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2011 (8) TMI 1350
Issues Involved:
1. Condonation of delay in filing an appeal.
2. Credibility of medical certificates submitted by the applicant.
3. Applicant's conduct and suppression of facts.
Summary:
Condonation of Delay in Filing an Appeal:
The applicant sought condonation of a delay of four months and twelve days in filing an appeal against the judgment and order of conviction dated 10.11.2010 by the Judicial Magistrate, First Class, Vasco-Da-Gama, u/s 138 of the Negotiable Instruments Act, 1881. The Assistant Sessions Judge dismissed the application on the ground that no material was placed in support of the delay.
Credibility of Medical Certificates Submitted by the Applicant:
The applicant initially submitted a certificate dated 25.3.2011 from Dr. Shrisha Kumar, claiming treatment from 22.11.2010 and advised rest for five months. Respondent no. 1 pointed out that the applicant was in jail from 23.6.2010 to 13.12.2010, leading to the submission of another certificate dated 18.6.2011. The court found both certificates suspicious and unreliable, noting discrepancies and potential fabrication.
Applicant's Conduct and Suppression of Facts:
The applicant failed to disclose his imprisonment period in the application for condonation of delay. The court found that the applicant had not come with clean hands, had relied on fabricated medical certificates, and had suppressed material facts. The court emphasized that such conduct does not merit discretionary relief u/s 397 read with Section 401 of Cr.P.Code.
Conclusion:
The court dismissed the revision application with costs of Rs. 5000 in favor of respondent no. 1, finding no ground to interfere with the Assistant Sessions Judge's order. The applicant was granted two weeks to surrender to the Judicial Magistrate, First Class, Vasco-Da-Gama, failing which appropriate steps would be taken to enforce the sentence. The amount of Rs. 2,00,000 deposited by the applicant was ordered to be returned to him.
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2011 (8) TMI 1349
Issues Involved:
1. Eligibility of the petitioner Sangham to claim benefits under Section 82 of the Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act, 1987.
2. Validity of the lease in favor of the petitioner Sangham.
3. Determination of whether the petitioner Sangham's members qualify as landless poor persons.
4. Interpretation of the term "landless poor person" under Section 82(2) of the Act of 1987.
5. Applicability of the Andhra Pradesh (Andhra Area) Tenancy Act, 1956 to the lease.
Detailed Analysis:
1. Eligibility of the Petitioner Sangham to Claim Benefits under Section 82 of the Act of 1987:
The petitioner Sangham challenged the proceedings dated 22.01.2005 and the appellate order dated 16.09.2005, which held that the petitioner was not eligible to claim benefits under Section 82 of the Act of 1987. The court directed the fourth respondent to reconsider the application as one submitted individually by its members, determining whether each member fulfilled the requirements of the Explanations to Section 82(2) of the Act of 1987.
2. Validity of the Lease in Favor of the Petitioner Sangham:
The court found that the lease in favor of Sannakaru Rythu Sangham, Peddapuram, was valid and executed in accordance with due procedure. The lease was initially for six years from 1979-80 to 1984-85. The court held that the petitioner Sangham, being the successor-in-interest of the original lessee Sangham, continued as the lawful lessee of the fifth respondent Choultry in respect of these lands, despite the initial lease ending in 1984-85.
3. Determination of Whether the Petitioner Sangham's Members Qualify as Landless Poor Persons:
The court emphasized that the individual members of the petitioner Sangham should be considered for determining whether they fulfilled the requirements of Section 82(2) of the Act of 1987. The authorities were directed to consider the certificates issued by the Mandal Revenue Officer, Peddapuram, and other relevant material to ascertain whether each member qualified as a landless poor person.
4. Interpretation of the Term "Landless Poor Person" under Section 82(2) of the Act of 1987:
The court clarified that the term "landless poor person" should be interpreted to refer to individual farmers who fulfill the stipulated requirements, rather than treating the Sangham as a single unit. The court noted that the legal character of a society registered under the Societies Registration Act, 1860, did not confer it the status of a body corporate, and it should not be treated as a unit for the purpose of applying Section 82(2).
5. Applicability of the Andhra Pradesh (Andhra Area) Tenancy Act, 1956 to the Lease:
The court acknowledged that the Andhra Pradesh (Andhra Area) Tenancy Act, 1956, applied to the subject lease until 1987, and the petitioner Sangham must be deemed to have continued as the lawful lessee of the fifth respondent Choultry. The authorities' finding that there was no lease existing in favor of the petitioner Sangham as of 1987 was deemed incorrect.
Conclusion:
The writ petition was allowed, and the orders dated 22.01.2005 and 16.09.2005 were set aside. The fourth respondent was directed to reconsider the application of the petitioner Sangham's members individually and determine their eligibility for the benefits under Section 82(2) of the Act of 1987. The exercise was to be completed within six months, and the parties were to maintain the status quo during this period.
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2011 (8) TMI 1348
Issues Involved:
1. Jurisdiction of CIT u/s 263 of the Income Tax Act.
2. Allowability of depreciation on toll road.
3. Under-assessment of interest income from fixed deposits.
4. Deduction of interest paid on late deposit of TDS.
5. Discrepancy in addition to fixed assets.
Summary:
1. Jurisdiction of CIT u/s 263 of the Income Tax Act:
The appeal challenges the jurisdiction of the CIT to pass an order u/s 263, holding the assessment made by the AO as erroneous and prejudicial to the interest of the revenue. The CIT noted that the AO allowed depreciation on a toll road owned by the government without examination, leading to the issuance of a show cause notice.
2. Allowability of Depreciation on Toll Road:
The assessee argued that depreciation was claimed on the road constructed on a Build, Operate, and Transfer (BOT) basis and referred to various Tribunal decisions supporting the claim. However, the CIT observed that the AO did not discuss the issue in the assessment order nor raised any queries, indicating a lack of examination. The Tribunal upheld the CIT's view, stating that the AO's order was passed mechanically without necessary examination, making it erroneous and prejudicial to the revenue.
3. Under-assessment of Interest Income from Fixed Deposits:
The CIT identified an under-assessment of income due to a discrepancy between the interest credited in the P&L account and the TDS certificate issued by Punjab National Bank. The assessee contended that the interest was offered to tax in the subsequent year. However, the Tribunal agreed with the CIT, noting that the interest income should be taxed in the year it accrued as per the mercantile system, and the AO's failure to do so was prejudicial to the revenue.
