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2009 (4) TMI 988
The Supreme Court dismissed the appeal in the case with citation 2009 (4) TMI 988 - SC. Judges were S.H. Kapadia and Mr. Aftab Alam.
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2009 (4) TMI 987
The Supreme Court dismissed the appeal in the case with citation 2009 (4) TMI 987 - SC. Judges were Mr. S.H. Kapadia and Mr. Aftab Alam.
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2009 (4) TMI 986
Issues Involved:
1. Validity of the procedure for reservation in Group-I services.
2. Compliance with Articles 14, 16, and 335 of the Constitution of India.
3. Legality of GOMs No. 570 dated 31.12.1997.
4. Validity of the notification dated 27.12.2007.
5. Implementation of community-wise reservation.
6. Right of reservation at all levels.
7. Fixation of cut-off marks for each category.
8. Locus standi of the Andhra Pradesh Public Service Commission to maintain the appeal.
Detailed Analysis:
1. Validity of the Procedure for Reservation in Group-I Services:
The Supreme Court examined the procedure adopted by the Andhra Pradesh Public Service Commission for filling vacancies in Group-I services. The selection process involved a preliminary examination followed by a main examination and interview. The procedure had different criteria for general and reserved category candidates. The Court noted that the purpose of the preliminary examination was to ensure the basic standard of eligibility and that reservation rules should not be applied at this stage, as held in earlier cases like S. Jafeer Saheb v. State of Andhra Pradesh.
2. Compliance with Articles 14, 16, and 335 of the Constitution of India:
The Court reiterated that Articles 14 and 16 of the Constitution provide for equality of opportunity and non-discrimination in public employment. Article 335 emphasizes the need for maintaining administrative efficiency while considering the claims of Scheduled Castes and Scheduled Tribes. The Court held that the procedure adopted by the Andhra Pradesh Public Service Commission did not violate these constitutional provisions as it aimed to maintain a basic standard of eligibility.
3. Legality of GOMs No. 570 dated 31.12.1997:
The Government Order (GOMs) No. 570 dated 31.12.1997 provided for shortlisting candidates based on a preliminary examination in the ratio of 1:50 to the total number of vacancies, irrespective of community. The Court observed that this GOMs was issued in compliance with the earlier judgment in S. Jafeer Saheb and had attained finality. The High Court's decision to declare this GOMs unconstitutional was set aside by the Supreme Court.
4. Validity of the Notification dated 27.12.2007:
The notification dated 27.12.2007, which called for applications for Group-I services, was also challenged. The High Court had declared it ultra vires Articles 14 and 16 of the Constitution. However, the Supreme Court held that the notification was in line with the established procedure and did not violate constitutional provisions. The Court emphasized that the preliminary examination was a necessary step to maintain a basic standard of eligibility.
5. Implementation of Community-wise Reservation:
The High Court had directed the implementation of community-wise reservation at the preliminary examination stage, which was challenged. The Supreme Court held that community-wise reservation at the preliminary stage was not required and that the procedure adopted by the Andhra Pradesh Public Service Commission was valid. The Court noted that the reservation rules should be applied at the final selection stage.
6. Right of Reservation at All Levels:
The respondents argued that the right of reservation should be recognized at all levels, including the preliminary examination. The Supreme Court rejected this argument, stating that reservation rules should not compromise the basic standard of eligibility and administrative efficiency. The Court emphasized the importance of maintaining merit and efficiency in public services.
7. Fixation of Cut-off Marks for Each Category:
The High Court had held that non-fixation of cut-off marks for each category was violative of Articles 14 and 16. The Supreme Court disagreed, stating that the preliminary examination was only an eligibility test and not a proficiency test. The Court noted that different qualifying marks for various categories were already provided for General English, which was a qualifying paper.
8. Locus Standi of the Andhra Pradesh Public Service Commission to Maintain the Appeal:
The respondents questioned the locus standi of the Andhra Pradesh Public Service Commission to file the appeal. The Supreme Court held that the Commission had the locus standi as it was responsible for conducting the examination and implementing the selection procedure. The Court noted that the High Court's judgment had set aside both the GOMs and the notification, necessitating a fresh selection procedure.
Conclusion:
The Supreme Court set aside the judgment of the Andhra Pradesh High Court, upholding the validity of the procedure adopted by the Andhra Pradesh Public Service Commission for shortlisting candidates for Group-I services. The Court emphasized the importance of maintaining a basic standard of eligibility and administrative efficiency while ensuring compliance with constitutional provisions. The appeal was allowed, and the impugned judgment was set aside, with no order as to costs.
