Recovery of Loan amount - legality of the order of issue of process - whether the material available is sufficient enough to constitute a prima facie case against the accused? - HELD THAT:- When a person files a complaint and supports it on oath, rendering himself liable to prosecution and imprisonment if it is false, he is entitled to be believed unless there is some apparent reason for disbelieving him; and he is entitled to have the persons, against whom he complains, brought before the court and tried. The only condition requisite for the issue of process is that the complainant's deposition must show some sufficient ground for proceeding. Unless the Magistrate is satisfied that there is sufficient ground for proceeding with the complaint or sufficient material to justify the issue of process, he should not pass the order of issue of process. Where the complainant, who instituted the prosecution, has no personal knowledge of the allegations made in the complaint, the magistrate should satisfy himself upon proper materials that a case is made out for the issue of process. Though under the law, a wide discretion is given to magistrate with respect to grant or refusal of process, however, this discretion should be exercised with proper care and caution.
Under the terms and conditions, when the Kotak Mahindra Bank was already in an agreement with the Respondent-Company in order to safeguard its interest, the fact of the Assignment Deed between the State Bank of Travancore and the Kotak Mahindra Bank with regard to alleged rights of the State Bank of Travancore pertaining to the immovable properties allegedly mortgaged in its favour, must be communicated by the State Bank of Travancore to the Respondent-Company. More so, the fact of such assignment deed must also be brought to the notice by the Kotak Mahindra Bank to the Respondent-Company when it was responsible to provide necessary assistance to the Respondent-Company.
The position becomes more clear from the fact that even after the alleged assignment, in a proceeding before the appellate tribunal, none of the representative of the State Bank of Travancore mentioned about the factum of such assignment. The Respondent-Company came to know about the alleged Assignment after a lapse of 9 months i.e. on 17.01.2007, when an application was moved by the Kotak Mahindra Bank for substituting its name in place of State Bank of Travancore. In the absence of such knowledge, on 11.01.2007, the Respondent-Company entered into a deed of Assignment with the Kotak Mahindra Bank wherein all the dues of a defaulter, viz., Ravishankar Industries Pvt. Ltd., of more than Rs. 32 crores were assigned to the Kotak Mahindra Bank. The Kotak Mahindra Bank was under an obligation to inform the Respondent-Company about the earlier Assignment Deed which was not done. More so, the Kotak Mahindra Bank received a sum of Rs. 225 lakhs in March 2007 from Ravishankar Industries Pvt. Ltd. but without giving any information as to the terms of settlement and the mode of payment to the complainant-Company, approached the Recovery Officer-I for appropriating the same.
Thus, there was suppression of facts by both the Banks and the State Bank of Travancore was duty bound to inform the Respondent-Company about the Assignment dated 29.03.2006. As regards the Appellants herein, Appellant No. 1 herein has claimed to have joined the State Bank of Travancore on 11.05.2006 i.e. subsequent to the assignment deed dated 29.03.2006 whereas Appellant No. 2 was the signatory to the said deed - There is no denying the fact that both the Appellants were responsible for day to day functioning of the State Bank of Travancore. Furthermore, admittedly, Appellant No. 1 was in employment of the State Bank of Travancore at the time of the execution of the deed of assignment and the Appellant No. 2 was the signatory to it. On a bare perusal of the complaint, it creates an iota of doubt as to why the Respondent-Company was kept in dark by the State Bank of Travancore at the time of alleged Assignment Deed dated 29.03.2006.
However, from the admitted position, it is evident that the complainant-Respondent Company in its wisdom had withdrawn the complaint against the two persons, who were the officers of the Kotak Mahindra Bank Ltd. from a common complaint made against four persons - the complaint against the present Appellants does not survive and in the interest of justice the same is liable to quashed and is accordingly quashed.
Final decree drawn up in a partition suit - Principles of res judicata in case of decision in original suit - sale deed hit by doctrine of lis pendens or not - transfer pendente lite void or not by Section 52 of T.P. Act - effect of preliminary decree for partition - necessary to file a suit for cancellation of sale deed - adverse possession - alienating the share of co-sharer in the property - right to claim equity for allotment in final decree proceedings in suit for partition - sale was for legal necessity or not - effect of proceedings under the Tenancy Act, 1950 - effect of decision of this Court and High Court with respect to final decree proceedings in Item No. 2 of Schedule 'B' property - waiver of right by Appellants - guilty of delay or laches - effect of the decision of the Court under the Urban Land Ceiling Act?
Whether the decision in Original Suit No. 294 of 1993 operates as res judicata, if yes, to what extent? - HELD THAT:- In view of the categorical findings recorded by the trial court and first appellate court it is apparent that the sale deed dated 23.11.1959 was hit by doctrine of lis pendens and secondly on the basis of the said sale deed, L.Rs. of Bala Mallaiah could have claimed only to the extent of the share of his vendor and not the entire land, i.e. only to the extent of 14/104th share of Defendant No. 1 - in the case on hand it was necessary for the Court in the earlier round of litigation to decide the nature and scope of gift deed Ext. A-1. Accordingly, the courts decided that the gift made in favour of ancestors of Respondent 1 of the land was absolute and it was not an endowment for a public or charitable purpose. On the facts of the case, it is clear that though an issue was not formally framed, the issue was material and essential for the decision of the case in the earlier proceeding. Hence, the bar of res judicata applies to the facts of the present case.
