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2007 (7) TMI 681
Issues involved: Challenge to order passed by High Court for winding up a company u/s 20(1) of SICA based on BIFR opinion, application to recall the order, consideration of subsequent BIFR orders and change in company's financial position.
Issue 1: Challenge to winding up order u/s 20(1) of SICA
The applicant challenged the order passed by the High Court on 10-6-2004 for winding up M/s. Dr. Writer's Food Products Pvt. Ltd. based on the opinion of BIFR that the company was not likely to become viable in the future and should be wound up u/s 20(1) of SICA. The applicant sought to recall this order, arguing that it was passed ex parte without considering the possibility of appeal against the BIFR order. The subsequent BIFR order dated 29-5-2006 indicated a positive change in the company's financial position, leading to the conclusion that the company was no longer a sick industrial company as per Section 3(1) of the Act.
Issue 2: Applicability of Companies Act, 1956 and Company Court Rules
The applicant invoked the provisions of the Companies Act, 1956 and the Company Court Rules, specifically Rule Nos. 6 and 7, to challenge the winding up order. It was argued that the ex parte order to wind up the company without notice and without considering the appeal process under SICA was unjust, especially in light of the subsequent developments and findings by the BIFR. The Court considered the change in circumstances, including the company's increased net worth, and the applicability of the Code of Civil Procedure in such proceedings.
Issue 3: Judicial discretion and interest of justice
The Court exercised its inherent power and discretion to quash the order for winding up the company in the interest of justice and to avoid further complications. The change in the company's financial position, as evidenced by the subsequent BIFR orders, was a significant factor in the Court's decision to allow the applicant's challenge and set aside the previous order. The Court emphasized the need to consider the evolving circumstances and to prevent unnecessary prolongation of the legal proceedings.
This summary provides a detailed overview of the legal judgment, highlighting the key issues involved and the Court's reasoning in addressing the applicant's challenge to the winding up order.
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2007 (7) TMI 680
Issues involved: Application for approval of bid in auction, ownership of property under liquidation, confirmation of sale, rights of auction purchaser.
The High Court of Karnataka considered an application filed by a company, the successful bidder in an auction conducted by the Official Liquidator, seeking approval of its bid of Rs. 317.50 lakhs for a land and building. The company had initially quoted a lower bid which was subsequently increased through intense bidding. The applicant had deposited an earnest money amount as per auction terms. The Official Liquidator confirmed the receipt of the earnest money. The application requested approval of the bid and confirmation of the sale in favor of the applicant, along with possession handover. Another entity, M/s. M.J. Mehta and Company, raised objections claiming ownership of the property under liquidation, opposing the sale confirmation. The Court was tasked with determining the ownership of the auctioned property and the rights of the auction purchaser.
The Court delved into the legal principle that in a court auction, the auction purchaser acquires the rights, title, and interest of the judgment debtor, without the Court guaranteeing or rectifying any title defects. The Court emphasized the responsibility to ensure transparency for the auction purchaser regarding the judgment debtor's rights. In this case, the Company under liquidation was not the owner of the property on the auction day. The Court sought clarification from the Official Liquidator on how the company had acquired title to the property. The property in question originally belonged to KIADB and was subleased to M/s. M.J. Mehta & Co., who further subleased it to the company under liquidation. However, no sale deed had been executed in favor of either party, indicating that the title remained with KIADB. The auction notice described the sale as "as is where is," without specifying the nature of the rights being sold. The Court informed the auction purchaser that the company under liquidation did not own the property, offering the purchaser the option to proceed with the purchase under the current conditions.
The auction purchaser expressed willingness to proceed with the purchase under the understanding that they would obtain absolute title to the property, unaware of the leasehold nature of the company's rights. The purchaser suggested that if directed, the Official Liquidator could obtain a sale deed to convey absolute title, and the purchaser would still proceed with the purchase. However, upon realizing the leasehold status, the auction purchaser retracted the offer. The Court clarified that the property was sold in a leasehold condition, and the auction purchaser's expectation of absolute title was incorrect. As the auction purchaser was not willing to proceed with the purchase under the leasehold terms, the Court rejected the application for sale confirmation and directed the refund of the earnest money deposit to the auction purchaser within a specified timeframe.
