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Showing 61 to 80 of 628 Records
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2011 (12) TMI 737
Issues Involved:
1. Valuation of shares and principles of natural justice.
2. Basis for valuation date.
3. Reliance on third-party valuation reports.
4. Binding nature of valuer's decision.
Summary:
1. Valuation of Shares and Principles of Natural Justice:
The appellant challenged the CLB's order directing the respondent to pay Rs. 3,00,000/- as fair valuation for 1000 shares. The appellant argued that the valuation by M/s. Vipin Aggarwal, Chartered Accountant, did not observe principles of natural justice as no hearing opportunity was given. However, the court noted that the valuer was appointed with the consent of both parties, and the appellant had agreed to the valuation date of 31st March 2008.
2. Basis for Valuation Date:
The appellant contended that the valuation should be based on the Balance Sheet as on 31st March 2005, alleging that the respondent manipulated the assets and losses between 2005 and 2008 to reduce share valuation. The court found that the appellant had consented to the valuation date of 31st March 2008, and the CLB's practice was to use the balance sheet proximate to the petition date, which was 22nd February 2008.
3. Reliance on Third-Party Valuation Reports:
The appellant argued that M/s. Vipin Aggarwal relied on M/s. Neeraj and Associates' report without independent valuation of the respondent company's land and building. The court held that as an expert, M/s. Vipin Aggarwal was entitled to rely on any report placed on record by either party. The appellant had not challenged the report of M/s. Neeraj & Associates before the valuation report was furnished.
4. Binding Nature of Valuer's Decision:
The court emphasized that the valuer's decision, made with the consent of both parties, is binding unless there is evidence of fraud or collusion. The appellant did not impeach the valuer's report on these grounds. The court cited precedents affirming that parties are bound by the valuer's decision if made honestly and in good faith.
Conclusion:
The appeal was dismissed as it lacked merit. The court upheld the CLB's order and the valuation by M/s. Vipin Aggarwal. Additionally, the respondent agreed to let the appellant retain a Maruti Baleno car, which the court accepted and held the respondent bound by this statement.
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2011 (12) TMI 736
Issues involved: Appeal against order of Commissioner of Income Tax (Appeals) regarding addition of amount in respect of creditors and chargeability of interest under section 234B of the Income Tax Act, 1961.
Issue 1: Addition of amount in respect of creditors
The assessee, a firm engaged in manufacturing, filed its return of income for the assessment year 2007-2008. During assessment, the Assessing Officer added an amount to the income of the assessee under section 41(1) of the Act, considering it as cessation of liability due to inability to furnish confirmation statements for certain sundry creditors. The Commissioner of Income Tax (Appeals) upheld the addition, stating that creditors would not remain silent for long without receiving payment. The appellant argued that most creditors were genuine, accumulated over years, and not paid in time, leading to non-cooperation. The appellant cited case laws supporting that outstanding balances cannot be taxed under section 41(1) without evidence of benefit received by the assessee. The Tribunal found that the revenue failed to show any benefit received by the assessee or that the amount was accounted for in earlier years. Consequently, the addition was deleted as the creditors' non-cooperation was justified due to delayed payments and lack of investigation by the revenue authorities.
Issue 2: Chargeability of interest under section 234B
The Tribunal dismissed the ground raised by the assessee regarding the chargeability of interest under section 234B of the Act, deeming it consequential and mandatory.
In conclusion, the Tribunal partly allowed the appeal filed by the Assessee, deleting the addition made under section 41(1) of the Act.
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2011 (12) TMI 735
Issues Involved:
1. Legality of the suspension orders of the Petitioners.
2. Applicability of Section 56(1)(b) of the Bombay Provincial Municipal Corporations Act, 1949.
3. Applicability of Rule 4(2)(a) of the Maharashtra Civil Services (Discipline and Appeal) Rules, 1979.
4. Requirement of ratification of suspension by the Corporation.
5. Automatic revocation of suspension after six months.
Issue-wise Detailed Analysis:
1. Legality of the Suspension Orders of the Petitioners
The Petitioners, officers of the Municipal Corporation of Navi Mumbai, challenged their suspension orders issued by the Commissioner on 10th September 2009. The suspension was based on allegations of irregularities in payments to a contractor, leading to an FIR and subsequent arrest of the Petitioners. The orders stated that the Petitioners were detained for over 48 hours, invoking Rule 4(2)(a) of the Civil Services Rules and Section 56(1)(b) of the Bombay Provincial Municipal Corporations Act, 1949.
2. Applicability of Section 56(1)(b) of the Bombay Provincial Municipal Corporations Act, 1949
Section 56(1)(b) allows the Commissioner to suspend any officer or servant pending an order of the Corporation, but such suspension must be confirmed by the Corporation within six months. If not confirmed, the suspension automatically ends. The Court found that the Commissioner's powers under this section are valid for suspensions pending disciplinary inquiries and are not considered penalties.
