Scheme of amalgamation - Application seeking that the convening of the meetings of the shareholders, secured and unsecured creditors be dispensed with - HELD THAT:- The applicant company has two equity shareholders who have on perusing the scheme consented to the same as indicated from the documents at Annexure-L series. The certificate dated 04.07.2014 (Annexure-M) issued by the Chartered Accountant indicates that the applicant company has no secured creditors. In that view consideration of the scheme would not arise. The certificate dated 04.07.2014 (Annexure-N) would indicate that the applicant company has 3 unsecured creditors and all the 3 unsecured creditors have issued their consent letters to the scheme.
When the Board of Directors have approved the scheme and subsequently, since the shareholders and unsecured creditors have perused the scheme and consented to the same and also when it is demonstrated that there is no secured creditor, the convening of the meetings would not arise.
The meetings of the shareholders, secured and unsecured creditors is dispensed.
Maintainability of appeal - order of dismissal of an application under Order VII Rule 11 of the CPC is appealable order or not - HELD THAT:- The claim for damages is not such qua which enquiry is to be held nor are the damages claimed such as to which accounts are to be taken under the orders of the Court. It is for the respondent/plaintiff to quantify the damages claimed and prove the entitlement thereto. It was thus incumbent upon the respondent/plaintiff to quantify the damages/compensation for recovery of which the suit was filed and in the absence thereof, no enquiry into the claim for damages can be conducted. Similarly, if the respondent/plaintiff presses the claim for damages, the respondent/plaintiff is also required to value the same for the purposes of court fees and jurisdiction and which has also not been done. The counsel for the respondent/plaintiff does not controvert that ad-valorem court fees is payable on the damages so claimed.
The respondent/plaintiff, without appropriately valuating the suit for the relief of recovery of damages/compensation claimed and without quantifying the damages/compensation claimed and paying appropriate court fees thereon is not entitled to have the claim for damages/compensation adjudicated.
Computation of taxable profits - Exclude from the taxable profits, the sales tax exemption benefit which is included in Sales and which is taxed in the assessment order as part of profits of the business - HELD THAT:- We find that an identical issue has been adjudicated by the Tribunal [2011 (8) TMI 1154 - ITAT MUMBAI] and the matter is restored to the record of the Assessing Officer to examine the additional evidence filed by the Assessee and then decide the issue as per law. Since the issue is identical for both the years, therefore, additional ground No.1 raised for the assessment year 1999-00 also stands disposed off in the same terms and directions to AO as given in para 27 to 27.2 of the impugned order. Accordingly the additional ground No.1 stands disposed off.e
Expenditure incurred on assets not owned - allowable revenue or capital expenses - HELD THAT:- As identical issue has been decided by the Tribunal for the assessment year 1995-96 and by following the order of this Tribunal the AO has allowed the claim of the Assessee while passing the order giving effect to the order of this Tribunal. We find that AO has already allowed the claim of the Assessee as raised in additional ground No.2 for the assessment year 1999-00 [2011 (8) TMI 1154 - ITAT MUMBAI] while passing the giving effect order dated 28/03/2013. Therefore, the additional ground No.2 raised for the assessment year 1999-00 becomes infructuous as AO has allowed the same being consequential to the assessment year 1995-96 in which the said claim was allowed by this Tribunal.
Recovery of excess money from the pensionary benefit of the Respondent-white washer - wrong fixation of pay - whether the Government is entitled to recover from an employee any payment made in excess of what the employee is otherwise entitled to, in the absence of any fraud or misrepresentation on the part of the employee? - HELD THAT:- The observations made by the Court not to recover the excess amount paid to the Appellant-therein were in exercise of its extra-ordinary powers Under Article 142 of the Constitution of India which vest the power in this Court to pass equitable orders in the ends of justice.
In Chandi Prasad Uniyal's case [2012 (8) TMI 928 - SUPREME COURT], a specific issue was raised and canvassed. The issue was whether the Appellant-therein can retain the amount received on the basis of irregular/wrong pay fixation in the absence of any misrepresentation or fraud on his part. The Court after taking into consideration the various decisions of this Court had come to the conclusion that even if by mistake of the employer the amount is paid to the employee and on a later date if the employer after proper determination of the same discovers that the excess payment is made by mistake or negligence, the excess payment so made could be recovered.