Separate Judgement: None.
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2007 (7) TMI 679
100% EOU - benefit of Section 4(4)(d)(ii) of the Central Excise Act - Held that: - the ld. Commissioner demanded a higher amount of duty even after accepting the assessee's worksheet wherein an amount of ₹ 9,00,760.63 was mentioned as outstanding duty. No amount of duty over and above the amount stated in the assessee's worksheet should have been demanded. This error can be corrected by the Commissioner.
A composite penalty was imposed under different penal provisions which worked on different principles - Considerations relevant to imposition of penalty under Section 11AC are different from those relevant to imposition of one under Rule 173Q. Ld. Commissioner lost sight of this distinction. This error also can be corrected by him.
Matter remanded for the limited purpose of re-quantification of the demand of duty on the basis of the assessee's worksheet - appeal allowed by way of remand.
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2007 (7) TMI 678
Issues involved:
The judgment involves the issue of whether the pendency of an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 stays the execution of an award.
Issue 1: Appeal against order dismissing Execution Petition
The appeal was directed against the order dismissing the Execution Petition due to the pendency of appeals under Section 37 of the Act. The Single Judge held that the Execution Petition could not be entertained during the appeals' pendency.
Issue 2: Interpretation of Arbitration and Conciliation Act, 1996
The counsel for the Appellant argued that the automatic stay due to pending appeals defeats the purpose of the Act. In contrast, the Respondent's counsel contended that the appeal is a continuation of the original proceedings and the award is not final until the appeal is decided.
Issue 3: Comparison with a similar case
Reference was made to a case where the High Court allowed execution of an award despite a pending appeal in the Supreme Court. The court emphasized the need for a speedy remedy under the Act.
Issue 4: Examination of relevant legal provisions
The court examined Sections 35 and 36 of the Act, emphasizing the finality of arbitral awards and the enforcement process. The Respondent highlighted the significance of "this Part" in Section 35 and its relation to the Act's different chapters.
Issue 5: Legislative intent and interpretation
The court interpreted the Act in line with the legislative intent to provide a speedy remedy for commercial transactions. It differentiated between decrees in civil suits and awards in arbitration, emphasizing the Act's aim to minimize procedural delays.
Issue 6: Stay of execution pending appeal
The court analyzed Order XLI Rule 5 of the Code of Civil Procedure regarding stays of execution pending appeals. It emphasized the importance of not automatically staying execution unless sufficient cause is shown.
Conclusion:
The court agreed with the reasoning in a previous judgment and set aside the order dismissing the Execution Petition. The Respondent was directed to deposit the amount with interest, subject to the pending appeal's outcome. Non-compliance would lead to enforcement through coercive means.
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2007 (7) TMI 677
Issues Involved:
1. Challenge to eviction under Section 19 of SAFEMA.
2. Lawful tenancy rights and due process of eviction.
3. Forfeiture of property under SAFEMA and its implications.
4. Principles of natural justice and right to be heard.
5. Applicability of precedents and interpretation of "free from all encumbrances."
Detailed Analysis:
1. Challenge to eviction under Section 19 of SAFEMA:
The petitioners contested the eviction action under Section 19 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA), arguing that they are lawful tenants and cannot be evicted without due process of law. The respondents argued that the property had been forfeited to the Central Government, which vests free from all encumbrances, thereby nullifying the petitioners' tenancy rights.
2. Lawful tenancy rights and due process of eviction:
The petitioners claimed protection under tenancy laws, asserting that they were not parties to the SAFEMA proceedings and had no opportunity to be heard. They argued that eviction without a show cause notice violates natural justice principles. The respondents contended that forfeiture under SAFEMA extinguishes all previous rights, including tenancy, and the competent authority is empowered to evict any person in possession of the forfeited property.
3. Forfeiture of property under SAFEMA and its implications:
The court examined the SAFEMA provisions, particularly Section 7(3), which states that forfeited property vests in the Central Government free from all encumbrances. The court held that once the property is forfeited, all prior rights, including tenancy, are extinguished. The court also noted that SAFEMA's objective is to deprive smugglers and foreign exchange manipulators of their ill-gotten gains, and the forfeiture process is distinct from compulsory purchase under the Income Tax Act.
