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• 2011 (4) TMI 1477
  

  fake encounter - whether after filing of the charge-sheet by the State agency, the Court is precluded from appointing any other independent specialized agency like the CBI to go into the same issues if the earlier investigation was not done as per the established procedure - In present case, Petitioner alleged that the Respondents/accused officers enjoy powerful position in their respective State Police and are trying to obstruct further inquiry into the fake encounter killing of her son, who was a material witness in the case of fake encounter of Sohrabuddin and his wife Kausarbi. Hence, the Petitioner has preferred this petition before this Court praying for direction to CBI to register an FIR and investigate the case.

  HELD THAT:- In view of discussions and submission although, charge-sheet has been filed by the State of Gujarat after a gap of 3 1/2 years after the incident, that too after pronouncement of judgment in Rubbabudin's case [2010 (1) TMI 1156 - SUPREME COURT] and considering the nature of crime that has been allegedly committed not by any third party but by the police personnel of the State of Gujarat, we are satisfied that the investigation conducted and concluded in the present case by the State police cannot be accepted. In view of various circumstances highlighted and in the light of the involvement of police officials of the State of Gujarat and police officers of two other States. it would not be desirable to allow the Gujarat State Police to continue with the investigation, accordingly, to meet the ends of justice and in the public interest, we feel that the CBI should be directed to take the investigation.

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• 2011 (4) TMI 1476
  
  Issues Involved:
  1. Appointment of an Arbitrator
  2. Limitation period for raising disputes
  3. Applicability of amended Section 28 of the Indian Contract Act, 1872
  
  Summary:
  
  1. Appointment of an Arbitrator:
  The petitioner sought the appointment of an Arbitrator for disputes arising from an Agreement executed between the parties concerning road construction work. The petitioner completed the work and requested final payment, which was delayed due to a rebate issue. After the final payment was made with deductions, the petitioner sought arbitration as per the contract terms.
  
  2. Limitation period for raising disputes:
  The petitioner was informed that the claim was time-barred, leading to the dismissal of the application for arbitration by the District Judge on the grounds that it was beyond the 180-day limitation period from the date of final payment. The petitioner then approached the High Court after withdrawing the revision petition filed against the District Judge's order.
  
  3. Applicability of amended Section 28 of the Indian Contract Act, 1872:
  The petitioner argued that restricting the right to raise disputes after 180 days contravenes Section 28 of the Indian Contract Act, 1872, as amended by Indian Parliament Act No.1 of 1997. The amendment renders void any contract clause that extinguishes the right to enforce claims within a specified period. The court noted that the amendment aimed to remove the anomaly where extinguishing rights was permissible while barring remedies was not. The court referenced judgments from the Delhi High Court and Madras High Court, which supported the prospective application of the amended Section 28 to contracts executed after the amendment.
  
  The court concluded that the amended Section 28 applied to the present case, as the contract was executed in 2002, post-amendment. The mistaken belief that the amendment was repealed was clarified, affirming that the amendment remains effective despite the Repealing and Amending Act, 2001.
  
  Conclusion:
  The court held that the petitioner's right to arbitration could not be extinguished by the 180-day limitation clause in the Agreement. Consequently, the court appointed Shri B.R. Gupta, Addl. District Judge (Retd.), as the Arbitrator to adjudicate the disputes between the parties.

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• 2011 (4) TMI 1475
  
  The Supreme Court of India issued an order to issue notice on the application for condonation of delay and special leave petition. Dasti service is permitted, and the petition is tagged with S.L.P. (C) Nos........../2011 (CC 5774-5775/2011).

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• 2011 (4) TMI 1474
  
  Issues involved:
  The appeal concerns the deletion of an addition made by the Assessing Officer (AO) under section 41(1)(a) of the Income Tax Act.
  
  Issue 1: Addition under section 41(1)(a) of the IT Act
  The AO added an amount to the total income of the assessee, considering it as a cessation of liability under section 41(1)(a) of the IT Act. The assessee contended that the liability was still existing and uncleared, not to be treated as a cessation of liability. The CIT(A) allowed the appeal, emphasizing that the burden is on the revenue to prove the remission or cessation of liability. The revenue challenged this decision.
  
  Details:
  The assessee, a Director of a trading company, had an outstanding trade liability in the books of accounts relating to a dispute with a distillery. The AO added the amount to the total income, citing a lack of evidence from the assessee. The CIT(A) ruled in favor of the assessee, stating that the revenue must prove the cessation of liability. The Tribunal remitted the matter back to the AO for fresh consideration, emphasizing the need for cooperation from the assessee in providing necessary details for assessment.
  
