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2009 (2) TMI 873
The Supreme Court dismissed the case. The citation is 2009 (2) TMI 873 - SC. The High Court reference is 2007 (1) TMI 248 - Karnataka High Court. The judges were Justice S.H. Kapadia and Justice H.L. Dattu. Petitioner represented by Mr. A. Mariarputham, Ms. Madhurima Tatia, Ms. Anil Katiyar, and Mr. B.K. Prasad. Respondent represented by Mr. T.R. Andhyarujuna, Mr. Soumik Ghosal, Mr. Devvrat, Mr. Vasudevan Raghavan, and Mr. K.T. Anantharaman.
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2009 (2) TMI 872
Manufacture - Appellant receiving Clove oil and Sandalwood oil in bulk packing and repacking in the small packings - the decision in the case of DABUR INDIA LTD. Versus COMMISSIONER OF CENTRAL EXCISE, GHAZIABAD [2008 (8) TMI 262 - CESTAT NEW DELHI] contested, where it was held that No process was undertaken by the appellant which amounts to manufacture and there is no chapter note under chapter 33 of the tariff which states that the packing and repacking of goods classifiable under sub-heading 3301.00 amounts to manufacture and demand not sustainable - Held that: - the decision in the above case upheld - appeal dismissed.
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2009 (2) TMI 871
Issues involved: Challenge to order discharging accused in Criminal Complaint Case u/s 138 of NI Act, interpretation of MOU terms, applicability of judgment in Venkatesh Dutt v. M/s. MS Shoes East Limited, relevance of subsequent judgment in Lalit Kumar Sharma & Anr v. State of UP V (2008) SLT 1.
Interpretation of MOU terms:
- Complaint filed for dishonour of cheque under NI Act.
- Parties entered into MOU for settlement.
- MOU stipulated payment terms and consequences of dishonour.
- Post-dated cheques issued as per MOU.
- Complaint not disposed of based on MOU.
- Accused filed for acquittal citing Venkatesh Dutt judgment.
- Petitioner argued MOU failure due to dishonoured cheques.
- Court considered clause 5 of MOU and Venkatesh Dutt judgment.
- Petitioner sought discharge based on MOU terms.
Applicability of Venkatesh Dutt judgment:
- Venkatesh Dutt case involved compromise during complaint.
- Cheques issued post-compromise dishonoured.
- Court held fresh cause of action for each dishonoured cheque.
- Multiple complaints maintainable for each dishonoured cheque.
- Petitioner argued Venkatesh Dutt judgment outdated.
- Petitioner sought revival of original complaint based on MOU terms.
Relevance of Lalit Kumar Sharma judgment:
- Lalit Kumar Sharma case involved loan repayment cheques.
- Compromise reached during complaint proceedings.
- Subsequent cheques dishonoured, new accused added.
- Supreme Court held second complaint not maintainable.
- Second cheque not towards original liability.
- Second complaint misconceived, appeal allowed.
- Petitioner argued Lalit Kumar Sharma judgment supersedes Venkatesh Dutt.
- Court agreed, set aside MM's order, revived original complaint.
Conclusion:
- Court found Venkatesh Dutt judgment outdated.
- Lalit Kumar Sharma judgment deemed relevant.
- Original complaint revived based on MOU terms.
- Matter to proceed before MM as per law.
- Petition disposed of, order for revival issued.
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2009 (2) TMI 870
Issues involved: Challenge to judgment of Bombay High Court setting aside trial court's decision and directing acquittal of respondent u/s 5(1)(e) of Prevention of Corruption Act, 1947.
Judgment Summary:
Issue 1: Interpretation of Section 5(1)(e) of the Act
The respondent, a government servant, was convicted for possessing wealth disproportionate to known sources of income. High Court held that acquisition of wealth before 1964 could not be considered as an offence. Citing precedents, the High Court's view conflicted with the interpretation in Sajjan Singh v. State of Punjab. The Supreme Court agreed that the High Court overlooked the scope of Section 5(1)(e) and remitted the matter back for further consideration of all aspects raised in the appeal.
Key Points:
- High Court's decision conflicted with Sajjan Singh case.
- High Court's focus on pre-1964 wealth acquisition deemed incorrect.
