cases Handled by SIT (CBI):
The court reviewed the status report submitted by SIT (CBI), which detailed the progress of investigations into 11 cases. The court expressed satisfaction with the efforts and progress made. The report mentioned that 96 persons had been examined who might be cited as witnesses. The court listed the First Information Reports (FIRs) registered along with the names of the accused and the allegations against them, covering various incidents of violence, threats, and property-related crimes involving advocates.
2. Allegations Against Various Advocates:
The allegations included incidents of advocates damaging court property, assaulting court staff, threatening and assaulting individuals, and engaging in fraudulent property transactions. Specific cases were highlighted, such as the rampage by advocates led by Parshuram Mishra, threats and assaults by Shiv Sharan Upadhyay, and land grabbing by a group of lawyers through forgery.
3. Confidentiality and Progress of Special Income Tax Investigation Committee:
The court noted the confidential nature of the investigation by the Special Income Tax Investigation Committee and refrained from disclosing any information contained in the report. The court acknowledged that the process would take some time.
4. Application for Setting Aside Ex Parte Order and Cross FIR Assignment to CBI:
The court referred to the legal position regarding the application of the Code of Civil Procedure in writ matters, citing various judgments, including Puran Singh and Ors. v. State of Punjab and Ors., which clarified that writ proceedings under Article 226 of the Constitution are not subject to the procedural rules of the Code of Civil Procedure. The court allowed the application to the extent of assigning the investigation of Cross FIR 378/2010 to SIT (CBI) but rejected the prayer for setting aside the ex parte order dated 28.10.2010.
5. Legal Position on the Application of the Code of Civil Procedure in Writ Matters:
The court discussed the legal position elaborated by the Supreme Court, emphasizing that writ proceedings under Article 226 aim to provide speedy and efficacious remedies and are not bound by the procedural rules of the Code of Civil Procedure. The court reiterated that the High Court has the discretion to adopt its own procedure in writ matters.
6. Complaints and Issues Raised by the Petitioner:
The petitioner, Prashant Singh Gaur, highlighted the prevailing unruly atmosphere in the District Court premises, marked by incidents of violence and criminal activities by some advocates. The court acknowledged the seriousness of the situation and emphasized the need for extraordinary measures to address the issue.
7. Measures to Address Criminal Activities Within the Legal Profession:
The court issued several orders to tackle the criminal activities within the legal profession, including the constitution of a Special Investigation Team (SIT) headed by a Joint Director of CBI, and the involvement of various authorities like the Intelligence Bureau, Bar Councils, and Income Tax Department. The court also sought views from the Law Commission of India and other authorities on measures to protect the legal profession from criminal elements.
8. Suggestions by the Law Commission of India:
The Law Commission of India provided several suggestions, including tracking criminal cases against advocates, initiating disciplinary action based on chargesheets, and framing rules for disqualification from enrollment in case of involvement in criminal acts. The Commission also emphasized the need for verification of law degree certificates and suggested measures for expeditious investigation and trial of criminal cases involving advocates.
9. Proposals for Regulating the Realty Sector to Curb Black Money and Illegal Activities:
The court discussed the need to regulate the realty sector to curb black money and illegal activities. It proposed the setting up of a National Property Exchange to ensure transparency in property transactions and suggested measures like reintroducing certain provisions of the Income Tax Act, implementing Tax Collection at Source (TCS), and introducing the concept of "Arms length pricing" for property transactions.
10. Directions for Framing Rules and Legislative Measures:
The court directed various authorities to consider framing rules and legislative measures to address the issues highlighted. These included framing rules by the Bar Council of India and the Central Government for disqualification from enrollment of advocates involved in criminal acts, providing a column in the enrollment application for criminal case details, and setting up a National Land Stock Exchange. The court also directed the State of U.P. to register property dealers and scrutinize their income for unaccounted wealth.
Conclusion:
The court emphasized the need for stringent measures to address the criminal activities within the legal profession and restore public faith in the judicial system. It directed the SIT (CBI) and other authorities to continue their investigations and submit progress reports. The court also highlighted the importance of regulating the realty sector and suggested various legislative and administrative measures to curb black money and illegal activities.
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2010 (12) TMI 1327
Issues involved: Appeal against assessment order u/s 144 for AY 2005-06, determination of net profit percentage, reliance on past history and comparable cases, opportunity to A.O. under Rule 46A, applicability of section 44AD, burden of proof on assessee.