3. Applicability of Rule 4(2)(a) of the Maharashtra Civil Services (Discipline and Appeal) Rules, 1979
Rule 4(2)(a) states that a government servant is deemed to be under suspension if detained in custody for over 48 hours. The Court noted that the suspension under this rule is automatic and does not require a specific order. However, the appointing authority retains the power to review or revoke such suspensions. The Court emphasized that the appointing authority in this case is the Corporation, not the Commissioner.
4. Requirement of Ratification of Suspension by the Corporation
The Court highlighted that any suspension under Section 56(1)(b) must be ratified by the Corporation within six months. In this case, the suspension was not ratified within the stipulated period, leading to its automatic revocation. The Court criticized the decision in Sudhir R. Bhatankar, which suggested that suspensions pending inquiries are not covered by Section 56(1)(b), clarifying that this interpretation was incorrect.
5. Automatic Revocation of Suspension After Six Months
The Court declared that the suspension of the Petitioners ended automatically after six months from the date of suspension due to the Corporation's failure to ratify it. The Court directed the Corporation to allow the Petitioners to resume work, emphasizing the automatic nature of the revocation under Section 56(1)(b).
Conclusion
The Court concluded that the Petitioners' suspension orders ceased to exist after six months due to lack of ratification by the Corporation, as mandated by Section 56(1)(b) of the Bombay Provincial Municipal Corporations Act, 1949. The Court directed the Corporation to reinstate the Petitioners, thereby making the rule absolute with no order as to costs.
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2011 (12) TMI 734
Issues involved: Appeal against levy of penalty for claiming depreciation on land at 10% under Section 260A of the Income Tax Act, 1961.
Summary:
The High Court of Delhi dismissed the appeal challenging the penalty imposed by the Assessing Officer for claiming depreciation on land at 10%. The appellant argued that the claim was a bona fide error and should not result in a penalty. However, the Court held that depreciation on land cannot be claimed as per established principles. The appellant did not revise the return even in the subsequent assessment year, indicating a lack of bona fide mistake. The Tribunal found that the appellant failed to discharge the onus under Section 271(1)(c) of the Act. Based on the Tribunal's reasoning and factual analysis, the Court declined to interfere with the decision and upheld the penalty.
In conclusion, the appeal was dismissed by the Delhi High Court.
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2011 (12) TMI 733
Issues involved: Allowability of interest expenditure on purchase of securities as revenue expenditure.
Summary:
Issue 1: Allowability of interest expenditure on purchase of securities as revenue expenditure
The M.P Nos. 205 to 209/Mds/2011 and M.P No. 210/Mds/2011 were disposed of by a consolidated order due to similar issues. The assessee contended that interest paid on purchase of securities should be allowed as revenue expenditure based on a High Court decision. The Tribunal initially decided the issue as capital expenditure but upon the assessee's submission, it was pointed out that the High Court had ruled in favor of treating such interest as revenue expenditure. The High Court held that interest paid on charge of investments should be treated as revenue expenditure, not capital expenditure, based on the nature of the securities as stock-in-trade. The Tribunal amended its order in favor of the assessee, following the High Court decision. The decision was rectified under section 254(2) of the Income-tax Act, 1961, in line with the Supreme Court's ruling in ACIT Vs. Saurashtra Kutch Stock Exchange Ltd [2008] 173 Taxmann 322 [SC].
In conclusion, all the M.Ps were allowed, and the Tribunal's decision was amended to treat interest expenditure on purchase of securities as revenue expenditure in accordance with the High Court's decision.
Order pronounced on 16th December, 2011.
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2011 (12) TMI 732
Issues involved: Appeal against deletion of penalty u/s. 271D of the Income Tax Act.
Summary:
1. The appeal by the revenue challenges the deletion of penalty u/s. 271D by the CIT(A) regarding loans received in cash from family members.
2. The main issue is the cancellation of the penalty order by the CIT(A) based on the genuineness of the transactions and reasonable cause.
3. The Assessing Officer alleged violation of section 269SS by the assessee for receiving loans in cash from family members.
4. The CIT(A) deleted the penalty citing bona fides and genuineness of the transactions as reasonable cause.
5. The revenue's appeal was dismissed by the Appellate Tribunal based on the family nature of the transactions and previous legal precedents.
6. The Tribunal upheld the CIT(A)'s decision and dismissed the revenue's appeal against the penalty deletion.
This case highlights the importance of establishing reasonable cause and genuineness in transactions to avoid penalties under the Income Tax Act.
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2011 (12) TMI 731
Issues involved: Violation of regulations 3 and 4 of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.
Issue 1: Alleged misleading disclosures regarding promoter shareholding
The appeals were filed against the orders imposing a monetary penalty under Section 15HA of the Securities and Exchange Board of India Act for violating regulations 3 and 4 of the FUTP Regulations. The appellant, a stockbroker registered with the Board, was accused of misleading shareholders and investors by making inaccurate disclosures to the National Stock Exchange regarding promoters' shareholding. The adjudicating officer found the appellant guilty of violating the regulations based on the misleading disclosures made to the public through NSE.