  Conclusion:
  The Tribunal allowed the appeal filed by the revenue for statistical purposes, directing a reevaluation by the AO with the cooperation of the assessee for a proper assessment.

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• 2011 (4) TMI 1473
  
  Issues involved: The judgment deals with the issue of a derivative action brought by shareholders for partition of alleged joint family assets, the concept of derivative action, and the maintainability of the suit.
  
  Derivative Action and Misconceived Claim:
  The Court noted that the suit appeared to be a derivative action brought by shareholders for partition of joint properties. However, upon scrutiny, it was found that the claim was misconceived as it did not adhere to the principles of a derivative action. The Court emphasized the doctrine of indoor management and the rule of judicial non-interference, which restricts the Court from intervening in a company's affairs unless majority members seek redress. The evolution of the rule from Foss v. Harbottle to subsequent cases was discussed, highlighting the exceptions to the rule. The Court clarified that a derivative action is where members sue on behalf of the company itself, deriving the right from the company. The judgment referenced past cases to explain the legal position of derivative actions.
  
  Inappropriate Cause-Title and Unmaintainable Action:
  The cause-title of the suit was found to be inappropriate and incomprehensible, deviating from the essence of a derivative action. The Plaintiffs' attempt to sue on behalf of multiple companies for partition of assets was deemed legally flawed. The Court emphasized that a derivative action seeks to enforce a cause of action belonging to the company, not for personal gain. In this case, the primary relief sought, i.e., partition of company assets, did not align with the purpose of a derivative action. The Court criticized the contradictory nature of the suit, where different Plaintiffs pursued personal benefits within a derivative action framework, rendering the claim legally unsustainable.
  
  Dismissal of Interlocutory Reliefs:
  Due to the fundamental flaws in the suit's structure and claims, the Court dismissed the interlocutory reliefs sought by the Plaintiffs. The Court highlighted that the suit was unlikely to succeed, and therefore, the requested reliefs could not be granted. The Court ordered the dismissal of the application with costs to be paid to one of the Defendants. All interim orders in the suit were vacated immediately. The Court refrained from delving into the merits of the claim or the Plaintiffs' entitlement to partition, emphasizing the unsuitability of claiming partition of multiple companies' assets in a derivative action.
  
  This judgment from the Calcutta High Court elucidates the intricacies of derivative actions, the limitations on Court interference in company affairs, and the importance of aligning legal claims with established principles to ensure maintainability in a court of law.

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• 2011 (4) TMI 1472
  
  Issues involved:
  The correctness of CIT(A)'s order regarding assessment u/s 143(3) of the Income Tax Act, 1961 for the assessment year 2006-07 is questioned.
  Ground Nos. I & II:
  The appeal concerns the allowance of deduction u/s 80-IB(10) of the Act and the satisfaction of conditions for the deduction. The issue is covered by a Special Bench decision and upheld by the Bombay High Court, affirming the CIT(A)'s conclusions.
  Ground Nos. III & IV:
  The dispute involves the deletion of an addition of Rs. 20,00,000 based on a partner's statement during survey proceedings. The CIT(A) deleted the addition, citing lack of discrepancies in the assessee's profit calculation and the general nature of the partner's statement. The ITAT upheld the CIT(A)'s decision, emphasizing that additions cannot be solely based on survey statements.

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• 2011 (4) TMI 1471
  

  Whether after furnishing `no-claim certificates' and the receipt of payment of final bill, any arbitrable dispute between the parties survived or the contract stood discharged - the agreement between the parties made an integral part of the contract. Condition 70 provided mode for resolution of disputes and differences between the parties through arbitration. HELD THAT:- The present, in our opinion, appears to be a case falling in the category of exception noted in the case of Boghara Polyfab - 2008 (9) TMI 864 - Supreme Court. As to financial duress or coercion, nothing of this kind is established prima facie. Mere allegation that no-claim certificates have been obtained under financial duress and coercion, without there being anything more to suggest that, does not lead to an arbitrable dispute. The certificates leave no manner of doubt that upon receipt of the payment, there has been full and final settlement of the contractor's claim under the contract. That the payment of final bill was made to the contractor is not in dispute. After receipt of the payment, no grievance was raised or lodged by the contractor immediately. The concerned authority, thereafter, released the bank guarantee. It was then that on that day itself, the contractor lodged further claims. The conduct of the contractor clearly shows that `no claim certificates' were given by it voluntarily; the contractor accepted the amount voluntarily and the contract was discharged voluntarily.