The finding with respect to purchase being made during lis pendens had attained finality and was not open to question in the present proceedings. Besides, the validity of the sale deed to the extent of the share of the vendor which was sought to be re-agitated in the final decree proceedings, was also not open to be raised in view of clear findings recorded in the suit of 1993.
Whether the sale deed dated 23.11.1959 executed by Defendant No. 1 in favour of Bala Mallaiah is hit by doctrine of lis pendens? - HELD THAT:- In the instant case, a suit for partition was filed in the year 1935. On abolition of Darul Qaza Court in 1951 the case was transferred to the High Court. On abolition of original jurisdiction of the High Court, file was sent to the city civil court. It appears that when the file from Custodian did not reach the city civil court, hence order dated 8.1.1955 was passed - It is apparent from the aforesaid order that it was clearly an order of keeping the case sine die to be taken up only on receipt of the file on being informed by filing an application by the Plaintiff. The file was not before the court. Thus, there was no question of dismissal of the case in default nor was it so dismissed by the court. However the Plaintiff laboured under wrong impression, as such filed application under Order 9 Rule 9 Code of Civil Procedure and prayed for restoration of the suit.
There was no necessity for the Plaintiff to file an application under Order 9 Rule 9 Code of Civil Procedure. The High Court had set aside the order dated 8.1.1955 and also held that there was no jurisdiction with the city civil court to pass an order on 1.12.1955 to impose and pay costs of Rs. 50.
No doubt about it that Section 2 of T.P. Act protects Rule of Mohammedan law by excluding the provisions of Chapter II containing Sections 5 to 53A thereof. In our opinion, exclusion is conditional upon existence of Rule of Mohammedan law in that regard, that is to say if principle/rule of Mohammedan law provides as to transfers lis pendens, the same would prevail and nothing in Section 52 of T.P. Act shall be deemed to affect any such rule. However, we have not been shown any such Rule of Mohammedan law containing provision as to lis pendens and thus, in the absence whereof the provisions of Section 52 T.P. Act would be attracted. The submission as to non-applicability of Section 52 of T.P. Act to Mohammedan law is hereby rejected.
No legal fiction can be created in favour of the Respondents that the suit itself had been dismissed on 15.12.1955 due to non-payment of costs for restoration; whereas it was not dismissed at all and the High Court has also held that the order dated 1.12.1955 was without jurisdiction. The said order has to be ignored and was in fact set aside by the High Court. Thus the suit was in fact pending and was wrongly treated as having been dismissed. The High Court has rightly held that it was never dismissed. Thus, the sale deed in question dated 23.11.1959 was executed during lis pendens and the High Court has erred in law in holding otherwise in the judgment impugned herein.
Whether Section 52 of T.P. Act renders a transfer pendente lite void? - HELD THAT:- The sale deed is not void but only valid to the extent of the share of vendor of Bala Mallaiah i.e. it is valid to the extent of 14/104th share which has been found in the preliminary decree and affirmed in the final decree. The sale deed was subject to the outcome of the suit which was to the aforesaid effect.
What is the effect of preliminary decree for partition and the extent to which it is binding? - HELD THAT:- The determination of shares as per preliminary decree has attained finality, shares of the parties had been crystallised in each and every property. Purchaser pendente lite is bound by the preliminary decree with respect to the shares so determined and it cannot be re-opened and whatever equity could have been claimed in the final decree proceedings to the extent of vendor's share has already been extended to the purchasers - It is apparent from Section 97 of the Code of Civil Procedure that the matters which are concluded by preliminary decree cannot be re-agitated in an appeal against the final decree. No appeal was preferred by the purchasers or by Defendant No. 1 as against the preliminary decree.
Whether it was necessary to file a suit for cancellation of sale deed dated 23.11.1959? - HELD THAT:- When the sale deed had been executed during the pendency of suit the purchaser pendente lite is bound by the outcome of the suit. The provisions of Section 52 prevent multiplicity of the proceedings. It was not at all necessary to file a suit for cancellation of the sale deed as the vendor had no authority to sell land of other co-sharers. He had right to alienate his own share only which he had in the property to the extent of 14/104th. As such the right, title and interest of Bala Mallaiah were subject to the pending suit for partition in which a preliminary decree was passed in the year 1970 which had attained finality in which vendor of Bala Mallaiah, Defendant No. 1 was found to be having share only to the extent of 14/104th. The preliminary decree was not based upon fraud or collusion - The lis pendens operates during execution also. Bala Mallaiah, his L.Rs. and purchasers from them are bound by the decision of the case. They cannot circumvent the jurisdiction of the court and wriggle out of the decree. The transfer remained valid subject to the result of the suit and pendente lite purchaser is subject to the legal rights and obligations of his vendor as decided by the court.
Whether Bala Mallaiah, his heirs and purchasers had perfected their right, title and interest by virtue of adverse possession? - HELD THAT:- The High Court has held that there was no lis pendens, and as such it was necessary to question the sale deed and for want of questioning the sale deed, the Plaintiffs had perfected their title by virtue of adverse possession. The same is clearly a perverse finding - Merely a bald statement that there was adverse possession is not enough to set up a plea of adverse possession. It has to be clearly set out from which date it commenced, and became hostile when there was repudiation of the title. No such plea has been raised.
The High Court has erred in law in holding that the Plaintiffs perfected their title by virtue of adverse possession. The finding is perverse and has no foundational basis.
