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2010 (12) TMI 1288
Issues involved: Challenge to TDSAT order declining ad-interim injunction in a petition related to broadcasting agreement termination.
Summary:
Issue 1: Agreement Termination and Ad-interim Injunction
The petitioner, a broadcaster, sought a declaration that the broadcasting agreement with NDTV was valid and binding, and requested to restrain Star Den Media Services from interfering with its rights. TDSAT declined the ad-interim relief, citing Specific Relief Act provisions and lack of prima facie case. The court found that compensation could be an adequate relief and balance of convenience was not in favor of the petitioner.
Issue 2: Interpretation of Specific Relief Act
Petitioner argued that the court misread Section 14(1)(a) of the Specific Relief Act, emphasizing on the term 'adequate relief'. It was contended that the discretion to grant an ad-interim mandatory injunction should not be fettered by Section 14(1)(d) of the Act. Distinctions were drawn from previous judgments to support the claim for specific performance.
Issue 3: Illegal Termination and Relief
The termination of the agreement was deemed illegal by the petitioner due to the absence of essential conditions. However, the court held that even in cases of illegal termination, relief in the form of damages, not continuation of the contract, is granted. The court emphasized that damages or losses suffered by the petitioner could be quantified and compensation could be an adequate relief.
Conclusion:
The court dismissed the writ petition, upholding the TDSAT's decision, as no grounds were made out for interference. The court highlighted the inability to direct the revival of an agreement when one party unequivocally wishes to terminate it. The judgment emphasized the quantifiability of damages and the limitations imposed by the Specific Relief Act on granting injunctions in such cases.
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2010 (12) TMI 1287
Issues:
The judgment involves appeals by the Revenue against the orders of the C.I.T.(A)-XXXIII, Kolkata for the assessment years 2002-03 and 2003-04 regarding exemption u/s 11 and various expenses claimed by the assessee.
Assessment Year 2002-03:
The Revenue challenged the allowance of exemption u/s 11 and expenses under salary, donation without proper evidence. The AO made assessments u/s 144 due to non-production of accounts and bills by the assessee. Various expenses were disallowed, including donations and capital expenditures. The CIT(A) deleted the additions, holding the Trust as charitable and genuine donations. The CIT(A) observed that expenses were application of funds for charitable purposes, hence no disallowance was warranted. The CIT(A) also ruled that trustee residence within Trust premises was not a violation of Sec. 13. The Revenue appealed against these decisions.
Assessment Year 2003-04:
The CIT(A) partly deleted additions made by the AO, allowing donations and expenses related to charitable purposes. The CIT(A) directed the AO to allow expenses for medicines, electrical charges, and salary. The CIT(A) held that the accumulation purpose was charitable and allowed the claim u/s 11(2). The Revenue appealed against these decisions.
Conclusion:
After hearing both parties, the Tribunal observed discrepancies in the application of funds by the assessee trust and the genuineness of donations. The Tribunal set aside the orders of the CIT(A) and directed a fresh verification by the AO. The appeals of the Revenue were allowed for statistical purposes.
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2010 (12) TMI 1286
Issues involved: Mediation process confidentiality and reporting guidelines.
In the judgment, the Supreme Court emphasized the importance of maintaining confidentiality in mediation proceedings. The Court highlighted that mediation proceedings are confidential and should not be disclosed to the public. The Court stated that if mediation is successful, the mediator should send the agreement signed by both parties to the Court without revealing details of the discussions. However, if mediation fails, the mediator should simply report that the mediation was unsuccessful without disclosing any other information. The Court stressed that revealing details of mediation discussions could compromise the confidentiality of the process. The Court directed that a copy of the order be sent to various mediation centers to ensure compliance with these guidelines. The Court also scheduled the matter for further proceedings in January 2011 at the request of the Appellants' counsel.
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2010 (12) TMI 1285
Issues involved: Recovery of debts by a public financial institution, liquidation of respondent-company, distribution of proceeds from sale of assets, priority of claims by creditors.
The petitioner, a public financial institution, granted a loan to the respondent-company for a telecom business, with personal guarantees from two directors. When the loan was not repaid, the petitioner filed for recovery of debts, leading to a decree against the company and guarantors. Subsequently, the respondent-company went into liquidation, and the Official Liquidator (OL) challenged the order of the Recovery Officer. The OL filed appeals under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, which were eventually compromised and disposed of. The Recovery Officer sold the company's properties in auction, and the petitioner sought the proceeds to be handed over. The OL filed an appeal, resulting in a modification of the order regarding the distribution of sale proceeds from land and moveable assets. The petitioner appealed this decision, which was dismissed by the DRAT.
The petitioner contested the direction to deposit proceeds from the sale of immovable assets with the OL, acknowledging that it was not a secured creditor in this regard. The petitioner agreed to bear expenses for future advertisements from the funds held. Despite opportunities, the OL did not file a counter affidavit promptly. The OL's counter affidavit provided no new information, stating that no claims had been received except one, without details on verification. The OL planned to issue advertisements in various states for claims, with costs to be borne by the petitioner.