  The appeal is, accordingly, allowed. The impugned order passed by the Chief Justice of the High Court of Punjab and Haryana is set aside. The parties shall bear their own costs.

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• 2011 (4) TMI 1470
  
  Issues Involved:
  1. Whether criminal proceedings initiated by the appellant at Gaya against her husband and his relatives are maintainable for lack of jurisdiction?
  
  Summary:
  
  Issue: Maintainability of Criminal Proceedings for Lack of Jurisdiction

  2) The only issue for consideration in both the appeals is whether criminal proceedings initiated by the appellant herein at Gaya against her husband and his relatives are maintainable or not for lack of jurisdiction?

  Facts and Proceedings:

  3) Brief facts:

  (a) The appellant got married to respondent No.2 on 16.04.2000 at Gaya. Post-marriage, she faced harassment and torture from her in-laws for bringing less dowry. Her husband demanded an additional amount of Rs. 4 lakhs and her father's house at Gaya. Due to continuous torture, she lodged an FIR No. 66 of 2007 u/s 498A and 406 read with Section 34 IPC and Sections 3 and 4 of the Dowry Prohibition Act, 1961 at Magadh Medical College Police Station, Gaya.

  (b) The Chief Judicial Magistrate found a prima facie case and took cognizance of the offences, transferring the case to the Court of Sub-Divisional Judicial Magistrate, Gaya for trial. The objection regarding jurisdiction was rejected by the Magistrate.

  (c) The accused challenged this order in the High Court of Patna, which quashed the proceedings at Gaya for lack of jurisdiction, allowing the appellant to file in the appropriate Court.

  (d) Aggrieved by the High Court's orders, the appellant filed appeals before the Supreme Court.

  Legal Provisions and Analysis:

  5) The issue pertains to territorial jurisdiction. The SDJM found that the Court at Gaya has jurisdiction, but the High Court reversed this decision. Relevant provisions include Sections 177-179 of the Code of Criminal Procedure, 1973.

  6) Section 177 states that every offence shall ordinarily be inquired into and tried by a Court within whose local jurisdiction it was committed. Section 178 allows for inquiry or trial by a Court having jurisdiction over any of the local areas where the offence was committed partly or as a continuing offence. Section 179 allows for trial where the consequence of the offence ensued.

  Application of Law to Facts:

  7) The appellant's complaint detailed ill-treatment and cruelty at Ranchi and her forced relocation to Gaya. The complaint was registered as an FIR for offences u/s 498A and 406/34 IPC and Sections 3 and 4 of the D.P. Act. The main offence u/s 498A IPC pertains to cruelty by husband and relatives.

  8) Similar cases were considered by the Supreme Court in Sujata Mukherjee vs. Prashant Kumar Mukherjee and State of M.P. vs. Suresh Kaushal, where it was held that the Magistrate at the wife's parental place has jurisdiction due to the continuing nature of the offence.

  9) The respondent's counsel argued that the Court at Gaya has no jurisdiction over the husband's relatives in the absence of any act at Gaya, citing Y. Abraham Ajith vs. Inspector of Police. However, this was distinguished based on the continuing nature of the offence.

  10) The decision in Bhura Ram vs. State of Rajasthan was also distinguished for similar reasons.

  Conclusion:

  11) The appellant's complaint indicated a continuing offence of ill-treatment and cruelty, with actions at both Ranchi and Gaya. Thus, u/s 178 and 179 of the Code, the Court at Gaya has jurisdiction.

  12) The Supreme Court set aside the High Court's orders, allowing the SDJM, Gaya to proceed with the criminal proceedings. The appeals were allowed, with no expression on the merits of the case.

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• 2011 (4) TMI 1469
  
  Issues Involved:
  1. Non-constitution of Permanent Establishment (PE) of the appellant in India.
  2. No attribution of income deemed to accrue/arise in India to the alleged PE of the appellant in India.
  