Whether under the Muslim Law, Defendant No. 1 being a co-sharer could have alienated the share of other co-sharers in the disputed property? - HELD THAT:- In the instant case, the property was ancestral property of Late Nawab Jung. It is not in dispute that Nawab Jung died intestate. The legal heirs of Late Nawab Jung succeeded to the estate as tenants in common and not as joint-tenants. The heirs succeeded to the estate in specific shares - As per the Sunni law, a testator can leave a legacy to an heir only to the extent of 1/3rd of estate and not exceeding that. After death of a person the first step is to make payment of funeral expenses, debts and legacies.
On consideration of the incidents of disposition of property under different laws, it is required to consider the personal law and then to apply the general principles of tenancy law to the permissible non-conflict zone to personal law which holds the field for the parties to arrive at a decision. The Privy Council in the case of Imambandi and Ors. v. Mutsaddi and Ors. [1918 (2) TMI 2 - PRIVY COUNCIL] considering the distinction between the law which is applicable to Mohammedans, has held that there is a sharp distinction which has to be drawn with other laws with respect to its special nature. The Court cautioned to apply the foreign decisions which are on considerations and conditions totally differing from those applicable to or prevailing in India - thus, courts have to be careful to apply the decision of Muslim law to a case relating to Hindu law and the foreign decisions and vice versa. There cannot be universal application of principles of law on a particular subject. Special laws by which parties are governed are also to be taken into consideration so as to arrive at a just conclusion.
In Abdul Majeeth Khan Sahib v. C. Krishnamachariar [1916 (11) TMI 2 - MADRAS HIGH COURT], a Full Bench of the Privy Council was faced with the issue that if one of the co-heirs of a deceased Muhammadan in possession of the whole estate of the deceased or of any part of it sells the property in his possession forming part of the estate for discharging the debts of the deceased, is such sale binding on other co-heirs or creditors of the deceased, and if so, to what extent? It was held that property of a deceased Muhammadan vests in his heir upon his death in specified share. Heirs of the deceased take their shares in severalty, as tenants-in-common and under Muhammadan Law one heir of the deceased cannot bind shares to his co-heirs.
Thus, sale beyond 14/104th share by Hamid Ali to Bala Malliah was void. The Mohammedan Law does not recognize the right of one of shareholders being tenants-in-common for acting on behalf of others. While discharging debt also they act as independent debtors. A co-sharer cannot create charge on property of co-heir. The right of Muslim heir is immediately defined in each fraction of estate. Notion of joint family property is unknown to Muslim law. Co-heir does not act as agent while discharging debt but is an independent debtor not as co-debtor or joint debtor. Co-sharers are not defined as joint contractors, partners, executors or mortgagees.
Whether the purchaser has a right to claim equity for allotment of Item No. 6 of Schedule 'B' property in final decree proceedings in suit for partition? If yes, to what extent? - HELD THAT:- Though it is true that purchasers can work out the equity in the final decree proceedings but it is only to the legally permissible extent and not beyond that. The preliminary decree declared the shares in item No. 6 of Schedule 'B' property in specified shares. The preliminary decree is binding and even otherwise the sale was valid only to the extent of the share of Defendant No. 1 i.e. 14/104th share in the specific property and not beyond it - In the instant case, preliminary decree has declared the share only to the extent of 14/104th in the disputed property in item No. 6, Schedule 'B'. Thus, by no equitable principle the purchaser can claim the entire property to be allotted to him.
In the instant case, equitable right of allotment of some land other than which was purchased out of some other properties allotted to the share of vendor Hamid Ali Khan, D-1 has not been claimed in the objections filed during the final decree proceedings filed by the purchasers. The property admittedly has exchanged hands a number of times during the pendency of suit from 1935 till date and how the equity is to be worked out is always a question of fact in every case, how much share has been allotted to the share of one vendor and how much property he had already alienated till that time and what are the debts or charges on the property that are legally permissible, would be some of the relevant considerations - In the absence of requisite data, pleadings and evidence, question of working out equity in aforesaid manner, cannot be examined or gone into by this Court at this stage. The claim of equity is outcome of ingenuity of arguments made only in this Court like a drowning fish trying to catch last straw.
Whether sale was for legal necessity, and thus binding? - HELD THAT:- There are no force in the submissions raised on behalf of the Respondents based upon pattedar rights as it was subject to Section 52 of T.P. Act and the same is hereby rejected.
What is the effect of decision of this Court and High Court with respect to final decree proceedings in Item No. 2 of Schedule 'B' property? - HELD THAT:- At least on point of law the decision of this Court being a reasoned order has relevance.
Whether there is waiver of right by Appellants? - HELD THAT:- During the pendency of the partition suit with respect to ancestral property of Late Nawab Jang, Hamid Ali Khan - Defendant No. 1 - had alienated the property treating it as his own whereas it was obviously subject to the right of other co-shares finally declared in the preliminary decree. Bala Mallaiah and his successors have filed several proceedings, civil suit of 1993 in which they have failed. Boddam Narsimha, nephew of Bala Mallaiah also filed proceedings under the Act of 1950 for issuance of ownership certificate by virtue of their being protected tenants which case was also dismissed. Thus, the stand which was taken by Appellants under the protected Tenancy Act was not at all inconsistent and did not amount to approbation and reprobation on the part of the heirs of Late Nawab Jung. Land grabbing proceedings were also instituted by L.Rs. of Bala Mallaiah and his brothers - The Appellants or their predecessors had not taken inconsistent stands. They were clearly protected by doctrine of lis pendens.