4. Principles of natural justice and right to be heard:
The petitioners argued that they should have been given an opportunity to be heard before eviction, citing principles of natural justice. The court, however, held that once the property is forfeited under SAFEMA, the question of granting a hearing does not arise as the property vests in the government free from all encumbrances. The court distinguished this case from precedents where the right to be heard was emphasized, noting that those cases involved different statutory contexts.
5. Applicability of precedents and interpretation of "free from all encumbrances":
The petitioners relied on several Supreme Court decisions, including C.B. Gautam v. Union of India and others, to argue that "free from all encumbrances" should not negate tenancy rights. The court distinguished the SAFEMA context from the Income Tax Act, noting that the latter involves compulsory purchase with compensation, whereas SAFEMA involves forfeiture without compensation. The court also referred to the Supreme Court's decision in Attorney General for India v. Amratlal Prajivandas, which upheld SAFEMA's constitutionality, including the provision for forfeiture free from all encumbrances.
Conclusion:
The court dismissed the petition, holding that the forfeited property vests in the Central Government free from all encumbrances, nullifying the petitioners' tenancy rights. The court rejected the claim that the petitioners were entitled to a hearing before eviction, as the statutory framework of SAFEMA does not provide for such a right once forfeiture is finalized. The court also dismissed the argument that the principles from C.B. Gautam's case should apply, emphasizing the distinct statutory purposes of SAFEMA and the Income Tax Act. The court concluded that the petitioners must vacate the premises within eight weeks, during which the eviction order would not be executed.
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2007 (7) TMI 676
The Supreme Court dismissed the Special Leave Petition but kept the question of law open. Delay was condoned.
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2007 (7) TMI 675
Issues involved: The judgment addresses the following substantial questions of law:
a) Correctness of CESTAT's decision on confiscation under section 111(j) of the Customs Act, 1962 regarding permissions for vessel conversion and port clearance.
b) Properness of goods clearance based on port permissions despite Bills of Entry filed for home consumption under section 46 without section 47 permissions.
c) Treatment of imported goods as foreign vessels needing conversion permissions, and compliance with section 47 for clearance.
d) Applicability of confiscation under section 111(j) in relation to goods removal and clearance definitions.
e) Correctness of confiscation under section 111(j) considering importers' readiness to pay duty before clearance u/s 47.
Judgment Details:
1. The High Court admitted the case based on the substantial questions of law raised. These questions primarily revolve around the interpretation and application of various sections of the Customs Act, 1962 by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
2. The Court provided interim relief to the petitioner, directing the respondent to furnish a bond for penalty and fine, along with a bank guarantee. The existing bank guarantee was to be returned upon compliance with the new guarantee requirements. This interim order was made pending the final disposal of the appeal.
3. Notice waiver was granted on behalf of the respondents, indicating their acknowledgment or agreement with the proceedings without the need for formal notice.
This judgment from the Bombay High Court delves into the nuanced legal aspects of customs regulations, specifically focusing on the interpretation and application of relevant sections of the Customs Act, 1962. The Court's decision on the substantial questions of law raised by the parties sheds light on the complexities surrounding permissions, clearances, and confiscations in the context of importation and customs compliance.
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2007 (7) TMI 674
Issues involved: Challenge to the order allowing claim of bad debts under Section 36(1)(vii) read with Section 36(2) of the Income Tax Act, 1961 for Assessment Year 1998-99.
Assessee's Claim of Bad Debts:
The Assessee, engaged in providing loans, claimed bad debts written off totaling to &8377; 78,72,189/- from various parties. The Assessing Officer initially disallowed the claim citing the possibility of recovery since legal suits were filed. However, the Commissioner of Income Tax (Appeal) found no justification for the disallowance and directed its deletion.
Revenue's Challenge:
The Revenue challenged the Commissioner's order before the Tribunal, arguing that the provisions of Section 36(2) were not satisfied as the debts did not represent money lent in the ordinary course of business. The Revenue contended that the loan advanced was not in the course of business or money lending.
