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2009 (3) TMI 1051
The Supreme Court condoned the delay and dismissed the Special Leave Petition regarding a penalty of Rs. 10,000 without interference. The question of law is kept open. (Case Citation: 2009 (3) TMI 1051 - SC)
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2009 (3) TMI 1050
Issues Involved:
1. Addition on account of notional interest.
2. Ad hoc addition on account of non-inclusion of damaged stock in valuation of closing stock.
3. Addition on account of presentation of gift articles.
4. Addition on account of prior period adjustments.
Summary:
1. Addition on account of notional interest:
The common ground raised in these cross appeals is in respect of addition on account of notional interest. The AO noticed that the assessee had given interest-free loans to subsidiary companies and disallowed interest claim of Rs. 2,62,74,000/- by applying 12% interest. The CIT(A) deleted the disallowance related to Pentasia Investment(I) Ltd and Asian Paints Industrial Coatings Ltd but confirmed the addition for Technical Instruments Manufacturing Ltd. The ITAT remitted the matter back to the file of the CIT(A) with identical directions as given in earlier orders, including the disallowance related to Pentasia Investment (I) Ltd.
2. Ad hoc addition on account of non-inclusion of damaged stock in valuation of closing stock:
The AO noticed that the assessee valued unserviceable, damaged, and inert stock at Nil and estimated the realizable value of the damaged stock at Rs. 50.00 lakhs. The CIT(A) confirmed the addition. The ITAT agreed with the AO's findings and confirmed the orders of the revenue authorities on this issue.
3. Addition on account of presentation of gift articles:
The assessee claimed Rs. 9,39,208/- for gift articles presented. The AO disallowed the claim due to lack of details, and the CIT(A) reduced the disallowance to 50%. The ITAT, considering the absence of details and past disallowances, restricted the disallowance to 10% of the claimed amount.
4. Addition on account of prior period adjustments:
The assessee claimed Rs. 98.36 lacs on account of prior period adjustments during assessment proceedings, which the AO disallowed. The CIT(A) held that such claims must be made in the return of income and rejected the claim. The ITAT found that appellate authorities, including CIT(A) and ITAT, have the power to admit such claims. The matter was remitted back to the file of the CIT(A) to decide the issue on merit in accordance with law.
Conclusion:
In the result, the appeal of the assessee is partly allowed for statistical purposes, and the appeal of the revenue is allowed for statistical purposes.
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2009 (3) TMI 1049
Power of Magistrate to frame the charge - discharge of the accused on the ground that the charge is groundless - Whether, even before any evidence is led u/s 244 CrPC, can the Magistrate straightaway proceed to frame a charge - HELD THAT:- It must be, at this stage, borne in mind that the word used in Section 246 CrPC is "evidence", so also, in Section 244 CrPC, the word used is "evidence". Therefore, ordinarily, the scheme of the Section 246 CrPC is that, it is only on the basis of any evidence that the Magistrate has to decide as to whether there is a ground to presume that the accused has committed an offence triable under this Chapter.
We must note that while Section 245(2) CrPC speaks about the discharge of the accused on the ground that the charge is groundless, Section 246(1) operates in entirely different sphere. An order u/s 245(2) CrPC results in discharge of the accused, whereas, an order u/s 246 CrPC creates a situation for the accused to face a full-fledged trial. Therefore, the two Sections would have to be interpreted in slightly different manner, keeping in mind the different spheres, in which they operate.
There is only one judgment of the Andhra Pradesh High Court in Verendra Vs. Aashraya Makers[1999 (4) TMI 661 - ANDHRA PRADESH HIGH COURT], which has taken the view that the Magistrate can frame the charge even without any evidence having been taken u/s 244 CrPC. We do not think that is a correct expression of law, as the right of the accused to cross-examine the witnesses at the stage of Section 244(1) CrPC would be completely lost, if the view is taken that even without the evidence, a charge can be framed u/s 246(1) CrPC. The right of cross-examination is a very salutary right and the accused would have to be given an opportunity to cross-examine the witnesses, who have been offered at the stage of Section 244(1) CrPC. The accused can show, by way of the cross-examination, that there is no justifiable ground against him for facing the trial and for that purpose, the prosecution would have to offer some evidence. While interpreting this Section, the prejudice likely to be caused to the accused in his losing an opportunity to show to the Court that he is not liable to face the trial on account of there being no evidence against him, cannot be ignored.