Whether Appellants are guilty of delay or laches? - HELD THAT:- As a matter of fact, L.Rs. of Bala Mallaiah and his brother etc. took steps in the year 1993 and onwards by filing successive cases as enumerated above. There was no delay on the part of the Appellants defeating their rights. It was the Respondents who having lost in the three proceedings one after the other, raised objection in the year 2004 in the final decree proceedings. What prevented them from doing so in the year 1993, has not at all been explained. Thus, it is they who are responsible to delay in the final decree proceedings in a partition case instituted in the year 1935 and the matter is still pending in the shape of instant appeals before this Court.
The effect under the Urban Land Ceiling Act - HELD THAT:- It was also submitted that under the Urban Land Ceiling Act proceedings, the land was not shown to be belonging to the heirs of Late Nawab Jung. The orders passed in urban land ceiling case have not been placed on record. That apart, it was stated that the proceedings lapsed due to repeal of Urban Land Ceiling Act. Be that as it may. The Respondents are purchasers from branch of Bala Mallaiah whose vendor was Defendant No. 1. The property has further exchanged hands. Since the orders have not been placed on record, in the aforesaid factual scenario, the aforesaid proposition is not examined further and it is not appraised how the purchasers could claim a better right than the one possessed by their vendor.
A compromise petition has been filed with respect to area 18 acres 25 guntas. As per the compromise the division of the property has to take place between the Appellants and the newly added Respondent Nos. 87 to 127. Same was objected to by one of heirs. It will involve transfer of the property, hence, we leave the parties to have resort to an appropriate remedy in this regard. It is found not to be recordable in the form of transaction in which it has been filed.
Impugned judgment and decree passed by the High Court is set aside. The final decree of the Trial Court is restored - Appeal allowed.
Rejection of remission of duty filed under Rule 21 of the Cenvat Excise Rules, 2002 - rejection on the ground that the appellant is required to reverse the cenvat credit on inputs contained in finished goods, semi finished goods and work in progress - HELD THAT:- Considering the fact that it is a case of the claim of the remission of duty. It is not disputed the occurred of fire in the factory of the appellant, therefore, the appellant is entitled for claim of remission of duty. The only reasons to deny remission claim is that the appellant is required to reverse the cenvat credit on inputs contained in finished goods, work in progress and semi finished goods. The contention of the Ld. Commissioner is not sustainable in the light of the judgements in the case of THE COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. JOY FOAM PVT. LTD., CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL (CESTAT) [2015 (7) TMI 386 - MADRAS HIGH COURT] wherein the Honble High Court held that in case of fire, for the claim of remission of duty the assessee is not required to reverse the cenvat credit contained in work in progress, finished goods and semi finished goods.
The impugned order deserves no merits, hence set aside by allowing the claim of remission of duty to the appellant - Appeal allowed.
Nature of expenditure - revenue or capital expenditure - expenditure on account of payment for compensation as per exclusive data supply agreement for compensating the 2/3rd cost at WDV for the PMS meters becoming obsolete and consequently holding cost of severance of personal of ORG redundant consequent to PMS technology becoming obsolete - HELD THAT:- We are of the view that it has not acquired any asset by paying the aforesaid amounts to ORG for the cost of write off of PMS as the PMS meters were rendered obsolete and as a part of the arrangement for supply of data to INTAM the payment had to be made. In fact, the PMS meters remained with ORG and not acquired by INTAM and not used by INTAM as the Picture Matching Technology became obsolete.
Any payment made for writing off the PMS meters borne by INTAM was of revenue nature as no asset was acquired by it. Similarly, the compensation paid to ORG for the severance of the personnel engaged in collecting data by PMS technology was also of revenue in nature, as no asset was acquired by the assessee on payment of such amount. If the expenditure did not result in the acquisition of any asset or advantage of enduring benefit, such expenditure cannot be considered as capital in nature and the same is necessarily of revenue in nature.
What is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would he disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is. therefore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts and circumstances of a given case. This issue of the assessee’s appeal is allowed.
Unaccounted cash receipts - Revenue carried out search and seizure operation u/s. 132 - reliability of the loose sheets - interpretation given by the Assessing Officer to the noting made in the loose papers - HELD THAT:- We have noticed earlier that the assessing officer has taken the figures noted in these loose sheets as representing “lakhs” - A careful perusal of the same would show that a sum of Rs.50.0 was withdrawn on 18.9.07 with the narration “Drawings”. The drawings could not be normally in lakhs, but only in thousands. Hence the statement given by Shri Vinod Faria, in our view, would stand corroborated by this entry. Hence we are of the view that the tax authorities are not justified in interpreting the figures as “in lakhs”. When this point was put to Ld D.R, he also admitted that the possibility of taking the figures in thousands is more in the facts and circumstances of the case. Hence the aggregate amount for consideration should be taken as Rs.65,000/- and not Rs.65,00,000/- as presumed by tax authorities.
Nature of payment - contention of the assessee is that he has not received any payment as alleged by the tax authorities - There is no evidence to show that there were certain business transactions which resulted in payment of any income by Shri Vinod Faria to the assessee. Hence, even if it is considered for a moment that the payments have been made to the assessee under the name “Milan bhai”, yet the question would remain as to whether those payments can be considered as assessee’s income?. In the absence of any other material to show that these payments have been made towards business dealings, we are of the view that the alleged payments cannot be considered as income of the assessee.