  Summary:
  
  Issue 1: Non-constitution of Permanent Establishment (PE) of the appellant in India

  The appellant contested the AO's and DRP's conclusion that its two Indian subsidiaries constituted a 'Business Connection' u/s 9(1)(i) of the Income-tax Act, 1961 or a 'Permanent Establishment' (PE) under Article 5 of the India-Germany Tax Treaty. The appellant argued that it operates entirely from outside India and has no fixed place of business in India. The Tribunal referred to its previous decision for AY 2003-04, where it was held that the appellant did not have any PE in India and that no revenues earned by the appellant could be attributed to a PE. The Tribunal noted that neither the AO nor the DRP distinguished the facts of the current year from AY 2003-04 and followed the previous decision, allowing Ground No. 1 in favor of the appellant.

  Issue 2: No attribution of income deemed to accrue/arise in India to the alleged PE of the appellant in India

  The appellant argued that since it operates entirely from outside India, no income can be attributed to the alleged PE in India under Article 7 of the Tax Treaty. The Tribunal referred to its previous decision, which stated that even if a PE existed, no part of the revenues could be attributed to it unless there was a live economic nexus with the PE. The Tribunal concluded that the taxation on a gross basis at a higher rate of 20% u/s 115A read with 44D of the Act was unwarranted and that taxation should be at 10% on a gross basis under Article 12(2) of the Tax Treaty. Accordingly, Ground No. 2 was allowed in favor of the appellant.

  Conclusion:

  The appeal was allowed in favor of the appellant on both grounds, following the Tribunal's previous decision for AY 2003-04.

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• 2011 (4) TMI 1468
  
  Issues Involved:
  1. Conviction and sentencing u/s 138 of the Negotiable Instruments Act.
  2. Enhancement of punishment.
  3. Validity of statutory notice.
  4. Quantum of sentence.
  
  Summary:
  
  1. Conviction and Sentencing u/s 138 of the Negotiable Instruments Act:
  The accused was convicted by the trial court for the offence u/s 138 of the Negotiable Instruments Act and sentenced to six months' simple imprisonment and a fine of Rs. 5,000, in default, to undergo one month simple imprisonment. The first appellate court modified the sentence to three months' simple imprisonment and directed the accused to pay a balance amount of Rs. 2,85,000/- to the complainant, in addition to the Rs. 2,00,000/- already deposited.
  
  2. Enhancement of Punishment:
  The complainant filed Crl.R.C.No.807 of 2005 seeking enhancement of the punishment. The complainant argued that the accused was in the habit of borrowing money and issuing cheques without sufficient funds, leading to multiple cases u/s 138 of the Negotiable Instruments Act. The court, however, found no merit in enhancing the sentence beyond the three months' simple imprisonment already imposed by the first appellate court.
  
  3. Validity of Statutory Notice:
  The accused contended that no statutory notice was received. The court found this argument unmeritorious, as Ex.P-9 proved that the notice was sent to the correct address and was refused by the accused. Thus, the notice was deemed to have been served validly.
  
  4. Quantum of Sentence:
  The court considered various precedents and the conduct of the accused, who had not paid the balance amount despite the appellate court's judgment. The court directed the accused to deposit the balance amount of Rs. 2,85,000/- within two months, failing which she would undergo one month simple imprisonment. The complainant was permitted to withdraw the Rs. 2,00,000/- already deposited and the additional Rs. 2,85,000/- upon deposit.
  
  Conclusion:
  The conviction and sentence by the first appellate court were confirmed. The trial court was directed to secure the custody of the accused to undergo the remaining period of the sentence if any. Both Crl.R.Cs. were dismissed, and the complainant was allowed to withdraw the deposited amounts.

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• 2011 (4) TMI 1467
  

  Arbitration Proceedings - Delay in execution of the work - termination of contract - liability to pay liquidated damages - the Respondents awarded the work of "extension of terminal building" at Guwahati airport to the Appellant. As per the contract, the date of commencement of work and the period of completion of the work was 21 months, to be completed in different stages. As the Appellant (`contractor') did not complete the first phase of the work within the stipulated time, the Respondents terminated the contract. The termination was challenged by the Appellant in a writ petition filed before the Guwahati HC. the HC set aside the termination and directed the Respondents to grant time to the Appellant till the end of January for completion of the first phase reserving liberty to the Appellant to apply for further extension of time. As the work was not completed, the Respondents granted an extension, without levying any liquidated damages. The contractor proceeded with the work even thereafter. However, as the progress was slow, the Respondents terminated the contract again on the ground of non-completion even after 35 months. The Appellant filed a writ petition, challenging the cancellation. The High Court referred the parties to arbitration. In pursuance of it, on a request by the Appellant, the Respondents appointed the arbitrator. the Appellant filed its statement of claims. the Respondents their reply and also filed their four counter claims before the arbitrator. the Arbitrator awarded a sum with interest and costs in favor of the Appellant and rejected the counter claims of the Respondents. this petition is filed by Respondents.