Issue 2: Disputed promoter shareholding disclosures
The Tribunal analyzed the discrepancies in the disclosures made by the appellant regarding promoter shareholding. The appellant's explanation that the variance in figures was due to pledged shares not being taken into account was rejected. It was established that the shares were transferred by the bank and sold to other persons before the disclosures were made. The misleading disclosures were deemed to create a false impression for investors, leading to a violation of FUTP Regulations. The imposition of a penalty was upheld based on the inaccurate and inflated promoter shareholding disclosures.
Issue 3: Liability of directors and company
The Tribunal addressed the argument that the appellant, as a director of the company, should not be held liable for the violations. It was noted that the appellant, being responsible for the conduct of the company's business, could not evade liability. The company, acting through its directors, was deemed responsible for the violations under Section 27 of the Act. The Tribunal upheld the findings of the adjudicating officer, dismissing the appeals and affirming the penalty imposed.
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2011 (12) TMI 730
Issues involved: Violation of section 12A (d) and (e) of the Securities and Exchange Board of India Act, 1992 (SEBI Act) read with Regulation 3(i) and 4 of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992.
Summary:
1. The appellant, a non-executive Vice Chairman and Director of a company, traded in the company's shares while in possession of unpublished price sensitive information, violating SEBI Act and Insider Trading Regulations.
2. A show cause notice was issued, appellant denied allegations, but adjudicating officer found him guilty and imposed a penalty.
3. Legal provisions prohibit insider trading to ensure fair market practices and protect ordinary shareholders and the public.
4. The appellant, as a director, was an insider and purchased shares before the information became public, violating regulations.
5. The argument that the information was not price sensitive before the contract award was rejected, upholding the adjudicating officer's decision.
6. The order was supported by the respondent, emphasizing the appellant's insider position and early knowledge of the contract.
7. Shareholders and the public rely on accurate information for investment decisions, insiders must not use privileged information for personal gain.
8. The appellant's purchase of shares before public disclosure of the contract award constituted insider trading, as per regulations.
9. The adjudicating officer's decision was upheld based on the appellant's insider status and early access to price sensitive information.
In conclusion, the appeal was dismissed, and the penalty upheld for insider trading violations.
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2011 (12) TMI 729
Murder - Act of a person of unsound mind - Conviction for offence punishable under Sections 302, 295 and 449 of the IPC - defence of insanity - suffering from Epilepsy - HC acquitted of all the offences - ''mens rea'' - respondent abruptly hurled a stone on head of Pujari Tulsi Das (now deceased) resulting into his instantaneous death - he also damaged the idol and other properties of the temple - This all was unprovoked.
HELD THAT:- To commit a criminal offence, mens rea is generally taken to be an essential element of crime. It is said furiosus nulla voluntus est. In other words, a person who is suffering from a mental disorder cannot be said to have committed a crime as he does not know what he is doing. For committing a crime, the intention and act both are taken to be the constituents of the crime, actus non facit reum nisi mens sit rea. Every normal and sane human being is expected to possess some degree of reason to be responsible for his/her conduct and acts unless contrary is proved. But a person of unsound mind or a person suffering from mental disorder cannot be said to possess this basic norm of human behavior.
Once, a person is found to be suffering from mental disorder or mental deficiency, which takes within its ambit hallucinations, dementia, loss of memory and self-control, at all relevant times by way of appropriate documentary and oral evidence, the person concerned would be entitled to seek resort to the general exceptions from criminal liability.
Epileptic Psychosis is a progressing disease and its effects have appropriately been described in the text book of Medical Jurisprudence and Toxicology by Modi, 24th Ed. 2011 - “Epileptic Psychosis – Epilepsy usually occurs from early infancy, though it may occur at any period of life. Individuals, who have had epileptic fits for years, do not necessarily show any mental aberration, but quite a few of them suffer from mental deterioration. Religiousity is a marked feature in the commencement, but the feeling is only superficial. Such patients are peevish, impulsive and suspicious, and are easily provoked to anger on the slightest cause.''
According to the statement of this doctor and the prescription, the respondent was suffering from Epilepsy and while describing post epileptic insanity, this witness stated that after the epileptic attack, a patient behaves like an insane person and he is unable to recognise even the known persons and relatives. During this time, there is a memory loss and the patient can commit any offence.
Another witness who was produced by the defence was DW-1, Bhanwar Lal, the brother of the respondent. According to this witness, the respondent was suffering from mental disorder since 1993. He stated that when he gets the fits of insanity, he can fight with anybody, hit anybody and even throw articles lying around him. This oral and documentary evidence clearly shows that the respondent was suffering from epileptic attacks just prior to the incident. Immediately prior to the occurrence, he had behaved violently and had caused injuries to his own family members. After committing the crime, he was arrested by the Police and even thereafter, he was treated for insanity, while in jail.