Legal Provisions and Tribunal's Finding:
Section 36(1)(vii) allows deduction for bad debts without the requirement of proving the debt has actually become bad in the relevant year, only necessitating the write-off in the books of accounts. The Tribunal found that since the amount was written off, the Assessee was entitled to the deduction, holding it as bona fide.
Judgment and Conclusion:
The High Court upheld the Tribunal's decision, stating that the Assessee was entitled to the deduction of &8377; 78,72,189/- for bad debts. It found no infirmity in the Tribunal's reasoning, concluding that no substantial question of law arose for consideration. The appeal by the Revenue was dismissed as not maintainable.
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2007 (7) TMI 673
Removal From Army Services - competent authority has wrongly quoted Section 20 in the order of discharge - Challenged the Order of discharge from service in the High Court - Violation Of Principles of Natural Justice - appellant found guilty of prejudicial act to good order and military discipline, charged u/s 63 of the Army Act, 1950 [Army Act] - HELD THAT:- It is an admitted case of the parties that the appellant is governed by the provisions of the Army Act and the Army Rules framed thereunder. The scheme of the Army Act is fairly clear. Chapter IV of the Act deals with Conditions of Service of persons subject to the Army Act.
It is well settled that if an authority has a power under the law merely because while exercising that power the source of power is not specifically referred to or a reference is made to a wrong provision of law, that by itself does not vitiate the exercise of power so long as the power does exist and can be traced to a source available in law [see N. Mani v. Sangeetha Theatre & Ors. [2004 (3) TMI 786 - SUPREME COURT]]. Thus, quoting of wrong provision of Section 20 in the order of discharge of the appellant by the competent authority does not take away the jurisdiction of the authority u/s 22 of the Army Act. Therefore, the order of discharge of the appellant from the army service cannot be vitiated on this sole ground as contended by the learned counsel for the appellant.
A plain reading of the order of discharge shows that it is an order of termination of service simpliciter without casting or attaching any stigma to the conduct of the appellant, therefore the said order cannot be termed to be punitive in nature or prejudicial to the future employment of the appellant in getting employment in civil service. Thus, the contention of the learned counsel for the appellant that the order of discharge is punitive in nature does not merit acceptance.
We are satisfied that there is ample evidence on record in support of the judgment and order of the Division Bench of the High Court and there is nothing that would justify this Court interfering with it. Therefore, the above arguments of the appellant are unacceptable to us.
Thus, the appeal is devoid of merit and it is, accordingly, dismissed. The judgment and order of the Division Bench is affirmed. The parties, however, are left to bear their own costs.
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2007 (7) TMI 672
The Delhi High Court ruled in favor of the assessee, stating that the capital subsidy received cannot be adjusted for determining the cost of acquisition of building and machinery for tax purposes. The decision was based on a previous Supreme Court ruling in CIT v. P.J. Chemicals Ltd. (1994).
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2007 (7) TMI 671
The High Court of Andhra Pradesh disposed of a petition where the petitioner sought the return of earnest money deposit of Rs. 26,25,000 for a failed auction bid. Respondent stated the deposit was returned. The petition was disposed of as infructuous, with the option for the petitioner to seek further legal recourse if desired.
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2007 (7) TMI 670
... ...
... ... ..... ORDER Delay condoned. The appeal is dismissed.
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2007 (7) TMI 669
Issues involved: Determination of tax rate for the commodity 'Swad', levy of interest on additional tax, consideration of additional evidence by the Tax Board.
Tax rate for 'Swad': The Rajasthan Sales Tax Tribunal classified 'Swad' as a confectionery item, subject to a general tax rate of 10% instead of the concessional rate of 6% for Ayurvedic medicines. The Tribunal exempted interest on the additional tax due to the assessee's genuine contention. The High Court referred to a similar case from the Madhya Pradesh High Court where 'SWAD' tablets were considered Ayurvedic medicine. The Hon'ble Supreme Court allowed the assessee to present evidence supporting 'Swad' as a medicine, leading to a remand for further consideration.
Levy of interest: The Tribunal did not impose interest on the additional tax, acknowledging the assessee's reasonable argument against the general tax rate for 'Swad'. The Revenue challenged this decision through a revision petition, seeking to levy interest. The High Court upheld the Tribunal's decision to waive interest due to the genuine dispute regarding the tax classification of 'Swad'.