Unfortunately, the earlier cases of the same Court, were brought to the notice of the Learned Judge. Again, the Learned Judge has not considered the true impact of the clause "at any previous stage of the case", which could only mean that even with a single witness, the Magistrate could proceed to frame the charge.
It is clear that the opportunity to the accused to cross-examine the witnesses is lost, as the Trial Court has straightaway proceeded to frame the charge. In that view, we would have to quash the order, framing the charge. It is accordingly, quashed. The matter will now go back before the Trial Court, where the prosecution may offer the witnesses u/s 244(1) CrPC and the opportunity to cross-examine, would be offered to the accused. It is only thereafter, that the Trial Court would proceed to decide as to whether the charge is to be framed or not. The charge framed in this case is clearly premature, in view of the reasons given by us. The order framing the charge would, therefore, have to be set aside.
We are not expressing anything on merits, particularly because we have directed the evidence of the prosecution to be led u/s 244 (1) CrPC. Any expressions on our part are likely to cause prejudice to the prosecution, as the case may be, accused. We are, therefore, leaving the matter at this.
Accordingly, the appeal is disposed of with the direction that the matter shall now go back to the Trial Court and the Trial Court shall proceed to examine all the witnesses offered by the prosecution and it is only after the evidence of those witnesses is recorded, that the Trial Court would proceed to decide as to whether the charge is to be framed or not. The appeal, thus, succeeds partly.
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2009 (3) TMI 1048
Issues involved: Disallowance of expenditure on foreign tour and traveling expenses u/s assessment year 2004-05.
Dispute Details:
The appeal by the Revenue challenges the disallowance of expenditure on foreign tour and traveling expenses amounting to Rs. 18,89,812 in relation to employees and partners in the course of the assessee's business. The AO and CIT(A) raised concerns regarding the lack of full details and supporting vouchers, leading to the disallowance. The assessee provided detailed explanations and justifications for the expenses, emphasizing the business nature of the tours and the necessity of the expenditures.
Arguments and Decision:
The assessee presented full details of the disallowance and foreign traveling expenses, highlighting the business connections and purposes of the tours to Hong Kong, Dubai, and Singapore. The Revenue contended that the initial onus to justify the expenses was not met, supporting the disallowance. However, considering the substantial export turnover of the assessee and the business requirements, the Tribunal found the claim of expenditure reasonable. The Tribunal noted that the expenses were incurred for business purposes and had a clear business nexus, warranting acceptance. Referring to a similar case before the ITAT, the Tribunal concluded that the disallowance was unjustified and deleted the addition made by the AO and upheld by the CIT(A).
Conclusion:
The Tribunal allowed the assessee's appeal, emphasizing the reasonableness of the claimed expenses in relation to the business activities and overturning the disallowance made by the Revenue authorities.
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2009 (3) TMI 1047
Issues involved: Interpretation of principles in Mcdowel's case, genuineness of transactions, entitlement to depreciation for a hire purchaser.
Interpretation of principles in Mcdowel's case: The High Court considered whether the Tribunal erred in holding that the principle laid down in Mcdowel's case would not apply. The Assessment Year in question was 1995-96, and the Assessing Officer disallowed the claim of depreciation at 100% by the assessee, citing that the transactions were not genuine. The Commissioner (Appeals) upheld this decision, but the Tribunal, in its order dated 16.04.1999, deemed the transactions to be genuine and allowed the depreciation claim.
Genuineness of transactions: The Tribunal's decision was supported by a previous order dated 10.09.2008 in a similar case, where the Tribunal's ruling was upheld by the High Court. The High Court concluded that the transactions were indeed genuine, and the Tribunal did not err in allowing the depreciation claim. The Assessing Officer was directed to process the claim of depreciation in line with the law.
Entitlement to depreciation for a hire purchaser: The High Court also addressed whether the assessee, being a hire purchaser, was entitled to depreciation. It was determined that the assessee was indeed entitled to depreciation, and all three questions raised were answered in favor of the assessee. Consequently, the appeal was dismissed with no costs imposed.