The court noted the unique circumstances where funds from the sale of immovable properties were with the petitioner, not a secured creditor, and no other claims had been verified. The OL's role is to ensure secured creditors are paid first, with unsecured creditors receiving the remainder. As no unsecured creditors had come forward, the court allowed the petitioner to retain the proceeds from the sale of immovable properties, with unsecured creditors' claims ranking equally. The OL was instructed to communicate advertisement costs to the petitioner, who would pay the amount along with additional expenses. The petitioner was to adhere to previous undertakings given.
In conclusion, the writ petition was allowed, with each party bearing their own costs.
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2010 (12) TMI 1284
Issues Involved:
1. Validity of the notice issued under Section 13(2) of the SARFAESI Act, 2002.
2. Jurisdiction of the Company Court to entertain applications under Sections 391-394 of the Companies Act.
3. Applicability of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1985 Act) in light of the SARFAESI Act, 2002.
4. Requirement of consent from three-fourth of secured creditors under Section 13(9) of the SARFAESI Act, 2002.
5. Availability of statutory remedy under Section 17 of the SARFAESI Act, 2002.
6. Alleged waiver and abandonment of claim by the Respondent.
Detailed Analysis:
1. Validity of the Notice Issued under Section 13(2) of the SARFAESI Act, 2002:
The court held that the notice under Section 13(2) of the SARFAESI Act, 2002 issued by Respondent No. 4 is valid. The SARFAESI Act, 2002 is a special Act with an overriding effect over other laws, including the 1985 Act. The court emphasized that the SARFAESI Act, 2002 provides for quick enforcement of security interests and does not require the withdrawal of applications pending before the Debt Recovery Tribunal for taking recourse under the SARFAESI Act, 2002.
2. Jurisdiction of the Company Court to Entertain Applications under Sections 391-394 of the Companies Act:
The Division Bench of this Court held that the Company Court has no jurisdiction to entertain applications under Sections 391-394 of the Companies Act if the matter is pending before the BIFR. This was affirmed by the special appeals filed by ING Vysya, which were allowed, and the orders of the Company Judge were set aside.
3. Applicability of Section 22 of the 1985 Act in Light of the SARFAESI Act, 2002:
The court concluded that Section 22 of the 1985 Act does not bar proceedings under Section 13(2) and 13(4) of the SARFAESI Act, 2002. The SARFAESI Act, 2002, being a later enactment with a non-obstante clause, prevails over the 1985 Act. The amendments made by the SARFAESI Act, 2002 to Section 15 of the 1985 Act further reinforce this legislative intent.
4. Requirement of Consent from Three-Fourth of Secured Creditors under Section 13(9) of the SARFAESI Act, 2002:
The court observed that Respondent No. 4 has the written consent of more than three-fourth in value of the secured creditors, as required under Section 13(9) of the SARFAESI Act, 2002. Consequently, Respondent No. 4 is entitled to take measures under Section 13(4) of the SARFAESI Act, 2002. The reference before the BIFR automatically abates when such measures are taken.
5. Availability of Statutory Remedy under Section 17 of the SARFAESI Act, 2002:
The court emphasized that the writ petition challenging the notice under Section 13(2) of the SARFAESI Act, 2002 is not maintainable due to the availability of an effective statutory remedy under Section 17 of the SARFAESI Act, 2002. The court cited the judgment in United Bank of India v. Satyawati Tondon, which reiterates that the High Court should not entertain petitions under Article 226 of the Constitution if an effective alternative remedy is available.
6. Alleged Waiver and Abandonment of Claim by the Respondent:
The court rejected the Petitioner's claim that Respondent No. 4 waived and abandoned its claim by entering into negotiations and agreeing to a scheme of settlement. The court noted that Respondent No. 4 explicitly communicated the rejection of the Petitioner's reply to the notice under Section 13(2) and later withdrew its consent to the scheme due to the delay in finalization and objections raised by ING Vysya.
Conclusion:
The High Court dismissed all the writ petitions filed by the Shamken Group of Companies, holding that the notices issued under Section 13(2) of the SARFAESI Act, 2002 are valid, and the Company Court has no jurisdiction to entertain applications under Sections 391-394 of the Companies Act when matters are pending before the BIFR. The court further held that Section 22 of the 1985 Act does not bar proceedings under the SARFAESI Act, 2002, and the Respondent No. 4 has the necessary consent from secured creditors to take action under Section 13(4) of the SARFAESI Act, 2002. The Petitioners were directed to avail the statutory remedy under Section 17 of the SARFAESI Act, 2002 if they had any grievances.
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2010 (12) TMI 1283
Issues Involved:
1. Error in canceling the assessment order under section 143(3) of the Income-tax Act, 1961.
2. Failure to appreciate the verification and examination done by the Assessing Officer (AO).
3. Incorrect assumption about the payment of commission to a foreign agent.
4. Disregard of a jurisdictional Tribunal decision in a similar case.
Detailed Analysis:
1. Error in Canceling the Assessment Order Under Section 143(3):
The assessee contended that the Commissioner of Income Tax (CIT) erred in canceling the assessment order passed under section 143(3) of the Act. The CIT directed a fresh assessment after detailed inquiries and verification of transactions with Golden Cover Trading (GCT). The Tribunal noted that the CIT found the AO's order erroneous and prejudicial to the interests of the Revenue due to inadequate inquiries regarding the commission paid to GCT. The Tribunal highlighted that the AO had issued a show-cause notice and received detailed submissions from the assessee, which were considered before accepting the claim. The Tribunal emphasized that the CIT's power to revise under section 263 requires the order to be both erroneous and prejudicial to the Revenue, as established in Malabar Industrial Co. Ltd. vs. CIT, 243 ITR 83 (SC).