4. Deduction of Interest Paid on Late Deposit of TDS:
The assessee claimed a deduction for interest paid on the late deposit of TDS, which the AO allowed without examination. The CIT held that such interest is penal in nature and not allowable as a deduction. The Tribunal upheld this view, stating that the interest on TDS is akin to tax, which is not deductible, making the AO's allowance erroneous and prejudicial to the revenue.
5. Discrepancy in Addition to Fixed Assets:
The CIT noted a discrepancy in the addition to vehicles between the schedule of fixed assets and the details filed by the assessee. The AO did not examine this discrepancy, leading to the CIT's conclusion that the assessment was erroneous and prejudicial to the revenue. The Tribunal agreed, emphasizing the need for necessary examination by the AO.
Conclusion:
The Tribunal upheld the CIT's exercise of jurisdiction u/s 263, affirming that the AO's order was erroneous and prejudicial to the interest of the revenue. The appeal of the assessee was dismissed.
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2011 (8) TMI 1347
1. ISSUES PRESENTED and CONSIDERED The judgment primarily addresses the following legal issues: - Whether the repeated filing of anticipatory bail applications by the Petitioners constitutes an abuse of the process of law.
- Whether the Petitioners are entitled to anticipatory bail under the circumstances of the case.
- Whether the Petitioners' conduct in filing multiple bail applications without a change in circumstances warrants the imposition of costs.
- Whether the criminal proceedings against the Petitioners should be considered a civil dispute, thus affecting the applicability of criminal law.
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Abuse of Process of Law - Relevant Legal Framework and Precedents: The court refers to the practice of filing successive bail applications and the requirement for a change in circumstances to justify such filings.
- Court's Interpretation and Reasoning: The court finds that the Petitioners have engaged in "forum shopping" and "bench hopping," which is a gross abuse of the process of law.
- Key Evidence and Findings: The Petitioners filed eight anticipatory bail applications without any change in circumstances, indicating a misuse of legal processes.
- Application of Law to Facts: The court applies the principle that successive bail applications require a change in circumstances, which was absent in this case.
- Treatment of Competing Arguments: The Petitioners argued that their case was essentially a civil dispute, but the court rejected this as a frivolous and belated plea.
- Conclusions: The court concludes that the Petitioners' actions constitute an abuse of the process of law, warranting sanctions.
Issue 2: Entitlement to Anticipatory Bail - Relevant Legal Framework and Precedents: Section 438 of the Code of Criminal Procedure governs the grant of anticipatory bail.
- Court's Interpretation and Reasoning: The court emphasizes that anticipatory bail is not meant for individuals who manipulate legal processes.
- Key Evidence and Findings: The Petitioners' repeated attempts to secure bail without any new developments in their case demonstrate a lack of merit.
- Application of Law to Facts: The court applies the criteria for anticipatory bail and finds that the Petitioners do not meet the requirements.
- Treatment of Competing Arguments: The Petitioners' claim that the criminal law is being used oppressively is dismissed as unfounded.
- Conclusions: The court denies anticipatory bail, finding no justification for its grant under the circumstances.
Issue 3: Imposition of Costs - Relevant Legal Framework and Precedents: The court considers the imposition of costs as a sanction for abuse of legal processes.
- Court's Interpretation and Reasoning: The court determines that imposing costs is appropriate to deter frivolous litigation and misuse of court time.
- Key Evidence and Findings: The Petitioners' conduct in repeatedly filing bail applications without new grounds justifies the imposition of costs.
- Application of Law to Facts: The court applies its discretion to impose a cost of Rs. 1,00,000 on each Petitioner.
- Treatment of Competing Arguments: The Petitioners' arguments against costs are not addressed directly, as their conduct speaks for itself.
- Conclusions: Costs are imposed to sanction the Petitioners for their misuse of legal processes.
Issue 4: Nature of Dispute - Relevant Legal Framework and Precedents: The distinction between civil and criminal disputes is considered.
- Court's Interpretation and Reasoning: The court finds that the Petitioners' attempt to characterize the dispute as civil is a tactic to evade criminal liability.
- Key Evidence and Findings: The facts of the case, including the allegations of cheating, support the criminal nature of the proceedings.
- Application of Law to Facts: The court applies the relevant legal principles to affirm the criminal nature of the case.
- Treatment of Competing Arguments: The Petitioners' argument that the dispute is civil is rejected as a desperate attempt to avoid criminal proceedings.
- Conclusions: The court concludes that the criminal proceedings are justified and should not be quashed.
3. SIGNIFICANT HOLDINGS - Preserve verbatim quotes of crucial legal reasoning: "The conduct as well as the modes adopted by the Petitioners is nothing but gross abuse of the processes of law."
- Core principles established: Successive bail applications require a change in circumstances; misuse of legal processes warrants sanctions.
- Final determinations on each issue: The court denies anticipatory bail, imposes costs on the Petitioners, and affirms the criminal nature of the proceedings.
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2011 (8) TMI 1346
Issues Involved:
1. Treatment of investment in land as undisclosed income.
2. Treatment of salary and commission of business income as undisclosed income.
3. Treatment of physical cash found during the search as undisclosed income.
4. Treatment of deficit/surplus stock as undisclosed income.
5. Treatment of unaccounted payment to M/s Laxmi Narasimha Pictures.
6. Treatment of unexplained payment made to M/s Jet Speed.
Summary:
1. Treatment of investment in land as undisclosed income:
During the search, evidence suggested an unexplained investment of Rs. 2.5 lakhs in property at D. No. 21-1-854 Rikabgunj, Hyderabad. The Assessee admitted that the investment was not reflected in the books of accounts and requested telescoping against undisclosed sales admitted by other concerns. The Assessing Officer rejected this request, noting that the investment was made in the previous year relevant to assessment year 2001-02 and the income from suppression of sales belonged to other group members. The Tribunal directed the Assessing Officer to telescope the undisclosed investment out of the undisclosed income determined, avoiding double addition. The issue was set aside for fresh consideration and partly allowed.
2. Treatment of salary and commission of business income as undisclosed income:
The Assessee argued that salary and commission income, subject to tax deduction at source, should not be treated as undisclosed income. However, the Tribunal found that no such ground was raised before the CIT(A) or the Tribunal, dismissing the arguments as misplaced.
3. Treatment of physical cash found during the search as undisclosed income:
The Assessing Officer added 50% of the cash found in the Assessee's bedroom, totaling Rs. 3,66,199/-, as undisclosed income. The Assessee's explanation regarding the source of cash was rejected due to inconsistencies and lack of evidence. The Tribunal directed the Assessing Officer to give due credit to the available cash balance in the books of accounts and telescope the unexplained cash out of the undisclosed income determined during the block period. The issue was set aside for reconsideration.
