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2011 (9) TMI 1263
Whether the provisions for fixation of standard rent, and provisions prescribing other obligations for the landlord such as maintenance of essential services under the concerned Rent Control Act viz. Maharashtra Rent Control Act, 1999 as in the present case (hereinafter referred to as the MRC Act), are applicable in respect of public premises owned by a corporation such as the first respondent Life Insurance Corporation of India (L.I.C in short) which is otherwise covered by the provisions of the Public Premises (Eviction of Unauthorized Occupants) Act, 1971 (hereinafter referred to as the Public Premises Act)?
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2011 (9) TMI 1261
Issues Involved:
1. Validity of the auction sale of the company's assets.
2. Determination of whether the assets purchased were movable or immovable.
3. The Appellant's claim over the assets and the subsequent legal proceedings.
4. The role and findings of the Local Commissioner regarding the assets.
5. The legal implications of the auction and the Appellant's rights.
Detailed Analysis:
1. Validity of the Auction Sale:
The central issue in this case was the validity of the auction sale conducted by the Tehsildar and Collector, Morena, for the assets of the company in liquidation. The Appellant contended that they had purchased all the plant, machinery, and structures of the company, excluding the land, building, and other permanent structures. However, the court noted inconsistencies in the Appellant's claims, as earlier proceedings indicated that the Appellant had claimed to have purchased only the movable assets. The auction records and proceedings clearly stated that only movable assets were auctioned, and the immovable property was not part of the sale. The court found that the auction sale was valid only concerning the movable property, i.e., "Chal Sampatti."
2. Determination of Movable vs. Immovable Assets:
The court examined whether the assets in question were movable or immovable. It relied on the proceedings recorded by the Tehsildar, which indicated that the auction was for movable assets only. Furthermore, communications from the Tehsildar and other officials confirmed that only movable assets were auctioned, and the factory sheds and machinery embedded in the earth were not included. The court also referred to legal precedents, such as Duncans Industries Ltd. and M/s T.T.G. Industries Ltd., to conclude that the heavy machinery and plant were intended to be permanent installations, thus constituting immovable property.
3. The Appellant's Claim and Legal Proceedings:
The Appellant's claim over the assets was challenged due to discrepancies in their statements across different proceedings. Initially, the Appellant had acknowledged purchasing only movable assets, which contradicted their later claims. The court emphasized that the Appellant's assertions were unsupported by the auction records and the statements made during the Madhya Pradesh High Court proceedings. The court dismissed the Appellant's application (C.A. No.385/2007) as it found no merit in the claim that the Appellant had rights over the immovable assets.
4. Role and Findings of the Local Commissioner:
To resolve the dispute over whether the Appellant had removed any immovable property, the court appointed a Local Commissioner to inspect the premises and report on the nature of the assets. The Local Commissioner's report was not contested by the Appellant, and the court did not find it necessary to delve further into this issue. The findings suggested that the Appellant had removed only the movable assets, aligning with the auction's terms.
5. Legal Implications of the Auction and Appellant's Rights:
The court's analysis concluded that the Appellant's appeal lacked merit, primarily due to the inconsistency in their claims and the clear delineation of movable and immovable property in the auction records. The court upheld the learned Company Judge's decision, which dismissed the Appellant's application and allowed the highest bidder from the subsequent auction to take possession of the assets. The Appellant's rights were limited to claiming the value of any movable assets, if admissible, from the sale proceeds deposited by the highest bidder.
In conclusion, the appeal was dismissed, affirming the validity of the auction sale concerning movable assets and rejecting the Appellant's broader claims over the company's assets. The court's decision was grounded in the evidence presented and the legal principles governing movable and immovable property.
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2011 (9) TMI 1260
Issues:
1. Interpretation of orders passed by the Debts Recovery Tribunal and the Appellate Authority.
2. Compliance with the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
3. Delay in adjudication of appeals under Sections 17 and 18 of the Act.
4. Failure of the Appellate Authority and the Appellate Tribunal to discharge statutory duties.
Analysis:
The case involves a petitioner who took a commercial loan from a bank and faced recovery proceedings due to default. The Debts Recovery Tribunal issued orders allowing the bank to proceed with auction and sale of the secured assets if the bid exceeded a specified amount. The Appellate Authority permitted the bank to proceed with the auction but gave the petitioner the option to pay dues before the auction of a second property. The judgment discusses the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, emphasizing the expeditious disposal of applications by the Tribunal. Section 17 of the Act mandates timely resolution of applications and provides for appeals to the Appellate Tribunal.