2. Failure to Appreciate the Verification and Examination Done by the AO:
The Tribunal observed that the AO had made inquiries and obtained compliance from the assessee regarding the commission payment. The AO had accepted the claim after examining the relevant agreement and material evidence. The Tribunal referred to CIT vs. Gabriel India Ltd., (1993) 203 ITR 108 (Bombay), which clarified that an order cannot be termed erroneous unless it is not in accordance with law. The Tribunal concluded that the AO's decision, made after due inquiry, cannot be deemed erroneous merely because the CIT had a different opinion.
3. Incorrect Assumption About the Payment of Commission to a Foreign Agent:
The Tribunal noted that the CIT assumed the assessee paid commission to GCT, which was not debited in the Profit & Loss account but deducted from the export sale invoice. The CIT considered GCT as the assessee's overseas customer rather than a commission agent. The Tribunal emphasized that the AO had accepted the commission payment based on the agreement and submissions provided by the assessee. The Tribunal reiterated that the CIT cannot exercise revisional jurisdiction merely due to a difference in opinion or inadequate inquiry, as established in CIT vs. Sunbeam Auto Ltd. [2010] 189 Taxman 436 (Del).
4. Disregard of a Jurisdictional Tribunal Decision in a Similar Case:
The assessee argued that the CIT disregarded a jurisdictional Tribunal decision in a similar case involving Shri Samir A. Batra. The Tribunal noted that the CIT dismissed the relevance of the cited case, stating that the facts were not exactly the same and the decision was not accepted by the Department. The Tribunal emphasized that the AO had made inquiries and accepted the claim based on the evidence provided. The Tribunal concluded that the CIT's assumption of jurisdiction under section 263 was not justified, as the AO had applied his mind and made a decision based on the material on record.
Conclusion:
The Tribunal set aside the CIT's order under section 263, quashing the same. The Tribunal held that the AO had made proper inquiries and accepted the assessee's claim after due consideration. The Tribunal emphasized that a mere change of opinion or inadequate inquiry does not justify the exercise of revisional jurisdiction by the CIT. Consequently, the appeal was allowed, and the impugned order under section 263 was quashed.
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2010 (12) TMI 1282
Issues involved: Review of order granting extension of time under a policy for industrial unit located in Doiwala, Dehradun, Uttarakhand.
Review Application (CLMA No. 305 of 2006):
The review application sought to reconsider the order granting an extension of time to an industrial unit for substantial expansion. The petitioner argued that the order was beyond the court's jurisdiction as the policy did not provide for an extension mechanism. The counsel for the petitioner did not object to the review and suggested hearing the writ petition on other grounds.
The High Court allowed the review petition, recalling the previous order and directing a fresh hearing of the writ petition.
Writ Petition (M/B) No. 263 of 2005:
The petitioner, an existing industrial unit in Doiwala, Dehradun, sought benefits under a government policy. The petitioner claimed that a notification mistakenly excluded industrial estates in Doiwala but was later amended to include them. However, even if the petitioner's industry was shifted to the correct annexure, no relief would be granted as the petitioner failed to expand and commence production by the specified deadline.
The writ petition was dismissed by the Court due to the petitioner's failure to meet the expansion and production requirements by the deadline.
This judgment highlights the importance of compliance with policy requirements and deadlines for industrial units seeking benefits under government schemes.
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2010 (12) TMI 1281
Issues Involved:
1. Allegations of oppression and mismanagement u/s 397 and 398 of the Companies Act, 1956.
2. Legality of the EGM and resolutions passed on 09.09.2005.
3. Change of registered office.
4. Creation of charge over the company's movable properties.
5. Status of directorship of petitioners.
6. Other reliefs sought by the petitioners.
Summary:
1. Allegations of Oppression and Mismanagement:
The petitioners alleged various acts of oppression and mismanagement in the affairs of M/S. Krishna Hydel Power Private Limited, including mal-utilisation of funds and assets by Respondent Nos. 2, 3, and 4. They sought the supersession of these respondents and the appointment of an administrator to manage the company.
2. Legality of the EGM and Resolutions Passed on 09.09.2005:
The petitioners contended that the EGM held on 09.09.2005 by Respondent Nos. 2 and 3, which increased the authorized share capital from Rs. 10 lac to Rs. 20 lac and allotted majority shares to Respondent No. 2, was illegal and void. The Board found that the EGM and the resolutions passed were indeed illegal and void, declaring them not binding on the company.
3. Change of Registered Office:
The petitioners argued that the change of the registered office was done without proper authorization and with malafide intentions. The Board declared the change of registered office as illegal.