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2009 (3) TMI 1046
Issues involved: Application for waiver of predeposit of penalty, reduction in quantum of fine and penalty, failure to declare foreign currency worth approximately &8377; 58 lakhs.
The judgment by the Appellate Tribunal CESTAT CHENNAI pertains to an application for waiver of predeposit of penalty of &8377; 5 lakhs imposed upon the appellant for failure to declare foreign currency worth approximately &8377; 58 lakhs. The Tribunal decided to proceed with the appeal itself at this stage, considering the appellant's request for reduction in the quantum of fine and penalty. Citing precedents such as Philip Fernandes Vs. Commissioner of Customs (Airport), Mumbai and Halithu Ibrahim Vs. Commissioner of Customs (Airport), Chennai, the Tribunal reduced the fine from &8377; 32,00,000/- to &8377; 7,50,000/- and the penalty from &8377; 5,00,000/- to &8377; 1,00,000/-. The Tribunal also allowed the appellant's prayer for the return of the sale proceeds after deducting the reduced fine and penalty from the realized amount of &8377; 56,00,000/-. The appeal was partly allowed in favor of the appellant.
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2009 (3) TMI 1045
Issues involved: Appeal against Order of the Commissioner (Appeals) regarding confiscation of imported old and used Photocopiers, enhancement of declared value, imposition of redemption fine, and penalty.
Confiscation of goods without required license:
The Respondent imported old and used Photocopiers, declared value enhanced by Original Authority, goods confiscated for lack of required import license. Commissioner (Appeals) upheld confiscation due to violation of licensing condition. However, disagreed with value enhancement, reducing redemption fine from Rs. 1,50,000 to Rs. 10,000 and penalty from Rs. 1,20,000 to Rs. 5,000. Department appealed seeking restoration of Original Authority's Order.
Disagreement on value enhancement:
Commissioner (Appeals) found contravention of Foreign Trade Policy and Customs Act, leading to confiscation and penal action. Disagreed with Original Authority's acceptance of Chartered Engineer's valuation without proper reasoning. Held that transaction value declared by importer should be accepted for Customs Duty, citing precedents. Found no mala fide intention on importer's part, as goods description matched Bill of Entry. Reduced redemption fine and penalty based on leniency due to first-time import and lack of mis-declaration.
Decision and reasoning:
Appellate Tribunal rejected department's appeal, upholding Commissioner (Appeals) order. Found no valid reason to interfere with findings regarding confiscation and reduction of redemption fine and penalty. Acknowledged leniency shown by Commissioner (Appeals) considering circumstances of the case. upheld Commissioner (Appeals) decision due to lack of mis-declaration and first-time import factor.
Conclusion:
Department's appeal against Commissioner (Appeals) order rejected, confirming reduction of redemption fine and penalty. Commissioner (Appeals) decision upheld based on lack of mis-declaration and leniency shown towards first-time importer.
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2009 (3) TMI 1044
Issues Involved:
1. Deletion of disallowance towards foreign agency commission.
2. Applicability of Section 195 and Section 40(a)(i) of the Income Tax Act.
3. Relevance of CBDT Circulars No. 23 and No. 786.
4. Interpretation of the Supreme Court decision in Transmission Corporation of Andhra Pradesh Ltd. vs. CIT.
Summary:
1. Deletion of Disallowance Towards Foreign Agency Commission:
The Revenue appealed against the Commissioner of Income Tax (Appeals) for deleting the disallowance of Rs. 23,57,715/- towards foreign agency commission. The Assessing Officer had disallowed this amount on the grounds that the commission was paid without deduction of tax at source.
2. Applicability of Section 195 and Section 40(a)(i) of the Income Tax Act:
The Assessing Officer argued that the assessee failed to deduct tax at source as required u/s 195, thereby invoking Section 40(a)(i) to disallow the deduction. The Commissioner of Income Tax (Appeals) disagreed, noting that the services were rendered outside India and thus not chargeable to tax in India, making Section 195 and Section 40(a)(i) inapplicable.