Consideration of additional evidence: The Hon'ble Supreme Court permitted the assessee to submit additional evidence demonstrating that 'Swad' is perceived as a medicine, drug, or pharmaceutical preparation in the market. Following the production of additional evidence, the matter was transferred back to the High Court for review. The High Court directed the Tax Board to reconsider the case, taking into account the new evidence provided by the assessee, emphasizing a swift resolution due to the case's age dating back to the assessment year 1986-87.
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2007 (7) TMI 668
Issues involved: Grant of depreciation on vehicles used in business at 20% instead of 40%.
Summary:
The appellant contested the depreciation rate granted by the CIT(A) at 20% instead of 40% on vehicles used in business. The appellant cited a previous Tribunal order in AY 1997-98 where depreciation was allowed at 40%. The CIT(A) based the 20% rate on the AY 1997-98 decision, which was later challenged and overturned by the Tribunal in favor of 40% depreciation. The Departmental Representative argued for a different interpretation based on a Supreme Court judgment regarding lease agreements, suggesting the lessee should be treated as the owner for depreciation purposes. However, the appellant's counsel argued that the Supreme Court judgment was not applicable in this context. The Tribunal examined the facts and clarified that the Supreme Court judgment did not address depreciation issues but focused on ownership disputes in a lease agreement. The Tribunal ruled in favor of the appellant, directing the AO to grant depreciation at 40%.
This judgment highlights the importance of interpreting legal precedents in the correct context and not extrapolating them beyond their intended scope. The Tribunal's decision reaffirmed the appellant's entitlement to 40% depreciation on vehicles used in business, overturning the CIT(A)'s initial ruling based on a misapplied legal argument.
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2007 (7) TMI 667
Mining lease from the Government of Orissa for mining manganese ore - Appeal u/s 37(1)(a) of the Arbitration & Conciliation Act, 1996 (Acts) - scope of Section 9 of the Acts - term of the agreement was 10 years - whether, an order of injunction could be granted restraining O.M.M. Private Limited from interfering with Adhunik Steels' working of the contract which O.M.M. Private Limited has sought to terminate - HELD THAT:- It is true that the intention behind Section 9 of the Act is the issuance of an order for preservation of the subject matter of an arbitration agreement. According to learned counsel for Adhunik Steels, the subject matter of the arbitration agreement in the case on hand, is the mining and lifting of ore by it from the mines leased to O.M.M. Private Limited for a period of 10 years and its attempted abrupt termination by O.M.M. Private Limited and the dispute before the arbitrator would be the effect of the agreement and the right of O.M.M. Private Limited to terminate it prematurely in the circumstances of the case. So viewed, it was open to the court to pass an order by way of an interim measure of protection that the existing arrangement under the contract should be continued pending the resolution of the dispute by the arbitrator. May be, there is some force in this submission made on behalf of the Adhunik Steels. But, at the same time, whether an interim measure permitting Adhunik Steels to carry on the mining operations, an extraordinary measure in itself in the face of the attempted termination of the contract by O.M.M. Private Limited or the termination of the contract by O.M.M. Private Limited, could be granted or not, would again lead the court to a consideration of the classical rules for the grant of such an interim measure.
Whether an interim mandatory injunction could be granted directing the continuance of the working of the contract, had to be considered in the light of the well-settled principles in that behalf. Similarly, whether the attempted termination could be restrained leaving the consequences thereof vague would also be a question that might have to be considered in the context of well settled principles for the grant of an injunction.
Therefore, on the whole, we feel that it would not be correct to say that the power u/s 9 of the Act is totally independent of the well known principles governing the grant of an interim injunction that generally govern the courts in this connection. So viewed, we have necessarily to see whether the High Court was justified in refusing the interim injunction on the facts and in the circumstances of the case.
Whether in the circumstances, an order of injunction could be granted restraining O.M.M. Private Limited from interfering with Adhunik Steels' working of the contract which O.M.M. Private Limited has sought to terminate - Whatever might be its reasons for termination, it is clear that a notice had been issued by the O.M.M. Private Limited terminating the arrangement entered into between itself and Adhunik Steels. In terms of Order XXXIX Rule 2 of the Code of Civil Procedure, an interim injunction could be granted restraining the breach of a contract and to that extent Adhunik Steels may claim that it has a prima facie case for restraining O.M.M. Private Limited from breaching the contract and from preventing it from carrying on its work in terms of the contract.