- Supreme Court remitted the case for a comprehensive review by the High Court.
Outcome: The appeal was allowed to the extent of setting aside the High Court's decision on the interpretation of Section 5(1)(e) and remitting the case for further consideration of all aspects raised in the appeal.
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2009 (2) TMI 869
Issues Involved:
1. Legality of High Court's reversal of trial court's acquittal.
2. Evaluation of evidence and witness credibility.
3. Applicability of Section 25 of the Arms Act.
4. Consistency of prosecution's case with medical and ballistic evidence.
Issue-wise Detailed Analysis:
1. Legality of High Court's reversal of trial court's acquittal:
The appellant challenged the High Court's judgment which reversed the trial court's acquittal, arguing that the High Court's interference was unjustified and contrary to established principles under Section 378 of the Criminal Procedure Code. The Supreme Court reiterated that if two views are possible, the High Court should not disturb the trial court's acquittal unless the conclusions are unreasonable, perverse, or unsustainable. The Supreme Court found the trial court's view reasonable and plausible, thus the High Court's interference was unwarranted.
2. Evaluation of evidence and witness credibility:
The trial court had acquitted the appellant based on several findings: the incident did not occur as alleged, the identity of the accused was not established beyond doubt, and there were inconsistencies in witness testimonies. The High Court, however, found the evidence of key witnesses believable despite minor contradictions. The Supreme Court, upon independent analysis, found significant discrepancies in the evidence of the prosecution witnesses, which were not minor but vital for disbelieving their testimonies. The Supreme Court concluded that the High Court disregarded these discrepancies and wrongly overturned the trial court's acquittal.
3. Applicability of Section 25 of the Arms Act:
The High Court convicted the appellant under Section 25 of the Arms Act, which pertains to the illegal possession and use of arms. The Supreme Court pointed out that the appellant was charged and tried under Section 27 of the Arms Act for using a firearm, not for possessing it illegally. Therefore, the High Court erred in convicting the appellant under Section 25.
4. Consistency of prosecution's case with medical and ballistic evidence:
The Supreme Court found that the prosecution's evidence was inconsistent with medical and ballistic reports. The medical evidence indicated that the injuries could not have been caused by a single bullet as alleged. The ballistic expert's report also contradicted the prosecution's case regarding the weapon used. The trial court had noted these inconsistencies and acquitted the appellant, a decision the Supreme Court found reasonable.
Conclusion:
The Supreme Court allowed the appeal, set aside the High Court's judgment, and restored the trial court's acquittal. The appellant was ordered to be released forthwith if not required in any other case.
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2009 (2) TMI 868
Issues involved: Alleged reduction in percentage shareholding, maintainability of the petition u/s 399.
Alleged reduction in percentage shareholding: The petitioner, holding 100 shares in M/s. Seth Hotels Private Limited, claimed his 20% shareholding had decreased significantly due to further share allotments. The company, incorporated in 1993, had increased its paid-up capital from Rs. 5,000 to over Rs. 1.79 crores through multiple allotments excluding the petitioner and another brother. The petitioner sought cancellation of the impugned shares and requested to tag his petition with another shareholder's petition. The respondents challenged the maintainability of the petition u/s 399, arguing the petitioner did not hold 10% shares or constitute 1/10th of the membership due to 15 shareholders in the company.
Maintainability of the petition u/s 399: The respondents contended that apart from one brother, none of the other siblings showed interest in the company, and shares were allotted without objection. They highlighted that all shareholders except the petitioner had transferred their shares to the 16th/17th respondent group, which invested over Rs. 6 crores to manage the company and settle a lawsuit. The respondents emphasized that relevant returns were filed for all share allotments, and the petitioner was aware of these transactions. The petitioner's delay in filing the petition, despite knowing about the allotments in 2006, was noted, leading to the dismissal of the petition for being not maintainable u/s 399.
Conclusion: The petition was dismissed as not maintainable u/s 399, rendering the related application infructuous. The dismissal did not prevent the respondents from negotiating to purchase the petitioner's shares.
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2009 (2) TMI 867
The Supreme Court dismissed the appeal in the case with citation 2009 (2) TMI 867 - SC. Judges were Mr. S.B. Sinha and Mr. V.S. Sirpurkar.