The judgment criticizes the Tribunal for keeping the matter pending with interim orders instead of deciding it on merit. It highlights that the Tribunal's power is not to prolong matters indefinitely but to adjudicate promptly. The Appellate Tribunal also failed to direct the timely resolution of the appeal, impacting the Act's objectives. The judgment stresses the importance of ensuring appeals are decided within the statutory period to avoid frustration of the Act's purpose. It directs the Presiding Officers to ensure timely resolution of appeals and avoid unnecessary delays due to repeated interim orders.
In conclusion, the appeal is allowed, setting aside the impugned order and directing the Debts Recovery Tribunal to decide the appeal expeditiously within two months. Recovery proceedings are suspended for two months if the petitioner deposits a specified amount within one month. The Chairman of the Debts Recovery Tribunal is instructed to circulate the order for compliance by the Tribunals. The judgment underscores the need for timely resolution of appeals under the Act to uphold its objectives and prevent undue delays in the legal process.
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2011 (9) TMI 1259
Issues Involved:
1. Jurisdiction of the Delhi courts to entertain complaints under Section 138 of the Negotiable Instruments Act, 1881.
2. Interpretation of acts constituting the offence under Section 138 of the NI Act.
3. The significance of "giving notice" in terms of jurisdiction and limitation under Section 138 of the NI Act.
Issue-wise Detailed Analysis:
1. Jurisdiction of the Delhi Courts:
The primary issue was whether the courts in Delhi had jurisdiction to entertain complaints under Section 138 of the NI Act. The respondent company presented the cheques for collection with its banker in Delhi, and notices were issued from Delhi. However, the petitioners contended that the cheques were drawn in Mumbai, and the drawee bank was located in Mumbai. The court analyzed the jurisdictional aspect with reference to Sections 177, 178, and 179 of the Code of Criminal Procedure and the Supreme Court's decision in K. Bhaskaran v. Shankaran Vaidhyan Balan. The court concluded that the jurisdiction of a court is determined by the location where the offence or part of the offence is committed. The acts constituting the offence under Section 138, as identified by the Supreme Court, include drawing the cheque, presenting it to the bank, returning it unpaid, giving notice in writing, and failure to make payment. The court held that the presentation of the cheque and its return unpaid must occur at the drawee bank, which was in Mumbai, not Delhi. Therefore, the Delhi courts lacked jurisdiction.
2. Interpretation of Acts Constituting the Offence:
The court examined the acts constituting the offence under Section 138 of the NI Act, as elucidated in Bhaskaran's case. These acts include drawing the cheque, presenting it to the bank, returning it unpaid, giving notice in writing, and the drawer's failure to pay. The court emphasized that the presentation of the cheque must occur at the drawee bank, as clarified in Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd., where the Supreme Court held that "the bank" refers to the drawee bank. Consequently, the acts of presenting the cheque and its return unpaid are confined to the location of the drawee bank, which in this case was Mumbai.
3. The Significance of "Giving Notice":
The court addressed the interpretation of "giving notice" under proviso (b) to Section 138 of the NI Act. The Supreme Court in Bhaskaran's case held that "giving notice" means sending the notice, which is relevant for starting the limitation period. However, in Harman Electronics Pvt. Ltd. v. National Panasonic India Pvt. Ltd., the Supreme Court clarified that for jurisdictional purposes, "giving notice" means the receipt of notice by the drawer. The court reconciled these interpretations by acknowledging that the same expression can have different meanings in different contexts. For limitation purposes, "giving notice" means sending, while for jurisdictional purposes, it means receipt. Therefore, the act of sending the notice from Delhi did not confer jurisdiction on the Delhi courts.
Conclusion:
The court concluded that no part of the cause of action arose in Delhi, as the essential acts constituting the offence under Section 138 of the NI Act occurred in Mumbai. Consequently, the petitions were disposed of by quashing the impugned orders and directing the complaints to be returned for filing in a court with the appropriate territorial jurisdiction. No costs were awarded.
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2011 (9) TMI 1258
Issues Involved:
1. Disallowance under Section 14A for expenditure related to exempted income.
2. Treatment of Voluntary Retirement Scheme (VRS) expenses as revenue or capital expenditure.
3. Disallowance of premium on debenture redemption and interest on secured premium notes.
4. Treatment of Warwick expenses as revenue or capital expenditure.
5. Addition of lease equalization charges to book profit under Section 115JA.
Issue-wise Detailed Analysis:
1. Disallowance under Section 14A for expenditure related to exempted income:
The Revenue challenged the deletion of disallowance made under Section 14A for expenditure related to exempted income. The assessee argued that investments were made from internal accruals, not borrowed funds, and no interest expenditure was incurred for earning exempt income. The Assessing Officer (AO) disallowed 10% of the exempt income as attributable expenses. The CIT (A) deleted this disallowance, finding no nexus between interest-bearing borrowings and investments in shares. However, during the hearing, the assessee agreed to the disallowance, leading to the restoration of the AO's decision.