3. Relevance of CBDT Circulars No. 23 and No. 786:
The assessee relied on CBDT Circular No. 23 dated 23.7.1969 and Circular No. 786 dated 7.2.2000, which clarified that commission payments to non-resident agents operating outside India are not taxable in India and thus do not require tax deduction at source. The Commissioner of Income Tax (Appeals) upheld this view, stating that the assessee's case was fully supported by these circulars.
4. Interpretation of the Supreme Court Decision in Transmission Corporation of Andhra Pradesh Ltd. vs. CIT:
The Revenue contended that the Supreme Court decision mandated tax deduction at source irrespective of the income aspect. However, the Commissioner of Income Tax (Appeals) and the Tribunal found that the Supreme Court decision did not apply to cases where the non-resident rendered services entirely outside India. The Tribunal emphasized that the obligation to deduct tax u/s 195 arises only if the payment is chargeable to tax in India.
Conclusion:
The Tribunal upheld the order of the Commissioner of Income Tax (Appeals), concluding that the foreign agency commission paid by the assessee was not chargeable to tax in India, and thus, no tax was deductible u/s 195. Consequently, the disallowance u/s 40(a)(i) was not applicable. The appeal filed by the Revenue was dismissed.
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2009 (3) TMI 1043
Issues Involved:
1. Alleged acts of oppression and mismanagement.
2. Validity of the transfer of shares to the third respondent.
3. Validity of the petitioner's removal as a director.
4. Appointment of the third respondent as a director.
5. Rectification of the register of members.
6. Division of assets and liabilities of the company.
Detailed Analysis:
1. Alleged Acts of Oppression and Mismanagement:
The petitioner claimed 50% of the issued and paid-up capital of the company and alleged acts of oppression and mismanagement by the second respondent. The petitioner argued that the second respondent neither convened board meetings nor issued notices for such meetings and unlawfully removed the petitioner from the office of director using a forged resignation letter. The petitioner also alleged that the second respondent neglected his obligations, leading to the company's financial distress and eventual closure.
2. Validity of the Transfer of Shares to the Third Respondent:
The petitioner contended that the share transfer form dated September 12, 2003, was forged. The form had several discrepancies, such as incorrect initials, upside-down rubber stamps, and misspelled company names. The petitioner argued that no consideration was paid for the transfer and that the third respondent did not provide proof of payment. The respondents claimed that the petitioner had transferred his shares to settle a debt with the third respondent, who had repaid the amount to the legal heirs of a deceased creditor. However, the court found no material evidence supporting the approval of the transfer or the payment of consideration.
3. Validity of the Petitioner's Removal as a Director:
The petitioner argued that the resignation letter dated September 12, 2003, was forged. The court compared the disputed signatures with the petitioner's admitted signatures and found significant differences. The court also noted the absence of board meeting minutes approving the resignation. Consequently, the court declared the resignation letter forged and set aside the petitioner's cessation from the office of director.
4. Appointment of the Third Respondent as a Director:
The court found no material evidence supporting the appointment of the third respondent as a director. The respondents failed to produce board meeting minutes or any primary evidence of such an appointment. The court set aside the appointment of the third respondent as a director, citing the lack of proper documentation and the reliance on a forged resignation letter.
5. Rectification of the Register of Members:
The court declared the impugned transfer of shares in favor of the third respondent null and void due to the forged share transfer form. The company was directed to rectify the register of members by substituting the petitioner's name in place of the third respondent. The court emphasized that the relief of rectification could be granted under Sections 397 and 398 read with Section 402, without the need to invoke Section 111.
6. Division of Assets and Liabilities of the Company:
The court noted the irreconcilable differences between the petitioner and the second respondent, which resulted in a deadlock situation. Given the valuable property owned by the company, the court directed both parties to quote a competitive price for each share in sealed covers. The party quoting the higher price would have the first option to buy the shares of the other party. The court reserved the right to issue appropriate directions for the exit of either party from the company and ensured that the company's immovable property would not be alienated without written concurrence from both parties.
Conclusion:
The court found that the petitioner's claims of forgery and mismanagement were substantiated. The transfer of shares and the petitioner's removal as a director were declared null and void. The court directed the rectification of the register of members and outlined a procedure for resolving the deadlock between the petitioner and the second respondent. The company petition was disposed of with specific directions for the exit of either party from the company.