Thus, there is evidence to show continuous mental sickness of the respondent. He not only caused death of the deceased but also on the very same day injured and caused hurt to his family members including DW-1. His statement made under Section 313 Cr.PC is fully corroborated by oral and documentary evidence of DW-2 and Ext. D-3 and D-4. Though, the High Court has not discussed this evidence in great detail, but this being an admissible piece of evidence, can always be relied upon to substantiate the conclusion and findings recorded by the High Court.
Ex-facie, injuries do not appear to be so vital that they could have resulted in the death of the deceased, but this fact was required to be proved by expert evidence. There is no documentary or oral evidence to prove the fact that the injuries caused by the respondent to the deceased were sufficient in the ordinary course of nature to cause death.
Therefore, we find no error in the judgment under appeal. Thus, we have no hesitation in dismissing the appeal and the same is hereby dismissed.
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2011 (12) TMI 728
Issues involved: Validity of reassessment under Section 19(1) of the Kerala General Sales Tax Act based on compounding.
The High Court of Kerala addressed the issue of the validity of reassessment completed under Section 19(1) of the Act, which was challenged by the Tribunal due to the original assessment being based on compounding. The Court referred to a previous Division Bench judgment in M/s.Joy Alukkas Traders (I) Pvt. Ltd. v. State of Kerala, where it was held that Section 19(1) also applies to assessments completed based on compounding. Consequently, the Court reversed the Tribunal's decision and upheld the validity of the reassessment under Section 19(1).
The respondent in the case had not appeared during the reassessment process under Section 19(1), leading to an exparte decision. The Court directed the respondent to provide work orders with detailed schedules to the Assessing Officer for verification, specifically regarding work executed for PWD, such as fish farming. The respondent was given an opportunity to produce necessary documents within one month for the Assessing Officer to reconsider the assessment.
In conclusion, the High Court allowed the revision case by vacating the Tribunal's order and returning the assessment to the Assessing Officer for reconsideration. If the respondent fails to provide the required records within the specified time, the reassessment will be considered final. However, if the records are submitted along with a copy of the judgment, the Assessing Officer will review the assessment and make any necessary modifications.
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2011 (12) TMI 727
Issues involved:
The appeal concerns the denial of deduction for society charges and non-occupancy charges under the head property income.
Summary:
Issue 1: Society Charges
The assessee claimed deduction for society charges and non-occupancy charges under section 24 of the Income Tax Act. The Assessing Officer (AO) disallowed the claim, citing that standard deduction at 30% of annual value covers such expenses. The CIT(A) upheld the AO's decision. However, the ITAT Mumbai Bench ruled in favor of the assessee, allowing the deduction of society charges from the rental income for the purpose of calculating annual letting value under section 23(1)(b). The Tribunal held that all outgoings for earning rental income are admissible deductions, as per various precedents. Consequently, the assessee was granted the deduction of society charges.
Issue 2: Non-Occupancy Charges
Regarding non-occupancy charges, the ITAT relied on a previous decision in the case of Sharmila Tagore Vs. Jt. CIT, allowing the deduction of non-occupancy charges from the rent received for determining the annual letting value under section 23(1)(b). The Tribunal set aside the CIT(A)'s order and granted the deduction of non-occupancy charges.
Conclusion:
The ITAT Mumbai ruled in favor of the assessee, allowing both the deduction of society charges and non-occupancy charges. The appeal was allowed, and the order of the CIT(A) was set aside.
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2011 (12) TMI 725
Issues Involved:
1. Adoption of cost of acquisition of land as on 1.4.1981.
2. Claim of deduction under Section 54 of the Income Tax Act.
3. Adoption of the value of the land as on 1.4.1981.
4. Disallowance of commission and legal expenses.
5. Disallowance of compensation paid to tenants.
Issue-wise Detailed Analysis:
1. Adoption of Cost of Acquisition of Land as on 1.4.1981:
The Revenue contested the CIT (A)'s decision to adopt the cost of acquisition of the land at Rs. 175 per sft as on 1.4.1981 instead of Rs. 24 per sft determined by the AO. The CIT (A) observed that the AO mistakenly considered the asset as a vacant site and adopted Rs. 24 per sft based on a single sale instance from the Sub-Registrar's office. The CIT (A) instead adopted Rs. 175 per sft based on the Supreme Court guidelines in Chimanlal Hargovind Das v. Special L.A.O A.I.R. 1988 S.C. 1652, considering the land's potential and other factors. The Tribunal remitted the issue back to the AO for fresh consideration, emphasizing the need for thorough investigation and verification.
2. Claim of Deduction under Section 54 of the Income Tax Act:
The assessee claimed deduction under Section 54, which the AO denied, allowing deduction under Section 54F instead. The CIT (A) rejected the assessee's claim on the grounds that the assessee failed to purchase or construct a new residential house within the specified period. The Tribunal noted that the authorities did not consider the proviso to sub-section (2) of Section 54 and remitted the issue back to the AO for fresh consideration, directing the assessee to provide all relevant documents.
