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2014 (9) TMI 1296
Block assessment - satisfaction u/s 158BD to be recorded before the completion of assessment under section 158BC or not? - HELD THAT:- As decided in M/s Calcutta Knitwears Ludhiana [2014 (4) TMI 33 - SUPREME COURT] we hold that for the purpose of section 158BD of the Act a satisfaction note is sine qua non and must be prepared by the assessing officer who has jurisdiction over such other person. The satisfaction note could be prepared at either of the following stages: (a) at the time of or alongwith the initiation of proceedings against the searched person under section 158BC of the Act; (b) along with the assessment proceedings under section 158BC of the Act; and (c) immediately after the assessment proceedings are completed under section 158BC of the Act of the searched person.
On the aforesaid premises, as submitted that the matter be remanded to the Tribunal with a direction to decide the same afresh in the light of observations made in the aforesaid pronouncements. thus we find that the issue requires to be decided afresh.
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2014 (9) TMI 1295
Seeking to issue a writ of mandamus commanding respondent nos. 1 to 4 to conduct a fair and speedy investigation - transfer of investigation to a different investigating agency - involvement of bank officers in fraudulent activities warrants further action or not - HELD THAT:- All issues arising out of lapses in the functioning of the private sector banks relating to corruption, malpractices, frauds should be property investigated. Timely and appropriate action should be taken in the cases involving fraud. Instances of frauds, such as unauthorized credit facilities extended by the bank for illegal gratification, negligence and cash shortages, cheating, forgery etc. must be properly investigated. In dealing with the cases of fraud / embezzlement, banks should not merely be actuated by the necessity of recovering expeditiously the amount involved, but should also be motivated by public interest.
In the instant case, the allegation is that the amount to the tune of Rs. 34 crores was siphoned off fraudulently. Such perpetrators of fraud, including Bank Officers, should not be permitted to take everybody for a ride.
The investigation pertaining to FIR no. 389 of 2012, lodged at police station, Kotwali, Dehradun is, therefore, handed over to CBI to ensure fair, impartial and thorough investigation. Needless to say that if the Bank Officers / officials are also found guilty, during the course of investigation, CBI will be at liberty to proceed against them in accordance with law.
The criminal writ petition thus stands disposed of.
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2014 (9) TMI 1294
Maintainability of writ petition filed in the public interest - locus standi of writ Petitioner to file the writ petition - separate but concurring orders passed by the Division Bench of the High Court which were concurred by the nominated third Judge are legal and valid or not - allotment order of land made in favour of the Appellant-Institute is in violation of Article 14 of the Constitution of India or not.
Whether the writ petition filed in the public interest is maintainable or not and whether the writ Petitioner has locus standi to file the writ petition? - HELD THAT:- The Respondent No. 1-the writ Petitioner has filed a bonafide writ petition and he has the necessary locus. There is an apparent favour shown by the Union Territory of Chandigarh in favour of the Appellant-Institute which is a profit making company and it has not shown to this Court that the allotment of land in its favour is in accordance with law. Hence, we are of the view that there is a strong reason to hold that the writ petition is maintainable in public interest. We completely agree with the views taken by the High Court, wherein it has rightly held that the writ petition is a Public Interest Litigation and not a Private Interest Litigation. The writ petition in question is the first petition filed by the first Respondent and his first endeavor to knock the doors of the constitutional court to protect the public interest by issuing a writ of certiorary.
The Appellants have miserably failed to show the malafide intention on the part of the Respondent No. 1 in filing writ petition and we agree with the view of the then Chief Justice in his order who has held that he is a public spirited person - The writ petition filed by the first Respondent is maintainable as the allotment of the land in question made in favour of the first Appellant-Institute is arbitrary, illegal and the same is in violation of Article 14 of the Constitution.