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2009 (2) TMI 866
Issues involved: Determination of whether Cenvat credit is required to be recovered on inputs in stock, finished products, and work in process when final products become exempt under Rule 12 of the Cenvat Credit Rules.
Summary:
The appellants, engaged in tractor manufacturing, faced a dispute regarding the recovery of Cenvat credit on inputs, finished products, and work in process when final products were exempted under Rule 12. The Commissioner confirmed duty demand, interest, and penalty. The appellant cited a favorable decision by the Larger Bench in a previous case, while the DR relied on a Division Bench decision. The Tribunal referred to the decision in the case of M/s. HMT Ltd. & others, stating that the credit need not be reversed when the final product becomes exempt. The Tribunal also mentioned similar views upheld in other cases. Consequently, the impugned orders were set aside, and all appeals were allowed with consequential relief.
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2009 (2) TMI 865
The Supreme Court dismissed the Special Leave Petition on facts while condoning the delay. The question of law remains open. (2009 (2) TMI 865 - SC)
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2009 (2) TMI 864
The Supreme Court dismissed the appeal under Section 130E of the Customs Act due to the conduct of the appellant.
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2009 (2) TMI 863
Issues Involved:
1. Levy of penalty under section 271(1)(c) of the Income Tax Act.
2. Allegation of concealment of income or furnishing inaccurate particulars of income.
3. Applicability of Explanation 1 to section 271(1)(c).
Issue-wise Detailed Analysis:
1. Levy of Penalty under Section 271(1)(c):
The core issue revolves around the levy of penalty amounting to Rs. 1,61,943 under section 271(1)(c) of the Income Tax Act for the assessment year 2001-02. The assessee had shown discrepancies in the creditor balances with M/s Elegant Enterprise and M/s Silva Sales & Service, leading the Assessing Officer (AO) to treat the differences as unexplained cash credits under section 68, subsequently imposing the penalty.
2. Allegation of Concealment of Income or Furnishing Inaccurate Particulars of Income:
The assessee contended that all necessary details, including reconciliations and confirmations from the parties, were furnished. The discrepancies arose due to different accounting systems and clerical errors. The AO, however, imposed the penalty without specifying whether the assessee concealed particulars of income or furnished inaccurate particulars. The Tribunal emphasized that the expressions "has concealed the particulars of his income" and "has furnished inaccurate particulars of income" are distinct and not defined in the Act, implying different circumstances leading to the same effect-keeping off a portion of income.
3. Applicability of Explanation 1 to Section 271(1)(c):
Explanation 1 to section 271(1)(c) deals with deemed concealment and imposes a civil liability for failure to offer a bona fide explanation or if the explanation is found false. The Tribunal noted that the assessee provided a reasonable explanation substantiated with evidence, such as books of accounts and reconciliations, which were not found false by the AO. The Tribunal highlighted that the AO must point out the exact failure of the assessee for penalty imposition, which was not done in this case. The Tribunal referred to various judicial precedents, including CIT vs. Mussadilal Ram Bharose and K.P. Madhusudhanan vs. CIT, to underline that mere non-acceptance of an explanation does not justify penalty unless the explanation is proven false with definite evidence.
Conclusion:
The Tribunal concluded that the penalty under section 271(1)(c) was not justified as the assessee had furnished all necessary details and explanations, which were substantiated and not found false. The AO failed to point out the specific default warranting the penalty. Consequently, the penalty of Rs. 1,61,943 was canceled, and the appeal of the assessee was allowed.
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2009 (2) TMI 862
Issues Involved:
1. Disallowance of pre-operative expenditure.
2. Allowability of trial run expenditure.
3. Treatment of sales tax deferment loan.
4. Deduction u/s.35AB for technical know-how fees.
5. Annual value of property.
6. Disallowance of interest.
7. Disallowance of foreign travel expenses.
8. Disallowance of expenditure for earning tax-free income.
9. Adjustment of prior period expenditure and debenture redemption reserves while computing book profit u/s.115JA.
10. Addition due to closing stock valuation.
11. Addition on account of MODVAT credit.
12. Deduction on account of training fees.
13. Allowability of deduction on account of VRS payment.
Summary:
1. Disallowance of Pre-operative Expenditure:
The Tribunal allowed the assessee's claim for pre-operative expenditure of Rs. 1,25,23,020/- incurred at the Nasik steel division, following its own decision in the assessee's case for AY 1996-97. The claim for Gopal Nagar unit was dismissed as not pressed.