3. Adoption of the Value of the Land as on 1.4.1981:
The assessee argued that the CIT (A) should have directed the AO to adopt Rs. 480 per sft instead of Rs. 175 per sft. The Tribunal reiterated that the issue of adopting the value of the land as on 1.4.1981 had been remitted back to the AO for fresh consideration, thus this ground was also remitted back.
4. Disallowance of Commission and Legal Expenses:
The assessee claimed commission and legal expenses of Rs. 1,85,607, which the AO disallowed due to lack of substantiation. The CIT (A) upheld the disallowance based on precedents. The Tribunal observed that the expenses were incurred in connection with the sale of the property and remitted the issue back to the AO for detailed verification and appropriate action.
5. Disallowance of Compensation Paid to Tenants:
The assessee claimed compensation of Rs. 17,25,000 paid to tenants for evicting them, which the AO disallowed due to lack of proof. The CIT (A) upheld the disallowance. The Tribunal noted conflicting claims and remitted the issue back to the AO for detailed verification and appropriate action, directing the assessee to provide necessary evidence.
Conclusion:
The Tribunal allowed the Revenue's appeal for statistical purposes and partly allowed the assessee's appeal for statistical purposes, remitting various issues back to the AO for fresh consideration and detailed verification, ensuring compliance with the provisions of the Income Tax Act.
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2011 (12) TMI 724
Issues involved: Appeal against CIT(A) order for assessment year 2007-08 regarding deletion of addition made u/s 145(3) of the Income-tax Act, 1961 based on net profit rate.
Issue 1: Deletion of addition based on net profit rate
The Revenue appealed against the CIT(A) order which deleted the addition made by the Assessing Officer by applying a net profit rate of 3% on estimated sales of Rs. 16.82 crores u/s 145(3) of the Income-tax Act, 1961. The assessee, engaged in retail sale of liquor, had shown total sales of Rs. 13.76 crores with a net profit rate of 1.2%. The AO rejected the books of accounts due to unverifiable sales and applied a higher net profit rate. However, the CIT(A) held that the AO was unjustified in rejecting the maintained books of account and not disturbing the declared results, as there was no evidence of discrepancies in sales or purchases. The CIT(A) emphasized that the AO did not provide any proof of sales outside the books or any stock discrepancies. The CIT(A) referred to a similar case and concluded that rejection of books merely due to lack of cash vouchers was not justified. Therefore, the addition made by the AO was deleted, and the results declared by the appellant were accepted.
Issue 2: Assessment of net profit rate
During the assessment proceedings, the assessee presented all books of account without discrepancies in sales and purchases. The AO rejected the books solely because the assessee did not issue sales bills copies and applied a net profit rate of 3%. The CIT(A) noted that liquor purchases were based on permits and no adverse findings were made by the AO. The CIT(A) highlighted that daily sales were recorded, and there was no evidence of sales outside the books or suppressed sales. The CIT(A) also mentioned the impact of changes in excise law policy on profit margins. Despite these findings, the unverifiable sales figures remained. Considering the circumstances, the Tribunal modified the lower authorities' orders and directed the AO to apply a net profit rate of 1.5% instead of the declared 1.25%. The Revenue's appeal was allowed in part based on these considerations.
This judgment highlights the importance of maintaining accurate records and the burden of proof on tax authorities to justify adjustments based on estimated figures under the Income-tax Act, 1961.
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2011 (12) TMI 723
Issues Involved:
1. Validity of referring disputes to arbitration u/s 8 of the Arbitration and Conciliation Act, 1996.
2. Appealability of the order passed u/s 8 of the Arbitration and Conciliation Act, 1996.
3. Jurisdiction of the Trial Court in dismissing the suit while referring disputes to arbitration.
Summary:
1. Validity of Referring Disputes to Arbitration u/s 8 of the Arbitration and Conciliation Act, 1996:
The appellants filed a suit seeking a declaration that the defendants had no right, title, or interest in the dissolved partnership firm, M/s. Bharat Industries and Commercial Corporation. The defendants filed an application u/s 8 of the Arbitration and Conciliation Act, 1996, to refer the disputes to arbitration based on an arbitration clause in the partnership deed dated 23rd December 1972. The plaintiffs contested, arguing that the arbitration agreement was no longer subsisting and that the subject matter of the suit was beyond the scope of the arbitration agreement. The learned Trial Judge found the arbitration agreement valid and referred the matter to arbitration, dismissing the suit.
2. Appealability of the Order Passed u/s 8 of the Arbitration and Conciliation Act, 1996:
The appellants argued that the impugned order was appealable under Clause 15 of the Letters Patent as it involved questions of jurisdiction and limitation. They contended that the order was not merely an order u/s 8 of the 1996 Act but also involved the dismissal of the suit, which made it a "judgment" within the meaning of Clause 15. The court agreed, stating that the order was not an order under section 8 of the Act, 1996, as it sought to bind a non-party to the arbitration agreement (Mimani). Hence, the order was appealable under Clause 15 of the Letters Patent.