Summary:
The appeal before the Appellate Tribunal ITAT Chennai pertained to the assessment year 2005-06, where the assessee, engaged in civil construction, declared income based on a total turnover. The Assessing Officer (A.O.) completed the assessment u/s 144 of the Income-tax Act, 1961, applying a net profit rate on gross receipts. The CIT(Appeals) subsequently reduced the net profit rate, leading to the Revenue's appeal on various grounds.
The Revenue contended that the assessment u/s 144 was justified due to the assessee's failure to produce necessary books of accounts and vouchers. It was argued that the CIT(Appeals) erred in reducing the net profit rate without proper evidence, especially considering significant cash expenses. Additionally, the Revenue raised concerns regarding the CIT(Appeals) relying on new evidence without providing an opportunity to the A.O. under Rule 46A.
The Tribunal observed that the A.O.'s application of a 10% net profit rate lacked evidential basis and should have considered past history or comparable cases. Citing a relevant Special Bench decision, the Tribunal emphasized the importance of adopting a suitable net profit rate based on factual grounds. In this case, the A.O. made an ad hoc addition without proper reference, while the CIT(Appeals) adopted a 2.5% rate, which was upheld by the Tribunal due to the absence of an appeal from the assessee.
Ultimately, the Tribunal dismissed the Revenue's appeal, affirming the CIT(Appeals) order. The decision was pronounced on 22nd December 2010.
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2010 (12) TMI 1326
Issues involved: Disallowance of depreciation claim on windmills given on lease.
Summary:
1. The appellant contested the disallowance of a depreciation claim of Rs. 1,10,00,000/- on windmills given on lease, despite a certificate from the Electricity Board confirming their commissioning.
2. The Assessing Officer (AO) questioned the cost of the windmills and limited the depreciation claim to Rs. 43,39,469/- based on a grant agreement with a bank. He also doubted the production of power by the windmills on the claimed date.
3. The Commissioner of Income Tax (Appeals) upheld the AO's decision, stating that even if the windmills were ready for use, depreciation could not be claimed.
4. The appellant argued before the Tribunal, citing the electricity board's certificate and precedents supporting their claim for depreciation.
5. The Departmental Representative contended that the minimal power production was insufficient for a depreciation claim.
6. The Tribunal found that the windmills were indeed connected to the grid and producing electricity, thus allowing the depreciation claim. The quantification of depreciation was remitted back to the AO for further assessment.
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2010 (12) TMI 1325
Issues Involved:
1. Maintainability of the Criminal Revision Application.
2. Service of Notice to the Petitioners.
3. Continuation of Police Custody Remand (PCR).
Summary:
1. Maintainability of the Criminal Revision Application:
The primary issue was whether the Criminal Revision Application against the order refusing Police Custody Remand (PCR) was maintainable. The Petitioners argued that the order was interlocutory and thus not subject to revision u/s 397(2) of the Criminal Procedure Code. They relied on the Supreme Court judgment in *State represented by Inspector of Police vs. N.M.T. Joy Immaculate, (2004) 5 SCC 729*. However, the Court referred to the judgments in *Madhu Limaye vs. State of Maharashtra, AIR 1978 SC 47* and *Amar Nath vs. State of Haryana, AIR 1977 SC 2185*, which clarified that the nature of the order determines its finality. The Court concluded that the order refusing PCR was final as it precluded the State from filing further applications for police custody, thus making the revision application maintainable.
2. Service of Notice to the Petitioners:
The Petitioners contended that they were not served notice by the State, making the Sessions Court's order ex parte and in violation of natural justice. The Court noted that the advocate for the accused had appeared before the Sessions Court and had given an undertaking to appear, thus negating the need for separate service of notice. The Court found no merit in the Petitioners' argument regarding the lack of service of notice.
3. Continuation of Police Custody Remand (PCR):
The Petitioners argued that since the initial 15-day period u/s 167 of the Criminal Procedure Code had expired, the Magistrate could not reconsider the grant of police custody. They cited the Supreme Court judgment in *Central Bureau of Investigation vs. Anupam J. Kulkarni, (1992) 3 SCC 141*. The Court distinguished the facts of the present case, noting that the Petitioners were arrested on 09/11/2010, produced before the Magistrate on 10/11/2010, and granted bail on the same day. Since the Petitioners did not remain in custody for more than one day, the 15-day period did not continue to operate. The Court held that the Sessions Court could direct the Magistrate to reconsider the application for PCR if the 15-day period had not expired. The Court found no reason to interfere with the Sessions Court's order.