2. Allowability of Trial Run Expenditure:
The Tribunal allowed the trial run expenditure of Rs. 2.69 crores for the Nasik steel project, treating it as revenue expenditure, consistent with its decision for AY 1996-97.
3. Treatment of Sales Tax Deferment Loan:
The ground regarding the sum of Rs. 22,24,144/- deposited with MP High Court was dismissed as not pressed.
4. Deduction u/s.35AB for Technical Know-how Fees:
The Tribunal upheld the CIT(A)'s decision that technical know-how fees paid in installments are covered by section 35AB, allowing only 1/6th of the gross amount as deduction, following its own decision for AY 1994-95.
5. Annual Value of Property:
The Tribunal confirmed the CIT(A)'s method of computing the annual value of JK House based on standard rent, following its decision for AY 1994-95.
6. Disallowance of Interest:
The Tribunal allowed the interest expenditure of Rs. 11,12,83,657/- for the Nasik steel unit, treating it as an extension of the existing steel division, consistent with its decision for AY 1995-96.
7. Disallowance of Foreign Travel Expenses:
The Tribunal allowed the foreign travel expenses of employees' spouses, following its decision for AY 1991-92, where such expenses were deemed essential for business purposes.
8. Disallowance of Expenditure for Earning Tax-free Income:
The ground regarding the disallowance of Rs. 1,61,999/- was dismissed as not pressed.
9. Adjustment of Prior Period Expenditure and Debenture Redemption Reserves:
The Tribunal allowed the adjustment of prior period expenditure of Rs. 300.35 lacs and deleted the addition of Rs. 1880.30 lacs for debenture redemption reserves, following the Supreme Court's judgment in Apollo Tyres and National Rayon Corporation Ltd.
10. Addition Due to Closing Stock Valuation:
The Tribunal upheld the CIT(A)'s decision to follow the direct cost method of valuation, rejecting the Assessing Officer's full cost method, consistent with its decision for AY 1997-98.
11. Addition on Account of MODVAT Credit:
The Tribunal confirmed the CIT(A)'s decision to exclude MODVAT from closing stock valuation, following the Supreme Court's judgment in Indo Nippon Chemical Co. Ltd.
12. Deduction on Account of Training Fees:
The Tribunal upheld the CIT(A)'s decision to allow training fees paid to a foreign company as revenue expenditure.
13. Allowability of Deduction on Account of VRS Payment:
The Tribunal confirmed the CIT(A)'s decision to allow VRS payment as revenue expenditure, following the High Court's judgment in Bhor Industries Ltd.
Conclusion:
The appeal of the assessee was partly allowed, and the appeal of the revenue was dismissed. The order was pronounced in open court on 25.02.2009.
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2009 (2) TMI 861
... ...
... ... ..... RDER Delay condoned. The appeal is dismissed.
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2009 (2) TMI 860
The High Court of Delhi dismissed the appeal as no substantial question of law arose for consideration, citing the decision in CIT vs. Vikramaditya and Associates P. Ltd., 287 ITR 268. Advocates for the Appellant were Ms. Premlata Bansal, Mr. Mohan Prasad Gupta, and Mr. Sanjeev Rajpal.
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2009 (2) TMI 859
Oppression and mismanagement - Rights issue of shares - shareholding of the Petitioners had been diluted - no notices were given for the meetings pertaining to the rights issue - shifting of the registered office, also, no notice for the same is given - appointment and removal of directors - Directorial disputes -
HELD THAT:- The finding of the Company Law Board that the several resolutions alleged to have been passed in the meeting of the Board of Directors on various dates cannot be held to be validly convened or passed and the decision rendered by the Company Law Board in that regard requires no intervention.