4. Creation of Charge Over the Company's Movable Properties:
The petitioners claimed that Respondent Nos. 2 and 3 created a charge over the company's movable properties for Rs. 380 lac with IREDA without proper consent. The Board noted that since the State of Karnataka and IREDA were not made parties to the petition, relief on this matter could not be granted directly. However, the parties were allowed to apply to IREDA to release the charge.
5. Status of Directorship of Petitioners:
The respondents claimed that the petitioners had resigned from their directorships, which the petitioners denied. The Board held that in the absence of evidence of resignation, the petitioners continued to be directors of the company.
6. Other Reliefs Sought by the Petitioners:
The Board disallowed other prayers made in the petition, including the appointment of an administrator, convening of general meetings for a new board, and compensation for damages.
Conclusion:
The Board concluded that Respondent Nos. 2, 3, and 4 were guilty of acts of oppression. The EGM and resolutions of 09.09.2005 were declared illegal, and the change of registered office was also declared illegal. The petitioners were affirmed as directors, and the petition was disposed of with directions to take appropriate steps with the ROC, Karnataka. No orders as to costs were made.
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2010 (12) TMI 1280
Issues involved: Directions regarding comprehensive analysis of harmful effects of gutkha, tobacco, pan masala, finalization of Plastics Rules, imposition of fine, and restriction on use of plastic material in sachets.
Comprehensive Analysis of Harmful Effects: The Supreme Court directed the concerned Ministries to approach the National Institute of Public Health for a comprehensive analysis and study of the contents of gutkha, tobacco, pan masala, and similar articles manufactured in the country, along with the harmful effects of consuming such articles. The Solicitor General was instructed to ensure a report based on the study is made available within eight weeks.
Finalization of Plastics Rules: The Court ordered the finalization, notification, and enforcement of the Plastics (Manufacture, Usage and Waste Management) Rules, 2009 within eight weeks from the date of the judgment.
Imposition of Fine: The direction in the impugned High Court order for the imposition of a fine was stayed by the Supreme Court.
Restriction on Use of Plastic Material: Manufacturers of gutkha, tobacco, pan masala, and similar products were restrained from using plastic material in the sachets of these products. This restriction was set to come into force from March 1, 2011.
Next Hearing: The case was scheduled for further hearing on March 9, 2011.
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2010 (12) TMI 1279
Issues Involved:
1. Permanent injunction, grant of damages, and delivery up of infringing material.
2. Alleged violation of proprietary rights and passing off.
3. Alleged concealment of material facts by the plaintiff.
4. Delay, laches, and acquiescence by the plaintiff.
5. Validity of the Assignment Deed and rights of the assignee.
6. Distinctiveness and likelihood of confusion between the trademarks.
7. Equitable relief and conduct of the parties.
Detailed Analysis:
1. Permanent Injunction, Grant of Damages, and Delivery Up of Infringing Material:
The plaintiff, Eveready Industries India Limited, sought a permanent injunction, damages, and delivery up of infringing material against the defendants for using the trademark EVEREADY and EVEREADY (device) in relation to hand tools, which the plaintiff claimed violated its proprietary rights. The plaintiff alleged that the defendants' use of the mark would cause confusion and dilute the distinctive character of its trademark.
2. Alleged Violation of Proprietary Rights and Passing Off:
The plaintiff argued that the defendants' adoption of the EVEREADY mark was in violation of its proprietary rights and constituted passing off. The plaintiff claimed that the defendants copied the essential and dominant features of the EVEREADY (device) to mislead consumers and take advantage of the plaintiff's established reputation.
3. Alleged Concealment of Material Facts by the Plaintiff:
The defendants contended that the plaintiff had suppressed material facts, specifically the knowledge of the defendants' registration of the EVEREADY trademark in class 8 since 1985-86. The court found that the plaintiff was aware of the registration by March 2000 but falsely claimed in the plaint that it first learned of the defendants' use in September 2008. The court emphasized that a party must come to the court with clean hands and disclose all material facts.
4. Delay, Laches, and Acquiescence by the Plaintiff:
The court noted that the plaintiff had not taken any action against the defendants' use of the EVEREADY trademark for over nine years, despite being aware of it since March 2000. This delay amounted to laches and acquiescence, which precluded the plaintiff from obtaining an interim injunction. The court cited several precedents to support the principle that delay and acquiescence can bar equitable relief.
5. Validity of the Assignment Deed and Rights of the Assignee:
The defendants argued that the Assignment Deed dated January 6, 2009, assigned the trademark EVEREADY from Defendant No. 2 to Defendant No. 1. The court found that the assignment was valid and that Defendant No. 1 had applied for registration of the assignment. The court held that the delay in registration by the Trademark Registry did not affect the assignee's right to use the trademark.
6. Distinctiveness and Likelihood of Confusion Between the Trademarks:
The court observed that the products sold by the defendants (screwdrivers and pliers) were different from those sold by the plaintiff (batteries, flashlights, etc.), and were sold through different trade channels. There was no reasonable possibility of confusion among consumers. The court also noted that the defendants had been using the trademark since 1985-86, and the plaintiff did not manufacture or sell similar products.