In any case, the noting made in page no.16 pertains to the period relevant to AY 2008-09 as per the dates noted against other transactions. Hence, on a conspectus of the matter, we are of the view that the transactions noted in these loose sheets cannot be considered as representing income of the assessee. In view of our finding given above, we do not find it necessary to go into the question of reliability of the loose sheets. Decided in favour of assessee.
Disallowance made of fabrication charges - Addition made to the income of the assessee holding the fabrication charges to be bogus and in-genuine - onus of proving the necessary facts in order to avail deduction u/s 37(1) - assessee contended that the disallowance on the basis of human probability and preponderance of probability cannot be made without bringing any evidence or material on record to substantiate the findings - CIT (Appeals) also held that the bills of fabrication charges were not signed by the contractors who had also denied receipt of any fabrication charges which clearly established that the fabrication charges were not genuine - HELD THAT:- We are in complete agreement with the Ld. CIT (Appeals) that the onus of proving the necessary facts in order to avail deduction u/s 37(1) is on the assessee and if the assessee fails to establish the facts necessary to support his claim, then the said claim for deduction of expenditure is not admissible.
As in the case of CIT Vs. Calcutta Agency Ltd. [1950 (12) TMI 4 - SUPREME COURT] has settled the aforestated legal proposition. But having said so, we, however, do not agree with the Ld. CIT (Appeals) that the assessee in the present case before us has failed to discharge its onus.
Assessee had given detailed explanation of the circumstances which led to the employment of its own workers as contractors. Assessee had explained that it was manufacturing machinery parts and accessories thereof for reputed companies on tailor made basis as per the specifications of the customers. Designs and drawings for the job were supplied by the customers which were covered under the confidentiality clause and to maintain the secrecy of the drawings the assessee had evolved modus operandi of getting fabrication work done at its own premises with its own machinery using his own workers and technical staff who were otherwise technically competent to undertake the work after the regular working hours on contract basis.
Assessee had incurred fabrication charges and had duly discharged it onus of proving the same. Further we find that no anomaly in the above evidences and explanations was pointed out by the Revenue. None of the above facts have been controverted by the Revenue except that the bills were not signed. The Revenue has not denied that the assessee had to incur fabrication charges in the course of its manufacturing process.
The only anomaly pointed out by the Department is that the bills were unsigned. Considering the voluminous evidences and explanations filed by the assessee, we do not consider the non-signing of the bills to be a factor major enough to displace the other evidences filed by the assessee and proving conclusively that fabrication charges incurred were bogus.
Sole basis for holding the impugned expenses as bogus is the statement of two contractors recorded by the Assessing Officer, which as per the Revenue has evidentiary value since it was recorded on oath. On this aspect, we are in agreement with assessee that since no opportunity of cross examination was afforded to the assessee despite specific request made by the assessee in this behalf, the evidentiary value of such statement given at the back of the assessee have no value.
Thus we hold that the assessee had discharged its onus of proving that the fabrication charges were incurred by it for the purpose of its business and there was no reason to deny any portion of the expenses to the assessee at all. In view of the above, the entire expenses incurred on fabrication charges are allowed to the assessee.
Addition of unaccounted scrap at the rate of 0.5% of the total turnover - CIT-A deleted the addition - HELD THAT:- No infirmity in the order of the Ld. CIT (Appeals) deleting the disallowance made on account of unaccounted scrap. It is not denied that in the preceding year scrap generated had been estimated by the AO - AO in the impugned year had adopted the same basis for calculating the scrap generated without taking into consideration the fact that there were differences in the facts of the two years, the turnover in the preceding year being much lower than the turnover in the current year. More importantly the addition is based only on estimates and no other evidence was brought on record by the Revenue to suggest that scrap, more than what was shown by the assessee, was generated during manufacturing process by the assessee in the impugned year. In view of the same, we uphold the order of the CIT (Appeals) on this account deleting the disallowance made on account of unaccounted scrap - Decided against revenue.
Exemption u/s 11 - registration u/s 12AA - application seeking review of our judgment [2017 (1) TMI 1006 - ALLAHABAD HIGH COURT] - review-applicant submitted that this Court has observed that admittedly no registration certificate under Section 12A was granted to review-applicant - HELD THAT:- As office of CIT confirmed to review-applicant that registration certificate u/s 12A was granted on 22.09.1987 but despite repeated query, no such copy of registration certificate has been placed before us.
No such certificate was available before Tribunal or other Revenue Authorities when the matters were decided and when we decided this appeal at that time also, no such certificate was produced. Today also no such certificate has been placed before us.
Review-applicant contended that this letter should be deemed to be registration certificate but its language is very clear and this shows registration certificate was granted on 22.09.1987 but as a matter of fact no such registration certificate is shown to exist at all. No ground of review of our judgment.
Validity of Settlement Commission orders u/s 245 D (4) - as admitted by Settlement Commission that it is not in a position to pass any appropriate order for proper settlement - HELD THAT:- Since Settlement Commission has passed order u/s 245 (D) (4A) without any proper settlement observing that it is not practicably possible to examine records and investigate the case, it cannot be said that there is a valid order passed by Settlement Commission and, therefore, matter could have been sent to Commission to pass fresh order in accordance with law, but since order itself is not under challenge, reliefs prayed in this petition, which relates only to assessment, cannot be granted.