2. Treatment of Voluntary Retirement Scheme (VRS) expenses:
The AO treated the VRS expenditure as capital expenditure, citing enduring benefits to the company. The CIT (A) reversed this, treating it as revenue expenditure, referencing several judicial precedents, including the decision in Bhor Industries Ltd., which classified such expenses as revenue in nature. The Tribunal upheld the CIT (A)'s decision, aligning with the jurisdictional High Court's view that VRS expenses are allowable as revenue expenditure under Section 37(1).
3. Disallowance of premium on debenture redemption and interest on secured premium notes:
The AO disallowed deductions for premium on debenture redemption and interest on secured premium notes, treating them as non-allowable under Section 37(1). The CIT (A) found these expenses to be interest expenditures for business modernization and expansion, allowable under Section 36(1)(iii). The Tribunal upheld this view, citing the Tribunal's previous decision in the assessee's favor, which was consistent with the Supreme Court's ruling in Madras Industrial Investments Corporation Ltd.
4. Treatment of Warwick expenses:
The AO treated Warwick expenses as capital expenditure, but the CIT (A) reversed this, considering them as revenue expenditure for business improvement, including consultancy and training fees. The Tribunal agreed with the CIT (A), noting the expenses were incurred for business purposes and supported by judicial precedents, allowing them as revenue expenditure.
5. Addition of lease equalization charges to book profit under Section 115JA:
The AO added lease equalization charges to book profit under Section 115JA. The CIT (A) deleted this addition, following appellate orders from previous years. The Tribunal upheld the CIT (A)'s decision, referencing the Tribunal's earlier ruling that lease equalization charges fall outside the scope of adjustments under Section 115JA, supported by the Supreme Court's decision in Vijaya Bank v. CIT.
In conclusion, the Tribunal partly allowed the Revenue's appeals by restoring the disallowance under Section 14A, while dismissing other grounds, and upheld the CIT (A)'s decisions on VRS expenses, debenture redemption, Warwick expenses, and lease equalization charges. The assessee's appeals were dismissed as not pressed.
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2011 (9) TMI 1257
Issues Involved:
1. Successive Bail Application
2. Role of the Applicant-Accused
3. CBI Investigation and Charge Sheet
4. Judicial Precedents and Hierarchical Considerations
5. Length of Detention and Personal Liberty
Issue-wise Detailed Analysis:
1. Successive Bail Application:
The present application was filed by the applicant-original accused under Section 439 of the Code of Criminal Procedure for granting regular bail, which is a successive bail application after Criminal Misc. Application No. 8326 of 2009 was rejected. The court emphasized that no change of circumstances had been pointed out by the learned advocate for the applicant except the fact that the investigating agency is now the CBI, which has a different conclusion in the chargesheet. The court stated that considering the role and prima facie case against the applicant, the earlier application was rejected, and there has been no material change in the fact-situation to warrant a different decision.
2. Role of the Applicant-Accused:
The applicant-accused was charged with multiple offences under the Indian Penal Code. The learned advocate for the applicant argued that the applicant was initially a witness and later arraigned as an accused. The CBI's chargesheet stated that the applicant did not have any active role and there was no meeting of mind with the main conspirators, leading to his removal from the list of accused. However, the court noted that once a person is arraigned as an accused by a High Court order, sustained by the Apex Court, the CBI could not unilaterally remove the name without following the appropriate procedure. The court emphasized that the applicant's presence at the scene of the offence and the role attributed to him were significant factors in denying bail.
3. CBI Investigation and Charge Sheet:
The CBI's investigation concluded that the applicant-accused was not involved in the conspiracy, as there was no meeting of mind with the main conspirators. The learned advocate for the applicant argued that this finding should lead to bail. However, the court held that the CBI, as an investigating agency, could not make such conclusive remarks in the chargesheet once the matter was before the court. The appropriate procedure would have been to file a report before the competent court. The court also pointed out that the CBI's remarks were not sufficient to change the earlier decision to deny bail.