7. Equitable Relief and Conduct of the Parties:
The court emphasized that equitable relief, such as an injunction, requires the party seeking relief to come with clean hands and not withhold material information. The plaintiff's conduct, including the false statement about when it learned of the defendants' use of the trademark, disentitled it to an interim injunction. The court also considered the balance of convenience and the potential harm to the defendants if they were required to stop using the trademark after building their business over many years.
Conclusion:
The court denied the plaintiff's application for an interim injunction against the use of the EVEREADY trademark by the defendants in respect of screwdrivers and pliers. The court allowed the defendants to continue using the trademark for these products but restrained them from using the EVEREADY (device) as already ordered by the IPAB. The court directed the parties to proceed with the suit for final adjudication.
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2010 (12) TMI 1278
Issues involved: Appeal by Revenue against orders of CIT(A) for assessment years 2002-03 and 2003-04 regarding accumulation u/s 11(2) and exemption u/s 11 and 13(1)(c) of the I.T. Act.
Assessment Year 2002-03:
1. The Revenue contended that the CIT(A) erred in allowing accumulation u/s 11(2) without a specific purpose, as required by law.
2. The Revenue argued that the CIT(A) was unjustified in granting exemption u/s 11 based on a previous ITAT decision.
Assessment Year 2003-04:
1. The Revenue claimed that the CIT(A) wrongly allowed exemption u/s 11 despite a violation of u/s 13(1)(c) of the I.T. Act.
2. The Revenue also challenged the allowance of accumulation u/s 11(2) without a specific purpose.
Upon review, the ITAT noted that the issues raised in the current appeals had already been addressed in previous ITAT decisions for the same assessment years. In those cases, the orders of the CIT(A) were set aside for fresh consideration before the Assessing Officer. Given the related nature of the matters, the current appeals by the Revenue were also remanded to the AO for reevaluation, ensuring the assessee's right to a fair hearing.
As a result, the appeals by the Revenue were allowed for statistical purposes, indicating a procedural victory rather than a substantive decision on the merits of the issues raised.
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2010 (12) TMI 1277
Issues Involved:
1. Winding up of the company due to inability to discharge liabilities.
2. Proceedings under the SARFAESI Act initiated by the assignees of secured creditors.
3. Validity and enforceability of the assignment of debts to Kotak Mahindra Bank and Alchemist Asset Reconstruction Company.
4. Applicability of RBI's One Time Settlement (OTS) guidelines to the company.
5. Bona fide nature of the company's defense against the winding-up petition.
Detailed Analysis:
1. Winding up of the Company:
The court examined whether the company should be wound up for its inability to discharge its admitted liabilities. The company had availed loans amounting to Rs. 9.26 crores from a consortium of banks and failed to repay the amount despite several opportunities and concessions. The company's defense that the debt was disputed was deemed not bona fide. The court noted that the company had not responded to pre-admission notices and failed to file a written statement in time, leading to the admission of the winding-up petition. The company's appeals against the admission and publication orders were dismissed, and it was concluded that the company's defense was unreliable and dishonest. Consequently, the company was ordered to be wound up, and the Official Liquidator was appointed to take over its assets and liabilities.
2. Proceedings under the SARFAESI Act:
The company challenged the proceedings initiated under the SARFAESI Act by the assignees of IFCI and IDBI. The court noted that once a notice under Section 13(4) of the SARFAESI Act is issued, the remedy lies with the Debt Recovery Tribunal (DRT). The company had previously filed and withdrawn a writ petition seeking directions to the secured creditors to calculate dues as per RBI's OTS guidelines. The court held that the company's challenge to the SARFAESI proceedings was not maintainable and dismissed the writ petition, directing the company to approach the DRT for any grievances.
3. Validity and Enforceability of the Assignment of Debts:
The court addressed the company's contention that the assignment of debts to Kotak Mahindra Bank and Alchemist Asset Reconstruction Company was invalid due to improper stamp duty. The court held that the registration of the assignment deeds by the competent authority was prima facie proof of proper stamp duty. The assignees were entitled to enforce the debts as per the original loan agreements, and the company's argument was rejected.
4. Applicability of RBI's One Time Settlement (OTS) Guidelines:
The company claimed that it was entitled to settle its dues under RBI's OTS guidelines. The court examined the guidelines and noted that they were applicable to small and medium enterprises (SMEs) with outstanding balances below Rs. 10 crores. The company's investment in plant and machinery exceeded Rs. 10 crores, disqualifying it from availing the OTS scheme. The court also noted that the company's assets should have been declared as Non-Performing Assets (NPA) in 1993, but the relevant circulars indicated different criteria for NPA classification. The court concluded that the company was not entitled to OTS benefits.
5. Bona Fide Nature of the Company's Defense:
The court scrutinized the company's defense that the debt was bona fide disputed. It was found that the company had paid only a fraction of the interest due and had not made any payments towards the principal amount. The company's claim that only Rs. 2.62 lakhs was payable was deemed preposterous. The court highlighted the importance of financial institutions in maintaining economic liquidity and criticized the company's attempts to evade repayment. The company's defense was found to lack credibility and bona fide intent.