Article 142 of the Constitution of India is supplementary in nature and cannot supplant the substantive provisions, though they are not limited by the substantive provisions in the statute. It is a power that gives preference to equity over law. It is a justice oriented approach as against the strict rigors of the law - The Court have compartmentalized and differentiated the relief in the operative portion of the judgment by exercise of powers Under Article 142 of the Constitution as against the law declared. The directions of the Court Under Article 142 of the Constitution, while moulding the relief, that relax the application of law or exempt the case in hand from the rigour of the law in view of the peculiar facts and circumstances do not comprise the ratio decidendi and therefore lose its basic premise of making it a binding precedent.
This Court on the qui vive has expanded the horizons of Article 142 of the Constitution by keeping it outside the purview of Article 141 of the Constitution and by declaring it a direction of the Court that changes its complexion with the peculiarity in the facts and circumstances of the case - the decisions of the Court based on different scales of Article 136 and Article 142 of the Constitution of India cannot be best weighed on the same grounds of reasoning and thus there is no conflict in the views expressed in the first two judgments and the latter judgment.
Matters sent back to the Division Bench for its appropriate disposal.
Validity of reopening of assessment u/s 147 - Non disposal of objection to the reasons filed by an assessee by a speaking order - HELD THAT:- A law laid down by the Supreme Court in the case “GKN Driveshrafts (India) Ltd. [2002 (11) TMI 7 - SUPREME COURT] has not been followed by the Assessing Officer. The aforesaid decision requires the Assessing Officer not only to furnish reasons for the proposed reopening of the assessment but also has to dispose of the objection to the reasons filed by an assessee by a speaking order.
We set aside the Assessment order passed in respect of Assessment year 2008-09. We note that the petitioner had, by diverse communications filed their objections to the grounds in support of the impugned notices furnished by the Assessing Officer. We permit the petitioner to file a consolidated objections to both the impugned notices within a period of two weeks from today before the Assessing Officer. The Assessing Officer, thereafter, will dispose of the objections filed by the petitioner in respect of both the impugned notices.
Assessing Officer would not commence re-assessment proceedings for a period of four weeks from the date of communication of the order disposing of the objections filed by the petitioner.
Dishonor of Cheque - funds insufficient - discharge of legally enforceable debt or not - rebuttal of presumption - offence punishable under Section 138 of the Negotiable Instruments Act - HELD THAT:- It is revealed that the legal notice was issued by respondent No. 1 to all the applicants on their address and in spite of intimation given to the applicants by the Postal Department as they were not claiming the notice, the notice was returned to respondent No. 1 with endorsement "not claimed". It is further found averred in the complaint that all the applicants are equally responsible for the offence committed by them and they have issued the said cheque to discharge their legal liability towards respondent No. 1.
There are no substance in the criminal applications as admittedly the applicants are Directors of applicant No. 1 Company and proviso to Section 141 of the Negotiable Instruments Act can come into play in favour of applicants to save themselves from the punishment, if it is proved in the trial that the offence was committed without their knowledge. The applicants, who are Directors of applicant No. 1 Company, can also save themselves from punishment if they prove that they have exercised all due diligence to prevent the commission of such offence and also cheque involved in the prosecution is issued by the applicant No. 2 without their consent. The presumption under Section 139 of the Negotiable Instruments Act is that respondent No. 1 received the said cheque towards discharge of legal liability or debt. The burden to rebut the said presumption is on the applicant No. 1 Company and it can only be rebutted during trial.
Oppression and mismanagement - transfer of plaint schedule properties by way of sale deeds - sale deed was executed with the intention of transferring the plaint schedule property to somebody else for higher consideration - sale deed is a sham document without consideration or not - maintainability of suit in view of Sections 397 and 398 of the Companies Act - HELD THAT:- Going by the nature of the relief sought in the suit, it cannot be said that the complaint of the appellant was in respect of a continuing wrong or that the Company Court will be able to grant an effective relief sought for, by her as against the third parties, that too in respect of past transactions. It can be seen that there is no specific exclusion to seek remedies from a civil court. At the most it can be said that remedies are available under the Companies Act as well as under General Law of Contract from the civil court and there is an element of election for the party to approach appropriate forum, considering the nature of the relief he is seeking.
In the decision reported in Dwarka Prasad Agarwal (D) by Lrs. and Another Vs. Ramesh Chandra Agarwala and Others [2003 (7) TMI 481 - SUPREME COURT], the Honble Supreme Court while considering the question of jurisdiction for the civil court in a dispute in-between Directors of a company in a suit for eviction and permanent injunction, alleging illegal dispossession from a printing press, referring to the provisions contained in Sections 9 and 10 of the Companies Act, it was held that the above provisions do not oust the jurisdiction of the civil court.