Whether the separate but concurring orders passed by the Division Bench of the High Court which were concurred by the nominated third Judge are legal and valid or whether the same requires interference by this Court? - Whether the allotment order of land made in favour of the Appellant-Institute is in violation of Article 14 of the Constitution of India along with the applicability of the "Allotment of Land to Educational Institutions (Schools) Rules etc. on a Lease-hold basis in Chandigarh Scheme, 1996"? - HELD THAT:- The discretionary power conferred upon the public authorities to carry out the necessary Regulations for allotting land for the purpose of constructing a public educational institution should not be misused - the fundamental right to establish and run an educational institution in terms of Article 19(1)(g) of the Constitution is subject to reasonable restrictions Under Article 19(6) of the Constitution of India. Therefore, the State is within its competence to prohibit "commercialization of education".
On a careful evaluation of the statutory object behind Clause 18 of the "Allotment of Land to Educational Institutions (Schools) Rules Etc. on Lease Hold basis in Chandigarh Scheme, 1996" no systematic exercise has been undertaken by the Administration of Chandigarh to identify the needs of different kinds of professional institutions required to be established in Chandigarh - the Screening Committee comprising of senior and responsible functionaries allotted the institutional sites in favour of the allottee without following any objective criteria and policy.
There appears to be absolutely no point of difference or divergence between the then Chief justice and the companion puisne Judge, who have issued directions to the Administration of the Union Territory of Chandigarh. It has rightly been pointed out by the nominated Judge that there may apparently seem to be a difference in the thought process and also the relative rigour of the expressions used by both the learned Judges, yet, it has not been possible to conclude that there was any divergence in the directions recorded in their separate views.
The impugned order passed by the learned puisne Judge, which was concurred by the then Chief Justice by his separate order and the order of the third nominated Judge holding that there is no difference of opinion in the orders of the Division Bench are legal and valid and do not require any interference by this Court.
Conclusion - i) The writ petition filed by the first Respondent is maintainable as the allotment of the land in question made in favour of the first Appellant-Institute is arbitrary, illegal and the same is in violation of Article 14 of the Constitution. ii) The impugned order passed by the learned puisne Judge, which was concurred by the then Chief Justice by his separate order and the order of the third nominated Judge holding that there is no difference of opinion in the orders of the Division Bench are legal and valid and do not require any interference by this Court.
There are no reason to interfere with the impugned orders in exercise of this Court's appellate jurisdiction. The appeal is accordingly dismissed.
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2014 (9) TMI 1293
Issues involved: Reconsideration of an order passed in Commissioner of Customs, Guntur Etc. Vs. M/s. Muneer Enterprises Etc.
In the present judgment, the Supreme Court noted that during the hearing of the appeals, attention was drawn to an order dated 24th January, 2011 passed in Commissioner of Customs, Guntur Etc. Vs. M/s. Muneer Enterprises Etc. In that order, the appeals filed by the Commissioner of Customs had been dismissed on a similar issue. The Court felt that the issue required reconsideration and directed the Registry to place the matters before the Chief Justice of India for reference to a three-Judge Bench. The decision to refer the matters to a three-Judge Bench was made in light of the need for further examination and clarification on the issue at hand.
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2014 (9) TMI 1291
Winding up of company on the ground of inability to pay debt - sections 433, 434 and 439 of the Companies Act, 1956 - HELD THAT:- From the narration of facts, as well as the details coming out from the summary record and proceedings before the B.I.F.R., it becomes crystal clear that the respondent Company has no means or capacity to pay its debt to the petitioner claimed in the present petition. The Company does not have any defence, much less any bona fide defence towards dues. Therefore, a clear situation obtained is that the Company is unable to pay its debt and that it has lost its substratum. Accordingly, the respondent Company- M/s. Skylead Chemicals Limited is liable to be wound up. The petition therefore deserves to be allowed and accordingly, it is allowed.
The respondent company- M/s. Skylead Chemicals Limited is hereby ordered to be wound up under the provisions of sections 433, 434 and 439 of the Companies Act, 1956. The Official Liquidator attached to this Court is hereby appointed as Official Liquidator for the said company-M/s. Skylead Chemicals Limited.