Conclusion:
The court ordered the winding up of the company due to its failure to discharge admitted liabilities and dismissed the writ petition challenging the SARFAESI proceedings. The company's defenses were found to be dishonest and lacking in bona fide intent, and its claims under RBI's OTS guidelines were deemed inapplicable. The Official Liquidator was appointed to take over the company's assets and liabilities.
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2010 (12) TMI 1276
Issues involved: The judgment involves issues related to transfer pricing adjustments made by the Assessing Officer under section 143(3) read with section 144C of the Income-tax Act, 1961 for assessment year 2006-07.
Grounds raised by the assessee:
1. The Assessing Officer (AO) erred in confirming the adjustment made to the total income of the appellant on account of adjustment in the arm's length price of international transactions.
2. The Dispute Resolution Panel (DRP) erred in disregarding the economic analysis undertaken by the appellant for establishing the arm's length price of international transactions related to software development.
3. The Transfer Pricing Officer (TPO) and AO erred by not accepting the economic analysis undertaken by the assessee and conducting a fresh economic analysis for determining the arm's length price.
4. The TPO/AO erred in determining the arm's length margin/price using only financial year 2005-06 data.
5. The TPO/AO erred in rejecting certain comparable companies identified by the assessee where consolidated results had been used for analysis.
6. The TPO/AO erred in rejecting certain comparable companies identified by the assessee using turnover < Rs. 1 crore as a comparability criterion.
7. The TPO/AO erred in rejecting certain comparable companies identified by the assessee as having economic performance contrary to industry behavior.
8. The TPO/AO erred in rejecting certain comparable companies identified by the assessee as having different accounting year.
9. The TPO/AO erred in rejecting certain comparable companies identified by the assessee using employee cost greater than 25 percent of total revenues.
10. The TPO/AO erred in rejecting certain comparable companies identified by the assessee using onsite revenues greater than 75 percent of total revenues.
11. The TPO/AO erred in obtaining information not available in public domain for comparability purposes.
12. The TPO/AO erred by not providing the assessee an opportunity of being heard in certain cases.
13. The TPO/AO erred by not considering foreign exchange fluctuation gain/loss and provisions written back in computing operating margins of comparable companies.
14. The TPO/AO erred by not making suitable adjustments for differences in the risk profile of the assessee vis-Ã -vis comparables.
15. The TPO/AO erred in not providing the benefit of the arm's length range for computing the arm's length price.
16. The AO erred in not allowing set-off of unabsorbed depreciation for the assessment year 2006-07.
Additional grounds raised:
1. The assessment order passed u/s 143(3) read with section 144C is illegal and without jurisdiction.
2. The assessment was completed on a non-existing entity, and not on the amalgamating/successor company.
Key Decision:
The Tribunal allowed the appeal for statistical purposes and restored the matter to the DRP for further consideration and decision in accordance with the law.
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2010 (12) TMI 1275
Issues: Discharge order challenged by petitioner in illegal export of foreign currency case under Customs Act, 1962.
Analysis:
1. The petitioner filed a complaint under Section 135(1)(a) of the Customs Act, 1962 against the respondent for illegal export of foreign currency worth &8377; 41,22,050/-, leading to the respondent's summons based on pre-summoning evidence. Subsequently, pre-charge evidence was adduced, and the accused was discharged by the learned ACMM. The discharge was primarily on the grounds that the sanction for prosecution was granted in a mechanical manner without specifying the material considered or how the sanctioning authority acquired knowledge of the case's actual facts.
2. The judgment highlighted a previous case where the learned ACMM's order was found to be illegal, leading to the setting aside of the discharge order. The Court referenced the case of Directorate of Revenue Intelligence v. Mohd. Anwar, which was deemed relevant to the current revision petition. The order discharging the accused was overturned based on the reasoning provided in the previous judgment, emphasizing the need for proper consideration and justification in granting prosecution sanctions.
3. In response to the challenge against the discharge order, the High Court directed the parties to appear before the ACMM concerned on a specified date to proceed with the trial. This decision signifies the Court's commitment to ensuring a fair trial and addressing any procedural irregularities that may have led to the discharge of the accused. The directive aims to uphold the principles of justice and due process in the legal proceedings related to the illegal export of foreign currency under the Customs Act, 1962.
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2010 (12) TMI 1274
Imposition of 'late fee' for filing of returns under West Bengal VAT - Constitutional validity of Sub-section (2) of Section 32 of the West Bengal Value Added Tax Act, 2003 - provisions for imposition of late fee for filing of returns - Respondent contended that by introducing 'late fee' in furnishing return under Section 32(2) of the VAT Act beyond the due date, a dealer is practically benefited and/or saved from any penal consequences provided in Section 45(2)(a) or Section 46(2)(a) of the Act - existence of quid pro quo in imposing late fee - Competency of the "State Legislature" to impose fee in any matter in the List-II of the schedule VII - Retrospective effect of present Section 32(2) of the VAT Act.