4. Judicial Precedents and Hierarchical Considerations:
The court referred to several judicial precedents, including the Hon'ble Apex Court's observations in the cases of N.K. Amin v. State of Gujarat and Dinesh M.N. v. State of Gujarat, which emphasized that the role of the accused should not be bifurcated minutely. The court also highlighted that the order of the High Court, by which the applicant was arraigned as an accused, had merged with the order of the Apex Court. Therefore, the submissions made by the learned advocate for the applicant could not be accepted, as the High Court's order had merged with the Apex Court's order, and the court could not take a different view.
5. Length of Detention and Personal Liberty:
The learned advocate for the applicant argued that the applicant had been in jail for a long period and that the maximum punishment for his alleged role could be three years. The court referred to the Hon'ble Apex Court's observations in the case of Kalyan Chandra Sarkar v. Rajesh Ranjan, which stated that personal liberty could be deprived in accordance with the procedure established by law. The court noted that the applicant's detention was authorized by law and that there was no change in the material fact-situation to warrant bail. The court also emphasized that the applicant's case could not be considered differently from other co-accused who were present at the scene of the offence.
Conclusion:
The court concluded that there was no material change in the fact-situation or additional grounds to entertain the present application for bail. The application was rejected, and the rule was discharged.
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2011 (9) TMI 1256
Issues:
Imposition of penalty under Section 271(1)(c) of the Income-tax Act, 1961 on the Assessee for assessment year 2006-07 due to the nature of income declared as short term capital gain on trading in shares.
Analysis:
The Assessee, an individual deriving income from various sources, declared income from property and trading in shares, with short term capital gain on shares. The Assessing Officer (AO) observed that some shares were traded within a short period, leading to the conclusion that the transactions were of a business nature. Consequently, the AO treated the income as business income instead of short term capital gain, imposing a penalty under Section 271(1)(c). The CIT(A) upheld this decision, prompting the Assessee to appeal.
Upon review, the Appellate Tribunal found that the AO accepted the income declared by the Assessee, but disagreed with the nature of income declared as short term capital gain. It was noted that the Assessee provided full details of the transactions, including script details and holding periods, through an electronic system with a Demat account. The Assessee contended that the shares were purchased as investments and accounted for as such, although the AO treated them as stock in trade. The Tribunal referenced the decision in Reliance Petro Products case, emphasizing that making an incorrect claim in law does not constitute furnishing inaccurate particulars of income under Section 271(1)(c).
Citing various High Court judgments, the Tribunal highlighted that a wrong claim or treatment of income does not automatically lead to penalty imposition. The Delhi High Court and Punjab and Haryana High Court cases underscored that a wrong claim or treatment is distinct from concealment or providing inaccurate information. The Madhya Pradesh High Court case further supported this notion by upholding the deletion of penalty under Section 271(1)(c) for an Assessee engaged in commission agency business.
Ultimately, the Tribunal concluded that there was no merit in the imposition of the penalty under Section 271(1)(c) by the lower authorities. Both appeals by the Assessee were allowed, emphasizing the lack of justification for treating the capital gain as business income. The judgment was pronounced on 28th September 2011.
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2011 (9) TMI 1255
Issues involved:
The issues involved in this case are the cancellation of an allotment made in favor of a company at the SIPCOT Information Technology Park, failure to comply with the terms and conditions of the allotment, initiation of actions under the Tamil Nadu Public Premises Act, challenge against the cancellation order, possession of the plot, and the legality of the eviction notice.
Cancellation of Allotment:
The original allottee failed to observe the terms and conditions of the allotment, including commencing construction within the stipulated time frame and utilizing the plot for the designated purpose. Consequently, the allotment was cancelled, and actions were initiated under the Tamil Nadu Public Premises Act for eviction of unauthorized occupants.
Challenge Against Cancellation:
The petitioner, representing the company, challenged the cancellation order, claiming that they were in rightful possession of the property following an amalgamation. They argued that the original allottee had failed to comply with the conditions of the allotment and that the petitioner should be allowed to participate in the proceedings related to the cancellation and eviction.
Legal Standpoint:
The Supreme Court's decisions in U.P. Financial Corpn. v. Gem Cap (India) (P) Ltd. and Karnataka State Industrial Investment & Development Corpn. Ltd. v. Cavalet India Ltd. emphasize that the High Court cannot act as an appellate authority over administrative actions unless there is a statutory violation or unfairness on the part of the corporation. The relationship between the corporation and the borrower is that of creditor and debtor, and the court cannot interfere unless there is a violation of statutory provisions.
Decision:
The High Court dismissed the writ petition, stating that the petitioner did not have the standing to challenge the cancellation order or the eviction notice. The court found no unreasonableness in the actions taken by the respondents and concluded that there was no case made out by the petitioner. No costs were awarded, and the connected miscellaneous petition was closed.