Conclusion:
Both Criminal Applications were dismissed. The Court clarified that the effect of the bail order, which was not challenged by the State, should be considered by the Magistrate on merits and in accordance with the law. The Petitioners were directed to appear before the Magistrate on 03/01/2011, either personally or through their advocate, and the Magistrate was instructed to decide the application within six weeks.
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2010 (12) TMI 1324
Issues involved:
The issues involved in this case are the assessment of capital gains u/s 53A of the Transfer of Property Act 1882 and u/s 45(5)(b) of the Income-tax Act, 1961 for the assessment years 2000-01 and 2002-03.
Assessment of Capital Gains for AY 2000-01:
The assessee entered into a sale agreement for a property with M/s Devaki Hospital Ltd. The AO assessed capital gains based on sec. 53A of the TP Act, considering the receipt of sale proceeds and possession transfer. The CIT(A) upheld the AO's decision. However, the ITAT Chennai found that the transfer, as defined u/s 2(47)(v) of the Act, was complete in the previous year relevant to AY 1993-94, not in AY 2000-01. The ITAT concluded that no further transfers occurred in the impugned years, quashing the addition of capital gains.
Assessment of Capital Gains for AY 2002-03:
The AO relied on sec. 45(5)(b) of the Act to assess capital gains on an additional consideration received by the power of attorney holder. The ITAT noted that the provision of sec. 45(5)(b) applies only when compensation or consideration is enhanced by a court, Tribunal, or authority. As there was no such enhancement by a relevant entity, the ITAT held that sec. 45(5)(b) had no application. Consequently, the ITAT allowed the appeals of the assessee, quashing the addition of capital gains for both years.
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2010 (12) TMI 1323
Issues involved: Revision of assessment u/s. 263, disallowance of expenditure u/s. 14A, jurisdiction of assessing authority post revision.
The appeal before the Appellate Tribunal ITAT Chennai pertained to the revision of assessment for the assessment year 2005-06 under section 263 of the Income Tax Act, 1961, where the Commissioner of Income Tax revised the assessment and directed certain actions, including disallowance of expenditure u/s. 14A. The assessing authority, in compliance with the CIT's directions, made the disallowance. However, the CIT(A) in the first appeal held that the assessing officer exceeded the scope of directions issued by the CIT and deleted the disallowances. The main contention of the Revenue was that post revision u/s. 263, the assessing authority's jurisdiction is not limited, contrary to the CIT(A)'s interpretation.
In the appeal proceedings, the Revenue contended that once an assessment is revised u/s. 263, the assessing authority's jurisdiction is not restricted, and therefore, the CIT(A) erred in confining the assessing authority's powers within the CIT's directions. The Tribunal noted that in a revision matter, the assessing officer acts on behalf of the CIT and is bound by the directions issued. The assessing authority does not exercise independent jurisdiction but rather implements the CIT's directives. Consequently, the assessing officer cannot exceed the limits set by the CIT, and the CIT(A) was justified in deleting the disallowance made beyond the specified directions.
Ultimately, the Appellate Tribunal dismissed the appeal filed by the Revenue, affirming the CIT(A)'s decision to delete the disallowance made by the assessing authority beyond the directions issued by the CIT during the revision of assessment. The Tribunal emphasized the delegated nature of the assessing authority's actions post revision u/s. 263 and upheld the principle that the assessing officer cannot surpass the limits prescribed by the CIT in such cases.
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2010 (12) TMI 1322
Issues involved:
The denial of information u/s Section 8 (1) of the Right to Information Act, 2005 by the Deputy Commissioner of Police, Anti Corruption Branch (‘DCP’), regarding documents related to a criminal case under FIR No. 52 of 2003, as directed by the Central Information Commission (‘CIC’).
Summary:
Issue 1: Denial of information under RTI Act
The CIC directed the DCP to provide copies of documents related to a criminal case, finding the denial of information under Section 8 (1) of the RTI Act to be unjustified as it did not cover subjudice matters. The DCP challenged this order.