Petition allowed.
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2014 (9) TMI 1290
Dismissal of applications filed by the appellants under Section 536(2) of the Companies Act praying for acceptance of the sale of plots of the respondent’s company to them - Section 536(2) of the Companies Act - HELD THAT:- The report of the Serious Fraud Investigation Office has been placed before the learned Single Judge but has yet to be considered by the court. The Income Tax Authority as yet to submit their report on consideration of the matter. Interests of justice merit that the claims of these appellants be also placed with the claims of the other persons in the previously decided appeals who are identically placed as the present appellants deserve to be considered afresh by the learned Company Judge in the light of the observations made here.
Undoubtedly, there is delay in not only filing the appeal but also in refiling. The appellant has given sufficient explanation seeking condonation of the delay of the applications filed in this regard. For the view we have taken based on the orders passed on 6th of September, 2012 and 17th of December, 2012, it is inclined to accept the explanation tendered by the appellants, firstly, in filing the appeals and thereafter, in refiling the same as well.
The delay in filing the appeals as well as the refiling the same is hereby condoned - the impugned orders dated 23rd August, 2011; 25th August, 2011; 9th September, 2011; and 22nd November, 2011 are hereby set aside and quashed - the cases are remanded to the learned Company Judge for deciding on merit afresh - Appeal allowed.
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2014 (9) TMI 1289
Rejection of refund claim - there was no correlation between FIRC and Export Service invoices - HELD THAT:- The refund claims involved are for the period from April 2009 to September 2009, October 2008 to March 2009. After considering the submissions of both the sides, we consider that the matter has to be remanded to the original adjudicating authority with a clear direction that the examination of refund claim would be limited to the issues taken up by the Commissioner (Appeals) with regard to FIRC only.
In respect of other issues there is no observation by Commissioner and in the absence of any appeal by the Revenue, such issues cannot be reopened. Therefore both the impugned orders are set aside and the matters are remanded to original adjudicating authority with a direction to examine the issue relating to FIRC in the light of our observations in the Interim Order in APOTEX RESEARCH PVT. LTD. 55 OTHERS VERSUS CC, BANGALORE-CUS, 55 OTHERS [2015 (3) TMI 346 - CESTAT BANGALORE]
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2014 (9) TMI 1288
Assessment proceedings u/s 153A - no valid search had been conducted on the assessee - Whether no incriminating document was found in the search on the Bank accounts as mentioned in the Panchnama? - HELD THAT:- Copy of the warrant is never given to the assessee. It is only the copy of the Panchnama that goes to the assessee. A perusal of the provisions of section 132(1) shows that the warrant is to be specifically in the name of the person and it has to specify the place.
A perusal of the Panchnama clearly shows that the name of the assessee is mentioned in the Panchnama, the place has been identified categorically as the Bank account. On a specific direction to the ld. CIT, DR, he has shown the copy of the warrant to the Bench. The warrant also contains the name of the assessee and the Bank account number and the Branch name, etc. In any case, when an assessee is challenging the warrant to be illegal, then it is required to be challenged by filing affidavit alleging the same. In any case, such an affidavit has not been filed in any of the Cross Objections in the bunch of appeals. Consequently we are of the view that the search had validly been conducted on the assessee.
Warrant was served on the Bank Manager and not on the assessee and that the Panchnama is signed by the Bank Manager and not the assessee and, therefore, the search is invalid - The Bank account of an assessee is his private accounts, nobody, not even the Bank itself can do any transaction through such Bank account unless otherwise authorise to do so by the account holder. In effect the Bank acts as the agent of the assessee. The Bank Manager, the representative of the Bank, is admittedly responsible for anything that goes on in respect of the specified Bank accounts of the account holders. The Bank is answerable to the account holder for any act done with the account of the account holder without the instruction of the account holder. Thus the execution of the warrant on the Bank Manager of the Branch where the assessee was maintaining its accounts, which were searched, cannot be faulted with. Once it is held that the search on the Bank account is valid then admittedly the provisions of section 153A would operate.