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2011 (9) TMI 1254
Issues involved: Challenge to order of resuming unutilized portion of land by SIPCOT u/s lease conditions.
The Petitioner, an allottee of a plot in SIPCOT Industrial Park, challenged an order by SIPCOT to resume unutilized land. The lease conditions stipulated that failure to comply could result in cancellation of lease. The Petitioner was found to have not utilized the land as per the conditions of the lease, leading to the challenge of the order (Para 1).
The lease conditions required the allottee to use the land for the designated purpose and commence construction within specified timeframes. Failure to comply could result in cancellation of the allotment. The Petitioner received a notice for violating these conditions and was asked to show cause (Para 2).
The lease was executed in 2003, and after five years, a notice was issued to the Petitioner for non-compliance with the allotment conditions. The Petitioner responded, stating their need for the entire land and their expansion plans, requesting additional time for completion of construction (Para 3-4).
Despite the Petitioner's submissions, SIPCOT decided to resume the unutilized portion of land, leading to the challenged order. The Court noted that the transaction was contractual and the conditions were violated, thus declining to entertain the petition to modify the lease conditions (Para 5-7).
Citing Supreme Court judgments, the Court emphasized that disputes arising from contractual breaches should be settled through civil suits or arbitration, not through writ petitions. The Court cannot interpret contractual terms under Article 226 jurisdiction (Para 8-9).
Referring to another Supreme Court case, the Court highlighted that it cannot interfere with the actions of a corporation unless there is a statutory violation or unfairness. The Court dismissed the writ petition but allowed the Petitioner to file an explanation within an extended timeframe (Para 10).
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2011 (9) TMI 1253
Issues involved: Disallowance of deduction towards travelling expenses.
Summary:
The appeal was filed against the order of the CIT(A) regarding the disallowance of the assessee's claim for deduction towards travelling expenses. The assessee, a company dealing in medical devices, had debited a sum under 'business promotion expenses' for travelling expenses in its profit and loss account. The Assessing Officer (A.O.) disallowed the expenses as the Authorised Representative of the assessee admitted that they were not incurred for business purposes. The CIT(A) confirmed the disallowance stating lack of proof of reimbursement or business promotion agreements. The Tribunal held that the assessee should be given another opportunity to present its case as the CIT(A) did not consider a submission made by the assessee justifying the expenses. The order of the CIT(A) was set aside, and the matter was remitted back for fresh consideration.
In conclusion, the appeal of the assessee was treated as allowed for statistical purposes.
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2011 (9) TMI 1252
Issues involved: Appeal against deletion of addition u/s 40A(2)(b) for excess interest paid by assessee for AY 2006-2007.
Issue 1: Addition of excess interest under section 40A(2)(b)
- The Revenue appealed against the deletion of addition of Rs. 8,26,856 being excess interest paid by the assessee u/s 40A(2)(b) for AY 2006-2007.
- The AO mechanically disallowed the interest payments based on the previous year's decision without proper assessment.
- The CIT(A) deleted the addition following the precedent set in the previous year's appeal, which was upheld by the ITAT.
- The Tribunal analyzed the provisions of section 40A(2)(a) and emphasized the need for the AO to establish the excessive or unreasonable nature of the expenditure in relation to fair market value, legitimate business needs, or benefits derived by the assessee.
- The Tribunal concluded that the AO failed to provide evidence regarding the excessive nature of the interest payments in relation to the mentioned criteria, thus upholding the CIT(A)'s decision to delete the addition.
- The Tribunal confirmed the CIT(A)'s order to delete the disallowance of Rs. 8,26,856 under section 40A(2)(b) for the AY 2006-2007, based on the decision in the assessee's own case for the previous year.
This summary provides a detailed overview of the legal judgment, highlighting the issues involved and the Tribunal's decision regarding the addition of excess interest under section 40A(2)(b) for the assessment year 2006-2007.
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2011 (9) TMI 1251
The High Court of Bombay dismissed the appeals of the appellant in a tax case, citing a similar decision in the assessee's own case. The appeals were dismissed with no order as to costs. (Citation: 2011 (9) TMI 1251 - BOMBAY HIGH COURT)
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2011 (9) TMI 1250
Issues involved:
The judgment involves the modification of a previous order based on the recommendations of the Central Empowered Committee (CEC) regarding the sale and accounting of iron ore stock in certain districts. The key issues include the modalities for sale, participation eligibility, physical verification, auction procedures, payment obligations, establishment of a Monitoring Committee, and engagement of a public sector enterprise for conducting e-auctions.