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2009 (3) TMI 1042
Issues Involved:
The appeal against the impugned Judgment of the Allahabad High Court in Criminal Miscellaneous Writ Petition No.13227/2007 for quashing the F.I.R. in case Crime No.1133/2007 under Sections 467,468,471,420,409 and 218 I.P.C., Police Station Mahoba, District Mahoba, U.P.
Judgment Summary:
The Supreme Court heard the counsel for the parties and granted leave to appeal against the impugned Judgment of the Allahabad High Court. The High Court had refused to quash the F.I.R. but directed that if the appellant surrenders within 10 days, his bail application will be considered and disposed of expeditiously. The appellant was aggrieved by this order and filed the appeal.
An interim order was passed by the Supreme Court directing that the petitioner shall not be arrested in the meanwhile. The State of U.P. informed the Court that a charge sheet had been filed, cognizance taken, and the case was pending before the trial Court. The State counsel submitted that the Court should not exercise discretion under Article 136 of the Constitution to quash the F.I.R.
The appellant's counsel expressed apprehension regarding the appellant's potential arrest due to the absence of anticipatory bail provision in U.P. He relied on a decision of the Allahabad High Court in Amaravati Vs. State of U.P. 2005 Crl.L.J 755, which allowed for interim bail in certain cases pending final disposal of the bail application. The Supreme Court agreed with the High Court's decision in Amaravati's case and directed all Courts in U.P. to follow it, emphasizing the importance of considering interim bail in appropriate cases to prevent irreparable harm to reputation.
Considering the charge sheet had been filed and cognizance taken, the Supreme Court held that this was not a suitable case for quashing the F.I.R. The appeal was dismissed, but the appellant was granted time to appear before the trial Court by a specified date to file a bail application. The trial Court was instructed to consider the bail application on its merits and grant interim bail if deemed fit.
The Supreme Court ordered a copy of the judgment to be sent to the Registrar General of the Allahabad High Court for circulation to all Hon'ble Judges of the High Court and District Judges in the State.
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2009 (3) TMI 1041
Issues involved: Jurisdiction of designated Authority to review final finding, Violation of principles of natural justice.
Jurisdiction Issue: The High Court considered two main issues in this case. Firstly, it was argued that the designated Authority did not have the jurisdiction to review the final finding without proper authority. Secondly, it was contended that the Petitioners were not given an opportunity to be heard, thus violating principles of natural justice. The learned ASG disputed the legal correctness of the jurisdictional argument and assured that the matter would be argued before the designated Authority.
Violation of Natural Justice: On the issue of violation of natural justice, the learned ASG confirmed that the Petitioners would be granted an opportunity to be heard and access to any additional material submitted to the designated Authority. Consequently, the High Court set aside the impugned order and directed the Petitioner to appear before the designated Authority on a specified date. It was clarified that appearing before the Authority did not waive the Petitioner's objection to jurisdiction, which could still be raised before the Authority for a decision.
Additional Information: The Senior Advocate for the Petitioner requested liberty to approach the Court if the Petitioner remained aggrieved after the fresh order was passed. The Court clarified that while this new cause of action may not necessarily warrant granting liberty, the Petitioner could still seek redressal by approaching the High Court or the appropriate forum. The Writ Petition was disposed of based on these terms.
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2009 (3) TMI 1040
Issues involved: Interpretation of tax laws related to addition of specific amounts in the assessment u/s 115JB.
In the present case, the High Court of Delhi addressed three substantial questions of law raised by the Revenue. Firstly, whether the ITAT was correct in deleting the addition of Rs.13,54,706/- for long service award made by the Assessing Officer. Secondly, whether the ITAT was correct in law in upholding the Order of CIT (Appeals) and deleting the addition of Rs. 59,35,292/- on account of capitalized emergency spares. Lastly, whether the ITAT was correct in law in deleting the addition of Rs.31,34,366/- for provision of doubtful debts while computing profit u/s 115JB.
The learned counsel for the Appellant acknowledged that the first two questions were already addressed in a previous judgment related to the assessee's own case from the preceding assessment year. Additionally, the third question had been answered against the Revenue in a different case. Consequently, the Appeal was dismissed by the Court.