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2009 (4) TMI 985
Issues involved: Application for scheme of arrangement in the nature of amalgamation u/s 391 to 394 of the Companies Act, 1956.
Details of the Judgment:
Issue 1: Scheme of Arrangement for Amalgamation
The applicant, Shree Balaji Cinevision (India) Pvt. Ltd., a transferor company, proposed to enter into a scheme of arrangement in the nature of amalgamation with Balaji Electrical Insulators Pvt. Ltd., a transferee company, u/s 391 to 394 of the Companies Act, 1956. Both companies belong to the same group of management, and the amalgamation is aimed at achieving synergic advantages.
Issue 2: Shareholders and Creditors Consent
All equity shareholders of the applicant company provided written consent on oath, approving the scheme of arrangement. Similarly, all unsecured creditors of the company also gave their written consent on oath for the proposed scheme. Certificates from the Chartered Accountant confirming the status of shareholders and creditors were annexed to the application.
Issue 3: Dispensation of Meetings
Due to the unanimous consent received from equity shareholders and unsecured creditors, the meetings of these stakeholders as required u/s 391(2) of the Companies Act, 1956 were deemed unnecessary and thus dispensed with.
In conclusion, the application for the scheme of arrangement in the form of amalgamation was disposed of by the Gujarat High Court, recognizing the consent of shareholders and creditors as per the provisions of the Companies Act, 1956.
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2009 (4) TMI 984
Suit for specific performance - Application for interim injunction to restrain the appellant from entering into the land and disturbing the possession of the Respondent No.1 and to further restrain the appellant from alienating the land to any third party - filing a suit after 19 years - 280 transferees to whom plots have been conveyed by the owners - leave to construct on the vacant land - suit seeking enforcement of an agreement alleged to have been entered into between the parties on 19th May, 1980, when exemption u/s 20 of the said Act was no longer required - Whether High Court followed the basic principles for granting injunction, when the orders of injunction were passed - HELD THAT:- It is well established, that while passing an interim order of injunction under Order XXXIX Rules 1 and 2 CPC, the Court is required to consider three basic principles, namely, (i) prima facie case; (ii) balance of convenience and inconvenience; and (iii) irreparable loss and injury.
None of the said principles have been considered by the High Court while passing the second and third interim orders dated 22nd April, 2008 and 7th May, 2008, nor has the High Court taken into account the long silence on the part of the Respondent No.1 Corporation in filing a suit after 19 years.
In our view, while passing the interim order dated 7th May, 2008, the High Court ought to have considered the effect which its order would have on the 280 transferees to whom some portions of the land had already been sold and who had commenced construction thereupon, particularly when they were not even parties in the appeal, nor were they heard before they were injuncted from continuing with the construction work. Such an order affecting third party rights in their absence, as they were not parties to the proceedings, cannot be sustained having further regard to the manner in which the said order was passed. An application for an order which would have far and wide reaching consequences was sought to be disposed of by the Division Bench on the very next day without giving an opportunity of controverting the allegations made therein even to those who were parties in the suit, though it had been brought to the notice of the Court that conveyances had been executed in favour of 280 purchasers.
This is not a case where the appellant and the other co-owners had violated any restraint order passed by the Court in transferring the plots in question to the said 280 transferees. The said transfers were effected at a point of time when there was no injunction or restraint order against the appellant and the other owners of the property and as far as the said transfers are concerned, the only order that could have been passed on the said application is the order which was passed at the first instance on 29th January, 2008, based on the principles of Section 52 of the Transfer of Property Act, 1882. The restraint order on the transferees must, therefore, be held to be bad and liable to be set aside.
As far as the lands which the appellant and the other joint owners have been restrained from alienating by the second order dated 22nd April, 2008, are concerned, we are of the view that in the event the order of 22nd April, 2008, is set aside, the Respondent No.1 can be compensated in terms of money and no irreparable loss and injury will be caused to it on account thereof.
On the other hand, if the owners of the property remain restrained from developing the same, it is they, who will suffer severe prejudice, as they will be deprived of the benefit of the user of their land during the said period. The balance of convenience and inconvenience is against grant of such injunction. The success of the suit for specific performance filed by the Respondent No.1 depends to a large extent on tenuous proof of genuineness of the agreement sought to be enforced after 19 years, despite the finding of the Trial Court that the suit was not barred by limitation.