Issue 2: Interpretation of CrPC and RTI Act
The DCP argued that the case diary could not be used as evidence and the accused did not have an automatic right to it under Section 172 (2) of the Code of Criminal Procedure, 1973 (‘CrPC’). The Respondent, who was convicted in the trial, contended that his right to seek documents under the RTI Act was not subject to CrPC provisions.
Judgment:
The Court agreed with the CIC that denial of information under the RTI Act required justification under Section 8 (1). Since the criminal trial had concluded, disclosure of information related to the investigation, including the D.D. entry of arrest and case diary, to the Respondent would not prejudice the DCP. The right to seek such information post-trial under the RTI Act was not barred by the CrPC, as per Section 22 of the RTI Act. Therefore, the Court upheld the CIC's order, dismissing the petition and the pending application.
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2010 (12) TMI 1321
Issues involved: Appeal filed by Revenue against CIT(Appeals) order for assessment year 2004-05.
Grounds raised by Revenue:
1. CIT(A) erred in allowing deduction u/s 10B before setting off carry forward losses.
2. CIT(A) erred in considering scrap sales and provisions written back as incomes eligible for relief u/s 10B.
Regarding Grounds 2.1 and 2.2:
Revenue argued that deduction u/s 10B should be after setting off carry forward losses, citing precedent. Assessee argued that deduction should be set off against unabsorbed depreciation, not carry forward losses. Tribunal held that deduction should be allowed after setting off losses as per Act provisions.
Regarding Grounds 3.1 and 3.2:
Revenue contended that scrap sales and provisions written back should not be considered as income eligible for u/s 10B relief. Assessee argued that these were linked to industrial undertaking and should be eligible. Tribunal upheld CIT(A) decision based on High Court rulings, confirming that scrap sales and provisions written back were eligible for deduction u/s 10B.
Conclusion:
Tribunal reversed CIT(A) decision on deduction timing but confirmed decision on scrap sales and provisions written back eligibility for u/s 10B relief, partly allowing Revenue's appeal.
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2010 (12) TMI 1320
Issues involved: Appeal against order of Ld. CIT(A) u/s 68 of the Income Tax Act for the assessment year 2004-05.
The appellant contested the addition of Rs. 9,63,950 made by the AO u/s 68. The AO raised concerns about the genuineness of the long-term capital gain shown by the assessee on the sale of shares of Supreme Agro Products Ltd. through a broker. Discrepancies were noted between the contract note date and the payment receipt date, leading to suspicions of an accommodation entry. The AO's investigation involved contacting the broker and the Delhi Stock Exchange for verification.
The Ld. CIT(A) upheld the AO's decision, prompting the appellant to appeal. The appellant argued that the AO's investigation was inadequate, with key inquiries made late in the proceedings, limiting the appellant's ability to respond effectively. The appellant requested a re-investigation of the issue.
Upon review, the ITAT found fault with the AO's handling of the case. The AO's conclusions were deemed premature and lacking in thoroughness. The ITAT noted deficiencies in the summoning process and the relevance of information provided by the Delhi Stock Exchange. The ITAT concluded that a more in-depth investigation was necessary and remitted the issue back to the AO for reconsideration.
Ultimately, the ITAT allowed the appeal for statistical purposes, emphasizing that its decision did not prejudice either party's case.
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2010 (12) TMI 1319
Issues Involved: Whether the disallowance of earnest money deposit as a capital expenditure is justified.
Summary:
Issue 1: Disallowance of Earnest Money Deposit
The assessee applied for two plots and paid earnest money, but later forfeited one amounting to Rs. 7,92,000. The Assessing Officer disallowed the claim as a penalty/fine not allowable under Section 37(1). The CIT(A) upheld the disallowance as a capital loss. The assessee contended that the forfeiture was not a penalty but a normal business loss, as the plot purchase was not viable. The Tribunal found that the forfeiture was as per agreement terms, not due to any legal violation, making it a business expenditure. Since the earnest money was for business purposes, not capital assets, the loss was allowable. The appeal was allowed, overturning the lower authorities' decision.
This judgment dealt with the issue of disallowance of earnest money deposit as a capital expenditure. The assessee's contention that the forfeiture was a business loss, not a penalty, was accepted by the Tribunal, emphasizing the business nature of the transaction and the absence of legal violations.
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2010 (12) TMI 1318
Issues involved: Challenge to addition of overloading charges as penalty in assessment year 2005-06.