4. Treatment of deficit/surplus stock as undisclosed income:
On physical verification during the search, deficit/surplus stock was found. The Assessee claimed inter-concern transfer of cassettes and CDs, which was rejected by the lower authorities. The Tribunal directed the Assessing Officer to arrive at a cumulative net surplus or deficit stock and treat it as undisclosed income in the respective Assessees' hands. The issue was remitted back for fresh consideration and partly allowed.
5. Treatment of unaccounted payment to M/s Laxmi Narasimha Pictures:
Evidence indicated an unaccounted payment of Rs. 4,50,000/- towards purchase of assignment charges of a Telugu film. The Assessee sought telescoping of this payment against undisclosed sales admitted in other group concerns. The Tribunal directed the Assessing Officer to set off this unexplained expenditure out of undisclosed income during the block period. If no undisclosed income existed, the unexplained expenditure should be treated as undisclosed income separately. The issue was set aside for fresh consideration.
6. Treatment of unexplained payment made to M/s Jet Speed:
The Assessing Officer rejected the Assessee's explanation regarding a payment of Rs. 6,72,180/- to Jet Speed Audio Limited, citing lack of confirmation and proper source explanation. The Tribunal found no force in the Assessee's argument about payments on behalf of other parties but agreed to telescope the payment out of undisclosed income. The issue was set aside for fresh consideration.
Conclusion:
All the appeals of the Assessees were partly allowed for statistical purposes. The order was pronounced in open Court on 11.8.2011.
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2011 (8) TMI 1345
Issues Involved:
1. Deletion of disallowance of scheme expenses.
2. Deletion of disallowance on account of leave encashment.
Summary:
Issue 1: Deletion of disallowance of scheme expenses of Rs. 8,32,75,381/-
The assessee company, engaged in asset management for Tata Mutual Fund, claimed scheme-related expenses totaling Rs. 8,32,75,381/- under marketing, advertisement, brokerage, and incentives. The Assessing Officer disallowed these expenses, stating that the department had not accepted the Tribunal's decisions cited by the assessee. On appeal, the CIT(A) deleted the disallowance, noting that no reasons were provided by the Assessing Officer, similar expenses were allowed in previous years, and the assessee provided detailed justification. The Tribunal upheld the CIT(A)'s decision, referencing consistent Tribunal rulings that such expenses are allowable u/s 37(1) of the Act, as they are incurred under a contractual obligation for mutual fund promotion.
Issue 2: Deletion of disallowance of Rs. 4,06,140/- on account of leave encashment
The assessee claimed a deduction for leave encashment of Rs. 4,06,140/- via a letter, which was disallowed by the Assessing Officer for not being claimed in the original or revised return, citing the Supreme Court decision in Goetze (India) Ltd. On appeal, the CIT(A) allowed the deduction, emphasizing its legal admissibility u/s 43B, the CBDT Circular advising against exploiting assessee's ignorance, and the equity principle since the assessee had offered additional income of Rs. 5.25 crores. The Tribunal, referencing multiple decisions and CBDT Circulars, held that the legal claim should be allowed, and remanded the matter to the Assessing Officer for fresh consideration, ensuring the assessee is given a reasonable opportunity to be heard.
Conclusion:
The Tribunal upheld the CIT(A)'s deletion of the scheme expenses disallowance and remanded the leave encashment issue to the Assessing Officer for reconsideration, thus partly allowing the Revenue's appeal for statistical purposes.
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2011 (8) TMI 1343
Corporate Membership fee CSR Expenditure Deduction u/s 37(1) - Membership fee was not allowed as deduction by AO - HELD THAT:- Following the decision in the case of, OTIS ELEVATOR COMPANY (INDIA) LIMITED VERSUS COMMISSIONER OF INCOME-TAX [1991 (4) TMI 53 - BOMBAY HIGH COURT], we are of the opinion that membership in clubs are taken with the expectation that it would enable the officers of assessee to meet persons in high social status which would result to the growth of the business of the assessee. The expenditure can be said to have been incurred is wholly and exclusively for the purpose of his profession and hence allowable u/s 37(1) - Decision in favour of Assessee.
Undervaluation of closing stock - The AO made an addition to closing stock on the ground that the method followed by the assessee is not as per accounting principles and that date wise details of purchases and consumption of stock have not been furnished - HELD THAT:- . As per the provisions of sec 145A, the value of purchase tax has to be taken into account while valuing the closing stock, but at the same time, as held by the jurisdictional, High Court In the case of COMMISSIONER OF INCOME-TAX VERSUS MAHALAXMI GLASS WORKS P. LTD. [2009 (4) TMI 182 - BOMBAY HIGH COURT], the opening stock valuation should be correspondingly adjusted. Therefore, we restore the matter back to AO to reconsider the facts as per the decision of HC - Matter restored back.
Uninterrupted Power Supply system - Part of Computer System or not? - Ld. CIT(A) said that uninterrupted Power Supply system cannot be considered as part of the computer system and concluded they are not entitled to the rate of depreciation applicable to computer - HELD THAT:- No doubt the UPS can be used for other purposes, in the present case they constitute an essential part of the computer system. The UPS is necessary for the computers to function smoothly and without interruption.
The Delhi Tribunal in the case of DEPUTY COMMISSIONER OF INCOME-TAX VERSUS ORIENT CERAMICS AND INDUSTRIES LTD. [2010 (2) TMI 984 - ITAT DELHI], has held that UPS is an integral part of the computer and hence is entitled to the rate of depreciation applicable to computers. In following the ratio of the decision of the Delhi Tribunal we uphold the claim of the assessee on this issue - Decision in favour of Assessee.
Depreciation on Plant and Machinery - CIT(A) restricted depreciation to half the year stating that assessee has appended certificates from the Plant Managers, but he should have produced further material in the nature of evidence of production for allowance of depreciation for the full year - HELD THAT:- we are inclined to accept the submissions of the assessee that the Machinery in question were put to use prior to 30.9.2003. The certificates of installation issued by Plant Manager Cannot be ignored. The invoice for purchase were much prior to 30.9.2003 and it appears that only the capitalization entry was passed on 30.9.03. We uphold the claim of the assessee, for depreciation on the assets at the full rate.
Computation of Book Profit u/s 115JB - CIT confirmed the taxation of profit on sale of undertaking and profit on sale of fixed assets while computing book profits u/s. 115JB -HELD THAT:- We find that the decision in the case of RAIN COMMODITIES LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-3(1), HYDERABAD [2010 (7) TMI 794 - ITAT HYDERABAD] is against the assessee, whatever amount that have been credited to the Profit and Loss account will have to be taken into account in determining the Book profits u/s 115JB and only adjustments permitted are as per Explanation to the section 115 JB - Decision against Assessee.