  HELD THAT:- The arbitrator has examined the said issue and has recorded a categorical finding that the Respondents were responsible for the delay in execution of the work and the contractor was not responsible. The arbitrator also found that the Respondents were in breach and the termination of contract was illegal. Therefore, the Respondents were not entitled to levy liquidated damages nor entitled to claim from the contractor the extra cost (including any escalation in regard to such extra cost) in getting the work completed through an alternative agency. In view of the finding of the arbitrator that the Appellant was not responsible for the delay and that the Respondents were responsible for the delay, the question of Respondents levying liquidated damages or claiming the excess cost in getting the work completed as damages, does not arise. Once it is held that the contractor was not responsible for the delay and the delay occurred only on account of the omissions and commissions on the part of the Respondents, it follows that provisions which make the decision of the Superintending Engineer or the Engineer-in-Charge final and conclusive, will be irrelevant. Therefore, the Arbitrator would have jurisdiction to try and decide all the claims of the contractor as also the claims of the Respondents. Consequently, the award of the Arbitrator on items 1, 3 and 11 has to be upheld and the conclusion of the High Court that award in respect of those claims had to be set aside as they related to excepted matters, cannot be sustained.

  No part of the decision of the High Court is sustainable. The appeal is therefore allowed, the impugned order of the High Court is set aside and the order of the District Court is restored.

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• 2011 (4) TMI 1466
  
  The Supreme Court admitted an appeal and expedited the hearing, deciding to have the matter heard along with another case with similar issues (C.A. No. D27269/2009).

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• 2011 (4) TMI 1465
  
  Issues involved:
  The judgment involves the challenge to a communication issued by the Commercial Tax Officer seeking recovery of tax from a Public Trust engaged in the manufacture and supply of furniture to schools in villages. The issues include the validity of exemption under the Sales Tax Act, continuation of exemption under the Value Added Tax Act, and the unilateral withdrawal of tax relief by the authorities.
  
  Exemption under Sales Tax Act:
  The petitioner, a registered Public Trust, had obtained exemption from payment of Sales Tax under the Gujarat Sales Tax Act based on a certificate issued by the Gujarat Rajya Khadi & Gramodhyog Board. The Trust's registration was renewed, and the exemption was continued till the validity period of the Sales Tax exemption certificate, even after the introduction of the Gujarat Value Added Tax Act in 2006.
  
  Continuation of Exemption under Value Added Tax Act:
  A Division Bench decision allowed the continuation of exemptions granted under the Sales Tax Act until their validity period. However, the Bench did not direct the extension of benefits under the Value Added Tax Act, leaving it to the legislative function or government policy to decide on such extensions. The Trust applied for a fresh exemption under a Circular issued by the Government in 2009, which was initially granted but later questioned by the authorities.
  
  Unilateral Withdrawal of Tax Relief:
  The authorities unilaterally decided that the exemption granted to the Trust under the Value Added Tax Act was erroneous and sought recovery of the tax relief amount. The Trust argued that it had fulfilled all requirements for the exemption and that the withdrawal was improper. The Court noted that the Trust was eligible to apply for fresh exemptions under government policies and that the authorities' perception of the Trust's entitlement to exemptions post-2008 was incorrect.
  
  Court's Decision:
  The Court held that the Trust was entitled to apply for fresh exemptions under the government's Circular and that the authorities' unilateral withdrawal of the exemption was not justified. The Court directed the Government to reconsider the Trust's application for exemption, and until a decision was made, no recovery of tax already availed of should occur. The Court emphasized that the Trust should not be entitled to any tax exemptions until the Government's final decision, which should be concluded within two months.
  
  Conclusion:
  The judgment clarifies the Trust's entitlement to exemptions under the Sales Tax and Value Added Tax Acts, emphasizing the importance of following government policies and procedures in granting and withdrawing tax reliefs. The Court's decision aims to ensure fair treatment of the Trust and proper consideration of its exemption application by the authorities.

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• 2011 (4) TMI 1464
  

  Whether the Notification issued by state making any declaration can take away the accrued rights of the Appellant - In Present case, the appellant had joined as a member of the Commission vide order dated 29.6.2006 under the Act 1993. The State of U.P. issued Notification dated 28.5.2008 to the effect that appellant ceased to hold the office as a Member of the Commission. The appellant challenged the said Notification by filing Writ Petition mainly on the grounds that he had been appointed for a tenure of five years and that period could not be curtailed. The High Court dismissed the writ petition. Hence, this appeal.