Facts: Assessee, in transport business, paid overload charges to RTO, contending it's not penalty but collected from clients. AO disallowed charges as penalty, citing violation of statutory norms. Assessee argued it's permissible and not fine.
Arguments: Assessee cited precedents where similar charges were allowed as business expenditure. CIT(A) upheld AO's decision, stating overloading is a breach of law, hence not deductible. Assessee appealed against this decision.
Legal Analysis: Tribunal considered whether overload charges are penalty or compensation. Referenced a case where similar charges were allowed as deduction. Tribunal held overload charges are compensation, not penalty for breach of law. Ruled in favor of assessee, setting aside CIT(A)'s decision.
Conclusion: Tribunal allowed the appeal, stating overload charges paid to RTO are compensation, not penalty. Decision based on precedents and nature of charges. Addition made by AO and upheld by CIT(A) deemed unsustainable. Assessee's ground allowed, appeal granted.
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2010 (12) TMI 1317
Issues Involved:
1. Interpretation of Section 7(3) vis-Ã -vis Sections 9(2) and 9A of the Amendment Act.
2. Authority of the senior Up-Pramukh to discharge the duties of the Pramukh post-Amendment Act.
3. Validity of the District Magistrate's power to nominate an elected member as Pramukh when the post is vacant.
Summary:
Issue 1: Interpretation of Section 7(3) vis-Ã -vis Sections 9(2) and 9A of the Amendment Act
The court examined whether the non-obstante clause in Section 7(3) of the Amendment Act overrides the provisions of Sections 9(2) and 9A. The court held that the non-obstante clause in Section 7(3) has a limited operation, allowing the Up-Pramukh to "continue to hold office as such... as if the said Act were not enacted." This means that despite the abolition of the post of Up-Pramukh, those elected before the amendment will continue to hold office as Up-Pramukh until their term expires. The court emphasized that the non-obstante clause should not be interpreted to revive the pre-existing provisions of Sections 82 and 83, which were expressly deleted by the Amendment Act.
Issue 2: Authority of the senior Up-Pramukh to discharge the duties of the Pramukh post-Amendment Act
The respondents argued that the Up-Pramukh should automatically become the Pramukh when the post falls vacant, based on the pre-Amendment Act provisions. However, the court rejected this argument, stating that the Amendment Act abolished the post of Up-Pramukh and provided that the District Magistrate should make arrangements for the discharge of the functions of the Pramukh when the post is vacant. The court clarified that the term "continue to hold office as such" means that the Up-Pramukh will only hold the office of Up-Pramukh and not discharge the functions of the Pramukh.
Issue 3: Validity of the District Magistrate's power to nominate an elected member as Pramukh when the post is vacant
The court upheld the District Magistrate's power to nominate an elected member to the post of Pramukh under Sections 9(2) and 9A of the Amendment Act. The court found that the Amendment Act was introduced to make the state laws regulating Panchayats compatible with Part IX of the Constitution. The court affirmed the orders passed by the District Magistrates in exercise of their power under these sections and set aside the contrary reasoning given in the High Court judgment.
Conclusion:
The appeals were allowed, and the judgments of the High Court were set aside. The court affirmed the District Magistrates' orders and clarified the limited operation of the non-obstante clause in Section 7(3) of the Amendment Act. There was no order as to costs.
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2010 (12) TMI 1316
Issues involved: Department's appeal against CIT(A)'s order for AY 2001-02. Grounds include deletion of addition u/s 68 of IT Act and unexplained expenditure.
Deletion of addition u/s 68 of IT Act:
- AO reopened assessment due to credit entries in assessee's books from certain parties.
- AO considered entries as escaped assessment, added Rs. 8,25,000 u/s 68.
- CIT(A) deleted the addition.
- Department appealed, arguing transactions were accommodation entries.
- Assessee argued amounts were refunds of advances for goods not supplied.
- ITAT found parties were not creditors of assessee, no loan taken.
- No evidence of undisclosed income, AO relied on unverified information.
- ITAT rejected department's arguments, upheld CIT(A)'s decision.
- Case laws cited by department deemed inapplicable.
- Ground no.2 of department's appeal rejected.
Unexplained expenditure addition:
- AO made addition of Rs. 16,500 for alleged unpaid commission.
- CIT(A) deleted this addition.
- Since addition of Rs. 8,25,000 was deleted, ground no.3 rejected.
- Appeal of the department dismissed.