Diminution in Investments - Provision for loans and Advances - Computation of book profit u/s 115JB - CIT confirmed the taxation of provision for diminution in investments and provision for loans and advances written book while computing book profit u/s 115JB- HELD THAT;- We find that the Ld. CIT(A) has not considered the provision of Explanation (i) to Sec 115 JB. Under that explanation any amount withdrawn from a reserve or provision has to be excluded in computing the Book Profits u/s 115JB. The amount withdrawn can be excluded only if in the year in which Reserve was created or provision made the book profits were increased by the amount of Reserves/ Provisions. However, in this case the provisions were created in the earlier financial year 2002-03. - Matter restored back to AO.
Levy of interest u/s 234B - CIT confirmed the levy of interest u/s 234B when the liability of the appellant arose only u/s 115JB(MAT) - HELD THAT:- Following the decision of JTC. IT., MUMBAI VERSUS M/S ROLTA INDIA LTD. [2011 (1) TMI 5 - SUPREME COURT], where it was held that, the pre-requisite condition for applicability of section 234B is that the assessee is liable to pay tax u/s 208 and the expression "assessed tax" is defined to mean the tax on the total income determined under section 143(1) or under section 143(3) as reduced by the amount of tax deducted or collected at source. Thus, there is no exclusion of section 115J / 115JA in the levy of interest under section 234B - Decision against assessee.
Payment to Scientific institutions as Business Expenditure - AO allowed payments made to various scientific institutes as a business expenditure by admitting additional evidence in violation of Rule 46A - HELD THAT:- The issue is remitted back to the Assessing Officer for verification of the additional evidence filed by the assessee before the Ld. CIT(A) and if found in order allow the claim of the assessee.
Expenditure incurred in installation -CIT held that fees paid to agency which installed and implemented SAP software to be part and parcel of the acquisition of software itself and thereby allowing 60% depreciation on the same - HELD THAT:- Expenditure incurred in installation/commissioning an asset should be considered as part of cost of acquisition of asset and depreciation allowed thereon. The Ld. CIT(A) had correctly allowed depreciation at 60% on the expenditure on installation treating it as part of cost of acquisition of software.
Business Disallowance u/s 40A(9) - CIT deleted the disallowance of some amount considering them as Staff and sports welfare expenses - HELD THAT:- Following the decision of High Court in the case of COMMISSIONER OF INCOME TAX. VERSUS BHARAT PETROLEUM CORPORATION LTD. [2001 (3) TMI 20 - BOMBAY HIGH COURT], where it was held that such expenditure can't be covered under Section 40A(9), revenue ground was dismissed.
Utilization of CENVAT Credit - CIT deleted the addition made to the total income of the assessee on account of CENVAT credit was obtained during the amalgamation. This CENVAT credit balance was treated as an opening CENVAT credit balance in the books of the assessee post merger - HELD THAT:- As held by CIT(A), as a result of grossing up u/s. 145A, there is an increase in the closing stock for A.Y. 2003-04 - This increase in closing stock has resulted in increase in the opening stock for the current A.Y. which has been brought out by the Tax Auditor. The increase in opening stock consequent to increase in closing stock in the previous year does not result in any reduction in the income. The Auditor has also clarified in the Tax Audit report that consequent to the application of Sec. 145A there is no impact on the profit before taxation. We confirm the finding of the Ld. CIT(A) that the utilization of CENVAT credit is completely revenue neutral and does not call for addition to the profit and loss account - Revenue Appeal Dismissed.
Contribution Towards the Brand Equity and Business Promotion Scheme - AO stated that the company has made huge business losses and since there is no profit before tax the brand equity payment was disallowed by him - HELD THAT:- We find that the issue is covered by the decision in the case of HARRISONS MALAYALAM LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), ERNAKULAM [2007 (5) TMI 372 - ITAT COCHIN], where such expenditure was allowed u/s 37(i) - Respectfully following the ratio of the decision in the case of Harrisons Malayalam (supra) we dismiss the revenue’s appeal.
Disallowance for Brokerage Paid -The assessee submitted that the AO has disallowed certain payments made as brokerage by relying on conjectures and surmises which are unjustified in fact and in law - HELD THAT:- The Ld. CIT(A) observed that the debit notes raised indicates the nature of work done. He further observed that the rate of brokerage charged is reasonable and the market reality is such that loans and borrowing cannot be obtained without brokerage expenses.
We find that the Ld. CIT(A) was correct in holding that the payments have been made for services rendered to the assessee and due to commercial expediency hence allowable as a deduction in the hands of the assessee. This ground of the Revenue is dismissed.
Bad Debts written off when not proved as actually bad - Revenue raised that CIT(A) has erred in deleting the Bad debts when the assessee has not proved them to be actually bad - HELD THAT:- We find that the issue is covered by the decision of Hon’ble Supreme Court in the case of TRF. LTD. VERSUS COMMISSIONER OF INCOME-TAX [2010 (2) TMI 211 - SUPREME COURT], wherein it has been held that, this position in law is well-settled. After 1st April, 1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. In the instant case there is no controversy about the write off, therefore we respectfully follow the decision of SC.
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2011 (8) TMI 1342
Issues Involved:
1. Whether the judgment and decree of a competent Civil Court can be declared null and void in collateral proceedings, specifically criminal proceedings.
2. Whether the criminal complaint filed by the Respondent No. 2 u/s 12 of the Protection of Women from Domestic Violence Act, 2005 is maintainable.
3. Whether the High Court erred in rejecting the application of the Appellant u/s 482 of the Code of Criminal Procedure for quashing the complaint.
Summary:
Issue 1: Nullity of Civil Court Judgment in Collateral Proceedings
The Supreme Court emphasized that even if a decree is void ab initio, the declaration to that effect must be obtained from the competent court and cannot be declared void in collateral proceedings. The court cited precedents such as *State of Kerala v. M.K. Kunhikannan Nambiar Manjeri Manikoth, Naduvil (dead)* and *Tayabbhai M. Bagasarwalla and Anr. v. Hind Rubber Industries Pvt. Ltd.*, affirming that a void order requires setting aside by a competent court. The court held that Respondent No. 2, having been a party to the alleged fraud, cannot seek equitable relief due to the legal maxim "allegans suam turpetudinem non est audients."