The petition is therefore well founded and the grievance seeking for intervention of the Company Law Board u/s 397 and 399 are, therefore, tenable in law. Hence, the persons who were admittedly the Directors of the Company as on 29.10.2005 were entitled to be served with due notices on every share holder found mentioned on the Register of Companies as on that date before taking any decision. It shall be open for the appellants to take such action in his personal capacity as transferee of shareholding of Ajmer Singh to give notices in the manner required by the law and take appropriate decisions after due notices in the manner sanctioned by law.
The entitlement or otherwise of Zora Singh to obtain transfer of shares pertaining to 25% held by Amrik Singh will be decided in the Civil Suit which is pending before it and no observation made by this Court shall be construed as constituting any remark in favour of or against either of the parties to contend that one way or the other about the respective merits of the case before the Civil Court.
From the discussions made above and the findings rendered for the points raised in appeal by capturing them under relevant sub- headings, the following is summary of the conclusions:-
(a) The MOU dated 09.11.2005 did not involve or contemplate transfer of asset of the company. It was an instrument to transfer the shares of the company to the parties to the document and a chosen medium for total control over the affairs of the company to one of the parties to the document. It did not operate to transfer the assets of the company to either of the parties. The fidings rendered by the Company Law Board, and found expressed in para 51 of the impugned order are set aside.
(b) The actual payment of consideration under MOU and the entitlement to obtain transfer of all the shares of the company to Zora Singh including the shares of Amrik Singh and Malkiat Singh to give a valid discharge on behalf of Amrik Singh (the respondent No.1 herein) shall be matters which shall fall adjudication only in the civil suit pending between the parties and nothing mentioned in this judgment nor the Company Law Board will operate to be final against the respective interests of the party.
(c) The findings rendered by the Company Law Board that Amrik Singh had no due notice of the meetings of the Board of Directors and the notices alleged to have been sent to him for meetings on 09.05.2006, 11.05.2006 and 19.05.2006 are confirmed and consequently the resolutions alleged to have been passed on the respective dates are set aside. Amrik Singh cannot be imputed with constructive notices of the meetings to be bound by any of the decisions in the said meetings.
(d) The effect of non-services of the notices on Amrik Singh, admittedly, a 25% shareholder and the purported decisions to appoint additional directors, removal of existing directors, including Amrik Singh and his son and increase in share capital shall constitute oppression and mismanagement of the affairs of the company, actionable before the appropriate forum.
The appeal is disposed of in the above terms.
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2009 (2) TMI 858
Issues Involved:
1. Validity of initiation of proceedings u/s 263 of the Income-tax Act, 1961.
2. Whether the assessment order u/s 143(3) was erroneous and prejudicial to the interests of revenue.
3. Correctness of the CIT's direction to recompute the deduction u/s 10A after adjusting brought forward business losses and unabsorbed depreciation.
Summary:
1. Validity of initiation of proceedings u/s 263 of the Income-tax Act, 1961:
The assessee contended that the preconditions necessary for initiation of proceedings u/s 263 did not exist and that the notice issued was bad in law, rendering the entire proceedings and order invalid. The Tribunal examined the validity of the initiation of proceedings and found that the CIT's action was not justified.
2. Whether the assessment order u/s 143(3) was erroneous and prejudicial to the interests of revenue:
The CIT held that the assessment order dated March 20, 2006, was erroneous and prejudicial to the interests of revenue. The Tribunal referred to previous decisions, including ACIT vs. M/s. Webspectrum Software (P) Ltd. and GE India Exports Pvt. Ltd., which established that the deduction u/s 10A should be allowed without setting off brought forward and current year losses of non-10A units. The Tribunal concluded that the CIT's order was not sustainable.
3. Correctness of the CIT's direction to recompute the deduction u/s 10A after adjusting brought forward business losses and unabsorbed depreciation:
The CIT directed the AO to recompute the deduction u/s 10A after considering brought forward losses and unabsorbed depreciation. The Tribunal, however, held that the deduction u/s 10A should be computed without setting off losses of non-10A units, following the principles laid down in previous judgments. The Tribunal annulled the CIT's order dated 13.12.2007 passed u/s 263 of the IT Act.