The exclusion of the jurisdiction of the civil courts to entertain a civil cause cannot be assumed unless a particular statute contains an express provision to that effect or leads to a necessary and inevitable implication of that nature. Merely because the Companies Act provides for certain remedies it cannot be said that the jurisdiction of civil courts to deal with a case brought before it in respect of some of the matters covered by the Act is barred - the prerequisites to approach the Company Law Board and for grant of an effective remedy under the Companies Act are not available in the present case. The appellant is seeking a relief against all the remaining Directors of the company against a past transaction, which does not amount to a continuing wrong. Therefore, an effective remedy is available to her only before the civil court, for which there is no specific ouster in the Companies Act. Moreover when the appellant can invoke her statutory rights under the Company Law as well as the rights under the common law, she has got every freedom to elect the forum which is more appropriate. The suit filed by her cannot therefore be dismissed as not maintainable.
As the suit was dismissed on a preliminary issue, the same is remanded to the court below for further proceedings - appeal allowed.
Claim for exemption u/s 10 - Agricultural income - processes undergone on hybrid seeds - whether the income derived by the assessee by sale of seeds constitutes agricultural income or business income? - HELD THAT:- Under the provisions of the Karnataka Land Reforms Act, lease of the agricultural land is totally prohibited, except to the extent provided in Section 5 of the Act. Though, each State has passed such Land Reforms Act, its provisions vary from State to State. The main policy before this agrarian reforms is to abolish absentee land lords and to confer tiller the ownership of the land. It is in this back ground, when we look at the provisions of the Income Tax Act and the exemption granted to agricultural income and the agricultural income having been defined specifically, the said provisions required to be interpreted in the light of the agrarian reforms. In case, where the assessee ploughs the land and in case, where the law permits taking agricultural leases of land and if the assessee cultivates the land, raises the crops and seeds and hence, income derived therefrom will fall within the definition of agricultural income and the assessee would be entitled to the benefit of Section 10(1)(a) of the Act.
If the assessee is not owning the land and in law, he cannot take the land on lease, but still he enters into contract with the land owners, gives them the monitory assistance and those land owners physically cultivate the land and grow the crops and when the assessee contends that crops grown belongs to him and he is selling them and therefore, it is an agricultural income, the question arises as to whether the exemption under Section 10(1) is attracted to such income?
Though, several judgments were cited contending that it is an agricultural income, we do not see in any of those judgments, they have taken note of this agrarian reforms. Most of the judgments are anterior to agrarian reforms. At any rate, the authorities have not applied their minds to these fundamental facts which are in the nature of jurisdictional facts before valid order is passed under the said Act. In the absence of the authorities applying their minds to these facts, it would be inappropriate for this Court to record any findings on the basis of the submissions made at the Bar or by looking into the documents, now being produced.
Therefore, we are of the view that the proper course would be to set-aside all the impugned orders, remit the matters back to the Assessing Authority, so that Assessing Authority would formulate proper points for consideration, give an opportunity to the assessee to produce evidence in support of their contention. The Assessing Authority would look into agrarian reforms passed in each State which is relevant for passing the assessment order and then, pass an order keeping in mind all the decisions relied by the parties. In our view, it would meet the ends of justice.
Assessing Authority shall record a finding on facts as What is the extent of land these assessees hold in the States where they are growing seeds and then looking into the relevant Land Reforms Act to find out whether they are entitled to hold such land or if so, under what provisions of the Act. Consequently, what would be the legal effect in respect of excess land held by them and in cases where there is a total prohibition of taking the land on lease, if the assessee has entered into an arrangement with the land owners irrespective of the nomenclature given, whether the income derived from such agricultural operation would be construed as an agricultural income as defined under Section 2(1)(A) of the Act to be eligible for exemption under Section 10(1) of the Act? - Also whether the processes undergone by hybrid seeds before it is sold in the market would in any way take away the character of an agricultural produce of the seeds to be kept away from the application of the provision of Section 2(1)(A) of the Act?
Entitled to deduction u/s.43B - belated remittance of employees contribution towards ESI - employees contribution is income of the assessee u/s.2(24)(x) of the Act and allowable as deduction u/s.36(1)(va) of the Act, if remitted within the due date prescribed under the ESI Act, and recorded a perverse finding - HELD THAT:- Issue decided in favour of assessee as relying on M/S ESSAE TERAOKA PVT LTD [2014 (3) TMI 386 - KARNATAKA HIGH COURT].