Levy of Entry Tax - violation of Article 301 meaning thereby it will not be treated as a hindrance in trade, commerce and intercourse -HELD THAT:- In some of the cases, particularly in the writ petition filed by M/s. Vedanta Aluminium Ltd. this issue was specifically raised in the High Court out of which SLP(C) No. 8199 of 2008 arises. But the High Court did not decide it. Instead the High Court in the impugned judgment has gone by the rate of Entry Tax vis-a-viz the rate of VAT/Sales Tax. Since, in order to decide the question proper pleadings are required, which are not before us, it may not be possible for this Court to decide the issue. In these circumstances, we permit the Appellants/Assessees to file fresh writ petitions with adequate material in the High Court. These petitions shall be filed within four weeks. The interim order passed in these cases shall continue for a period of four weeks. We make it clear that if the applications for stay are filed before the High Court, the High Court shall be competent to decide these applications on their own merits and would not influenced by continuation of stay granted by this Court as these stay orders were granted before answering the reference by the Nine Judge Bench and we have continued the same for four weeks only to enable the Assessees to approach the High Court in the meantime.
The interim orders dated 03.02.2010 were passed in these cases directing the Appellants to pay 33% of the tax - in many other cases coming from other States, interim stay was given subject to deposit of 50% of the tax amount.
Levy of Entry Tax - levy is compensatory in nature or not - HELD THAT:- The issue decided in the case of JINDAL STAINLESS LTD. AND ANR. VERSUS STATE OF HARYANA AND ORS. [2016 (11) TMI 545 - SUPREME COURT] where it was held that States are well within their right to design their fiscal legislations to ensure that the tax burden on goods imported from other States and goods produced within the State fall equally. Such measures if taken would not contravene Article 304(a) of the Constitution. The question whether the levies in the present case indeed satisfy this test is left to be determined by the regular benches hearing the matters, and the issue is decided in favour of the State.
Forgeries - wrong entries made in the revenue records of the State in respect of part of the property - whether Upa Lok Ayukta had jurisdiction to entertain the complaint or not? - HELD THAT:- The matter relates to a civil dispute which is pending before a Court of competent jurisdiction where both the parties have appeared. The nature of dispute is such that it has to be adjudicated by the Civil Court. Thus the matter being substantially sub judice before the Civil Court, in our opinion, the Upa Lok Ayukta ought not to have entertained the complaint at all and left the parties to avail all remedies as per common civil law. Even if both the parties moved the Upa Lok Ayukta, it is well established that consent cannot confer jurisdiction, where there was inherent lack of jurisdiction on the part of Upa Lok Ayukta to entertain such a complaint. Even if both the parties agreed, jurisdiction could not be conferred where the Statute does not provide for it - the complaint ought not to have been entertained by the Lok Ayukta. That being the position, the proceedings before the Lok Ayukta were wholly without jurisdiction and consequentially the orders passed therein cannot be held to be legal, valid and binding.
The writ petitioner seeks liberty to withdraw the complaint (Ext. P2) made before the Lok Ayukta in order to move Civil Court or such other competent authority as the petitioner may be advised - the complaint filed before the Lok Ayukta would thus stand withdrawn.
Gratuity liability - Accrual of liability - assessee was following mercantile system of accounting - whether there was no accrual of such liability during the year under consideration? - As per CIT-A accrued gratuity liability was not disallowable u/s. 36(1)(v), 43B and 40A(7)(a) or Rule 103 and 104 of the IT Rules, thus deleted the addition - HELD THAT:- We find that the issue is covered by order of this Tribunal in assessee’s own case for A.Y 2004-05 held that section 36(1)(v) nowhere speaks of the actual liability incurred during the year on account of retirement of the employees during the year itself. Such liability accrued during the year is taken care of in section 40A(7)(b) and the operation of section 40A(7)(a) is subject to section 40A(7)(b)
Section 40A(7)(b) that provision made by the assessee for the purpose of payment of any gratuity, that has become payable during the year is allowable which means that the liability which has actually accrued during the year is allowable. CBDT has also clarified the introduction of section 40A(7) that the provision made for payment of gratuity that has become payable during previous year is allowable. Therefore the liability accrued on account of the gratuity which became payable during the year on account of the employees who retired during the year itself is allowable.
Section 43B also speaks of the contribution of any gratuity or other fund and not to the liability accrued as above.
Rule 103 and 104 also speaks of the contribution or initial contribution to any gratuity fund and not for the actual liability accrued during the year. As relying on principles laid down in Kedarnath case [1971 (8) TMI 10 - SUPREME COURT] mentioned above are fully applicable and the assessee is entitled to the deduction of the accrued liability as claimed by it in the computation of the income. - Decided in favour of assessee.
Disallowance of Employees’ contribution to the “Labour Welfare Board” and PF - AR submits that though payments were not made in due date, but paid within grace period - CIT-A deleted the addition - HELD THAT:- We find support from the decision of Ganapathy Mills [1999 (2) TMI 26 - MADRAS HIGH COURT] wherein it held that the deduction can be allowed if the payments are made within the grace period. - Decided in favour of assessee.
SSI Exemption - denial of benefit on the ground that the brand names used by name of others - Department after the show cause notice observed that the brand names were registered under the name of Shri Sanjeev Bhardwaj, so the assessee-Appellants cannot use the brand name and denied the benefit of SSI exemption.