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2009 (3) TMI 1039
Issues Involved:
1. Confirmation of penalty levied u/s 271(1)(c) of the Act.
2. Determination of the residential status of the assessee.
3. Addition on account of low withdrawal for household expenses.
Summary:
Issue 1: Confirmation of Penalty Levied u/s 271(1)(c) of the Act
The sole ground of appeal is the confirmation of the penalty of Rs. 23,42,010/- levied u/s 271(1)(c) of the Act. The AO initiated penalty proceedings under section 271(1)(c) of the Act, observing that the assessee had concealed the particulars of his income and furnished inaccurate particulars of such income. The AO found that the assessee had filed a revised return only after scrutiny notices were issued, changing his status from "non-resident" to "resident" and offering the foreign remittance of Rs. 69.97 lacs for taxation.
Issue 2: Determination of the Residential Status of the Assessee
The AO found that the assessee was in India for 80 days during the assessment year and, upon examining the details of stay in India and abroad in earlier years, concluded that the assessee was a "resident" and not a "non-resident." The assessee filed a revised return offering the foreign remittance for taxation after the AO called for details of stay in India and abroad.
Issue 3: Addition on Account of Low Withdrawal for Household Expenses
The AO made an addition of Rs. 1 lac to the income of the assessee on account of low withdrawal for household expenses, stating that the assessee did not have enough money to run his household expenses. The Learned Commissioner of Income Tax (Appeals) upheld this addition, stating that the appellant failed to show the source of income for incurring household expenses.
Judgment:
The Tribunal observed that the AO levied the penalty on the ground that the assessee was guilty of both concealment of income and furnishing inaccurate particulars of income. However, the Tribunal referred to the decision of the Hon'ble Gujarat High Court in the case of New Sorathia Engineering Co. Vs. Commissioner of Income-tax, [2006] 282 ITR 0642(Guj), which held that the AO must arrive at a positive finding as to whether the assessee was guilty of concealment of income or furnishing inaccurate particulars of income. The Tribunal found that the AO did not arrive at a clear conclusion and used the term "and/or," indicating ambiguity.
In view of the decision of the jurisdictional High Court, the Tribunal concluded that the order of the AO suffered from a legal error and was bad in law. Therefore, the Tribunal set aside the order of the lower authorities and deleted the penalty of Rs. 23,42,010/-. The appeal of the assessee was allowed.
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2009 (3) TMI 1038
Issues involved:
1. Classification of additional quota of free sale of sugar as capital receipt.
2. Disallowance made by Assessing Officer under rule 6B of Rs. 17,556.
Issue 1 - Classification of additional quota of free sale of sugar as capital receipt:
The High Court considered the appeal regarding the classification of the additional quota of free sale of sugar granted to the assessee by the Central Government. The Court noted that the assessee had taken a loan for expanding the existing industrial undertaking for sugar production, and under the scheme, the assessee was entitled to the sale of additional sugar quota to repay the loan. The Court agreed with the tribunal's finding that the receipt should be treated as a capital receipt. The Court referred to a previous judgment and upheld the view that the receipt in question amounted to a capital receipt. Therefore, the Court concluded that the first question did not arise, and the appeal was dismissed.
Issue 2 - Disallowance made by Assessing Officer under rule 6B of Rs. 17,556:
Regarding the disallowance made by the Assessing Officer under rule 6B of Rs. 17,556, the Court found that the tribunal had followed a previous judgment of the Court in a similar case. The Court stated that nothing was presented to challenge the applicability of the previous judgment. Therefore, the Court held that the second question did not arise for consideration. Consequently, the Court dismissed the appeal on this issue as well.
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2009 (3) TMI 1037
The Allahabad High Court directed the standing counsel to file a counter affidavit within four weeks, and allowed a rejoinder affidavit to be filed within three weeks. The petitioner raised concerns about conflicting judgments and sought resolution from the court. As an interim measure, recovery proceedings were stayed if the petitioner provided adequate security within two weeks. Failure to provide security would result in the discharge of the interim order.