HELD THAT:- The relevant provisions set out above altogether makes it abundantly clear that under Section 32(2) of the Vat Act, a dealer is under legal obligation to furnish return within the prescribed period. In case of failure to do so, he may or may not opt for filing the return together with the total Net Tax and interest upon payment of "late fee" under the amended provision of Section 32(2) of the Act. Before amendment of the Sub-section (2) by Act-I of 2008. such a dealer could furnish return upon payment penalty and prior to that no such scope was available. The impugned amendment has introduced "late fee" in place of "penalty" which is entirely optional to such a dealer who has failed to furnish return within prescribed period. The dealer is under no compulsion or obligation to furnish return upon payment of 'late fee'. A dealer is still free to choose not to file return after the prescribed period upon payment of 'late fee' and to suffer penal consequences either under Section 45(2) or under Section 46(1) or under Section 46(2) of the Act.
There can not be any room of doubt that the amended Sub-section (2) of Section 32 of the Act affords a benefit rather special beneficial right to the dealer to submit return upon payment of 'late fee' even after the prescribed period - Payment of 'late fee' as introduced by the Act I of 2008 can not be a characterized as Tax as choice is left with the dealer concerned to be attractable by the levy. Needless to mention a fee is payment levied by the state in respect of services performed by it for the benefit of the individuals.
Existence of quid pro quo in imposing late fee - HELD THAT:- In case of levying tax there is no quid pro quo between the Tax payer and the State. But element of quid pro quo is a must in case of imposing Fee. By virtue of impugned amendment, a dealer is entitled to get service indirectly from the authority upon payment of late fee. His irregular filing of return is regularised upon payment of late fee without being suffered from penal consequences which can not be categorised as nothing but special service. Thus, there exists quid pro quo in imposing late fee.
On careful scrutiny of the scheme and system of assessment of VAT liability of the dealers, it is satisfied that late fee' as introducing by Act-I of 2008 is not at all 'tax' - the learned Tribunal has not at all erred in coming to the conclusion that there is no basis for raising the plea of double jeopardy by the Petitioners.
Competency of the "State Legislature" to impose fee in any matter in the List-II of the schedule VII - HELD THAT:- The imposition of impugned late fee by the State Legislature is well within its competency under Entry No. -66 of List II of VII Schedule.
Retrospective effect of present Section 32(2) of the VAT Act - HELD THAT:- The retrospective effect of present Section 32(2) of the VAT Act, by no way, is prejudicial to the dealers because if they pay the 'late fee' they cannot be treated as defaulters and no penalty would be imposed for want of filing return which is due between 01.4.07 to 31.3.2008.
Thus, the prayer of the Petitioners has no merit and the petition is liable to be dismissed - The learned Tribunal has made no mistake in dismissing the petitions of the Petitioners. The appeal, thus, fails.
Petition disposed off.
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2010 (12) TMI 1273
Issues Involved:
1. Anticipatory Bail Application
2. Alleged Illegal Removal of Goods
3. Violation of Customs Act Provisions
4. Duty Evasion and Penalties
Summary:
1. Anticipatory Bail Application:
The petitioner, the Managing Director of M/s. Jai Bhawani Steel Enterprises Limited, sought anticipatory bail in connection with proceedings in F.No.S.Misc.154/2010 SIIB. The petitioner apprehended arrest for alleged offenses u/s 132 and 135 of the Customs Act, 1962.
2. Alleged Illegal Removal of Goods:
The respondent alleged that M/s. Jai Bhawani Steel Enterprises Limited and M/s. SDS Steel Private Limited illegally removed imported materials from their bonded warehouses without paying customs duty. The respondent's investigation revealed significant discrepancies between the declared quantities and the actual quantities found during inspection, indicating illegal removal of goods valued at approximately Rs. 63.36 crores, with a duty evasion of Rs. 11.18 crores.
3. Violation of Customs Act Provisions:
The respondent stated that the companies violated Section 62(2), Section 68, and Section 71 of the Customs Act, 1962, by removing goods without proper clearance and without filing ex-bond bills of entry or paying the necessary duties and charges. The companies were also accused of not maintaining proper stock records as required by their bonded warehouse licenses.
4. Duty Evasion and Penalties:
The respondent argued that the goods were liable for confiscation u/s 111(j) of the Customs Act, 1962, and the importer was liable for penalties u/s 112(a). The respondent's investigation indicated that the petitioner and his companies had evaded customs duty and interest, and the petitioner had absconded, failing to respond to summons.
Court's Decision:
The court, considering the serious nature of the offense, the high revenue stakes involved, and the petitioner's failure to cooperate with the investigation, denied the anticipatory bail. The court emphasized the need for custodial interrogation and dismissed the Criminal Original Petition.
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2010 (12) TMI 1272
The High Court of Gujarat heard the case with Ms. Harsha Devani and Mr. H.B. Antani as judges. The court admitted the case to determine two substantial questions of law related to depreciation and modvat credit, and the invocation of the extended period of limitation by the Customs, Excise & Service Tax Appellate Tribunal.
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2010 (12) TMI 1271
Issues involved: The issues involved in this judgment revolve around the interpretation of section 163 of the Income Tax Act, specifically regarding the classification of a company as an agent of certain individuals or entities.