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2010 (12) TMI 1315
Issues Involved:
1. Admissibility of Co. Pet. No. 380/2008.
2. Admissibility of Co. Pet. No. 8/2009.
3. Admissibility of Co. Pet. No. 107/2009.
4. Commercial solvency and its relevance in winding up petitions.
5. Doctrine of privity of contract.
Issue-wise Detailed Analysis:
1. Admissibility of Co. Pet. No. 380/2008:
The court dismissed Co. Pet. No. 380/2008 filed by M/s Welldone Estate Projects Private Limited. Despite the Respondent company admitting receipt of Rs. 5,19,00,000, the absence of a written contract between the Petitioner and the Respondent made it impossible to ascertain the exact nature of the transaction. The court emphasized that in the absence of a written agreement, the rival contentions based on oral understandings could not be examined in summary proceedings before the Company Court. The court clarified that it had not expressed any opinion on the merits as a civil suit was already pending between the parties.
2. Admissibility of Co. Pet. No. 8/2009:
Co. Pet. No. 8/2009 was filed by Mr. Sunil Kothari, supported by a written agreement/MOU dated 26th August 2006. The agreement detailed the terms of sale and joint development, including a return of 14.11% and 14.50% of annual rental revenue for Anchor and Non-Anchor stores, respectively. The Respondent's defense that it acted as an agent of LIT was rejected for several reasons:
- The defense was not specifically pleaded in the reply to the company petition.
- The agreement did not state that the Respondent was merely acting as an agent.
- The agreement was a principal-to-principal agreement, and the Respondent had accepted personal liability.
- The Respondent had admitted receipt of Rs. 4,02,00,000 from the Petitioner in a letter dated 27th September 2006.
3. Admissibility of Co. Pet. No. 107/2009:
Co. Pet. No. 107/2009 was filed by Mr. Balwant Singh, who had booked office space of 1239 square feet for Rs. 50,17,350. The Respondent had issued several receipts for the amount paid in installments. The Respondent's reply to the notice dated 17th April 2007 acknowledged the booking and agreed to refund the booking amount after deducting up to 10% of the basic sale price as earnest money. The court found that the Petitioner was entitled to a refund due to the Respondent's inability to complete the project because of disputes with LIT/Government of Punjab.
4. Commercial Solvency and its Relevance in Winding Up Petitions:
The court addressed the issue of commercial solvency by referring to the Supreme Court's judgment in M/s IBA Health (I) Private Limited v. M/s Infor-Drive Systems Sdn. Bhd. The court noted that commercial solvency is relevant in determining whether the refusal to pay debt is a result of a bona fide dispute or an inability to pay. However, if a debt is undisputedly owing, the company must pay it regardless of its solvency. The court emphasized that a company cannot avoid payment to creditors by proving solvency at the statutory demand stage.
5. Doctrine of Privity of Contract:
The court discussed the doctrine of privity of contract, which means that only parties to a contract can enforce its terms. The Petitioners were not concerned with the disputes between the Respondent and LIT/Government of Punjab. The court held that the Respondent was bound by the terms of the contract with the Petitioners and could not avoid its obligations due to disputes with a third party. The court cited various legal principles and precedents to support this view.
Conclusion:
The court dismissed Co. Pet. No. 380/2008 and admitted Co. Pet. No. 8/2009 and Co. Pet. No. 107/2009. However, the court deferred the order on admission, appointment of Provisional Liquidator, and publication of citations for six weeks to enable the Respondent to negotiate with the Petitioners or deposit the principal amounts in the Court. The question of interest was left open. The court also provided detailed reasoning on the relevance of commercial solvency and the doctrine of privity of contract in the context of the petitions.
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2010 (12) TMI 1314
Issues involved: Compliance with accounting standards, adequacy of authorized share capital, correction of date of incorporation, conversion of companies from Private Limited to Public Limited.
Compliance with accounting standards: The Court noted observations by the Central Government regarding the maintenance of accounting standards. The petitioner's counsel assured the court that the necessary accounting standards would be upheld.
Adequacy of authorized share capital: Another observation was made regarding the inadequacy of the transferee company's authorized share capital to allot shares to members of transferor companies as per the scheme. The petitioner's counsel assured the court that the required increase in authorized capital would be promptly executed to facilitate the share allotment.