  HELD THAT:- A Constitution Bench of this Court in Chairman, Railway Board & Ors. v. C.R.Rangadhamaiah & Ors [1997 (7) TMI 662 - SUPREME COURT] observed the expressions - “vested rights” or “accrued rights” have been used while striking down the impugned provisions which had been given retrospective operation so as to have an adverse effect in the matter of promotion, seniority, substantive appointment, etc., of the employees. The said expressions have been used in the context of a right flowing under the relevant rule which was sought to be altered with effect from an anterior date and thereby taking away the benefits available under the rule in force at that time. It has been held that such an amendment having retrospective operation which has the effect of taking away a benefit already available to the employee under the existing rule is arbitrary, discriminatory and violative of the rights guaranteed under Articles 14 and 16 of the Constitution.” Therefore, we do not have any hesitation to declare that the Notification dated 28.5.2008 is patently illegal.

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• 2011 (4) TMI 1463
  
  Issues Involved: Appeal against CIT(Appeals) orders regarding exemption u/s 10(23C)(vi) and other related issues.
  
  Exemption u/s 10(23C)(vi): The appellant, an educational institution, claimed exemption u/s 10(23C)(vi) based on its status as a subsidiary of an American association and its operations in India. The CIT(Appeals) rejected the claim citing previous decisions. However, the appellant challenged this decision based on subsequent developments, including a Supreme Court order and a High Court judgment directing the authorities to reconsider the approval application and monitoring conditions. The High Court upheld the conditions imposed by the CBDT but directed the authorities to allow a reasonable period for compliance. The ITAT agreed with the appellant's contention and set aside the issue for fresh adjudication by the AO in line with the High Court's directions.
  
  Fresh Adjudication: The ITAT directed the AO to determine the surplus, grant adequate opportunity to the assessee, and provide a reasonable period for compliance with monitoring conditions. The AO's previous order did not align with the High Court's directives, necessitating a denovo assessment in accordance with the law and the court's instructions. The appeals were allowed for statistical purposes, emphasizing the need for proper adherence to legal procedures and court directives in tax matters.
  
  Conclusion: The ITAT Mumbai, in a 2011 judgment, addressed appeals related to exemption claims u/s 10(23C)(vi) and other issues. The decision highlighted the importance of following court directives and ensuring proper adjudication in tax matters, emphasizing compliance with legal provisions and monitoring conditions.

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• 2011 (4) TMI 1462
  
  Issues Involved:
  
  1. Applicability of the Bombay Money-Lenders Act, 1946, to Non-Banking Financial Companies (NBFCs).
  2. Repugnancy between the Bombay Money-Lenders Act, 1946, and the Reserve Bank of India Act, 1934, concerning NBFCs.
  
  Issue-wise Detailed Analysis:
  
  1. Applicability of the Bombay Money-Lenders Act, 1946, to NBFCs:
  
  The primary issue is whether the Bombay Money-Lenders Act, 1946, applies to NBFCs. The appellants argued that the Money-Lenders Act was enacted to regulate money-lending transactions and protect weaker sections of society from exploitation by money-lenders. The State contended that the Act has exclusive power under Article 246(3) of the Constitution, with Entry 30 of List-II of the 7th Schedule empowering States to enact laws regarding money-lending and money-lenders.
  
  The Act defines "money-lender" to include individuals, undivided Hindu families, companies (as defined under the Indian Companies Act, 1913), and other banking financial institutions notified by the State Government. However, the Act does not include companies incorporated under the Indian Companies Act, 1956, unless notified by the State Government.
  
  The respondents, NBFCs registered under the Reserve Bank of India (RBI) Act, argued that they are governed by Chapter IIIB of the RBI Act, which is a self-contained code regulating their business and activities. The RBI Act defines "company" to include those registered under the Indian Companies Act, 1956, and grants the RBI regulatory and supervisory powers over NBFCs.
  
  The court concluded that companies incorporated under the Indian Companies Act, 1956, are not covered by the Money-Lenders Act unless notified by the State Government. Therefore, the Money-Lenders Act does not apply to NBFCs.
  