The judgment discusses the recommendations made by the CEC in its report dated 1st September, 2011, regarding the sale of existing iron ore stock. The modalities proposed include selling 1.5 million MT of iron ore per month through e-auctions, with specific conditions for participation by steel industries and beneficiation plants. The physical verification of stock, auction procedures, and payment obligations are detailed to ensure transparency and compliance with regulations.
The judgment outlines the establishment of a Monitoring Committee comprising forest and mining officials to oversee the sale and transportation of iron ore stock. The Committee is tasked with various responsibilities, including determining auction terms, verifying stock, monitoring payments, and addressing complaints. The judgment emphasizes the importance of effective oversight to prevent violations and ensure fair practices in the iron ore trade.
The judgment recommends engaging a public sector enterprise, MSTC Ltd., for conducting e-auctions of iron ore stock. The service charge for MSTC Ltd. is proposed at 0.3% of the sale value, deemed fair and reasonable compared to other offers. Additionally, the judgment specifies that the Monitoring Committee should not utilize sale proceeds except for specific purposes outlined in the recommendations, ensuring proper allocation and utilization of funds.
The judgment extends the modalities established for iron ore sales to also cover manganese ore available in the respective mining leases. By applying similar procedures and oversight mechanisms, the judgment aims to maintain consistency and transparency in the sale and accounting of both iron and manganese ore stocks.
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2011 (9) TMI 1249
Issues Involved:
1. Treatment of know-how fees as capital or revenue expenditure.
2. Disallowance of royalty payments under section 40A(2)(b).
3. Treatment of repairing expenses to plant and machinery as capital or revenue expenditure.
4. Taxability of interest on income-tax refund.
5. Treatment of repairs to building as capital or revenue expenditure.
6. Treatment of software expenses as capital or revenue expenditure.
7. Allowance of bad debts written off.
8. Charging of interest under sections 234B and 234D.
9. Treatment of lease rental payments.
10. Deletion of disallowance on repairs to building.
11. Deletion of disallowance of operating and license fee for SAP R3 software.
Issue-wise Detailed Analysis:
1. Treatment of Know-how Fees as Capital or Revenue Expenditure:
The assessee argued that the know-how fees were linked to the sales and commercial production of the company, thus should be treated as revenue expenditure. The Assessing Officer (AO) considered it as capital expenditure, stating it was for the introduction of new products and upgradation of existing ones. The Commissioner of Income-tax (Appeals) [CIT(A)] confirmed this view but allowed depreciation. The Tribunal held that the know-how was not the property of the assessee and was used for running the business, thus treating the payment of Rs. 43.10 lakhs as revenue expenditure.
2. Disallowance of Royalty Payments under Section 40A(2)(b):
The CIT(A) invoked section 40A(2)(b) and disallowed Rs. 278.78 lakhs on account of royalty paid, considering it excessive. The assessee argued that the royalty rates were revised due to changes in industrial policy and were lower than the rates approved by the Government of India. The Tribunal restored the issue to the AO for de novo adjudication, emphasizing the need for the Revenue to demonstrate the excessiveness of the payment with evidence.
3. Treatment of Repairing Expenses to Plant and Machinery as Capital or Revenue Expenditure:
The AO treated Rs. 46,58,516 and Rs. 2,28,55,484 as capital expenditure due to lack of detailed evidence from the assessee. The CIT(A) affirmed this view. The Tribunal restored the issue to the AO for de novo adjudication, allowing the assessee to furnish full details and evidence to demonstrate the nature of the expenditure.
4. Taxability of Interest on Income-tax Refund:
The AO taxed the interest received on income-tax refund. The CIT(A) upheld this. The Tribunal, following the Special Bench decision in Avada Trading Co. P. Ltd., held that such interest is taxable but directed the AO to include only the interest which has become final.
5. Treatment of Repairs to Building as Capital or Revenue Expenditure:
The AO treated Rs. 15,02,510 as capital expenditure. The CIT(A) allowed part of it as revenue expenditure. The Tribunal held that the expenditure was in the nature of current repairs and directed to allow the claim.
6. Treatment of Software Expenses as Capital or Revenue Expenditure:
The AO treated Rs. 26,95,590 as capital expenditure. The CIT(A) upheld this view. The Tribunal, following precedents, held that the expenditure on software was revenue in nature and allowed the claim.
7. Allowance of Bad Debts Written Off:
The AO disallowed Rs. 7,13,677 as bad debts, stating mere writing off in books did not qualify for deduction. The CIT(A) upheld this. The Tribunal, following the Supreme Court decision in T.R.F. Ltd., allowed the claim.