Winding up of respondent company - company unable to pay its debts - HELD THAT:- It is prima facie established that an amount of ₹ 42,80,385/- along with interest as claimed is due and payable by the Company to the Petitioner. The Company has failed to respond to the statutory notice or make any payments to the Petitioner as called upon therein. A copy of the Petition is forwarded to the Company at its Registered Office on two occasions. However, the same has been returned with the remarks “unclaimed/left” respectively. Since the Company Petition has been served by the Petitioner at the registered address of the Company as shown in the records of the Registrar of Companies (ROC), the Petition is deemed to be served despite being returned with the remarks “unclaimed/left”.
The Company Petition is admitted and made returnable on 14th August, 2014.
Validity of reassessment order passed by the AA under Section 39(1) of KVAT Act - barred by time limitation or not - Validity of cross appeals of the State.
Whether, the FAA is correct in holding that the reassessment of the AA is not barred by time limitation as per Section 40 of the Act? - HELD THAT:- The issue is answered in the affirmative. The reading of the new substituted Section 40 clearly proves that the reassessment order dated 25th September, 2010 of the AA is not barred by time-limit.
Even otherwise, it is to be noted that the AA has passed order considering the entire turnover for the year 2005-2006 as the turnover for the month of March 2006 and reassessment is done for the tax period of March 2006 alone. Considering this fact and without giving any finding whether it is correct or not, as per Section 40 of the Act as it stood then also, the reassessment order is not barred by time-limit as prescribed therein - the FAA is correct in resolving the first issue against the appellant and thereby the first point is answered in the affirmative.
Whether, the cross appeals of the State are justified in view of the detailed findings of the FAA on each of the issues raised in the appeal which is being contested in these cross appeals? - HELD THAT:- The issue is answered partly in the affirmative. The tax period is defined under Section 2(33) of the Act and Rule 37 prescribes each calendar month as the tax period other than in the case of dealers who have opted for composition. In the case of the appellant, the tax period is a calendar month whereas, the AA has concluded reassessment order violating Rule 37 of the KVAT Rules, 2005 by determining the total turnover and the taxable turnover under KVAT Act and CST Act for the month of March 2006 only.
The FAA is correct in holding that the AA has erred in clubbing the turnovers and passing the order for the month of March 2006 alone. The FAA should have stopped at this stage only without going into the merits of the case as the reassessment order of the AA is improper and not sustainable as the same has been done in violation of statutory provisions - the reassessment order need to be set aside and the case has to be remanded back to the AA with the direction that the reassessment orders are to be passed tax period wise separately under the KVAT Act and so also under the CST Act. Consequently, the impugned appellate order is also liable to be set aside. Therefore, the second point is answered partly in the affirmative.
What order regarding the appeals and the cross appeals? - HELD THAT:- The matter need to be remitted back to the AA to pass orders afresh keeping in view of the time limitation and computation of time limitation as envisaged under Section 40 of the Act.
Offences punishable Under Section 498A of the Indian Penal Code and Section 4 of the Dowry Prohibition Act, 1961 - Compounding of offences - HELD THAT:- Section 498-A of the Indian Penal Code is non-compoundable. Section 4 of the Dowry Act is also non-compoundable. It is not necessary to state that non-compoundable offences cannot be compounded by a Court. While considering the request for compounding of offences the Court has to strictly follow the mandate of Section 320 of the Code. It is, therefore, not possible to permit compounding of offences Under Section 498-A of the Indian Penal Code and Section 4 of the Dowry Act. However, if there is a genuine compromise between husband and wife, criminal complaints arising out of matrimonial discord can be quashed, even if the offences alleged therein are non-compoundable, because such offences are personal in nature and do not have repercussions on the society unlike heinous offences like murder, rape etc.
In this case, the Appellant is convicted Under Section 498-A of the Indian Penal Code and sentenced to undergo six months imprisonment. He is convicted Under Section 4 of the Dowry Act and sentenced to undergo six months imprisonment. Substantive sentences are to run concurrently. Even though the Appellant and Respondent No. 2-wife have arrived at a compromise, the order of conviction cannot be quashed on that ground because the offences involved are non-compoundable. However, in such a situation if the court feels that the parties have a real desire to bury the hatchet in the interest of peace, it can reduce the sentence of the accused to the sentence already undergone - sentence of the Appellant can be reduced to sentence already undergone by him.