3. Jurisdiction of the Trial Court in Dismissing the Suit While Referring Disputes to Arbitration:
The appellants contended that the Trial Court lacked jurisdiction to dismiss the suit while referring the disputes to arbitration, especially since Mimani, a non-party to the arbitration agreement, was involved. The court found that the disputes in the suit were closely interlinked with the interests of Mimani, and referring the matter to arbitration without his participation would lead to gross injustice. The court also noted that the application for reference to arbitration was not accompanied by the original arbitration agreement or a duly certified copy thereof, violating section 8(2) of the 1996 Act. Consequently, the court held that the Trial Judge's order was not sustainable and set it aside, directing that the suit and Mimani's suit for specific performance be heard analogously.
Conclusion:
The appeal was allowed, and the judgment and order of the learned Trial Judge were set aside. The court directed that both the suit filed by the appellants and the suit filed by Mimani for specific performance be heard analogously. The operation of this judgment and order was stayed for four weeks after the Christmas Vacation.
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2011 (12) TMI 722
Issues Involved:
1. Validity of the detention order based on stale cases.
2. Disturbance of public order versus law and order issue.
3. Erroneous observation regarding anticipatory bail.
4. Consideration of the detenu's representation by the detaining authority.
Summary:
1. Validity of the Detention Order Based on Stale Cases:
The petitioner challenged the detention order u/s Tamil Nadu Act 14, 1982, arguing that the adverse cases cited were stale. The court noted that the adverse cases from 2008, 2010, and 2011 were not stale, as the detenu had committed offenses within a short span, indicating habitual criminal behavior. The court found the detaining authority's conclusion that the detenu was a habitual offender to be justified and not based on stale instances.
2. Disturbance of Public Order Versus Law and Order Issue:
The petitioner argued that the incident was a land dispute and did not disturb public order. The court held that the detaining authority's observation that the detenu's actions were prejudicial to the maintenance of public order was based on subjective satisfaction, supported by witness statements. The court rejected the contention that it was merely a law and order issue.
3. Erroneous Observation Regarding Anticipatory Bail:
The petitioner contended that the detaining authority's observation about the detenu obtaining anticipatory bail was erroneous. The court found that the detenu was in remand only for Crime No. 361 of 2011 and not in the other cases. The detaining authority's concern was whether the detenu would be released on bail in the ground case, which was justified. The court concluded that the erroneous observation did not vitiate the detention order.
4. Consideration of the Detenu's Representation by the Detaining Authority:
The petitioner argued that the detaining authority failed to consider the detenu's representation, violating Article 22(5) of the Constitution. The court noted that the representation was received on 28.7.2011, and the detention order was approved by the government on 29.7.2011. The court held that there was no violation of Article 22(5) as the approval by the government relieved the detaining authority of the obligation to consider the representation.
Conclusion:
The court dismissed the habeas corpus petition, upholding the detention order as valid and not liable to be set aside.
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2011 (12) TMI 721
Issues involved: Validity of notice issued by Special Tahsildar regarding change of khatha without specifying reasons for appearance.
The writ petition challenged a notice issued by the Special Tahsildar directing the petitioner to appear regarding a change of khatha without providing specific reasons for the appearance. The petitioner argued that the notice was vague and violated principles of natural justice as he had not applied for any khatha change. The Counsel referred to a previous order directing khatha entry for the petitioner's land, questioning the need for appearing before the Special Tahsildar again.
The main issue in this case was whether the notice issued by the Special Tahsildar was valid in law. The judgment emphasized that a notice must be clear and precise, providing adequate information to the party concerned about the case they have to meet. It should state the reason for appearance and allow the party to rebut any evidence against them. The adequacy of notice is crucial for enabling an effective defense, and vague or unintelligible allegations would deny proper opportunity to be heard, violating principles of natural justice.
The Court found that the impugned notice failed to specify why the petitioner was required to appear before the Special Tahsildar regarding the change of khatha, especially when no application for such change was pending. Consequently, the notice was deemed vague and in violation of principles of natural justice. As a result, the notice was quashed, but the Special Tahsildar was permitted to initiate appropriate action by issuing a proper notice in accordance with the law.
In conclusion, the writ petition was disposed of, with the impugned notice being quashed due to its lack of clarity and violation of principles of natural justice.
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2011 (12) TMI 720
Issues Involved:
1. Disallowance of expenditure under the head 'technical design & drawings'.
2. Disallowance of foreign travelling expenses.
3. Disallowance of training expenses.
4. Disallowance of vehicle hire expenses.
5. Applicability of Section 145.
6. Estimation of net profit on Bhandar Dhara Project.
7. Disallowance of provision for accrued unpaid interest.
8. Disallowance on account of sale of turbo generator and compensation for high cost.
9. Disallowance of warranty expenses.
10. Disallowance of excise duty and sales tax.
11. Adhoc disallowance.
12. Disallowance of bad debts.
Summary:
1. Disallowance of Expenditure under the Head 'Technical Design & Drawings':
The Tribunal upheld the CIT(A)'s decision, agreeing that the payments made for the purchase of technical drawings and designs from the Austrian parent company were not in the nature of royalty but constituted an outright purchase. The Tribunal emphasized that the transaction was a principal-to-principal sale and not a transfer of rights in the copyright. Consequently, the payments did not attract tax u/s 195.