Issue 2: Maintainability of Criminal Complaint
The court noted that the reliefs sought in the complaint, such as custody of the minor child, right of residence, and restoration of dowry articles, cannot be granted by the criminal court while the judgment and decree of the Civil Court subsist. The court referred to the legal principle that fraud unravels everything but reiterated that the appropriate forum must set aside such orders. The court also highlighted that Respondent No. 2's complaint involved her own admission of being an accomplice to the alleged fraud, making her disentitled to any equitable relief.
Issue 3: High Court's Rejection of Application u/s 482 CrPC
The Supreme Court found that the High Court erred in rejecting the application of the Appellant u/s 482 CrPC. The court held that permitting the Magistrate to proceed with the complaint under the Act 2005 would be incompatible with the subsisting decree of divorce and amount to an abuse of the process of the court. The court emphasized that the complaint's contents must be taken at face value, but in this case, allowing the proceedings would be a travesty of justice.
Conclusion:
The appeal was allowed, and the impugned judgment and order dated 9.8.2010 were set aside. The petition filed by the Appellant u/s 482 CrPC was allowed, and Complaint No. 87/02/09 pending before the Magistrate, Jalandhar, along with all orders passed therein, were quashed. The court clarified that Respondent No. 2 could continue with her other cases, and the concerned court may proceed in accordance with the law without being influenced by the observations made in this judgment.
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2011 (8) TMI 1341
Penalty u/s 271(1)(c) - Excess stock of gold ornaments and silver ornaments was found in business premises of Assessee - AO imposed penalty u/s 271(1)(c) on the amount comprising disallowance of remuneration to partners on account of treatment of the amount disclosed on account of excess stock u/s 69B of the Act and the amount added u/s 68.
HELD THAT:- In the assessee's own case, CHOKSHI HIRALAL MAGANLAL VERSUS DY. CIT [2011 (1) TMI 125 - ITAT, AHMEDABAD], tribunal have accepted the claim of the assessee that excess stock has to be treated as business income, entitled to deduction of a higher amount of remuneration to partners in terms of provisions of section 40(b) of the Act. As regards the amount added u/s 68, the matter has been restored to the file of the AO for fresh decision in accordance with law.
Hon'ble Supreme Court in the case of, KC BUILDERS AND ANOTHER VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX [2004 (1) TMI 7 - SUPREME COURT], held that ordinarily, penalty cannot stand if the assessment itself is set aside. Where an order of assessment or reassessment on the basis of which penalty has been levied on the assessee, has itself been finally set aside or cancelled by the Tribunal or otherwise, the penalty cannot stand by itself and the same is liable to be cancelled.
Hon'ble Delhi HC, in the case of R DALMIA AND OTHERS (A. OP) VERSUS COMMISSIONER OF INCOME-TAX [1991 (10) TMI 35 - DELHI HIGH COURT], held that no penalty survives after deletion of additions, forming the basis for the levy of penalty.
Since the very basis upon which the penalty has been imposed on the amount relating to excess stock added u/s 69B and consequently, denial of deduction on account of remuneration to partners in terms of provisions of section 40(b) of the Act, does not exist in view of the aforesaid order, we are of the opinion that penalty levied in relation to the said amount has to be cancelled. As regards penalty levied in relation to amount added u/s 68, since matter is restored to the file of the AO, penalty does not survive at this stage. However, the AO is free to initiate the penalty proceedings in accordance with law while completing the assessment in pursuance to the aforesaid directions of the ITAT in quantum appeal - Matter restored back.
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2011 (8) TMI 1340
Issues Involved:
1. Justification of share premium charged by the assessee.
2. Application of Section 68 of the Income Tax Act, 1961, to the share premium amount.
3. Assessment of the identity, capacity, and genuineness of the shareholders.
Issue-wise Detailed Analysis:
1. Justification of Share Premium Charged:
The primary issue was whether the Commissioner (Appeals) was justified in deleting the addition of Rs. 2,53,35,000 made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961, as unexplained cash credits. The AO had questioned the justification of the share premium charged by the assessee, arguing that the valuation methods used were not appropriate and that the premium was excessive. The AO did not agree with the method of valuation and valuation reports provided by the assessee, which included methods like the discounted cash flow method.
2. Application of Section 68 of the Income Tax Act, 1961, to the Share Premium Amount:
The AO treated the amount of Rs. 2,53,35,000 as unexplained cash credit under Section 68, citing that the excessive share premium was not justified. However, the Commissioner (Appeals) held that the identity, capacity, and genuineness of the transactions were explained and that the AO had accepted a part of the transactions (face value of shares) while treating the premium as unexplained. The Tribunal noted that the AO had no grounds to dispute the valuation done by an expert and that the addition under Section 68 was bad in law. The Tribunal emphasized that the AO cannot impose his decision on the valuation of shares, which is a specialized and technical subject.
3. Assessment of the Identity, Capacity, and Genuineness of the Shareholders:
The Tribunal observed that the assessee had furnished sufficient documentary evidence to establish the identity, capacity, and genuineness of the shareholders. The AO had accepted the identity and genuineness of the shareholders to the extent of the face value of the shares but doubted the premium. The Tribunal held that the AO's action of treating the share premium as unexplained while accepting the share capital was legally incorrect. The Tribunal cited several case laws, including CIT v/s Steller Investment Ltd. and CIT v/s Lovely Exports P. Ltd., to support the view that if the identity of the shareholders is proved, no addition can be made under Section 68.
Conclusion:
The Tribunal upheld the order of the Commissioner (Appeals), stating that the addition of Rs. 2,53,35,000 under Section 68 was not warranted. The Tribunal emphasized that the share premium is a capital receipt and cannot be brought to tax under Section 68. The appeal by the Revenue was dismissed.
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2011 (8) TMI 1339
Issues involved: Extension of mining ban to Districts Tumkur and Chitradurga, determination of quantity of iron ore to be released from existing stock, survey and demarcation of mining leases, appointment of government agency for sale of stock, extension of environmental study to Districts Tumkur and Chitradurga.
Extension of Mining Ban to Districts Tumkur and Chitradurga:
The Supreme Court extended the mining ban to Districts Tumkur and Chitradurga based on the Report of Central Empowered Committee (&39;CEC&39;). The ban was imposed pending further orders to address the issue of iron ore extraction and its impact on the Steel Industry.
Determination of Quantity of Iron Ore to be Released:
The Court sought inputs from various stakeholders, including the learned Amicus Curiae, learned Attorney General, lessees, Association of Steel Industry, and other affected parties, to determine the quantity of iron ore that could be released from the existing stock of 25 million tonnes. This determination was subject to the submission of reclamation and rehabilitation plans.