Whether a case for reduction of sentence is made out particularly when the Appellant has undergone only seven days sentence out of six months sentence imposed on him? - HELD THAT:- The Appellant has offered to pay a sum of ₹ 2,50,000/- to Respondent No. 2-wife as compensation. A demand draft drawn in the name of Respondent No. 2 is brought to the Court. As directed by us even litigation costs of ₹ 25,000/- has been deposited by the Appellant in the Court. Respondent No. 2-wife has appeared in this Court on more than one occasion and requested this Court to take compromise into consideration and pass appropriate orders - the trial court had acquitted the Appellant. Though the Sessions Court reversed the order and convicted the Appellant for two years, the High Court reduced the sentence to six months. The Appellant and Respondent No. 2 were married in 2007. About seven years have gone by. Considering all these circumstances, in the interest of peace and amity, the Appellant's sentence must be reduced to sentence already undergone by him.
The conviction of the Appellant Under Section 498-A of the Indian Penal Code and Under Section 4 of the Dowry Act is maintained but the sentence awarded to the Appellant is reduced to sentence already undergone by him, subject to the condition that the Appellant pays a sum of ₹ 2,50,000/- to Respondent No. 2-wife as compensation - Appeal allowed in part.
Taxability of non occupancy charges - contribution to common amenity fund/repairs and welfare fund being the first contribution made by the existing/new member - Principle of mutuality - HELD THAT:- Appeals do not raise any substantial question of law. The findings rendered by the Tribunal are in consonance with the functioning and administration of a cooperative housing society that has been recognized by a Division Bench of this Court and the decision to that effect in Mittal Court Premises Cooperative Housing Society Ltd. V/s. Income Tax Officer [2009 (7) TMI 689 - BOMBAY HIGH COURT] concludes the issue. In the light of this Division Bench order and which has been followed in the cases of Jai Hind Cooperative Housing Society Ltd., Suprabhat Cooperative Housing Society Ltd. that we are of the opinion that the appeals deserves to be dismissed. They are accordingly dismissed
The High Court of Andhra Pradesh dismissed an appeal due to an identical issue previously dismissed in another case. The appeal was dismissed with no order as to costs.
Dishonor of Cheque - rebuttal of presumption u/s 139 of NI Act - whether complainant/respondent No. 2 can be said to be holder of a cheque that is received by him in discharge of any debt or other liability as envisaged under Section 139 of the Negotiable Instruments Act? - HELD THAT:- It is not possible to agree with the submission that presumption under Sec. 139 of the Negotiable Instruments Act, does arise in the case on hand or not, cannot be considered by the Court while exercising of powers under Sec. 482 of Cr.P.C. No absolute rule can be laid down. It depends upon the facts and circumstances of the case. The present case is a illustration of need for interference by this Court and quash the proceedings in exercise the powers under Sec. 482 of Cr.P.C. - it is not possible to say that cheques in the present case is issued in discharge of any liability or debt.
Once it is conceded that facts and circumstance of the case dominates and play decisive role, then it would not be difficult to accept the myth of might of presumption under Sec. 139 of the Act. At least in two ways, presumption becomes vulnerable to an attack by other side. One, fact may makes way for the accused and special facts or peculiar fact of the case may hold back the operation of presumption or in peculiar facts of the case, the Court may look into the material brought on record by the accused in support of his say that cheque is not issued in discharge of any debt or liability. In order to prevent injustice, the Court may look into such material - submission about rigours and all pervasive effect of presumption read with limitation of Court under Sec. 482 of Cr.P.C. is not possible to accept in the circumstances of the case.
Dishonor of Cheque - vicarious liability - Section 138 read with Section 141 of the Negotiable Instruments Act - HELD THAT:- In the instant case, there is a clear attempt on the part of the petitioners herein to escape the clutches of law. It appears, in the proceedings before Madras High Court, the same stand was taken as in the present case. The petitioners pleaded resignation from the post of Director without producing the relevant documents to support the same - in the instant case, when this Court went beyond the submission regarding representation that they have tendered their resignation through their venture capital company, it is clearly seen that there is nothing on record to show that their resignation being tendered and accepted. In a public limited company, whenever a person either appointed as a Director or subsequently tender his resignation, the same would be informed to ROC by filing prescribed form, which would indicate the date on which such appointment is made and the date on which resignation is tendered.
In the instant case, no such document is produced with regard to tendering of resignation prior to 30.07.2009. On the contrary a letter is sought to be produced to demonstrate that the resignation was much earlier to the date of dishonour of cheques. It is seen that an attempt is being made by the petitioners, their employers, namely M/s. ICICI Venture Funds Management Company Limited, in trying to rescue these two petitioners from facing the criminal trial. The documents which are produced does not either support the stand that they are not involved in day today business of the first accused and that their resignation was much prior to the cheques were dishonoured.