2. Disallowance of Foreign Travelling Expenses:
The Tribunal affirmed the CIT(A)'s decision to grant relief of Rs. 7,31,541/- out of the total disallowance of Rs. 9,06,541/-. It was held that the foreign travel expenses were incurred for business purposes, including finalization of accounts and procurement of contracts, and were therefore allowable.
3. Disallowance of Training Expenses:
The Tribunal upheld the CIT(A)'s decision to grant relief of Rs. 78,75,385/- out of the total disallowance of Rs. 81,00,385/-. It was noted that the training expenses were incurred for the legitimate needs of the business to enhance employee productivity and were thus allowable u/s 37 of the Act.
4. Disallowance of Vehicle Hire Expenses:
The Tribunal confirmed the CIT(A)'s decision to delete the disallowance of Rs. 5 lacs out of the total vehicle hire charges of Rs. 23,25,134/-. The Tribunal found that the expenses were supported by proper bills and vouchers, and no specific defect was pointed out by the Assessing Officer.
5. Applicability of Section 145:
The Tribunal agreed with the CIT(A) that the provisions of Section 145 were not applicable. The expenses on technical drawings and designs were genuine business expenditures and formed part of the cost of manufacturing. The Assessing Officer's suspicion was not supported by concrete evidence.
6. Estimation of Net Profit on Bhandar Dhara Project:
The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 81,72,801/-. The Assessing Officer's estimation of net profit was found to be presumptive and not based on any material evidence.
7. Disallowance of Provision for Accrued Unpaid Interest:
The Tribunal affirmed the CIT(A)'s decision to delete the disallowance of Rs. 5,03,508/-. It was held that the provision for accrued interest on foreign currency loans was allowable u/s 36(1)(iii) as the assessee followed the mercantile system of accounting.
8. Disallowance on Account of Sale of Turbo Generator and Compensation for High Cost:
The Tribunal upheld the CIT(A)'s decision to delete the additions of Rs. 43,00,800/- and Rs. 70,85,625/-. The Assessing Officer's additions were found to be based on assumptions without any substantiating evidence.
9. Disallowance of Warranty Expenses:
The Tribunal confirmed the CIT(A)'s decision to delete the disallowance of Rs. 15,88,080/-. It was held that the warranty provision was a business necessity and an allowable deduction u/s 37 of the Act.
10. Disallowance of Excise Duty and Sales Tax:
The Tribunal upheld the CIT(A)'s decision to delete the disallowance of Rs. 20,21,688/-. The excise duty and sales tax were paid by the assessee for the Shiva Project and were allowable deductions u/s 37 r.w. Section 43B.
11. Adhoc Disallowance:
The Tribunal affirmed the CIT(A)'s decision to delete the adhoc disallowance of Rs. 10 lacs. The Assessing Officer did not pinpoint any defects in the audited books of account to justify the disallowance.
12. Disallowance of Bad Debts:
The Tribunal upheld the CIT(A)'s decision to delete the disallowance of Rs. 1,91,487/-. It was held that after 1.4.1989, it is sufficient if the bad debt is written off as irrecoverable in the accounts of the assessee.
Cross-Objections:
The Tribunal dismissed the cross-objections raised by the assessee, finding no merit in the claims for additional deductions.
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2011 (12) TMI 719
Issues involved: Appeal against penalty u/s 271B of the Act for assessment year 2004-05.
Summary:
Issue 1: Penalty u/s 271B
The assessing officer levied penalty u/s 271B for delay in filing the audit report. The assessee cited a reasonable cause for the delay, explaining that the accountant responsible for data entry left abruptly without providing necessary information. The Tribunal noted the delay of two months in obtaining the audit report but found that the assessee filed the report along with the return of income. It was established that the delay was beyond the control of the assessee due to the sudden departure of the accountant. The Tribunal held that there was a reasonable cause within the meaning of section 273B of the Act and deleted the penalty of &8377;1 lakh.
Conclusion:
The Tribunal allowed the appeal, deleting the penalty imposed u/s 271B for the assessment year 2004-05.