Survey and Demarcation of Mining Leases:
The Court directed the Joint Team to carry out a survey and demarcation of mining leases in Districts Bellary, Tumkur, and Chitradurga. This order was extended to all the mining leases in these districts to ensure proper oversight and compliance with regulations.
Appointment of Government Agency for Sale of Stock:
On the next hearing date, the CEC was required to furnish the name of the Government Agency responsible for effecting sales of the existing stock of iron ore. This agency would also be tasked with keeping accounts of the sale proceeds, including royalty payable at the rate of ten percent of the market price.
Extension of Environmental Study to Districts Tumkur and Chitradurga:
The Court extended its previous order directing the Indian Council of Forestry Research and Education (ICFRE) to undertake a macro-level Environmental Impact Assessment (EIA) study in District Bellary to now include Districts Tumkur and Chitradurga. This extension aimed to ensure comprehensive environmental evaluation and the submission of reclamation and rehabilitation plans for these districts.
The matter was scheduled to be placed before the Court on 16th September 2011 for further proceedings and compliance with the directives issued.
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2011 (8) TMI 1338
Issues involved: Assessment of expenses as business loss u/s.143(3) for AY 2004-05 and disallowance of expenses for AY 2006-07.
Assessment Year 2004-05:
The appellant, a wholly owned Company of a foreign Company, claimed expenses disallowed by the Assessing Officer as "income from other sources" instead of business expenses. The appellant argued that all expenses were for business activities and should be considered as business loss. The ITAT found in favor of the appellant, stating that the Assessing Officer's interpretation was faulty and biased, directing confirmation of the loss as a business loss.
Assessment Year 2006-07:
The Assessing Officer disallowed various expenses without basis, including travelling, conveyance, legal and professional charges, and depreciation on assets. The ITAT held that the disallowances were based on misinterpretation of facts and directed the Assessing Officer to delete the disallowances, as the expenses were indeed incurred for the business of the assessee. The appeals for both assessment years were allowed by the ITAT.
This judgment by the Appellate Tribunal ITAT CUTTACK addressed the issues of assessing expenses as business loss for AY 2004-05 and disallowance of expenses for AY 2006-07. The ITAT found in favor of the assessee in both cases, emphasizing that all expenses were incurred for business purposes and should be allowed as business loss, overturning the decisions of the lower authorities.
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2011 (8) TMI 1337
Issues involved: Appeal against rejection of registration under sec.12AA of the Income-tax Act, 1961.
Summary:
The appeal was filed by the assessee against the order of the Commissioner of Income-tax rejecting the application for registration under sec.12AA. The trust was constituted in 1986, and the registration application was filed after a delay of 19 years, 9 months, and 10 days. The Commissioner granted registration with effect from 1st April, 2007, but not retrospectively. The assessee explained that the delay was due to the trustees being senior citizens working on an honorary basis in a far-flung area, engaged in charitable activities like conducting seminars and publishing articles. The Commissioner granted registration from 1st April, 2007, but not retrospectively. The Tribunal found that the delay was reasonable considering the circumstances and directed the Commissioner to grant registration retrospectively under sec.12AA.
The Tribunal noted that there was no dispute regarding the charitable nature of the activities carried out by the trust. While the Commissioner granted registration from 1st April, 2007, he did not do so retrospectively due to the reasons explained by the assessee for the delay. The Tribunal considered the fact that the trust had been engaged in charitable activities since 1986 and that the delay was not intentional but due to genuine reasons related to the trustees being senior citizens working on an honorary basis in a remote area. The Tribunal found that the delay of 19 years, though significant, was justified in the circumstances and directed the retrospective grant of registration under sec.12AA.
Therefore, the Tribunal allowed the appeal filed by the assessee and directed the Commissioner of Income-tax to grant registration retrospectively under sec.12AA of the Income-tax Act, 1961.
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2011 (8) TMI 1336
Issues Involved:
1. Disallowance u/s 40(a)(ia) for non-deduction of TDS from payments to subcontractors.
2. Treatment of interest income on FDRs and bank accounts as business income or income from other sources.
For the first issue, the assessee appealed against the disallowance of Rs. 1,01,50,000 u/s 40(a)(ia) for not deducting TDS from payments to subcontractors. The AO disallowed the amount as TDS was not paid by the due date. The assessee argued that the amendment in Section 40(a)(ia) by the Finance Act 2008 and 2010 allowed for deduction if TDS was paid before the due date of filing return. The CIT(A) rejected the contention, stating that TDS should have been deposited before the end of the previous year for deduction. The ITAT held that the amendment was curative and the TDS was paid within the statutory period, thus disallowance was not justified.
Regarding the second issue, the assessee challenged the treatment of interest income on FDRs and bank accounts as income from other sources. The AO had taxed the interest receipts twice, once under business income and again under income from other sources. The ITAT examined the details of interest received and concluded that interest on FDRs pledged as earnest money against performance guarantee should be considered as business income and set off against deduction of interest. The interest from the bank account for temporary funds was also deemed as business income. Therefore, the addition of Rs. 7,55,721 was deleted.
In conclusion, the ITAT Jaipur bench allowed the appeal of the assessee, ruling in favor of both issues.
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2011 (8) TMI 1335
Issues Involved:
1. Deletion of Gross Profit addition on unaccounted sales turnover.
2. Reliance on materials gathered during the search by the Central Excise Department.
3. Direction to adopt turnover as per the de novo order of the Central Excise Department.
4. Deletion of addition made under Section 40A(3) of the Income Tax Act.
Detailed Analysis:
1. Deletion of Gross Profit Addition on Unaccounted Sales Turnover:
The Revenue contested the deletion of Gross Profit addition of Rs. 1,69,22,954/- on unaccounted sales turnover by the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) relied on the de novo order passed by the Central Excise Department in compliance with the directions of the Central Excise Appellate Tribunal (CESTAT). The Tribunal noted that the CIT(A) correctly relied on the de novo order, which found the evidence from the Central Excise Department unreliable. The Tribunal affirmed that the Assessing Officer (AO) did not conduct independent inquiries and solely relied on the show cause notice, which was not sufficient for making the addition.
2. Reliance on Materials Gathered During the Search by the Central Excise Department:
The Revenue argued that the CIT(A) erred by disregarding the evidentiary value of the materials gathered during the search by the Central Excise Department. The Tribunal observed that the CESTAT had already found the evidence unreliable, and the AO did not conduct any independent verification. The Tribunal emphasized that findings from another department cannot be incorporated without independent inquiry, as per the Madras High Court's decision in CIT vs. Vignesh Kumar Jewellers (222 CTR 79).