This Court find it difficult to accept that the complaint as against them is required to be quashed. In any event, this Court would observe that the petitioners have right to produce all the documents in the trial to be conducted by the learned Magistrate to demonstrate that they were not incharge of the day today affairs of the business and also demonstrate with appropriate documents that as on the date of the dishonour of cheques, they were not on the Board of the Company - Petition dismissed.
Penalty on Customs House Agent - Fraud - penalties under Section 112(a) and/or 112(b) - It was held by High Court that If the importers had misused the facility by obtaining a duplicate license by misrepresentation and fraud, so also, manipulation of documents and with a view to avoid customs duty, then, it cannot be said that the Customs House Agent and its Director were totally innocent or unaware of these acts - HELD THAT:- Special leave petitions are dismissed.
Exemption u/s 11 denied - AO felt that the assessee was engaged in the business of running cafeteria and coffee shop with profit motive - HELD THAT:- The assessee is registered as a charitable institution u/s 12A with the Commissioner of Income tax.
It is not in dispute that the aims and objects of the society are objects of general public utility inasmuch as they attempt to promote better understanding amongst various sections of the society. Establishing communal harmony and better understanding between various sections of the society are purely in the nature of objects of general public utility.
The assessee had generated profit from cafeteria and coffee shop but the fact of the matter is that these facilities were created for the members of the assessee-society. The profit so generated from cafeteria and coffee shop was utilized for achieving the aims and objects of the society. The society had no overall profit in the year under appeal. Profits so generated from cafeteria and coffee shop were ultimately used for achieving aims and objects of the institution. Therefore, such profits generated from a few activities of the institution cannot be used to convert a purely charitable institution into non-charitable institution. The view that we are taking in the matter is supported by the order passed by a Coordinate Bench of this tribunal referred to by the ld. AR for the assessee at the time of hearing. Appeal filed by the Revenue is dismissed.
Disallowance of prior period expenses - difference between the Members - Third member nominated u/s. 255(4) - HELD THAT:- The deductibility of expenses needs to be tested on the touchstone of the principle laid down by the Tribunal in its order for the A.Y. 1995-96 in respect of each item of expenditure claimed under the head 'prior period expenses'. As the Assessing Officer has failed to examine the details of expenses, in my considered opinion, the view taken by the learned J.M. needs to be upheld with a direction to the AO to consider the deductibility of expenses as per the view taken by the Tribunal for A.Y. 1995-96. Therefore, answer the question in negative by holding that the learned CIT(A) was not justified in sustaining the disallowance of prior period expenses. As such agree with the view taken by the learned J.M. in restoring the matter to the file of the Assessing Officer instead of the ld. AM upholding the disallowance.
Disallowance of extra ordinary items - HELD THAT:- As both the learned Members have agreed on the point than there can be no bar on allowing deduction of expenses in respect of a closed business against the income of other businesses, when it is a case of composite business Both the learned Members have also agreed that it was a case of composite business and hence the deductibility of expenses could not be marred by such considerations. It is observed that the Assessing Officer has based the disallowance of expenditure simply on the ground that it was in respect of written off amounts of a closed business and hence not deductible. In view of the above decision of the tribunal, the foundation for the AO's view, does not stand. The AO did not examine the details of such expenses as to whether these were capital or revenue.
Since the stand taken by the Assessing Officer has been rejected by both the learned Members, in my considered opinion, the proper course should be to restore the matter to the file of the Assessing Officer for considering the deductibility or otherwise of such amounts as per law. It is simple and plain that the Appellate Authorities are required to adjudicate upon the orders of the authorities having original jurisdiction which appreciate the material and then decide about the point. Adverting to the facts of the instant case, I find that since the Assessing Officer did not have any occasion to apply his mind from the perspective as discussed above, it would be more appropriate to send the matter back to the file of the Assessing Officer for considering deductibility of expenses or otherwise as per law, instead of taking up the details of such expenses and rendering decision at the Tribunal's end. therefore, agree with the view taken by the learned J.M. on this point and hold that the learned CIT(A) was not justified in confirming the disallowance on account of disallowance of extraordinary items.