In the case of Dr. Mansukh Kanjibhai Shah-vs.-ACIT [2010 (5) TMI 536 - ITAT, AHMEDABAD] shows that in the said decision the Coordinate Bench of this Tribunal has not held that the execution of the warrant by drawing of the Panchnama was not the search on the assessee. In that case, the service of the warrant was on the Bank Manager of the Trust. It was because the service of the warrant was on the Bank Manager of the Trust, it was held that it was not search on the assessee in the individual case of the assessee. In the assessee's case, the search warrant is executed on the Bank Manager of the Branch where the account of the assessee is operating. In fact, the decision in the case of Dr. Mansukh Kanjibhai Shah goes against the argument raised by the assessee. As we have held that the search warrant has been rightly executed, the question of abatement does not arise.
Levy of interest u/s 234B - Though the ld. A.R. has filed a detailed note at pages 140-145 of the paper book, we are unable to agree with the ld. A.R. in so far as the levy of interest under section 234B is now consequential in nature. The argument that there was no advance tax liability does not hold water in so far as the addition are on which TDS was not liable to be made and the assessee had the liability to pay advance tax. The additions made are clearly under sections 68 & 69 of the Act. In these circumstances, the Cross Objections filed by the assessee stand dismissed.
Addition of share application money receipt - Allegation of unaccounted monies as laundered - Shri Santosh Kumar Shah had created a number of shell companies and in his statement subsequently recorded that he is a Director in the assessee-company - HELD THAT:- The web of the intricacies of the transactions being so vast and the facts are being hidden in such web with the intention not coming forward from the assessee we are left with no other alternative but to restore the issue in the Revenue's appeals in respect of the share application money to the file of the Assessing Officer for re-adjudication and we do so. The arguments raised by the ld. A.R. that the decision of Nova Promoters & Finlease Pvt. Ltd. [2012 (2) TMI 194 - DELHI HIGH COURT] does not apply and it is the decision in the case of Gangeswari Metals Pvt. Ltd. [2013 (1) TMI 624 - DELHI HIGH COURT] that is to be applied also does not hold water, in so far as in the present case Shri Santosh Kumar Shah is the Director of the assessee-company, he is the signatory to the return, he is the signatory to the Bank accounts and he has admitted categorically in his statement in the search that he is providing entries. He has explained the methodology adopted by him though not all the beneficiaries in its entirety and he has also gone to the extent of filing settlement application which has been rejected by the Settlement Commission.
AO has not been sitting idle, he has been attempting to collect the information which is under the control of the assessees and Shri Santosh Kumar Shah, which the assessee has been successfully delaying and thwarting for reasons best known to assessee and when the case is getting time barred has demanded the explanation from the Assessing Officer as to on what basis he is raising the allegation, when all the evidences are being hidden by the assessee. But instead of dismissing the assessee's claim following the decision in the case of Nova Promoters & Finlease Pvt. Ltd.[Supra], in the interest of justice, the assessee is being granted another opportunity to clean up its case and place all the facts and details before the Assessing Officer for proper adjudication.
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2014 (9) TMI 1287
Suit for recovery of money - Bar under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) - HELD THAT:- The issue that a simple suit for recovery of moneys is not barred by Section 22 of SICA is clear from the judgment of the Supreme Court in the case of Raheja Universal Limited Vs. NRC Limited and Ors. [2012 (10) TMI 233 - SUPREME COURT].
The ratio of this judgment of the Supreme Court in the case of Apollo International Ltd. Vs. Supriya Pharmaceuticals Ltd. [2012 (10) TMI 1275 - DELHI HIGH COURT] applied in the case of Apollo International Ltd. where it was held that 'In the present case, the suit for recovery of money is a suit for recovery of money simplicitor. Counsel for the plaintiff does not press the interim applications under Order 38 Rule 5 of Code of Civil Procedure, 1908 (CPC) and Order 39 Rules 1 and 2 CPC. Accordingly, in the subject suit, there is no threat to the liquidation of the assets of the sick company and therefore no prior permission is required under Section 22 of SICA.'