3. Direction to Adopt Turnover as per the De Novo Order of the Central Excise Department:
The CIT(A) directed the AO to adopt the turnover as per the de novo order of the Central Excise Department. The Tribunal upheld this direction, noting that the turnover determined by the Central Excise Department should be treated as unaccounted turnover for the respective years. The Tribunal affirmed the CIT(A)'s approach of determining the Gross Profit on this turnover and adding it to the returned income, deducting power and labor charges accordingly.
4. Deletion of Addition Made Under Section 40A(3) of the Income Tax Act:
The Revenue challenged the deletion of the addition made under Section 40A(3) for estimated unaccounted purchases. The Tribunal noted that the quantum of purchases was based on the unreliable show cause notice. Citing the Madras High Court's decision in CIT vs. Mohammed Dhurabudeen (4 DTR 218), the Tribunal held that when income is computed by applying the Gross Profit rate, there is no need to scrutinize the purchases separately under Section 40A(3). Consequently, the Tribunal affirmed the CIT(A)'s deletion of the disallowance under Section 40A(3).
Conclusion:
The Tribunal dismissed all four appeals of the Revenue, affirming the CIT(A)'s findings. The Tribunal concluded that the additions made by the AO, based on unreliable evidence from the Central Excise Department, could not be sustained. The Tribunal upheld the CIT(A)'s reliance on the de novo order and the deletion of additions under Section 40A(3). The Tribunal emphasized the necessity of independent inquiries by the AO and the inadmissibility of relying solely on findings from another department without corroborative evidence.
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2011 (8) TMI 1334
Issues Involved:
1. Classification of income from short-term deposits: Business income vs. Income from other sources.
2. Allowability of pre-commencement expenditure as business expenditure.
Detailed Analysis:
Issue 1: Classification of Income from Short-term Deposits
The primary issue was whether the interest derived from borrowed funds invested in short-term deposits should be classified under "income from other sources" or "income from business."
- Background: The assessee, a public limited company, was incorporated to set up iron and steel manufacturing facilities. It mobilized funds through share capital and debentures, which were parked in short-term deposits until utilized for the project.
- Assessing Authority's Stand: The interest earned from these deposits was considered as "income from other sources," arguing that the funds were not utilized for the company's main business activities, which had not yet commenced.
- Tribunal's Stand: The Tribunal held that since the company was authorized to carry on multiple businesses, including lending and bill discounting, and had commenced these activities, the income should be classified as "business income."
- High Court's Analysis: The High Court examined the company's Memorandum of Association, which included lending and bill discounting as part of its authorized activities. It concluded that once the company commenced any authorized business, the income from such activities should be considered as business income. The Court distinguished this case from the Supreme Court's decision in Tuticorin Alkali Chemicals & Fertilizers Ltd., noting that in that case, the company had not commenced any business activities.
Issue 2: Allowability of Pre-commencement Expenditure
The second issue was whether the expenditure incurred before the commencement of the main business of the integrated steel plant could be allowed as business expenditure.
- Background: The assessee incurred significant expenses related to the corporate treasury division and debenture issue before starting the steel plant operations.
- Assessing Authority's Stand: The expenses were disallowed on the grounds that the main business had not commenced, and thus, the expenditure could not be allowed under Sections 28 to 43 of the Income Tax Act.
- Tribunal's Stand: The Tribunal allowed the expenditure, reasoning that the company had commenced its business activities related to lending and bill discounting, which were part of its authorized business activities.
- High Court's Analysis: The High Court supported the Tribunal's view, emphasizing that the company had commenced its business by engaging in authorized ancillary activities. It noted that there is no legal prohibition against starting ancillary businesses before the main business. The Court cited several Supreme Court judgments, including Apollo Tyres Ltd. and India Cements Ltd., to support the principle that once business activities commence, related expenditures are allowable as business expenses.
Conclusion:
The High Court upheld the Tribunal's decision, affirming that the interest income from short-term deposits should be classified as business income and that the pre-commencement expenditure related to the corporate treasury division and debenture issue was allowable as business expenditure. The appeal by the revenue was dismissed, and the substantial questions of law were answered in favor of the assessee.
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2011 (8) TMI 1333
Issues involved: Impugning penalty imposed by Central Information Commission (CIC) under Section 20 of the Right to Information Act, 2005 on the petitioner.
Comprehensive Details:
1. The petitioner contested that the delay in providing information was due to Mr. S.C. Gupta, not him as the Public Information Officer (PIO) of the DDA. CIC imposed penalty on both the petitioner and Mr. S.C. Gupta. The petitioner argued that he promptly sought information and forwarded requests to Mr. S.C. Gupta, who caused delays. However, CIC found the petitioner failed to provide the information sought and merely forwarded a report without ensuring it addressed the query, deeming it a refusal of information. The petitioner did not address why the penalty was shared between him and Mr. S.C. Gupta.
2. The petitioner claimed his role as PIO was to forward requests and information received from officers to information seekers promptly, absolving him of liability for delays or incorrect information. This argument was likened to reducing the PIO's role to that of a Post Office, which the Act does not support.
3. The Act mandates PIOs to "deal with" requests and provide reasonable assistance to information seekers, not just act as intermediaries. The PIO is responsible for ensuring timely and accurate information disclosure, with Section 5(4) empowering them to seek assistance within the department. The PIO's role is pivotal in enforcing the Act's implementation.
4. The Court emphasized that designating a PIO implies responsibility for providing information, not just forwarding requests. The penalty was imposed on the petitioner for failing to analyze information received, blindly forwarding it without applying his own judgment. The PIO must independently assess and decide on information disclosure, not rely solely on subordinates.
5. Referring to previous judgments, the Court reiterated that PIOs must fulfill their obligations diligently, ensuring information seekers receive what they request without delays or evasive tactics. The Act places trust in the PIO's objectivity and decision-making, expecting them to act responsibly and not mechanically forward information.
6. The Court upheld the CIC's decision to equally apportion the penalty between the petitioner and Mr. S.C. Gupta, finding no fault in the order.
Conclusion: The petition was dismissed as lacking merit, with no costs imposed.
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2011 (8) TMI 1332
Issues Involved:
1. Legality of the High Court's direction to the State Government to pay compensation.
2. Consideration of relevant documents and facts by the High Court.
3. Status of the Respondent as an unauthorized occupant.
4. Validity of the inter-departmental communication as a basis for compensation.
Summary:
1. Legality of the High Court's Direction to Pay Compensation:
The Supreme Court addressed the legality of the High Court's direction to the State Government to pay Rs. 70,99,951.50 with interest to the Respondents. The High Court's reliance on an inter-departmental communication was scrutinized.