8. Charging of Interest under Sections 234B and 234D:
The Tribunal noted that the charging of interest under these sections is consequential and not in question.
9. Treatment of Lease Rental Payments:
The AO disallowed Rs. 30.96 lakhs as pre-paid rent. The CIT(A) allowed the claim following past history. The Tribunal, following the Special Bench decision, held the claim against the assessee but allowed the deduction in the relevant year.
10. Deletion of Disallowance on Repairs to Building:
The CIT(A) deleted part of the disallowance on repairs to building. The Tribunal upheld this, stating no new asset was created and the expenditure was current repairs.
11. Deletion of Disallowance of Operating and License Fee for SAP R3 Software:
The CIT(A) allowed the expenditure as revenue in nature. The Tribunal upheld this, following precedents that monthly payments for software usage are revenue expenditure.
Conclusion:
The Tribunal allowed the assessee's appeal partly, restoring some issues to the AO for fresh adjudication and providing relief on others. The Revenue's appeal was also partly allowed, with specific directions for the AO to consider alternate pleas.
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2011 (9) TMI 1248
Issues involved: The judgment involves the issue of whether an assessee is eligible for exemption under sec.11 u/s 12AA of the Income-tax Act, 1961 based on the status claimed by the assessee.
Summary:
Issue 1: Eligibility for exemption under sec.11
The Revenue contended that the Commissioner of Income-tax (Appeals) erred in allowing the claim of the assessee towards exemption under sec.11, arguing that registration under sec.12AA does not automatically make the assessee eligible for exemption under sections 11 and 12. The assessee had been granted registration under sec.12AA with retrospective effect, and the assessing authority disputed the status of the assessee as a Local Authority, suggesting it should be classified as an "Association of Persons."
The Commissioner of Income-tax (Appeals) disagreed with the assessing authority, stating that the benefit of sec.11 is available to a "person," including a Local Authority. He directed the assessing authority to extend the benefit of sec.11 to the assessee. The Tribunal upheld this decision, emphasizing that the classification of a charitable institution does not solely apply to an "Association of Persons" but also to a Local Authority, such as a Municipal Corporation or a Port Trust. The Tribunal concluded that the Assessing Officer cannot deny the benefit of sec.11 to the assessee based solely on the claimed status, as long as other conditions under sec.11, 12, and 13 are not violated.
In light of the above, the appeals filed by the Revenue were dismissed, and the cross objections filed by the assessee in support of the Commissioner's orders were also dismissed. Consequently, both the appeals and cross objections were rejected.
This judgment clarifies that the classification of a charitable institution under sec.11 is not limited to "Associations of Persons" but extends to entities like Local Authorities, provided they meet the necessary criteria. The decision emphasizes that eligibility for exemption should not be denied based solely on the claimed status, but rather on adherence to the conditions specified under the relevant sections of the Income-tax Act.
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2011 (9) TMI 1247
Issues involved: Appeal against addition of cash deposits in bank account as undisclosed income.
Summary:
The appeal was filed against the order of the CIT (Appeals) relating to assessment year 2007-08. The Assessing Officer made an addition of Rs.7,60,000/- as cash deposits in the bank account were considered as undisclosed income. The assessee explained that the cash deposits were from a withdrawal made for property purchase but later redeposited. The CIT (Appeals) confirmed the addition of Rs.7,50,000/- stating the explanation was not acceptable. The ITAT Chandigarh allowed the appeal, holding that the assessee satisfactorily proved the source of deposits and deleted the addition.
The Assessing Officer noticed cash deposits made by the assessee on various dates with different banks. The assessee explained that the cash deposits were from a withdrawal made for property purchase but later redeposited in the bank account. The Assessing Officer treated the amount as income from unexplained sources and added it to the total income.
The assessee argued that the cash deposits were explained by the withdrawal made for property purchase and subsequent redeposit in the bank account. The CIT (Appeals) allowed a relief for a minor discrepancy but confirmed the addition of Rs.7,50,000/- stating the explanation was not acceptable.
The ITAT Chandigarh held that the assessee satisfactorily proved the source of deposits made in the bank account. The explanation given by the assessee was considered plausible, and no adverse view could be taken. It was noted that there was no evidence of any investment made from the withdrawal amount. The addition was deleted as both lower authorities had not provided any cogent reason for the addition.
In conclusion, the ITAT Chandigarh allowed the appeal filed by the assessee, deleting the addition of Rs.7,50,000/- as undisclosed income.