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2011 (12) TMI 718
Issues Involved:
1. Deletion of disallowance u/s 35(1)(iv) for capital expenditure on machinery not used during the year.
2. Allowance of depreciation on machinery and building of the Food Division.
Summary:
Issue 1: Deletion of Disallowance u/s 35(1)(iv)
The Revenue appealed against the deletion of disallowance amounting to Rs. 45,50,025/- made by the Assessing Officer (AO) u/s 35(1)(iv) of the I.T. Act, 1961. The AO observed that the assessee did not carry out business of the Food Division during the accounting period, as evidenced by the lack of reference to production and profit from the Food Division in the profit and loss account and raw-material consumption details. The AO concluded that the business had not commenced and disallowed the deduction. The CIT(A) accepted the assessee's claim based on a certificate from the Commercial Tax Department and VAT returns, holding that the business commenced during the period under consideration. However, the Tribunal found that the evidence provided by the assessee was insufficient and contradictory, noting that the entire quantity of raw-materials purchased was shown as sold, which is highly improbable in a production industry. The Tribunal concluded that the business had not commenced and upheld the AO's disallowance.
Issue 2: Allowance of Depreciation on Machinery and Building of Food Division
The Revenue also contested the allowance of depreciation amounting to Rs. 29,29,610/- on machinery and Rs. 5,63,110/- on the building of the Food Division. The AO disallowed the depreciation on the grounds that the business had not commenced. The CIT(A) allowed the depreciation, accepting the assessee's claim that the machinery was used for research and production started on 25.3.2008. The Tribunal, however, found that the evidence provided did not substantiate the commencement of production before the end of the financial year. The Tribunal noted that the Commercial Tax Department's certificate was based on the assessee's submission without physical verification. The Tribunal concluded that the business had not commenced, and therefore, depreciation could not be allowed. The Tribunal set aside the CIT(A)'s order and restored the AO's decision.
Conclusion:
The Tribunal allowed the Revenue's appeal, concluding that the assessee had not commenced the business of the Food Division during the accounting period, and therefore, disallowance u/s 35(1)(iv) and depreciation on machinery and building were justified. The order of the CIT(A) was set aside, and the AO's order was restored.
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2011 (12) TMI 717
Issues Involved:
1. Disallowance of interest u/s 36(1)(iii)/14A.
2. Disallowance of deferred revenue expenditure.
3. Levy of interest u/s 234A, 234B, and 234C.
4. Allowance of deduction u/s 80IA.
5. Allowance of deduction u/s 80IA on scrap sale and commission received on late payment.
6. Allowance of depreciation on old plant & machinery.
7. Penalty u/s 271(1)(c).
Summary:
Issue 1: Disallowance of interest u/s 36(1)(iii)/14A
During the assessment proceedings, the AO disallowed the interest claimed by the assessee, noting loans and advances to related parties and investments in shares. The CIT(A) confirmed this disallowance. The Tribunal found that the AO did not specify the timing of the investments and the availability of surplus funds. The Tribunal referred to the decisions in CIT vs. Reliance Utilities & Powers Ltd. and Chemiinvest Ltd. vs. ITO, remitting the matter back to the AO for re-examination.
Issue 2: Disallowance of deferred revenue expenditure
The AO disallowed a sum of Rs. 1,14,240/- following the assessment order for A.Y 2003-04, which was confirmed by the CIT(A). The Tribunal referred to its earlier decision for A.Y 2003-04, where the expenditure was allowed as revenue expenditure, and directed the AO to allow the expenditure.
Issue 3: Levy of interest u/s 234A, 234B, and 234C
The Tribunal noted that the issue is consequential and directed the AO to levy interest as per the provisions of the Act.
Issue 4: Allowance of deduction u/s 80IA
The AO disallowed the deduction u/s 80IA, noting that the old machinery purchased exceeded 20% of the total value. The CIT(A) allowed the deduction, agreeing with the assessee's submission that the condition regarding old machinery applies only in the initial year. The Tribunal confirmed the CIT(A)'s decision, referring to the decisions in CIT vs. Nippon Electronics (India) Ltd. and ITO vs. Laxmi Packers.
Issue 5: Allowance of deduction u/s 80IA on scrap sale and commission received on late payment
The AO disallowed the deduction on scrap sale and commission on late payment. The CIT(A) allowed the deduction, referring to the decisions in Nirma Inds. vs. DCIT and DCIT vs. Harjivandas Juthabhai Zaveri And Another. The Tribunal confirmed the CIT(A)'s decision.
Issue 6: Allowance of depreciation on old plant & machinery
The AO invoked Explanation 3 of sec.43[1], disallowing depreciation on the machinery purchased from a sister concern. The CIT(A) allowed the depreciation, noting that the extra cost was due to excise duty and sales tax. The Tribunal confirmed the CIT(A)'s decision.
Issue 7: Penalty u/s 271(1)(c)
The AO levied a penalty due to disallowance of interest and deferred revenue expenditure. The CIT(A) allowed relief for the deferred revenue expenditure but confirmed the penalty for the interest disallowance. The Tribunal set aside the penalty proceedings, remitting the issue back to the AO for reconsideration after the set aside proceedings.
Conclusion:
The assessee's appeals in I.T.A.Nos.6200/Mum/2007 & 2289/M/2010 are allowed for statistical purposes, while the Revenue's appeal in I.T.A.No.6647/Mum/2007 is dismissed.
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