  2. Repugnancy between the Bombay Money-Lenders Act, 1946, and the Reserve Bank of India Act, 1934:
  
  The second issue is whether the Money-Lenders Act is repugnant to the RBI Act concerning NBFCs. The State argued that there is no repugnancy as both Acts operate in different fields. However, the respondents contended that Chapter IIIB of the RBI Act, which regulates NBFCs, overrides the Money-Lenders Act.
  
  Article 254 of the Constitution addresses inconsistencies between State and Central laws, stating that the Central law prevails in case of repugnancy. Section 45Q of the RBI Act specifies that the provisions of Chapter IIIB have an overriding effect on any inconsistent State law, including the Money-Lenders Act.
  
  The court referred to various Supreme Court and Federal Court decisions on repugnancy, emphasizing that repugnancy must be clear, direct, and irreconcilable. The court found that Chapter IIIB of the RBI Act occupies the field concerning the regulation and penal action against NBFCs, thereby precluding the State from taking regulatory or penal measures under the Money-Lenders Act.
  
  In conclusion, the court held that the Money-Lenders Act does not apply to NBFCs, and Chapter IIIB of the RBI Act has an overriding effect, rendering any inconsistent provisions of the Money-Lenders Act void. The appeals challenging the applicability of the Money-Lenders Act to NBFCs were dismissed, and the judgment directing the Registrar to decide the representation was set aside.

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• 2011 (4) TMI 1461
  

  CENVAT credit - distribution of Service tax credit made in one unit and availed of in another unit - Held that: - the assessee was dealing with the very same product - the assessee is entitled to distribute the cenvat credit on the input services on its manufacturing unit or other units providing the output services - appeal dismissed - decided against Revenue.

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• 2011 (4) TMI 1460
  
  Issues Involved:
  1. Addition on account of undisclosed investment in gold jewellery.
  2. Addition on account of excess stock of gold jewellery and diamonds found during survey.
  3. Addition on account of undisclosed income from finance and jewellery business.
  4. Addition on account of cash found during search.
  5. Addition on account of deposits in the bank accounts of minor daughters.
  6. Addition on account of unaccounted sales.
  
  Detailed Analysis:
  
  1. Addition on Account of Undisclosed Investment in Gold Jewellery:
  Facts:
  The assessee was found in possession of unaccounted gold jewellery, silver jewellery, diamond-studded jewellery, loose diamonds, and cash during a search operation. The Assessing Officer (AO) added Rs. 40,70,375/- for excess gold jewellery found at the residence.
  
  CIT(A)'s Findings:
  The CIT(A) gave credit for jewellery shown in wealth tax returns and VDIS declarations, reducing the addition to Rs. 2,89,104/-.
  
  Tribunal's Decision:
  The Tribunal upheld the CIT(A)'s decision, emphasizing the reasonableness of the assessee's explanation and the need to consider wealth tax records and VDIS declarations. The Tribunal dismissed the Revenue's appeal and the assessee's cross-objection regarding the sustained addition of Rs. 2,89,104/-.
  
  2. Addition on Account of Excess Stock of Gold Jewellery and Diamonds Found During Survey:
  Facts:
  Excess gold jewellery and diamonds were found at the assessee's business premises and residence during the survey. The AO added Rs. 75,69,499/- for excess gold jewellery and Rs. 12,00,000/- for excess diamonds.
  
  CIT(A)'s Findings:
  The CIT(A) gave credit for jewellery issued to a goldsmith and adjusted the addition to Rs. 24,48,880/-.
  
  Tribunal's Decision:
  The Tribunal remanded the issue to the AO for fresh examination, directing the AO to verify the entries in the G-11 Register and give appropriate credit. The Tribunal allowed the Revenue's appeal and the assessee's cross-objection for statistical purposes.
  
  3. Addition on Account of Undisclosed Income from Finance and Jewellery Business:
  Facts:
  The AO added Rs. 2,48,39,000/- based on a secret file named 'Dhanraj' found during the survey, which contained details of unaccounted transactions.
  
  CIT(A)'s Findings:
  The CIT(A) reduced the addition to Rs. 57,52,241/-, accepting the assessee's explanation for part of the unaccounted income.
  
  Tribunal's Decision:
  The Tribunal remanded the issue to the AO for re-examination, directing the AO to consider the cash flow statement and give appropriate credit. The Tribunal dismissed the Revenue's appeal and allowed the assessee's cross-objection for statistical purposes.
  
  4. Addition on Account of Cash Found During Search:
  Facts:
  The AO added Rs. 4,32,900/- for cash found during the search, treating it as unexplained income.
  