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2011 (9) TMI 1246
Issues involved: Appeal against order of Dispute Resolution Panel regarding disallowance of deduction u/s 10A and transfer pricing adjustment.
Deduction u/s 10A:
The assessee contested the disallowance of full deduction u/s 10A for profit and gains from software business by not deducting certain expenses from total turnover. Citing relevant case laws, it was argued that expenses reduced from export turnover should also be reduced from total turnover for computing deduction u/s 10A. The Tribunal directed the Assessing Officer to include expenses from both turnovers for computing the deduction u/s 10A.
Transfer Pricing Adjustment:
The Transfer Pricing Officer (TPO) rejected the cost plus method adopted by the assessee and determined the arms length price using the Transactional Net Margin Method (TNMM). The assessee raised objections regarding the TPO's method, comparables selected, and risk assessment. The Dispute Resolution Panel summarily upheld the TPO's order without providing a speaking order. The Tribunal remitted the issue back to the assessing authority with directions to refer the matter to the DRP for a judicial disposal of the objections, considering relevant judicial precedents.
Conclusion:
The Tribunal allowed the appeal of the assessee for statistical purposes, emphasizing the need for a judicial disposal of objections by the DRP and consideration of relevant precedents.
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2011 (9) TMI 1245
The Supreme Court of India dismissed the special leave petitions. The judgment requires hospitals to provide free treatment to 25% OPD and 10% IPD patients, who should not be charged. Hospitals can cover the costs through their own funds, resources, sponsorships, endowments, or donations.
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2011 (9) TMI 1244
Issues involved: Challenge to execution of an award under Arbitration and Conciliation Act, 1996 u/s 47 of CPC.
For the first issue, the judgment dealt with the revision application against the order rejecting the objection filed u/s 47 of CPC challenging the execution of an award made under the Arbitration and Conciliation Act, 1996. The petitioner, a judgment-debtor, contended that the award was not executable as it was illegal and defective. The decree-holder argued that the objection u/s 47 of CPC was not maintainable as the judgment-debtor participated in the arbitration proceeding and did not challenge the award in court. The Court observed that the award could be challenged under Section 34 of the Arbitration and Conciliation Act, which provides a detailed procedure for setting aside the award. The Court held that the objection u/s 47 of CPC was not maintainable for challenging the award made under the special provisions of the Arbitration Act.
Regarding the second issue, the petitioner's counsel challenged the order on the grounds that the Executing Court should have heard and decided the objection u/s 47 of CPC on merit. The Court, after considering the provisions of Section 34 of the Arbitration and Conciliation Act, emphasized that the Act provides a specific procedure for setting aside arbitral awards, and objections under Section 47 of CPC on grounds covered by Section 34 of the Act are not maintainable. The Court found no illegality or arbitrariness in the order of the learned Court below and dismissed the revision application accordingly.
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2011 (9) TMI 1243
Issues involved:
The judgment addresses issues related to E-auction of iron ore, illegalities in mining leases, alleged linkages between illegal mining in different districts, and investigations by CBI.
E-auction of Iron Ore:
The Court acknowledged the success of E-auction in selling iron ore and endorsed the continuation of E-auction to ensure the best possible price. It accepted the recommendation for M/s NMDC to continue mining operations subject to selling iron ore only through E-auction, with 80% of proceeds disbursed to M/s NMDC. The Court clarified that E-auction would proceed regardless of existing contracts and that challenges to E-auction would be exclusively under the jurisdiction of the Court.
Illegalities in Mining Leases:
The judgment highlighted serious illegalities in mining lease No. 2434 of M/s. Associated Mining Company, including illegal renewal, discrepancies in boundary pillars, and exaggerated iron ore production. The Court noted linkages between illegal mining activities in different districts and ordered investigations by the CBI. The Court also sought updates from the CBI regarding investigations into M/s. Obulapuram Mining Company Private Limited.
Third-Party Illegal Mining:
The Court noted massive illegal mining by a third party in mining lease No. 1111 of M/s. NMDC, despite complaints by M/s. NMDC. The Court directed the CBI to investigate the encroachment by M/s. Deccan Mining Syndicate in the area leased to M/s. NMDC. The judgment outlined the scope of investigations by the CBI and indicated a focus on illegalities by specific companies, with further directions to be issued as more reports are submitted.
Representation and Directions:
The judgment allowed CEC to consider representations from leaseholders against Joint Team findings, with subsequent findings to be presented to the Court for appropriate directions. The matter was scheduled for further consideration on 30th September 2011, particularly regarding an application to be filed by the State of Karnataka.
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