Disallowance on account of mine development expenses - HELD THAT:- On perusal of the Tribunal order for A.Y. 1996-97, it is seen that the Tribunal did not delete the disallowance as made by the Assessing Officer but restored the matter to the file of the Assessing Officer for taking a fresh decision in conformity with the directions given by it. As the learned A.M. has also restored the matter to the file of learned CIT(A)/Assessing Officer, I find myself in agreement with the view taken by the learned A.M. in restoring the matter to the authorities below. The obvious reason is that for the immediately preceding two years, the Tribunal has restored the matter and the ld. AM has followed such view. There can be no question of deviating from the opinion expressed by the Tribunal on this issue in earlier years. As the orders of the tribunal for earlier two years have not been modified by the Hon'ble High Court, would prefer to go with the wisdom of the Division bench for the earlier two years.
In the final analysis, we agree with the view taken by the learned A.M. and hold that the learned CIT(A) was not justified in deleting the disallowance on account of mine development expenses.
Addition of welfare expenses u/s. 40A(9) - HELD THAT:- Tribunal for the immediately two preceding assessment years has restored the matter with the necessary direction. It is also seen that such disallowance came up for consideration by the Hon'ble High Court in assessee's own case for A.Y. 1994-95. The Hon'ble High Court also remitted the matter for fresh consideration. In view of the fact, that the Hon'ble High Court for the A.Y. 1994-95 and the Tribunal for the A.Ys. 1996-97 and 1997-98 have sent the matter back the learned A.M. was justified in following the precedents by remitting the matter for fresh decision to be decided in conformity with the view expressed by the Tribunal for immediately two preceding assessment years.
Oppression and Mismanagement - Siphoning of funds - Ownership of 3000 shares with the shareholding in his own name - attachment of 3260 shares by the income tax department - The Petitioner was allotted 10 shares of the Respondent Company in the name of Lt. Col. Sawai Bhawani Singh as per Minutes dated 15.7.1972 and further allotment of 3250 shares in his name as per Minutes dated 17.3.1976. However, 3000 shares were allotted vide the said Minutes dated 17.3.1976 in the name of His Highness Maharaja Sawai Bhawani Singh of Jaipur.
HELD THAT:- The contention of the Petitioner Advocate that the Petitioner held 6260 shares under two different Folios, out of the issued 33260 equity shares is correct to the extent that 3260 shares were owned by the Petitioner in his individual capacity and the balance 3000 shares were held as Karta of HUF. It is also factually true that there are allegations in the Company Petition that the Respondent Company has committed serious acts of Oppression and Mismanagement including dilution of shareholding of the Petitioner and siphoning of funds of the company. But, the Respondents/Applicants Advocate has challenged the maintainability of the aforesaid Company Petition on the ground of law u/s. 399 of the Companies Act, 1956 on the argument that the Petitioner does not fulfill the mandatory provisions of Section 399 of the Companies Act, 1956 to entitle the Petitioner to file the Petition - in terms of Section 159 of the Companies Act, 1956, the Annual Returns are prima facie evidence of any matter stated therein and the Annual Returns clearly show that the Petitioner is the owner/member holding 6260 fully paid shares of Respondent Company under two different folios. In addition, it has also been highlighted that the shares cannot be held in the name of HUF which is not a legal entity.
After perusal of the contentions of the Petitioner Advocate and Respondents Advocate, it is observed that while looking into the maintainability of the Petition, only averments made in the Petition and documents filed by the Petitioners are to be looked into and the same is assumed to be correct and no defense or new facts not alleged in the Petition and the documents could be looked into. In fact, it was in this spirit only when the matter was initially heard on 25.9.2008 and on the same day, status quo as of date in regard to shareholding was allowed against the company. However, at the same time, it does not debar the Respondents to challenge the maintainability by way of moving separate Company Application and hence, the instant Company Application being No. 49/2009 has been filed challenging the maintainability on the ground of suppression of facts and non-fulfillment of the mandatory provisions of Section 399 of the Companies Act, 1956. Therefore, the present Company Application needs to be decided on merits.
3000 shares in the name of His Highness Maharaja Bhawani Singh as Karta of HUF are in the custody of the Receiver appointed by the Supreme Court of India and the Receiver appointed is in the custody of the shares as officer of the Court to determine the entitlement thereto. Under these circumstances, the Petitioner cannot claim that he is entitled to all the 3000 shares of the Respondent Company till the Partition Suit is so decided by the Competent Court in his favour. At the same time, there is no consent/no objection from the Co-parceners of HUF to initiate the present legal proceedings u/s. 397 and 398 of the Companies Act, 1956. At the most, the Petitioner may be entitled to his share in these 3000 shares presently in the name of His Highness Maharaja Bhawani Singh as Karta of HUF only when the Partition Suit is finally disposed of in his favour and based on the said Order, the shares are recorded in the Register of Members in his individual capacity.