2. Consideration of Relevant Documents and Facts:
The State of Uttaranchal argued that the High Court overlooked several vital documents and facts essential for a just determination of the dispute. The Supreme Court noted that the High Court failed to consider the pleadings and documents produced, causing serious prejudice to the State.
3. Status of the Respondent as an Unauthorized Occupant:
The Supreme Court highlighted that Ram Rattan Lal was declared an unauthorized occupant of the land since 27.1.1972. This finding had attained finality through various judicial orders:
- Order of the Prescribed Authority dated 13.9.1973.
- Judgment of the 1st Additional District and Sessions Judge, Saharanpur dated 8.11.1975.
- Judgment of the High Court of Allahabad in Civil Misc. Writ No. 12304 of 1975.
- Order of the Supreme Court in SLP(C) No. 6851 of 1979 dated 23.12.1981.
4. Validity of the Inter-Departmental Communication:
The Supreme Court found that the District Magistrate's communication recommending compensation was improper. The Government of Uttar Pradesh had rejected this recommendation, emphasizing that Ram Rattan Lal was an unauthorized occupant and not entitled to compensation. The High Court erred in treating the District Magistrate's recommendation as an order of the State Government.
Conclusion:
The Supreme Court set aside the High Court's judgment in Writ Petition No. 401 of 2002, expressing strong disapproval. The appeal was allowed with costs quantified at Rs. 10,000/-. The Court emphasized the necessity for judicial decisions to be reasoned and based on proper evaluation of evidence and legal rules to maintain public trust and confidence in the judicial system.
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2011 (8) TMI 1331
Liability to Repay the loan - Jointly and Severally - “letter of comfort” is wrongly interpreted and treated as “letter of guarantee” - Appellant executed a “letter of comfort” as per exhibit P14 - Respondent No. 2 committed default and did not repay the amount as agreed - HELD THAT:- The apex court in the case of State of Maharashtra v. Dr. M.N Kaul [1967 (3) TMI 107 - SUPREME COURT], while dealing with the aspect of the enforceability of the guarantee has observed: ''That depends upon the terms under which the guarantor bound himself. Under the law he cannot be made liable for more than he has undertaken.''
It is clear that the contract of guarantee is a contract to perform the promise or discharge the liability of a third person in case of his default. If the entire document in question, i.e, exhibit P14 is read as a whole, the same nowhere reveals that the appellant has entered into a contract or an agreement with respondent No. 1 to discharge the liability of respondent No. 2 herein (principal debtor) in case of its default.
All through, respondent No. 1 as well as other parties including the appellant has understood the document exhibit P14 as a “letter of comfort”, plain and simple. In the cross-examination of PW1 witness for respondent No. 1), he has clearly admitted that the appellant has not undertaken under exhibit P14 that he would repay the amount in case respondents Nos. 2 to 4 herein commit default in payment of the loan. In the light of clear admission of PW1 and having regard to the language employed in exhibit P14, it is clear that the appellant has not undertaken that it would repay the loan amount in case of default by respondents Nos. 2 and 4 herein.
Definition of “letter of comfort”, as found in P. Ramanatha Aiyar's Advanced Law Lexicon, which reads thus: “Letter of comfort - A document that indicates one party's intention to try to ensure that another party complies with the terms of a financial transaction without guaranteeing performance in the event of default.”
Therefore, it is clear that the letter of comfort merely indicates the appellant's assurance that respondent No. 2 would comply the terms of a financial transaction without guaranteeing performance in the event of default.
Since we find that the appellant has not bound himself for repaying the loans due to first respondent corporation in the event of default by respondents Nos. 2 and 4, the impugned order in so far as it relates to fixing liability on appellant is liable to set aside. Accordingly, the same is set aside. Rest of the order passed against respondents Nos. 2 to 4 continues to remain.
Appeal is allowed-in-part accordingly.
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2011 (8) TMI 1330
Issues Involved:
1. Quashing of the impugned orders.
2. Acceptance of exports towards discharge of export obligation.
3. Prohibition of action against the petitioner for non-fulfillment of export obligation.
4. Imposition of penalty and suspension of IEC.
5. Combination of DEPB and Advance License schemes.
Summary:
Issue 1: Quashing of the Impugned Orders
The petitioner sought a writ of certiorari to quash the order dated 26.9.2007 and the subsequent order dated 21.2.2008 confirming the duty of Rs. 80,62,950/- along with interest and penalty. The court found that the authorities did not apply their mind properly and denied the benefit under the DEPB scheme without justification. The orders passed by the Original Authority and the Appellate Authority were set aside.
Issue 2: Acceptance of Exports Towards Discharge of Export Obligation
The petitioner requested the respondents to accept the exports effected directly or through a third party towards the discharge of the export obligation under three Advance Licenses. The court directed the respondents to accept the exports towards the fulfillment of export obligation under the impugned advance licenses and the benefit of DEPB claimed against the said exports.
Issue 3: Prohibition of Action Against the Petitioner for Non-Fulfillment of Export Obligation
The petitioner sought a writ of prohibition to prevent the respondents from taking any action against them for non-fulfillment of export obligation on the grounds that the benefit of DEPB was also claimed. The court found that there was no prohibition in law to avail the benefit under DEPB scheme even after opting for Advance License Scheme when no raw material was imported under the Advance License Scheme.
Issue 4: Imposition of Penalty and Suspension of IEC
The petitioner challenged the imposition of a penalty of Rs. 280 lakhs and the suspension of their IEC. The court found that the cancellation of the IEC and the suspension of the Advance License were arbitrary and illegal. The respondents were directed to restore the Import and Export Code of the petitioner and withdraw the cancellation of the Advance License.
Issue 5: Combination of DEPB and Advance License Schemes
The petitioner argued that they had not availed any benefit under the Advance License Scheme for raw materials and were entitled to the DEPB scheme. The court held that the petitioner was entitled to the DEPB scheme as they had not imported any raw material other than fuel under the Advance License Scheme. The court found that the objection that originals were not produced was contrary to law and could not be sustained.
Order:
(i) Writ Petitions are allowed.
(ii) The impugned orders passed by the Original Authority and the Appellate Authority are set aside.
(iii) A writ of mandamus is issued directing the respondents to accept the exports towards the fulfillment of export obligation under the impugned advance licenses and the benefit of DEPB.
(iv) Respondents are directed to restore the Import and Export Code of the petitioner and withdraw the cancellation of the Advance License.
(v) All amounts received in terms of the impugned orders shall be refunded to the petitioner forthwith.
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