It is in that context that the High Court has held that this was not a case where the damages that may be suffered by Adhunik Steels by the alleged breach of contract by O.M.M. Private Limited could not be quantified at a future point of time in terms of money. There is only a mention of the minimum quantity of ore that Adhunik Steels is to lift and there is also uncertainty about the other minerals that may be available for being lifted on the mining operations being carried on. These are impoundables to some extent but at the same time it cannot be said that at the end of it, it will not be possible to assess the compensation that might be payable to Adhunik Steels in case the claim of Adhunik Steels is upheld by the arbitrator while passing the award.
But, in that context, we cannot brush aside the contention of the learned counsel for Adhunik Steels that if O.M.M. Private Limited is permitted to enter into other agreements with others for the same purpose, it would be unjust when the stand of O.M.M. Private Limited is that it was canceling the agreement mainly because it was hit by Rule 37 of the Mineral Concession Rules, 1960. Going by the stand adopted by O.M.M. Private Limited, it is clear that O.M.M. Private Limited cannot enter into a similar transaction with any other entity since that would also entail the apprehended violation of Rule 37 of the Mineral Concession Rules, 1960, as put forward by it. It therefore appears to be just and proper to direct O.M.M. Private Limited not to enter into a contract for mining and lifting of minerals with any other entity until the conclusion of the arbitral proceedings.
At the same time, we see no justification in preventing O.M.M. Private Limited from carrying on the mining operations by itself. It has got a mining lease and subject to any award that may be passed by the arbitrator on the effect of the contract it had entered into with Adhunik Steels, it has the right to mine and lift the minerals therefrom. The carrying on of that activity by O.M.M. Private Limited cannot prejudice Adhunik Steels, since ultimately Adhunik Steels, if it succeeds, would be entitled to get, if not the main relief, compensation for the termination of the contract on the principles well settled in that behalf. Therefore, it is not possible to accede to the contention of learned counsel for Adhunik Steels that in any event O.M.M. Private Limited must be restrained from carrying on any mining operation in the mines concerned pending the arbitral proceedings.
We therefore dismiss the appeal filed by O.M.M. Private Limited leaving open the questions raised by it for being decided by the arbitrator or Arbitral Tribunal in accordance with law. We also substantially dismiss the appeal filed by Adhunik Steels except to the extent of granting it an order of injunction restraining O.M.M. Private Limited from entering into a transaction for mining and lifting of the ore with any other individual or concern making it clear that it can, on its own, carry on the mining operations in terms of the mining lease.
We think that the arbitration proceedings must be expedited. We are told that the application for appointment of an arbitrator made before the Chief Justice of the Orissa High Court under Section 11(6) of the Act is pending for over two years without orders. Normally, we would have requested the Chief Justice of the Orissa High Court or his nominee to take up and dispose of the application under Section 11(6) of the Act expeditiously. But we put it to the parties that it would be more expedient if we appoint an arbitrator in this proceeding itself, so that further delay can be avoided. The parties have agreed to that course.
We therefore think that it would be in the interests of justice if we appoint here and now a sole arbitrator to adjudicate on the dispute between the parties.
The appeals are disposed of as above.
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2007 (7) TMI 666
The Gujarat High Court dismissed the appeal based on the decision in CIT v. Lakshmi Machine Works, which held that excise duty should be excluded from total turnover for deduction under Section 80HHC of the Income Tax Act.
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2007 (7) TMI 665
Business Auxiliary Services - appellant-CHA are rendering services of arranging shipment of the export cargo and negotiating the same with shipping lines on behalf of their clients - whether the demand of service tax under the head BAS justified? - Held that: - more specific category for coverage would be under the ‘Steamer Agent’ service which clearly refers to the type of activities carried out by the appellants under Section 65(100)(ii) i.e. “to book, advertise or canvass for cargo for or on behalf of a shipping line”.
It cannot be broad enough to bring in a specified activity which has been delineated under steamer agent under the definition of ‘Steamer Agent’ under Section 65(100) which specifically covers in its item 2. i.e., “to book, advertise or canvas for cargo for or on behalf of a shipping line”.