Correction of date of incorporation: Leave was granted to rectify the date of incorporation in the petition and scheme to reflect 30th July, 2008 for petitioner No.3. Additionally, permission was given to amend the cause title, body of the petition, and scheme to accurately represent the conversion of petitioner Nos.3 and 4 from Private Limited to Public Limited Companies.
Conversion of companies from Private Limited to Public Limited: The petitioners were allowed to make necessary corrections in the scheme to specify the original status of the companies as Private Limited and the date of conversion to Public Limited. The application was granted based on the assurances and conditions provided, with orders passed in accordance with the specified prayers.
Miscellaneous: The department was directed to accept a legible computerized printout of the scheme and asset schedule from the petitioners, to be appended to the certified order copy without the need for a handwritten version. A consolidated cost of 200 G.Ms was imposed on the petitioner to be paid to the Central Government. All parties were instructed to act upon a signed photocopy of the order, adhering to the usual undertakings.
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2010 (12) TMI 1313
Issues Involved:
1. Validity and vires of the Karnataka Tax on Lotteries Act, 2004.
2. Legislative competence of the State of Karnataka to impose tax on lotteries organised by other States.
3. Extra-territorial operation of the State Act.
4. Classification of lottery tickets as goods or actionable claims.
5. Application of relevant constitutional provisions and judicial precedents.
Detailed Analysis:
1. Validity and Vires of the Karnataka Tax on Lotteries Act, 2004:
The appellants challenged the Karnataka Tax on Lotteries Act, 2004, arguing that the State lacked jurisdiction to legislate on lotteries organised by other States. They contended that the Act was unconstitutional and sought a declaration to quash the enactment and restrain its implementation. The appellants argued that the proceeds from State-organised lotteries are significant for their budgets and that the Karnataka Act was an attempt to restrict their lotteries to benefit Karnataka's revenue.
2. Legislative Competence of the State of Karnataka:
The appellants argued that lotteries organised by the Government of India or State Governments fall under Entry 40 of List I (Union List) of the Seventh Schedule to the Constitution, thus only Parliament can legislate on them. They cited several judicial precedents, including H. Anraj v. State of Maharashtra and Sunrise Associates v. Government of N.C.T. of Delhi, to support their claim that the State of Karnataka lacked legislative competence to impose taxes on such lotteries.
The respondent/State of Karnataka contended that the tax was imposed on betting and gambling under Entry 62 of List II (State List), which includes taxes on luxuries, entertainments, amusements, betting, and gambling. They argued that the Central Act regulates lotteries but does not cover taxation, leaving the State free to impose such taxes.
3. Extra-Territorial Operation of the State Act:
The appellants argued that the draws of the lotteries take place outside Karnataka, and hence, the State cannot levy tax on activities occurring outside its jurisdiction. They cited cases like Cauvery Water Disputes Tribunal and Kochuni v. States of Madras and Kerala to argue that the State Act had extra-territorial operation and was beyond Karnataka's legislative competence.
The respondent countered that the tax was on the conduct of lotteries within Karnataka, specifically the sale of lottery tickets, and not directly on the draw itself, thus falling within the State's jurisdiction.
4. Classification of Lottery Tickets as Goods or Actionable Claims:
The appellants referred to Sunrise Associates v. Government of N.C.T. of Delhi to argue that lottery tickets are not goods but actionable claims, and therefore, cannot be subjected to sales tax. They contended that the Karnataka Act indirectly imposed a tax on the sale of lottery tickets, which is impermissible.
The respondent maintained that the tax was not on the sale of lottery tickets but on the draw of the lottery, which is a distinct taxable event.
5. Application of Relevant Constitutional Provisions and Judicial Precedents:
The judgment extensively discussed various constitutional provisions, including Articles 245, 246, and 289, and relevant entries in the Seventh Schedule. It also analyzed numerous judicial precedents to determine the legislative competence and the nature of the tax imposed by the Karnataka Act.
The court concluded that the State of Karnataka lacked the legislative competence to impose the tax under the impugned Act, as the primary taxable event (the draw) occurred outside Karnataka. The Act was deemed to have extra-territorial operation and was thus unconstitutional. The judgment set aside the orders of the single judge and directed the refund of any amounts collected under the Act.
Conclusion:
The appeals were allowed, and the Karnataka Tax on Lotteries Act, 2004, was struck down for being beyond the legislative competence of the State of Karnataka and having extra-territorial operation. The court ordered the refund of amounts collected under the Act to the appellants.