  CIT(A)'s Findings:
  The CIT(A) confirmed the addition.
  
  Tribunal's Decision:
  The Tribunal deleted the addition, accepting the assessee's explanation that the cash balance included amounts from the finance business. The Tribunal allowed the assessee's cross-objection.
  
  5. Addition on Account of Deposits in the Bank Accounts of Minor Daughters:
  Facts:
  The AO added Rs. 30,610/- for deposits in the bank accounts of the assessee's minor daughters, treating them as unexplained.
  
  CIT(A)'s Findings:
  The CIT(A) reduced the addition to Rs. 10,610/-.
  
  Tribunal's Decision:
  The Tribunal confirmed the CIT(A)'s decision, finding it reasonable. The Tribunal dismissed this part of the assessee's cross-objection.
  
  6. Addition on Account of Unaccounted Sales:
  Facts:
  The AO added amounts for unaccounted sales based on loose slips found during the search.
  
  CIT(A)'s Findings:
  The CIT(A) confirmed the additions.
  
  Tribunal's Decision:
  The Tribunal upheld the CIT(A)'s decision, finding the loose slips to be indicative of unaccounted sales. The Tribunal dismissed the assessee's appeals and cross-objections on this issue.
  
  Conclusion:
  The Tribunal's decisions involved a mix of upholding CIT(A)'s findings, remanding issues for re-examination, and deleting certain additions. The Tribunal emphasized the need for reasonable explanations and proper verification of records while considering the overall circumstances and evidence presented.

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• 2011 (4) TMI 1459
  
  Issues involved:
  The legal issues in this judgment involve the jurisdictional aspect of reassessment u/s 147 r.w.s. 148 of the Income Tax Act, 1961.
  
  Jurisdictional Issue:
  The first legal issue in this appeal concerns the order of CIT(A) not adjudicating the jurisdictional issue of reassessment u/s. 147 r.w.s. 148 of the Act. The appellant contended that the reasons recorded for initiating proceedings under section 147 were vague and not supported by evidence. The Tribunal observed that the proceedings under section 147 can be disputed even in the second round of appeal, citing the decision of Hon'ble Gujarat High Court in P. V. Doshi Vs. CIT. The Tribunal held that the CIT(A) should have decided the jurisdictional issue first and remanded the legal aspect for fresh adjudication.
  
  Background and Decision:
  The original assessment was completed under section 144/147 for the assessment year 1989-90, with subsequent reassessment under section 147/143(3)/254 of the Act. The Assessing Officer made additions and the appellant disputed these additions and the initiation of assessment proceedings under section 147 r.w.s. 148 before CIT(A). The Tribunal emphasized that the objection regarding lack of jurisdiction should be decided first, as per established legal principles. Therefore, the Tribunal set aside the legal aspect to the file of the CIT(A) for fresh adjudication, while also allowing the appeal for statistical purposes.

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• 2011 (4) TMI 1458
  
  Issues involved: Appeal against order of ld. CIT(A) on grounds of addition of notional interest, difference in books of account, and low profitability.
  
  Issue 1: Addition of notional interest
  
  The appeal challenged the addition of notional interest on advances made to individuals, contending it violated Sec 36(iii) of the Income-tax Act. The Authorized Representative acknowledged a similar issue had been decided previously by the Tribunal for A.Y 2005-06. Referring to the Tribunal's earlier order, it was noted that the advances were made for acquiring new assets to further the business activity, not as loans. The Tribunal upheld the disallowance of the notional interest, citing the proviso under Sec 36(1)(iii) as applicable. Consequently, the appeal on this ground was dismissed.
  
  Issue 2: Difference in books of account
  
  Regarding the addition related to differences in balances between the assessee's books and those of National Fertiliser Ltd., the Authorized Representative admitted the discrepancies and expressed the assessee's intention to conceal them. The matter was remanded to the Assessing Officer for reconciliation of the differences, directing a fresh assessment in accordance with the law. Ground No. 2 was treated as allowed for statistical purposes.
  
  Issue 3: Addition on account of low profitability
  
  The impugned addition on grounds of low profitability was made by the AO after the assessee had agreed to it. The ld. CIT(A) upheld the addition, which was confirmed during the hearing. The Authorized Representative clarified that the addition was agreed upon by the assessee's counsel in the absence of the assessee before the AO. As the assessee failed to provide any material to counter the AO's findings, ground No. 3 was dismissed. The appeal was partly allowed, with the order pronounced in April 2011.

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