We, accordingly, set aside the orders dated 22nd April, 2008 and 7th May, 2008, passed by the Division Bench of the Gujarat High Court and maintain the initial order dated 29th February, 2008. The appeals and the connected Interlocutory Applications are, accordingly, disposed of.
The High Court is requested to dispose of the appeals pending before it at an early date without being influenced by any observations made in this judgment.
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2009 (4) TMI 983
Issues involved: Dispute regarding admissibility of deduction u/s 10B of the I.T. Act for an export-oriented unit engaged in processing stone, marble, granite, and exporting the same.
Summary:
The appeal was filed by the Revenue against the order of the CIT(A) concerning the assessment year 2005-06, specifically regarding the admissibility of deduction u/s 10B of the I.T. Act for the activity undertaken by the assessee, who claimed to be engaged in a hundred percent export-oriented unit dealing with stone processing and export.
The CIT(A) held that the assessee was engaged in manufacturing or production of new articles, similar to previous years, and directed the AO to allow the deduction u/s 10B. The ITAT Delhi Bench 'F' in a consolidated order for previous assessment years found that the activity of cutting stone blocks into tiles, calibrating, and polishing them resulted in a distinct commercial product, qualifying as a manufacturing activity. The Tribunal cited various precedents supporting a broad interpretation of production/manufacturing and upheld the CIT(A)'s findings.
Based on the ITAT's previous order and the nature of the activity, the appeal by the Revenue was dismissed, affirming the eligibility of the assessee for the deduction u/s 10B.
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2009 (4) TMI 982
Issues Involved:
1. Validity of the assessment order passed by the ACIT.
2. Addition of negative cash balance.
3. Charging of interest u/s 234B and 234D.
4. Treatment of expenditure on application software.
5. Disallowance of 10% of total operating and other expenses.
6. Disallowance of international relocation expenses.
Summary:
1. Validity of the Assessment Order:
The assessee contended that the assessment order dated 27.3.2006 was passed without jurisdiction as the assessee, Software and Silicon Systems India Pvt. Ltd. (SSSIPL), had ceased to exist due to its amalgamation with Intel Technology India Pvt. Ltd. (ITIPL) effective from 1.4.2004. The Ld. CIT(A) upheld the assessment, stating that the appellant had voluntarily furnished its return and participated in the scrutiny proceedings. However, the Tribunal found that the AO was aware of the amalgamation and that the assessment on a non-existent entity was null and void. The Tribunal emphasized that section 292B does not cure a substantial defect such as lack of jurisdiction.
2. Addition of Negative Cash Balance:
The AO added Rs. 5,311 due to a negative cash balance found in the cash book as of 31.12.2002. The Ld. CIT(A) sustained this addition, considering the size of the assessee's financial transactions and the clerical error admitted by the assessee.
3. Charging of Interest u/s 234B and 234D:
The Ld. CIT(A) held that charging interest u/s 234B and 234D was mandatory and not appealable unless it contravened the relevant sections. The AO was directed to charge interest after considering the relief allowed in the impugned order.
4. Treatment of Expenditure on Application Software:
The AO treated the expenditure on application software as capital in nature, citing enduring benefits. The Ld. CIT(A) reversed this, treating it as revenue expenditure based on the Tribunal's decision in the assessee's own case for AY 2002-03.
5. Disallowance of 10% of Total Operating and Other Expenses:
The AO disallowed 10% of the operating and other expenses, stating that most payments were made to the holding company, ITIPL. The Ld. CIT(A) found this ad hoc disallowance unsustainable, as the AO had not verified the genuineness or reasonableness of the expenses.
6. Disallowance of International Relocation Expenses:
The AO disallowed international relocation expenses, claiming they were not incurred wholly for the assessee's business. The Ld. CIT(A) deleted this disallowance, noting the AO's failure to substantiate his action even in the remand report.
Conclusion:
The Tribunal cancelled the assessment order as null and void due to lack of jurisdiction, rendering other grounds raised by both the assessee and the Revenue infructuous. The assessee's appeal was allowed, and the Revenue's appeal was dismissed as infructuous.