HELD THAT:- From the record it appears that the assessee-Appellants’ proprietary concern was converted into the Private Limited Company and for that purpose all necessary documents were submitted before the Commissioner in reply to the show cause notice. When it is so, it is deemed fit to set aside the impugned order and remand all the appeals to the original authority for de novo adjudication but by providing a reasonable opportunity to the assessee-Appellants to present their case with liberty to file additional documents, if any, as per law.
CENVAT Credit - Cenvat Credit availed by the assessee-Appellants’ head office registered as an ISD and distributed to the assessee-Appellants’ unit denied on the ground that input services were used at the head office and cannot be distributed to the Bhiwadi Unit - required documents appearing as prove were not submitted - HELD THAT:- It appears that the adjudicating authority in his order has observed that “noticee have not even adduced any evidence to prove the Cenvat Credit was availed on the input services utilized in manufacture of final product or providing output service. There could have been input services used in providing output services which are not at all taxable, therefore, credit pertaining to such input services is not at all admissible, let alone distributable.”
During the course of arguments, the learned counsel submits that the necessary documents can be produced before the lower authorities to avail the benefit of the Cenvat Credit. She also assured full cooperation with the adjudicating authority.
The matter remanded to the adjudicating authority for de novo adjudication in the light of the above observations but by providing a reasonable opportunity to the assessee-Appellants to present their case with liberty to file additional documents, if any, as per law - appeal allowed by way of remand.
Scope and purport of the newly introduced provisions regarding the appointment of arbitrators and challenges to their continuance - whether an arbitrator should stand disqualified or be removed in these circumstances, viz.: the arbitrator is a practicing counsel? - arbitrator clarifies in writing that he has never been briefed to appear for that particular party, though he is sometimes briefed in other matters by the law firm in question - counsel having accepted a brief from a particular attorney, advocate-on-record or lawyer for some other client, qualified or not.
HELD THAT:- The association of the arbitrator must be proximate, not remote. Schedule V contemplates various scenarios - no arbitrator should be involved in any manner with one of the parties to the dispute or a partner with a lawyer or law firm appearing in the arbitration, or representing the law firm or lawyer personally.
A law firm"'s briefing of counsel in other, unrelated matters is on a very different footing. In our profession it very often happens that on a given day a law firm will brief counsel for one client and on the very next day, or perhaps later that very day, will brief another counsel against the first. At no point in their regular practice do counsel appear "'for"' the law firm that briefs them, leaving aside cases where the briefing lawyer or law firm is itself the litigant. In-house counsel or counsel who receive a fee-paid general retainer or salary from a law firm stand on a different footing - We have seen counsel withdrawing sometimes in court itself because their clients give them fresh instructions contrary to previous ones conveyed to court. In Mumbai at least, counsel from the same chambers often oppose each other in court and there is never a doubt raised about their professional independence. We have, too, in this city an acceptance of a junior counsel being briefed against the senior whose chamber he or she has joined. No one sees this as anything but the fiercest independence; indeed, seniors consider it a badge of honour to be opposed (the more vigorously the better) by their own juniors, for there is perhaps no better indicator of a briefing attorney"'s confidence in the capability, integrity and independence of a junior counsel than to field him against his own senior.
Independence, therefore, as used in the statute means nothing more than deciding for oneself. Impartiality is lack of bias: the ability to decide without tilting to one side on considerations other than the merits of the case.
Thus, counsel having accepted a brief from a particular attorney, advocate-on-record or lawyer for some other client is not per se a disqualification or ineligibility. The disqualification connection must be between the arbitrator-counsel and the litigant. That this is of the essence is obvious from Item 3 of the two schedules in a given case, where the law firm or lawyer is itself or himself the client, the arbitrator cannot function as such in an arbitration where that very law firm or lawyer is also engaged, though for some other party; for the arbitrator in question would then have before him a party for whom he is engaged.
The Petition are wholly without foundation in fact or law. The Notice of Motion and the Petition stand dismissed.
Validity of assessment order - main ground on which the impugned orders have been challenged is that an opportunity of personal hearing has not been granted - principles of natural justice - HELD THAT:- In the light of the fact that the petitioner has not been afforded an opportunity of personal hearing as mandated and as pointed out by the Hon'ble Division Bench in V SELLADURAI VERSUS CHIEF COMMISSIONER OF INCOME-TAX (OSD) AND ANOTHER [2007 (8) TMI 69 - HIGH COURT, MADRAS], this Court is of the view that the matter should be decided afresh after due opportunity to the petitioner.
The impugned orders are set aside and the matters are remitted back to the respondent for fresh consideration - Petition allowed by way of remand.
Maintainability of petition - order appealable to the Customs, Central Excise and Service Tax Appellate Tribunal (CESTAT) - whether the authorities have acted without jurisdiction in issuing a show-cause notice to the petitioner or not - SCN relates to Section 11(4) of the Central Excise Act, 1944 - time limitation - HELD THAT:- The impugned order is appealable. The existence of a statutory alternative remedy to the petitioner is not a complete bar to the maintainability of a writ petition. A writ petition can be sustained in spite of existence of a statutory alternative remedy, in the event the petitioner able to substantiate but, the fundamental right of the petitioner has been infringed or the authority had acted wholly without the jurisdiction or the impugned order is such that it shocks the conscience of the Court.