Conclusion:
The appeal filed by the assessee was allowed, and the order of the learned CIT dated 13.12.2007 was annulled. The Tribunal directed that the deduction u/s 10A should be allowed without setting off brought forward and current year losses of non-10A units. The order was pronounced in the open court on 13.02.2009.
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2009 (2) TMI 857
Issues:
Whether SIM cards attract sales tax as the sale of goods.
Analysis:
The judgment addresses the issue of whether SIM cards are subject to sales tax as the sale of goods. The matter was previously taken to the Supreme Court, which remanded it to the Assessing Officer. After the remand, the department accepted the contention of one of the parties. Different mobile operators in the State took divergent positions on the matter. Some companies, including BSNL and BPL Cellular Ltd., offered service tax on the value of SIM cards and recharge coupons, while others like ESCOTEL/IDEA paid sales tax and contested service tax liability. The Division Bench of the Court considered the liability for service tax on the value of SIM cards collected by service providers and held that it is part of the taxable service rendered by the service provider, and only the Central Government can collect service charges on such taxable services. The judgment directed the Assessing Officer to exclude the value of SIM cards and recharge coupons from the taxable turnover. Any sales tax collected on SIM cards and recharge coupons should be forfeited under the Kerala Value Added Tax Act, and refunds should be considered strictly in terms of the rules specified. The officer has the discretion to consider tax liability on the sale of other gadgets by mobile telecom operators.
In conclusion, the judgment clarifies the treatment of SIM cards in relation to sales tax and service tax liability. It emphasizes that the value of SIM cards and recharge coupons should not be included in the taxable turnover for sales tax purposes. Refunds, if applicable, should be processed according to the specified rules. The decision provides clarity on the taxation of SIM cards and reinforces the distinction between sales tax and service tax in this context.
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2009 (2) TMI 856
Issues Involved:
1. Interpretation of Maharashtra town planning law regarding Transferable Development Rights (TDR) and Floor Space Index (FSI).
2. Validity and applicability of the Municipal Commissioner's circulars in determining TDR/FSI.
3. Entitlement of landowners to TDR/FSI for constructing roads on surrendered land.
4. Statutory provisions versus executive instructions.
Detailed Analysis:
1. Interpretation of Maharashtra town planning law regarding Transferable Development Rights (TDR) and Floor Space Index (FSI):
The judgment discusses the evolution of the Maharashtra town planning law aimed at promoting planned development and decongesting highly congested areas. The law allows for the development potential of a plot of land to be separable from the land itself and transferable by the landowner. This is particularly useful for plots reserved for public purposes, prohibiting other developments. Landowners can surrender their plots free of cost to municipal authorities and receive TDR or FSI in return. Section 126(1)(b) of the Maharashtra Regional and Town Planning Act, 1966, and the Development Control Regulations for Greater Bombay, 1991, are central to this case. These provisions stipulate that landowners are entitled to TDR/FSI for surrendered land and additional TDR/FSI for constructing amenities on the surrendered land at their own cost.
2. Validity and applicability of the Municipal Commissioner's circulars in determining TDR/FSI:
The municipal authorities issued a circular on April 9, 1996, which introduced a graded scheme for granting additional TDR for constructing amenities, allowing only 15% of the road area for DP roads. This circular was later amended on April 5, 2003, to increase the TDR to 25% for road areas. The appellants argued that the circulars were merely executive instructions and could not override the statutory provisions of the Regulations, which are legislative in nature. The court agreed with this argument, stating that the statutory provisions could not be superseded by executive instructions.
3. Entitlement of landowners to TDR/FSI for constructing roads on surrendered land:
The appellants claimed that they were entitled to TDR/FSI equivalent to the entire surface area of the roads they constructed on the surrendered land, as per paragraph 6 of Appendix VII to the Development Control Regulations for Greater Bombay, 1991. The municipal authorities, however, granted only 15% (later increased to 25%) of the road area based on the circular. The court examined the statutory provisions and concluded that the law clearly envisaged granting TDR/FSI under two separate heads: one for the land and the other for the construction of the amenity. The court found that paragraph 6 of Appendix VII used the words "equivalent to the area of the construction/development," which meant that the additional TDR should be the same in area as the amenity constructed on the surrendered land.