In the instant case, the 3260 shares have been attached by the Income Tax Department u/s. 226(3) of the Income Tax Act, and the said shares can be sold in the process of recovery under provisions of Sections 226(ix) and (x) and Sec. 281 of the Income Tax Act, 1961. Therefore, these 3260 shares cannot be considered for the fulfillment of the mandatory requirement u/s. 399 of the Companies Act, 1956. Consequently, the Petitioner has not fulfilled the requirements of Section 399 of the Companies Act, 1956 due to the Partition Suit in respect of 3000 shares held in the name of His Highness Sawai Bhawani Singh and 3260 shares held by the Petitioner in his own name but the said shares have been attached by the Income Tax Department. Thus, due to non compliance of the statutory requirements of Section 399 of the Companies Act, 1956, the Company Petition is not maintainable.
Due to non compliance of the statutory requirements of Section 399 of the Companies Act, 1956, the Company Petition is not maintainable. As such, the present Company Application is hereby allowed and consequently, the Company Petition is dismissed.
Interpretation of statute - Race Club - would fall within the scope of word 'shop', for the purposes of notification issued under Sub-section (5) of Section 1 of the Employees' State Insurance Act, 1948 or not? - whether the judgment in the EMPLOYEES STATE INSURANCE CORPORATION VERSUS HYDERABAD RACE CLUB [2004 (7) TMI 654 - SUPREME COURT] was correct in holding that a 'race-club' is an "establishment" for the purposes of the ESI Act? - HELD THAT:- The matter is referred to three-Judge Bench of this Court as two-Judge Bench of this Court is of the view that the decision of two-Judge Bench of this Court in the case of Employees State Insurance Corporation v. Hyderabad Race Club may require reconsideration. By the aforesaid judgment, it was observed by this Court that 'race-club' is an 'establishment' within the meaning of the said expression as used Under Section 1(5) of the ESI Act.
The ESI Act is a welfare legislation enacted by the Central Government as a consequence of the urgent need for a scheme of health insurance for workers - A 'shop' is a place of business or an establishment where goods are sold for retail. However, it may be noted that the definitions as given in the dictionaries are very old and may not reflect, with complete accuracy, what a shop may be referred as in the present day.
The word 'shop' is not defined either in the ESI Act or in the notification. The ESI Act being a Social Welfare Legislation intended to benefit as far as possible workers belonging to all categories, one has to be liberal in interpreting the words in such a welfare legislation. The definition of a shop which meant a house or building where goods are sold or purchased has now undergone a great change. The word 'shop' occurring in the notification is used in the larger sense than its ordinary meaning. What is now required is a systematic economic or commercial activity and that is sufficient to bring that place within the sphere of a 'shop' - In view of the fact that an 'establishment' has been found to be a place of business and further that a 'shop' is a business establishment, it can be said that a 'shop' is indeed covered under, and may be called a sub-set of, the term 'establishment'.
Whether the activities of a race-club are 'entertainment'? - HELD THAT:- The 'entertainment' is an activity that provides with amusement or gratification. Further, it would include public performances, including games and sports - the said race-clubs also provide the viewers with the facilities to indulge in betting activities, which may even be said to be an integral part of the sport. The race-clubs further even charge a fixed commission on the said betting. "Commission" in common parlance has duly been understood to mean a fixed charge payable to an agent or a broker for providing services for facilitating a transaction.
Whether the Appellant-Turf Clubs fall under the definition of the term 'shop' for the purposes of the ESI Act? - HELD THAT:- The Appellant-Turf Clubs conduct the activity of horse racing, which is an entertainment. The Appellant-Turf Clubs provide various services to the viewers, ranging from providing facilities to enjoy viewer ship of the said entertainment, to the facilitating of betting activities, and that too for a consideration- either in the form of admission fee or as commission. An argument may be advanced that not all persons who come to the race would avail the services as provided by the Appellant-Turf Clubs, however the same would fail as even in the case of a shop in the traditional meaning, that is to say, one where tangible goods are put for sale, a customer may or may not purchase the said goods. What is relevant is that the establishment must only offer the clients or customers with goods or services. In this light, it is found that a race-club, of the nature of the Appellants, would fall under the scope of the term 'shop' and thereby the provisions of the ESI Act would extend upon them by virtue of the respective impugned notifications issued under Sub-section (5) of Section 1 of the ESI Act.
The Appellant-herein would fall within the meaning of the word 'shop' as mentioned in the notification issued under the ESI Act. Therefore, the provisions of the ESI Act would extend to the Appellant also - Appeal disposed off.
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