Appeal allowed - decided in favor of appellant.
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2007 (7) TMI 664
Delete the addition made cash payment to different person u/s. 40A(3) - various cash payments made to one party on one day were not required to be clubbed and treated as one cash payment? - several payments made on one day in small instalments and each instalment/payment has to be treated as an independent cash transaction? - HELD THAT:- A perusal of the of section 40A(3), shows that no deduction concerning payments made by an assessee is to be allowed, if the payment exceeding ₹ 2,500 has been made otherwise than by a crossed-cheque. A perusal of the accounts submitted by the respondent-assessee as reproduced in the assessment order would show that an amount of ₹ 2,500 or even less than that amount has been paid by the respondent-assessee. Once this is the factual position, then the rigours of section 40A(3) of the Act as it stood in the assessment year 1986-87, would not be attracted to the facts of the present case.
There are further findings that the payments have been found to be made after banking hours which have been found to be appropriate after looking into the exigencies of business. We are further of the view that the Tribunal has also correctly applied the view taken by Orissa High Court in the case of Aloo Supply Co.[1979 (12) TMI 60 - ORISSA HIGH COURT]. Therefore, the question referred is answered against the revenue and in favour of the assessee.
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2007 (7) TMI 663
Issues involved: Interpretation of sections 194C and 194-I of the Income Tax Act, 1961; applicability of penalty under section 271C; reasonable cause under section 273B.
Interpretation of sections 194C and 194-I: The Assessce deducted tax at source under section 194C for rent paid on premises along with fixtures and furniture. The Assessing Officer contended that tax should have been deducted u/s 194-I for fixtures and furniture, imposing liability for penalty u/s 271C. However, both the Commissioner of Income Tax (Appeals) and the Tribunal found that the Assessee believed in good faith that tax deduction u/s 194-I was not required for fixture and furniture charges. They noted that tax was deducted u/s 194C, leading to the conclusion that the Assessee had reasonable cause as per section 273B, thus exempting from penalty u/s 271C.
Applicability of penalty under section 271C: Despite the findings of the authorities in favor of the Assessee, the Revenue sought to interpret the law in a manner that would oppress the Assessee. The Court held that such interpretation was impermissible, emphasizing the importance of not using provisions of the Income Tax Act as instruments of oppression against taxpayers.
Conclusion: The Court found no substantial question of law arising from the case and dismissed the appeal.
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2007 (7) TMI 662
Issues involved:
The controversy revolves around the acceptance of a written statement filed beyond the stipulated 90 days from the date of service of summons, as per Order VIII Rule 1 of the Code of Civil Procedure, 1908 (CPC). The main issue is whether the provision is mandatory or directory.
Judgment Details:
Issue 1 - Acceptance of Written Statement Beyond 90 Days:
The appellants were issued summons by the trial Court but failed to file the written statement within 90 days, resulting in a delay of two days. The trial Court accepted the written statement despite objections from the plaintiff. The Karnataka High Court allowed a Writ Petition challenging this decision, stating that Order VIII Rule 1 of the CPC was mandatory. A review petition was dismissed by the High Court, leading to the current appeal.
Issue 2 - Interpretation of Order VIII Rule 1 of CPC:
The amended Order VIII Rule 1 requires the defendant to file the written statement within 30 days, extendable to 90 days by the Court. The provision aims to expedite case disposal and prevent dilatory tactics. The Court emphasized that procedural laws should serve justice and not hinder it, with the intention of the legislature being crucial in determining whether a provision is mandatory or directory.
Issue 3 - Judicial Discretion and Equitable Considerations:
The Court highlighted the importance of judicial discretion in exceptional cases to prevent injustice. It cited precedents emphasizing that procedural laws should facilitate justice and not become obstacles. The maxims of equity, including "actus curiae neminem gravabit" and "lex non cogit ad impossibilia," were deemed applicable to ensure fairness in legal proceedings.
Conclusion:
In light of the above considerations, the Supreme Court set aside the High Court's orders and directed the trial Court to consider the already filed written statement. The appeal was allowed without any costs being imposed.
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9911796707