In the present case, the petitioner raises a point of lack of jurisdiction on the authorities in issuing the show-cause notice. The contention of lack of jurisdiction is premised upon the show-cause notice dealing with a period which is not permissible under Section 11A(4) of the Central Excise Act, 1944. The impugned show cause which deals with a period which is barred by limitation prescribed under Section 11(4) of the Act of 1944. Limitation is a point of jurisdiction - The impugned show-cause notice alleges that there were suppression of material facts and willful misstatement on the part of the petitioner. The department relies upon on such sub-section which provides that the department is entitled to serve notice upon a person to show- cause in respect of an infringement of such sub-section within five years from the relevant date. The impugned show-cause notice relies to a period of five years from relevant date. The impugned show-cause notice, therefore, is not beyond the limitation prescribed under Section 11A(4) of the Act of 1944.
The petitioner had purchased the product from Oil India Limited. So far as the Oil India is concerned, the product is classified in a particular way. However, the classification so far as the Oil India is concerned, will not continue to remain valid for the end product after a manufacturing process as undertaken by the petitioner in the instant case - neither the finding in respect of the manufacturing process nor the end product has been demonstrated to be perverse.
The impugned order is otherwise reasoned. The authorities had given a personal hearing to the petitioner. The findings returned in the impugned order are plausible. - The petitioner has chosen not to prefer an appeal where the scope of the adjudicatory proceeding by the Appellate Authority is different to that available to a writ proceeding. The Appellate Authority is permitted to look into the materials made available to adjudicating authority so as to reapprise same evidence and come to a different conclusion.
Restitution of conjugal rights was rejected - decree for dissolution of marriage in favour of the Respondent (husband) granted - permission for divorce - respondent claimed cruelty within the meaning of Section 13(1)(i-a) of Hindu Marriage Act, 1955 entitling him to claim dissolution of marriage against the Appellant - HELD THAT:- The word "cruelty" used in Section 13(1)(ia) of the Act is not defined under the Act. However, this expression was the subject matter of interpretation in several cases of this Court. What amounts to "mental cruelty" was succinctly explained by this Court (three Judge Bench) in Samar Ghosh v. Jaya Ghosh [2007 (3) TMI 826 - SUPREME COURT] Their Lordships speaking through Justice Dalveer Bhandari observed that no uniform standard can ever be laid down for guidance, yet it is appropriate to enumerate some instances of human behavior which may be considered relevant in dealing with the cases of "mental cruelty".
Keeping in view the law laid down in Samar Ghosh's case, when we examine the grounds taken by the Respondent in his petition for proving the mental cruelty for grant of divorce against the Appellant, we find that none of the grounds satisfies either individually or collectively the test laid down in Samar Ghosh's case so as to entitle the Respondent to claim a decree of divorce.
A petition seeking divorce on some isolated incidents alleged to have occurred 8-10 years prior to filing of the date of petition cannot furnish a subsisting cause of action to seek divorce after 10 years or so of occurrence of such incidents. The incidents alleged should be of recurring nature or continuing one and they should be in near proximity with the filing of the petition - Few isolated incidents of long past and that too found to have been condoned due to compromising behavior of the parties cannot constitute an act of cruelty within the meaning of Section 13 (1)(ia) of the Act.
Both the Courts below failed to take note of this material aspect of the case and thus committed jurisdictional error in passing a decree for dissolution of marriage - We cannot, therefore, countenance the approach of the High Court because it did not, in the first instance, examine the grounds taken in the petition to find out as to whether such grounds constitute mental cruelty or not? The finding, therefore, though concurrent does not bind this Court.
In the first place, the Respondent did not seek a decree of dissolution of marriage on these grounds. Second, the grounds of cruelty taken by the Respondent in his petition does not include these grounds. Third, even if some stray allegations were made by the wife in her pleading/evidence as were relied upon by the learned Counsel are of no relevance because, as mentioned above, these ground were not pleaded in the petition by the Respondent for seeking a decree of divorce and nor were put in issue; and lastly, the burden being on the Respondent, the same could be discharged by the Respondent by pleading and then proving. It was not so done. It is for these reasons, we cannot accept the aforementioned two submissions for affirming the decree of divorce.
The Appellant is entitled for a decree for restitution of conjugal rights against the Respondent - from perusal of the evidence that it is the Respondent who withdrew from the Appellant's company without there being any reasonable cause to do so. Now that we have held on facts that the Respondent failed to make out any case of cruelty against the Appellant, it is clear to us that it was the Respondent who withdrew from the company of the Appellant without reasonable cause and not the vice versa.
The impugned judgment is set aside. As a result, the petition filed by the Respondent (husband) Under Section 13(1) of the Act seeking dissolution of marriage is dismissed - Appeal allowed.
Penalty imposed u/s 271D - necessity of recording of satisfaction regarding initiation of penalty proceedings - HELD THAT:- As find that in the Assessment Order there is no mention about initiation of any penalty proceedings in connection with the impugned penalty. In this view of the matter and respectfully following the Hon’ble Supreme Court’s judgment in the case of CIT vs. Jai Laxmi Rice Mills [2015 (11) TMI 1453 - SUPREME COURT] wherein it is held that recording of satisfaction regarding initiation of penalty proceedings under section 271E is a condition precedent for imposing the said penalty, we delete the impugned penalty. Assessee appeal is allowed.
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