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2009 (4) TMI 981
Issues Involved:
1. Conviction under Sections 304-B and 498-A of IPC.
2. Evaluation of evidence and allegations of dowry demand.
3. Parameters for appellate courts to interfere with acquittal judgments.
4. Reappreciation of evidence by the High Court.
Issue-wise Detailed Analysis:
1. Conviction under Sections 304-B and 498-A of IPC:
The appellant was convicted by the Punjab and Haryana High Court for offences punishable under Sections 304-B (dowry death) and 498-A (cruelty by husband or relatives) of the IPC. The High Court sentenced him to seven years of rigorous imprisonment and imposed a fine for the first offence, without a separate sentence for the latter. Initially, the Sessions Judge acquitted the appellant, giving him the benefit of doubt, but the State's appeal led to the High Court's conviction.
2. Evaluation of Evidence and Allegations of Dowry Demand:
The prosecution's version included that the deceased's marriage with the appellant was solemnized on 26.1.1989, and there were subsequent demands for dowry, including a gas connection and Rs. One lakh. The deceased's father, Yudhishter Singh (PW5), her mother, Lajwant (PW6), and her brother, Sunil Kumar (PW7), testified about these demands. However, the trial court found inconsistencies in their testimonies and noted that the allegations of dowry demand were not mentioned during the initial investigation. The trial court concluded that the case was one of suicide due to little physical contact between the accused and the deceased.
3. Parameters for Appellate Courts to Interfere with Acquittal Judgments:
The judgment elaborated on the legal principles governing appellate interference with acquittal. Section 378 of the Code of Criminal Procedure allows the State to appeal against acquittal. The Supreme Court highlighted that the High Court has full power to reappreciate, review, and reconsider evidence in appeals against acquittal. However, it emphasized the double presumption of innocence in favor of the accused, first from the fundamental principle of criminal jurisprudence and second from the trial court's acquittal.
4. Reappreciation of Evidence by the High Court:
The High Court's decision to convict the appellant was based on the evidence of Sunil Kumar (PW7), which it found conclusive. However, the Supreme Court noted that the High Court did not adequately address why it differed from the trial court's conclusions. The trial court had found the prosecution's evidence suspect, particularly noting that many crucial aspects were not stated during the investigation but were introduced for the first time in court. The Supreme Court criticized the High Court's reasoning that something must have happened for the deceased to commit suicide, deeming it indefensible.
Conclusion:
The Supreme Court allowed the appeal, reinstating the trial court's acquittal. It emphasized that the High Court should not have interfered with the well-reasoned judgment of the trial court, which found no evidence supporting the dowry demands. The bail bonds executed in connection with the bail order were discharged.
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2009 (4) TMI 980
Issues involved: The appeal raised substantial questions of law regarding the foreign exchange losses suffered by the assessee on the revenue account due to fluctuation in foreign exchange on the last date of the accounting year ending March 31, 2001.
a) Foreign exchange losses as contingent liability: The first issue was whether the foreign exchange losses, considered a contingent notional liability, were allowable as a deduction under the Income Tax Act. The contention was that these losses were suffered on the last date of the accounting year and should be deductible.
b) Allowability of foreign exchange losses on revaluation: The second issue questioned whether foreign exchange losses arising from the revaluation of foreign exchange borrowings utilized on revenue account, where repayments occurred after the accounting year under consideration, were not allowable as deductions under the Income Tax Act.
c) Method of accounting and accrual of liability: The third issue raised was whether the ITAT was justified in ignoring the method of accounting as per AS 11 for determining the allowability of deductions claimed. It was also debated whether the assessee needed to be obliged to discharge the liability for it to accrue.
d) Treatment of foreign exchange fluctuation loss: The final issue concerned the justification of the ITAT in upholding the order of CIT(A) in allowing foreign exchange fluctuation loss. The debate was on whether the loss, resulting from the restatement of liabilities, was notional and did not qualify as an actual loss for deduction as expenditure.
The judgment stated that all the issues raised were related to the foreign exchange loss suffered by the assessee on the revenue account due to fluctuation in foreign exchange on the last date of the accounting year. It was noted that the issues were covered by a previous Apex Court judgment, and as no substantial question of law arose in this appeal, it was dismissed in limine with no order as to costs.
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2009 (4) TMI 979
The Supreme Court dismissed the case with the delay condoned. The citation is 2009 (4) TMI 979 - SC Order, with a reference to the Bombay High Court's 2008 (7) TMI 1031. Justices S.H. Kapadia and Aftab Alam presided over the case. Petitioner represented by Mr. V. Shekhar, Mr. Kul Bharat, and Mr. B.V. Balaram Das.