4. Statutory provisions versus executive instructions:
The court emphasized that the statutory provisions of the Act and the Regulations had to be followed, and executive instructions in the form of circulars could not override these provisions. The court noted that the municipal authorities were aware of this legal position and had requested the State Government to modify paragraph 6 of Appendix VII. The court also highlighted that the circular dated April 9, 1996, was issued after the appellants had surrendered their land and constructed the roads, and thus, it would not affect their rights retrospectively.
Conclusion:
The court set aside the judgment and order of the Bombay High Court, which had upheld the municipal authorities' stand. The court allowed the appeals and writ petitions of the appellants, granting them TDR/FSI equivalent to the area of the roads constructed on the surrendered land, as per the statutory provisions. The court emphasized that any changes to the basis for granting TDR/FSI should be made through amendments to the law, not through executive circulars.
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2009 (2) TMI 855
Issues Involved:
1. Rejection of books of accounts u/s 145 of the Income Tax Act.
2. Gross Profit (GP) addition of Rs. 16,13,014/-.
3. Calculation of deduction u/s 80HHC.
4. Additions u/s 69C for unexplained expenditure.
5. Disallowance of depreciation.
6. Disallowance of foreign tour expenses.
7. Addition u/s 41(1) for cessation of liability.
8. Disallowance of interest u/s 36(1)(iii).
9. Charging of interest u/s 234B/C.
Summary:
1. Rejection of Books of Accounts u/s 145:
The Tribunal upheld the rejection of the books of accounts by the Assessing Officer (AO) due to various discrepancies, including untraceable stock registers and unsupported cash vouchers. The AO invoked provisions of section 145 of the Income Tax Act, 1961, and the Tribunal found this action legally and factually correct.
2. Gross Profit (GP) Addition of Rs. 16,13,014/-:
The AO added Rs. 16,13,014/- to the assessee's income by applying the previous year's GP rate of 38.79% instead of the declared 30.47%. The Tribunal directed the AO to verify if the net profit percentage to sales for the current year is better than the previous year or the average of the last three years. If so, the addition should be deleted.
3. Calculation of Deduction u/s 80HHC:
The Tribunal did not specifically address this issue in the detailed judgment provided.
4. Additions u/s 69C for Unexplained Expenditure:
The AO added Rs. 3,05,000/- for discrepancy in stock and Rs. 5,60,000/- for repairs disclosed during the survey as unexplained expenditure u/s 69C. The Tribunal directed the AO to delete the addition of Rs. 8,69,796/- since the disclosed income of Rs. 9,03,365/- was already included in the annual accounts, preventing double addition.
5. Disallowance of Depreciation:
The Tribunal did not specifically address this issue in the detailed judgment provided.
6. Disallowance of Foreign Tour Expenses:
The Tribunal did not specifically address this issue in the detailed judgment provided.
7. Addition u/s 41(1) for Cessation of Liability:
The AO added Rs. 71,860/- as income due to cessation of liability for outstanding creditors. The Tribunal remanded the issue back to the AO to verify the payment evidence provided by the assessee and re-adjudicate accordingly.
8. Disallowance of Interest u/s 36(1)(iii):
The AO disallowed Rs. 2,88,678/- due to the lack of verification of cash flow and bank statements. The Tribunal remanded the issue back to the AO, directing the assessee to furnish the necessary documents for verification and re-adjudication. The AO may also consider the alternate contention under section 14A read with Rule 8D.
9. Charging of Interest u/s 234B/C:
The Tribunal did not specifically address this issue in the detailed judgment provided.
Conclusion:
The appeal was partly allowed, with specific directions for verification and re-adjudication on certain issues. The Tribunal emphasized the need for proper documentation and verification by the AO before making additions or disallowances.
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2009 (2) TMI 854
The Supreme Court dismissed the special leave petitions after condoning the delay, as there were no merits found. The citation is 2009 (2) TMI 854 - SC. Dr. Justice Arijit Pasayat and Dr. Justice Mukundakam Sharma presided over the case. Petitioner represented by Mr. K.Radhakrishnan, Mr. H.Raghavendra Rao, Mr. Siddharth Choudhary, MS. Anil Katiyar, and Mrs. Anil Katiyar.
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9911796707