ITA No. 1796: The issue in this appeal was whether the assessee company could be considered as an agent of 13 technicians under section 163 of the IT Act. The Assessing Officer had treated the company as an agent of the technicians, leading to a dispute regarding the tax liability of the company for the technicians' income. The Ld. Commissioner of Income Tax (Appeals) referred to a previous tribunal decision and directed the Assessing Officer to provide relief to the assessee based on the precedent.
ITA No. 1797: In this appeal, the question was whether the assessee company could be deemed as an agent of A.P. Molar Maersk A/S under section 163 of the IT Act. The Assessing Officer had framed an assessment treating the company as an agent, but the Ld. Commissioner of Income Tax (Appeals) granted relief to the assessee based on a previous ITAT order.
ITA No. 2598: The issue raised in this appeal was the reliance on a previous decision by the Ld. Commissioner of Income Tax (Appeals) regarding the classification of M/s Maersk Co. Ltd. as an agent of M/s AP Moller Maersk AS. The tribunal upheld the decision in favor of the assessee based on the doctrine of stare decisis.
In summary, the judgment addressed the disputes related to the classification of the assessee company as an agent of technicians and A.P. Molar Maersk A/S under section 163 of the IT Act. The tribunal relied on previous decisions to provide relief to the assessee in all the appeals filed by the revenue, ultimately dismissing the appeals and upholding the orders of the Ld. Commissioner of Income Tax (Appeals).
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2010 (12) TMI 1270
Issues involved: Refund of amount recovered in an illegal manner by Income Tax Department, appeal u/s 246A(i) of the Income Tax Act, 1961, obligation of respondents to refund the amount.
Refund of Amount: The petitioners had earlier filed writ petitions which were disposed of with directions for the Commissioner of Income Tax-X (Delhi) to treat them as refund applications. The Income Tax Officer rejected the claim, leading to the current petition. The petitioners argued that the amount was recovered illegally by the Tehsildar of Dehradun at the instance of the Income Tax Department. The Court noted that an appeal u/s 246A(i) of the Income Tax Act is provided for such cases, and directed the petitioners to file an appeal with the Commissioner of Income Tax (Appeals) within six weeks. The appellate authority was instructed to conduct a proper inquiry and communicate with the concerned authorities to gather relevant documents.
Obligation to Refund: The Court emphasized that without a proper inquiry, it cannot mandate the refund of the amount along with interest. It was highlighted that under Section 246A(i) of the Income Tax Act, an appeal is the appropriate course of action for orders passed under Section 237. The Court directed the petitioners to file additional documents before the appellate authority and instructed the authority to dispose of the appeal on merits within six months. The respondent's counsel agreed that efforts would be made to obtain relevant documents from the Commissioner of Income Tax of Uttrakhand to assist in the inquiry process.
Conclusion: The writ petition was disposed of with the aforementioned directions, and no costs were awarded. The Court expressed hope that the appellate authority would address the grievances of the petitioners effectively, considering the circumstances surrounding the recovery of the amount.
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2010 (12) TMI 1269
Issues:
Interpretation of service tax on bi-monthly rental bills under the Indian Telegraphs Act, 1885 and Rules framed thereunder.
Analysis:
The petitioner, a subscriber under the Own Your Telephone scheme, challenged the service tax charged on bi-monthly rental bills. The dispute revolved around whether the bi-monthly rental amount should be considered as Rs. 340/- or Rs. 380/- for the purpose of service tax calculation under Section 66 of the Finance Act, 1994. The petitioner argued that due to an advance lump sum payment of Rs. 5,000/- made at the time of connection, a deduction of Rs. 40/- should be applied to the bi-monthly rental of Rs. 380/-. This would result in the petitioner's actual rental being Rs. 340/-, on which service tax of 5% should be charged, amounting to Rs. 17/-. However, the respondents contended that the rental should be considered as Rs. 380/-, with a Rs. 40/- rebate due to the initial deposit, resulting in a service tax of Rs. 19/-.
The Own Your Telephone scheme, as defined by the Circular issued by the Telegraph Department and Indian Telegraph Rules, entails a subscriber making an initial lump sum payment towards rental, allowing for a reduction in the annual rental payable for a specified period. Section IV of the Indian Telegraph Rules specifies the charges for connection under this scheme, indicating that a subscriber making an initial lump sum payment is entitled to a reduction in rental for a fixed period, such as 20 years, based on the amount paid. In this case, a payment of Rs. 5,000/- would result in a reduction of Rs. 40/- from bi-monthly rentals.
Regarding service tax, Section 66 of the Finance Act, 1994 mandates a 5% tax on the value of taxable services. Section 67 defines the valuation of taxable services, stating that for telephone connections, it is the gross total amount received by the telegraph authority from subscribers. The debate in this case centered on whether the Rs. 5,000/- initial payment should be considered a deposit or payment. If treated as a deposit, the reduction in rentals would need to be factored in, affecting the total amount payable by the petitioner.
The court concluded that as per the Own Your Telephone scheme definition and relevant rules, the initial payment made by the subscriber is not a deposit but a payment towards rentals, entitling them to a specified reduction in annual rentals for a set period. Therefore, the petitioner's contention that the bi-monthly rental should be considered as Rs. 340/- for service tax calculation was upheld. Consequently, the petition succeeded, and the rule was made absolute in favor of the petitioner.
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