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2009 (3) TMI 1036
The Bombay High Court dismissed the Revenue's appeal against the tribunal's order, which was restored to the file of A.O. for fresh decision based on a Delhi High Court decision. The Revenue argued that the benefit was already granted to the assessee, but the assessee's counsel stated that additions should be made at three stages. The court concluded that the A.O. should follow the law under Section 145A, as the Delhi High Court judgment did not address this issue.
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2009 (3) TMI 1035
Issues Involved:1. Validity of the detention order due to improper communication of additional documents. 2. Denial of legal assistance to the detenu. 3. Incorrect translation of documents provided to the detenu. Summary:Issue 1: Validity of the detention order due to improper communication of additional documentsThe petitioner, detained u/s 3(1)(i) of the COFEPOSA Act, challenged the detention order. It was argued that additional documents were supplied without specifying their purpose or whether they would be placed before the Advisory Board, causing confusion and impairing the detenu's ability to make an effective representation. The court referenced the judgment in STATE OF T.N. vs. SENTHIL KUMAR AND ANOTHER [1999 SCC (Cri) 299], which held that such omissions infringe on the detenu's right under Article 22(5) of the Constitution. The court agreed that the manner of document service caused confusion and impaired the detenu's representation rights. Issue 2: Denial of legal assistance to the detenuThe petitioner requested legal assistance in his representation dated 26.6.2008, which was rejected on 14.7.2008, after the Advisory Board meeting on 10.7.2008. The court cited STATE OF MAHARASHTRA AND OTHERS vs. ZUBAIR HAJI QUASIM [(2008) 3 MLJ (Crl) 627 (SC)], emphasizing that while the detenu has no right u/s 8(e) of the COFEPOSA Act to appear through a legal practitioner, any request for legal assistance must be considered with due application of mind. The court found no evidence that the Advisory Board considered the request, thus applying the Apex Court's judgment to the case. Issue 3: Incorrect translation of documents provided to the detenuThe petitioner argued that incorrect translations of documents were provided, impairing his ability to make an effective representation. The court noted that the correct translations were supplied only after the Advisory Board meeting, causing prejudice to the detenu. The court referenced an unreported order in W.P.No.6492 of 1990, which set aside a detention order under similar circumstances. The court found that the respondents' failure to provide correct translations in a timely manner caused significant prejudice to the detenu. Conclusion:The court found the detention order invalid due to improper communication of additional documents, denial of timely legal assistance, and incorrect translations. The Habeas Corpus Petition was allowed, and the petitioner/detenu was ordered to be set at liberty forthwith, if not required in any other case.
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2009 (3) TMI 1034
The Appellate Tribunal CESTAT Mumbai allowed the respondent to avail CENVAT credit for service tax paid on outdoor catering service for factory employees. The decision was based on a larger bench ruling that such credit was admissible for factories with over 250 employees. The Revenue's appeal was dismissed.
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2009 (3) TMI 1033
Issues involved: Whether the appellant was entitled to avail CENVAT credit of service tax paid on outdoor catering service received for supply of food in the canteen attached to their factory.
Summary:
Issue 1: Entitlement to CENVAT credit
The Tribunal's Larger Bench decision in CCE, Mumbai vs. GTC Industries Ltd. 2008 (12) STR 468 (Tri-LB) covered the issue in favor of the appellant. The decision stated that for a manufacturing unit with over 250 workers, CENVAT credit of service tax paid on outdoor catering service for supplying food to workers in the factory canteen could be utilized for duty payment on excisable products where food cost was part of production cost. The conditions set by the Bench were met in the present case, allowing the appellant to benefit from the decision.
Issue 2: Decision
The Tribunal held that the appellants were indeed entitled to CENVAT Credit for the service tax paid on outdoor catering service received in the factory-canteen during the material period. Consequently, the appeal was allowed.
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2009 (3) TMI 1032
Interpretation of the statute - dissolution of an unregistered partnership firm - suit not maintainable in view of sub-section (2A) of Section 69 of the Indian Partnership Act, 1932 (`the Act') - Whether sub-section 2A of Section 69 inserted by the Maharashtra Amendment violates Articles 14, 19(1)(g) and 300A - Bombay City Civil Court by order dated 16.8.1999 made a reference to the High Court u/s 113 of C.P.C. The High Court held that the said sub-section 2A of Section 69 of the Act is not unconstitutional.