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2010 (12) TMI 1312
Supreme Court admitted the appeals and listed them for hearing on their own turn. (2010 (12) TMI 1312 - SC Order)
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2010 (12) TMI 1311
Issues involved: Appeal by Revenue against CIT(A) order, consideration of foreign tax payments as business expenditure, approval by COD for pursuing specific issue, disallowance of expenses on maintenance of ships.
Consideration of foreign tax payments: The appeal focused on whether foreign tax payments claimed as expenses by the assessee were allowable. The COD granted approval to pursue the issue related to foreign tax payments only. The Assessing Officer disallowed the claimed expenditure based on a previous ITAT decision, but the assessee argued that it was allowable under section 37 of the Income Tax Act as it was incurred for the business purpose. The CIT(A) allowed the claim, stating that disallowance can only be made for taxes levied on profits and gains, not foreign taxes. The Tribunal, following previous decisions, dismissed the revenue's appeal, upholding the allowability of foreign tax payments under section 37(1) of the Act.
Disallowed expenses on maintenance of ships: The Revenue raised a second ground regarding the allowance of expenses on maintenance of ships during the accounting period. However, as there was no approval from COD to pursue this issue, the Tribunal dismissed this ground of appeal. The Tribunal stated that the Revenue could pursue this issue once COD approval was obtained, emphasizing compliance with the law in such matters.
Conclusion: The Tribunal dismissed the Revenue's appeal and rejected the assessee's C.O., citing previous decisions and the specific approval granted by COD for considering the issue of foreign tax payments. The judgment was pronounced on 23rd December 2010.
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2010 (12) TMI 1310
Issues involved: Refusal of registration under section 12AA of the Income-tax Act, 1961 to the assessee Trust by the Commissioner of Income Tax.
Summary:
The appeal was filed by the assessee Trust against the order of the Commissioner of Income Tax refusing to grant registration under section 12AA of the Income-tax Act, 1961. The main contention was regarding the alleged deficiency noted in the Trust Deed, specifically related to the vagueness and unworkability of the Trust's objects.
The assessee Trust was created through a Trust Deed executed on 18th March, 2002, and later amended on 26th May, 2009. The application for registration under section 12AA was filed on 22.07.2009. The Commissioner's refusal was based on the perceived deficiencies in the Trust Deed, particularly concerning the vagueness and unworkability of the Trust's objects.
The grounds of appeal by the assessee included contentions that the Commissioner erred in not considering the Trust's objects as per the Trust Deed, inappropriately looking into the accounts of the Trust while rejecting the registration, and not taking into account that it was the Trust's first year of activity. The assessee also cited precedents where similar Trusts were granted registration under section 12AA.
Upon hearing the submissions, the Tribunal found that the reasons given by the Commissioner for denying registration did not align with the requirements for granting or rejecting registration. The Tribunal noted that the Commissioner delved too deeply into the Trust's objects and activities, beyond what was explicitly stated in the Trust Deed. It was established that the Trust was engaged in charitable activities, particularly running a nursing college, which qualified it for registration under section 12AA.
The Tribunal directed the Commissioner to grant registration to the Trust, emphasizing that the examination of the Trust's activities should be done during the assessment stage, not at the registration application stage. Consequently, the appeal filed by the assessee Trust was allowed, and registration was granted.
The order was pronounced in the Court on 22nd December, 2010.
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2010 (12) TMI 1309
Issues involved: Appeal against revision order u/s 263 regarding deduction u/s 80IB(10) for assessment years 2004-05 and 2005-06.
Summary:
The Appellate Tribunal ITAT Chennai heard appeals by the assessee against a revision order by the Commissioner of Income-tax regarding deduction u/s 80IB(10) for assessment years 2004-05 and 2005-06. The Commissioner set aside the assessment orders directing re-consideration of the deduction claim as the Assessing Officer did not apply his mind on the issue. The assessee contended that the project was completed in a later year and followed percentage completion method for income recognition. The Revenue argued that statutory requirements were not met and the assessment orders were erroneous. The Tribunal found that the assessee's method of income recognition was accepted, and the deduction claim was valid even before project completion. Citing the Malabar Industrial Co. Ltd. case, the Tribunal held that the orders were not erroneous and set aside the revision orders as unsustainable in law, allowing the appeals filed by the assessee.
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