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2009 (4) TMI 978
Issues involved: Determination of continuation of business for the relevant assessment year based on findings of CIT(A) and ITAT.
The judgment of the Delhi High Court in this case revolves around the findings of the CIT(A) and ITAT regarding the continuation of the business of the assessee for the relevant assessment year. The CIT(A) noted that despite not receiving orders, there were sufficient reasons to conclude that the business operations were ongoing. The ITAT upheld the CIT(A)'s findings, which were based on a thorough consideration of the facts and previous assessment years.
The Assessing Officer had initially concluded that no business was conducted by the assessee for the assessment year in question, based on information from preceding and succeeding assessment years. However, the Tribunal referenced its own order for the earlier assessment year of 2002-2003 to clarify the situation. The decision of the authorities was not solely reliant on the reasoning from the previous assessment year, as indicated in the orders of the CIT(A) and ITAT.
The CIT(A) highlighted various aspects supporting the continuation of the business, such as expenses incurred, absence of plant and machinery sales or establishment closures, and the initiation of new business activities. The interconnection between the turbo charger business and the new venture of manufacturing coins and coins blanks was emphasized, demonstrating the ongoing nature of the business operations. The Revenue could not challenge the facts presented by the CIT(A) before the Tribunal, leading to the dismissal of the appeal by the High Court.
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2009 (4) TMI 977
Issues Involved:
1. Whether plaintiffs have established their title to the schedule property and entitlement to possession.
2. Whether the defendant has proved his title to the schedule property.
3. Whether the defendant has perfected his title by adverse possession and therefore the suit is barred by limitation.
Issue-wise Detailed Analysis:
Re: Question (i) - Establishment of Plaintiffs' Title and Entitlement to Possession:
The plaintiffs claimed that the suit property was initially purchased by Hanumakka in 1940, who sold it to Bellary Muniswamy Pillai, and subsequently, it was sold to their father, Narayanaswamappa, in 1950. They provided several documents to support their claim, including a payment challan from 1940, sale deeds from 1940 and 1950, and a mortgage decree from 1965. These documents established the plaintiffs' title to the property and indicated that their father had exercised ownership rights by mortgaging the property. The trial court found that the plaintiffs had established their title and identity of the suit property, but the High Court dismissed the plaintiffs' case based on a discrepancy in the katha number, which the plaintiffs explained as an error in the mortgage suit documents. The Supreme Court noted that possession follows title, and since the plaintiffs had established their title, they were entitled to possession unless the defendant proved adverse possession.
Re: Question (ii) - Defendant's Claim of Title:
The defendant claimed that he purchased the suit property from Gowramma in 1985, who inherited it from her husband, Channabasavanna. However, the defendant failed to produce any documents proving Gowramma's or her husband's title to the property. The sale deed from 1985 referred to previous title deeds and a court order, but these were not produced. The plaintiffs provided documents showing that Gowramma inherited a different property (site no.17) and not the suit property (site no.8). The Supreme Court found that the sale deed from 1985 was a fabricated document and did not convey any title to the defendant.
Re: Question (iii) - Adverse Possession and Limitation:
The defendant claimed to have been in possession of the suit property as a tenant since 1962 and later as an owner after purchasing it in 1985. The Supreme Court noted that the defendant's inconsistent claims of permissive possession as a tenant and adverse possession could not coexist. The defendant's claim of adverse possession was further weakened by the lack of evidence of continuous possession for 12 years prior to the suit. The only evidence of possession was a judgment from 1979, which granted an injunction against the Bangalore City Corporation but did not establish the defendant's title or adverse possession. The Supreme Court concluded that the defendant failed to prove adverse possession for the required period, and the plaintiffs' title remained unchallenged.
Conclusion:
The Supreme Court allowed the appeal, set aside the High Court's judgment, and restored the trial court's decree, which declared the plaintiffs' title to the suit property and directed the defendant to deliver possession to the plaintiffs. The plaintiffs were also awarded costs.
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2009 (4) TMI 976
Issues involved:
The appeal challenges the order passed by a single Judge of Punjab and Haryana High Court regarding the conviction of an investigating officer for offences under Sections 395, 450, 342 of the Indian Penal Code, 1860 (IPC). The main contention is the violation of principles of natural justice by condemning the appellant without granting an opportunity to be heard.