HELD THAT:- Article 300A of the Constitution of India states :- "No person shall be deprived of his property save by authority of law."
It is by now well settled that a law to be valid has to be non arbitrary vide the 7-Judge Bench decision of this Court in Maneka Gandhi vs. Union of India and another [1978 (1) TMI 161 - SUPREME COURT]
Sub-section 2A virtually deprives a partner of a firm from his share in the property of the firm without any compensation. Also, it prohibits him from seeking dissolution of the firm although he may want it dissolved.
Article 14 guarantees the right to equality and states that "The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India." Equal protection means the right to equal treatment in similar circumstances. In other words there can be classification for legitimate purposes, but it is well settled that the classification must be reasonable i.e. based on intelligible differentia and having nexus between the basis for classification and the object of the legislation.
Under Article 19(1)(g) of the Constitution all persons have the right to practice any profession or to carry on any occupation, trade or business. Clause (6) of that Article enables the State to make any law imposing, in the interest of general public, reasonable restrictions on the exercise of the right conferred under sub-clause (g) of Article 19(1).
The primary object of registration of a firm is protection of third parties who were subjected to hardship and difficulties in the matter of proving as to who were the partners. Under the earlier law, a third party obtaining a decree was often put to expenses and delay in proving that a particular person was a partner of that firm. The registration of a firm provides protection to the third parties against false denials of partnership and the evasion of liability. Once a firm is registered under the Act the statements recorded in the Register regarding the constitution of the firm are conclusive proof of the fact contained therein as against the partner. A partner whose name appears on the Register cannot deny that he is a partner except under the circumstances provided. Even then registration of a partnership firm is not made compulsory under the Act.
A partnership firm can come into existence and function without being registered. However, the Maharashtra Amendment effects such stringent disabilities on a firm as in our opinion are crippling in nature. It lays down that an unregistered firm cannot enforce its claims against third parties.
Similarly, a partner who is not registered is unable to enforce his claims against third parties or against his fellow partners. An exception to this disability was a suit for dissolution of a firm or a suit for accounts of a dissolved firm or a suit for recovery of property of a dissolved firm. Thus a partnership firm can come into existence, function as long as there is no problem, and disappear from existence without being registered. This is changed by the 1984 Amendment extending the bar of the proceedings to a suit for dissolution or recovery of property as well.
The effect of the Amendment is that a partnership firm is allowed to come into existence and function without registration but it cannot go out of existence (with certain exceptions). This can result into a situation where in case of disputes amongst the partners the relationship of partnership cannot be put an end to by approaching a court of law. A dishonest partner, if in control of the business, or if simply stronger, can successfully deprive the other partner of his dues from the partnership. It could result in extreme hardship and injustice. Might would be right.
An aggrieved partner is left without any remedy whatsoever. He can neither file a suit to compel the mischievous partner to cooperate for registration, as such a suit is not maintainable, nor can he resort to arbitration if any, because the arbitration proceedings would be hit by Section 69(1) of the Act (Jagdish Chandra Gupta vs. Kajaria Traders (India) Ltd.[1964 (4) TMI 109 - SUPREME COURT].
Therefore, the restrictions placed by sub-section 2A of Section 69 introduced by the Maharshtra Amendment Act, for the reasons given above, are arbitrary and of excessive nature and go beyond what is in the public interest. Hence the restrictions cannot be regarded as reasonable.
The High Court was of the view that the object of the Maharashtra Amendment was to induce partners to register and it was intended to protect third party members of the public. We cannot see how sub-section 2A of Section 69 in any way protects the third party members of the public. It makes it virtually impossible for partners in an unregistered firm to dissolve the firm or recover their share in the property of the firm. Hence it is totally arbitrary.
Since in our opinion sub-section 2A of Section 69 as introduced by the Maharashtra Legislature clearly violates Articles 14, 19(1)(g) and 300A of the Constitution, it is in our opinion ultra vires and is hence declared unconstitutional. Consequently this appeal is allowed and impugned judgment of the Bombay High Court is set aside. The suit can now proceed ignoring sub-section 2A which we have declared invalid. No costs.
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