Conviction and Directions by High Court:
The High Court upheld the conviction of the accused Sanjiv Kumar for the mentioned offences but expressed concern that the main person involved, the present appellant, had not been prosecuted. The Home Secretary and the DGP were directed to take steps to prosecute the appellant for the charged offences or for preparing false documents and wrongful confinement of the complainant.
Violation of Principles of Natural Justice:
The appellant argued that the High Court's observations and directions were made without granting him a hearing, thus violating the principles of natural justice. The counsel contended that the appellant was condemned without being given an opportunity to present his case.
Principles of Natural Justice:
Natural justice entails rules intended to protect individual rights against arbitrary procedures adopted by judicial, quasi-judicial, and administrative authorities. It ensures fairness and prevents injustice in decision-making processes.
Judicial Interpretation of Natural Justice:
Over time, two fundamental rules have evolved representing natural justice in judicial processes: 'nemo judex in causa sua' (no man shall be a judge in his own cause) and 'audi alteram partem' (hear the other side). These rules ensure impartiality and the right to be heard, essential for a fair hearing.
Quashing of High Court's Directions:
Considering the violation of natural justice principles, the Supreme Court quashed the observations and directions made by the High Court regarding the present appellant. The appeal was allowed, emphasizing the importance of fair procedures and the right to be heard in legal proceedings.
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2009 (4) TMI 975
Issues involved: Assessment of motor car expenses, lease line charges, application of Section 2(22)(e) of the Income Tax Act, 1961, and levy of interest u/s. 234B.
Assessment of Motor Car Expenses:
The appeal was against the disallowance of motor car expenses, car insurance, and depreciation, as well as the enhancement of income by applying Section 2(22)(e) of the Act. The Assessing Officer disallowed a portion of the expenses due to personal use of the car. The CIT(A) upheld the disallowance and invoked Section 2(22)(e) for deemed income. However, the Tribunal found that the car was purchased in the name of the director but owned by the company. Citing relevant case law, the Tribunal ruled in favor of the assessee, allowing depreciation and expenses as the car was used for business purposes.
Application of Section 2(22)(e):
The CIT(A) directed the Assessing Officer to examine the applicability of Section 2(22)(e) for other assessment years and initiate penalty proceedings. The Tribunal, after considering the evidence presented, concluded that the transaction of purchasing the car in the director's name was in the ordinary course of business, and there was no intention to provide a benefit to the director. Therefore, the amount deemed as income under Section 2(22)(e) was deleted.
Lease Line Charges:
The Assessing Officer disallowed lease line charges due to the absence of TDS payments, but the CIT(A) did not adjudicate on this issue. The Tribunal referred to a relevant decision and remanded the matter back to the CIT(A) for fresh consideration, providing the assessee with a reasonable opportunity to present their case.
Levy of Interest u/s. 234B:
The appeal also contested the levy of interest u/s. 234B. The Tribunal, after hearing both parties, directed the Assessing Officer to allow consequential relief regarding the interest levy. Consequently, the ground taken by the assessee was allowed.
In conclusion, the Tribunal partly allowed the assessee's appeal for statistical purposes, addressing the issues related to motor car expenses, application of Section 2(22)(e), lease line charges, and interest u/s. 234B. The Tribunal provided detailed reasoning based on the facts presented and relevant legal principles to arrive at its decisions.
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2009 (4) TMI 974
Issues involved:
1. Allowance of bad debts u/s 36(1)(vii) of the Income Tax Act, 1961
2. Applicability of section 40(a)(i) read with section 195 for payment to parent company
3. Requirement of TDS deduction u/s 195 for payment to parent company
Allowance of Bad Debts:
The appeal raised a substantial question of law regarding the allowance of bad debts amounting to Rs. 19,08,150 out of a total claim of Rs. 23,42,008 u/s 36(1)(vii) of the Income Tax Act. The ITAT's decision to allow the assessee's claim was challenged, but the counsel for the appellant acknowledged that a similar issue had been addressed in a previous Division Bench judgment. Consequently, the court dismissed this aspect of the appeal based on the precedent.
Applicability of Section 40(a)(i) and Section 195:
The issues related to the applicability of section 40(a)(i) read with section 195 of the Income Tax Act for a payment made to the parent company for the supply of printing material. The ITAT concluded that these provisions were not applicable as the payment was considered a reimbursement of costs without any embedded profit. The court noted that questions (b) and (c) centered around the appreciation of evidence, particularly highlighted in paragraph No. 9 of the Tribunal's order. Consequently, the court found no substantial question of law in this regard and dismissed the appeal without costs.
TDS Deduction Requirement:
Regarding the requirement of TDS deduction u/s 195 for the payment made to the parent company for the supply of printing material, the ITAT had held that no TDS was to be deducted. However, the court did not find any error in the Tribunal's decision on this matter, as it was intertwined with the appreciation of evidence. Therefore, the appeal was dismissed on this issue as well.
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2009 (4) TMI 973
Issues involved: Appeal against order of DIT(Exemptions), Bangalore; Non-application of mind by DIT(Exemptions); Violation of principles of natural justice; Interpretation of sections 13(2) and 13(3); Renewal of approval u/s 80G.
Non-application of mind and violation of natural justice: The appellant raised concerns that the DIT(Exemptions) did not adequately consider the facts of the case and hastily concluded the order. It was argued that principles of natural justice were not followed as the appellant was not given a proper hearing to explain their case. The DIT(Exemptions) concluded that a refundable rental deposit paid to an executive committee member fell under section 13(3) and violated section 13(2) without fully considering the explanations provided by the appellant.
Interpretation of sections 13(2) and 13(3): The DIT(Exemptions) held that lending income or property to a specified person without adequate interest violates section 13, leading to denial of renewal of approval u/s 80G. The appellant argued that the funds provided to the executive committee member were for construction purposes and not for personal benefit, thus not violating section 13. The AR highlighted the importance of consistency in granting renewals and argued for approval based on past approvals and circumstances.
Renewal of approval u/s 80G: The DIT(Exemptions) denied renewal of approval u/s 80G, citing violations of section 13 and lack of benefit to the specified person. The AR contended that the refundable advances were utilized for construction purposes and did not constitute a violation of section 13. The Tribunal directed the DIT(Exemptions) to renew the approval u/s 80G, emphasizing that there was no benefit to the specified person and the funds were used for legitimate purposes.
In conclusion, the Tribunal allowed the appeal, emphasizing the lack of benefit to the specified person under section 13(3) and directing the renewal of approval u/s 80G.
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2009 (4) TMI 972
Issues Involved:
1. Jurisdiction adopted by the Assessing Officer u/s 147/148.
2. Disallowance of depreciation on gas cylinders.
Summary:
Jurisdiction Adopted by the Assessing Officer u/s 147/148:
The assessee, M/s. Praxair India Pvt. Ltd., challenged the jurisdiction adopted by the Assessing Officer (AO) under the provisions of Section 147/148 of the Income Tax Act, 1961. The AO issued a notice u/s 148 on 21.3.2006, citing reasons for reopening the assessment, including excess depreciation granted on cylinders and assets acquired from other business units. The assessee argued that the reassessment proceedings were not in accordance with the provisions of the Income Tax Act, 1961, and that the reasons recorded should be disclosed by the AO. The CIT(A) did not consider the assessee's agitation regarding the AO assuming jurisdiction for framing reassessment under Section 147/148 but confined himself to the issues of depreciation on gas cylinders and assets acquired from other entities. The Tribunal held that the AO's assumption of jurisdiction under Section 147/148 was without basis, as the material facts were available to the AO, and the reassessment was based on an audit objection regarding the claim of depreciation on gas cylinders.
Disallowance of Depreciation on Gas Cylinders:
The AO disallowed the depreciation on gas cylinders, allowing it at 25% instead of the claimed 100%. The CIT(A) agreed with the assessee that industrial gas cylinders are eligible for depreciation at 100%. However, the CIT(A) upheld the AO's decision on the assets acquired from other business units, applying Explanation 3 to Section 43(1), which states that the main purpose of the transfer of such assets was to reduce the liability of income tax by claiming depreciation with reference to an enhanced cost. The Tribunal found that the AO did not provide an opportunity for the assessee to be heard before reducing the cost of acquisition of the assets from the block of assets for claiming depreciation. The Tribunal held that the AO's assumption of jurisdiction under Section 147/148 was misplaced, and the reassessment was based on suspicion and surmises. The Tribunal concluded that the claim of depreciation on gas cylinders at 100% could not be reduced to 25%, and the appeal of the assessee was allowed.
Conclusion:
The Tribunal allowed the appeal of the assessee, holding that the AO's assumption of jurisdiction under Section 147/148 was without basis and that the claim of depreciation on gas cylinders at 100% was justified. The reassessment proceedings were found to be based on an audit objection and not on material facts indicating income having escaped assessment.
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2009 (4) TMI 971
The Bombay High Court ruled that the petitioner should pursue statutory appeal under Section 246(1) of the Income-Tax Act instead of using extraordinary writ jurisdiction. The time taken for the court proceedings will not count towards the limitation period. The respondent agreed not to object to the appeal if filed within two weeks. Interim relief granted by the court will continue for four weeks to allow the petitioner to seek interim reliefs before the Appellate Authority. The writ petition has been disposed of.
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2009 (4) TMI 970
Issues involved: Application u/s 391 of the Companies Act, 1956 seeking permission to hold meetings of Equity Shareholders, Secured Creditors, and Unsecured Creditors for considering a scheme of amalgamation.
Equity Shareholders Meeting: The applicant-company, M/s. Indus fila Limited, sought permission to hold meetings of its equity shareholders, secured creditors, and unsecured creditors to consider the scheme of amalgamation with Tulip Apparels Private Limited. The High Court permitted the applicant to hold the meetings on 30th May 2009 at specified location with a quorum of five members. The voting at the meetings will be by poll, and proxies are allowed to attend and vote, with proxy forms required to be filed 48 hours before the meetings.
Appointment of Chairman: Mr. Nitin Mandhana, Vice Chairman and Managing Director of the Applicant-Company, was appointed as the Chairman of the meetings. It was mandated that individual notices of the meeting be sent to Equity Shareholders, Secured Creditors, and Unsecured Creditors. Additionally, a common advertisement relating to all the meetings was to be published in "The Hindu" and "Kannada Prabha" newspapers by 5th May 2009.
Reporting Requirement: The Chairman was directed to file a report on the meetings within 14 days from the date of the meetings. The Court allowed the application accordingly, as per C. A. 169/2009.
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2009 (4) TMI 969
Issues Involved:
1. Levy of penalty u/s 271(1)(c) on disallowance of Y2K expenses.
2. Disallowance of foreign travel expenses.
3. Addition of closing stock of consumables/spares.
Summary:
1. Levy of Penalty u/s 271(1)(c) on Disallowance of Y2K Expenses:
The assessee appealed against the CIT (A)'s order confirming the penalty on disallowance of Y2K expenses amounting to Rs. 75,93,724/- u/s 271(1)(c) for the assessment year 2000-01. The assessee argued that the expenses were incurred on EDP systems (computer hardware and software) and were allowable u/s 36(1)(xi). The assessee claimed the deduction based on a Chartered Accountant's certificate, asserting a bonafide belief in the deductibility of such expenses. The CIT (A) held that the claim was not bonafide and upheld the penalty. However, the Tribunal found that the assessee's claim was made in good faith based on the auditor's certificate, and all relevant facts were disclosed. The Tribunal concluded that the penalty was not justified as the explanation was not found false or incorrect, and the assessee did not conceal particulars of income or furnish inaccurate particulars. Therefore, the penalty was cancelled.
2. Disallowance of Foreign Travel Expenses:
The CIT (A) cancelled the penalty on the disallowance of foreign travel expenses amounting to Rs. 26,817/-. The assessee had previously succeeded in getting a similar disallowance deleted by the Tribunal for AY 1998-99. The Tribunal agreed with the CIT (A) that no penalty should be levied on this issue.
3. Addition of Closing Stock of Consumables/Spares:
The CIT (A) also cancelled the penalty on the addition of closing stock of consumables/spares amounting to Rs. 2,65,051/-. The assessee argued that this addition was made for the first time, rejecting the consistent accounting method followed for the last 25 years. The Tribunal upheld the CIT (A)'s decision to cancel the penalty on this issue as well.
Conclusion:
The Tribunal allowed the appeal filed by the assessee, cancelling the penalty levied u/s 271(1)(c) on the disallowance of Y2K expenses. The Tribunal found that the assessee's claim was made in good faith based on an auditor's certificate, and there was no concealment or furnishing of inaccurate particulars of income. The penalties on the disallowance of foreign travel expenses and the addition of closing stock of consumables/spares were also cancelled. The appeal was allowed, and the order was pronounced on 27.04.2009.
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