Therefore, looking at it from any view of the matter that earlier a similar application was dismissed, the fact that petitioner had failed to comply with the repeated directions of the court to show that debt of the respondent/plaintiff was included in the scheme of rehabilitation, that every suit for recovery of moneys does not require prior permission under Section 22 of SICA, and the fact that now since the petitioner/defendant-company is out of BIFR and as stated in the present petition, there is no merit in the petition which is therefore dismissed.
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2014 (9) TMI 1286
Seeking quashing of the FIR - there was neither sale nor purchase of the goods - evasion of tax - HELD THAT:- After going through the facts of the present case, this Court is of the view that under the VAT Act, 2005, there is a complete Code for initiate proceedings against a consignee, who makes an attempt to evade the tax. Registration of FIR would amount to an abuse of the process of Court and this fact had not been disputed by the respondents at the time when CRM-M-24853 of 2012 was allowed on 30.04.2013 (Annexure P-3). Since the Act provides for recovery and imposition of penalty, if an attempt is made to evade payment of VAT, registration of FIR is liable to be quashed.
Resultantly, FIR No. 104 dated 25.07.2012, under Sections 420, 467, 471, 120-B IP, registered at Police Station, Shambhu, District Patiala (Annexure P-1) is quashed with all consequential proceedings arising therefrom qua the petitioner.
Petition allowed.
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2014 (9) TMI 1285
Seeking directions to disburse the amount to the workers out of the available funds in the account of the company between the secured creditors and workers based on a calculation - HELD THAT:- The order is being passed to balance equities especially amongst the thousands of workmen of the appellant union, who are languishing and deprived of their legitimate dues for decades. In these facts, it cannot be denied that in the instant case interest of justice mandates that the amounts of the company including not only the principal amount received from the sale of its assets but also the accruals thereon in the nature of interest etc. be restored to the credit of the company and be made available for full and final disbursement between the creditors of the company.
There is no objection to the acceptance of the One Time Settlement as well as the entitlement of 2018 workers who were members of the appellant union in the sum of Rs.14,64,88,422/- as full and final payment to these workers. The same is hereby accepted.
The parties have stated on affidavits that they would not have any objection to the disbursement of One Time Settlement amount to the appellant. The parties shall remain bound by the consent, which they have given before us on affidavit. All claims of the appellant-Union’s 2018 workers shall stand finally satisfied upon receipt of the disbursement of the amount in terms of the One Time Settlement to them. It shall not be open for them to make any other or further claim after they receive the amounts thereof, which shall be in full and final settlement of all claims.
The Official Liquidator shall credit the account of the company with all amounts credited to the Common Pool Fund from the sale proceeds of the units of the company under liquidation after 1st November, 2005 till 13th August 2013 - Appeal disposed off.
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2014 (9) TMI 1284
Seeking grant of Regular bail - 12 plastic bags were recovered while checking trenches and the same were supposedly be containing narcotic substance - commercial quantity of narcotic substance - HELD THAT:- Section 173(i) of the Cr.P.C. clearly shows that the investigation is to be completed without any unnecessary delay and as per provisions contained under Section 173(ii) of the Cr.P.C., the challan is to be filed on completion of investigation only and not prior to that. Thus, it is clear that the trial Court is to accept the challan only on completion of investigation and by considering that all allegations levelled in the FIR have been investigated completely and charge can be framed only after considering the complete investigation report.
In the present case, the charge has been framed against the petitioner without obtaining Chemical Examiner's Report and in the absence of Chemical Examiner's Report in case of NDPS Act, it cannot be said as to whether the substance found in the bags recovered from the petitioner was a narcotic substance or not. In the absence of CFSL report, the trial Court cannot take cognizance of the offence and in the absence of Chemical Analysis Report, the charge sheet/challan cannot be said to be completed. Failure to file complete charge-sheet within a prescribed period confers on the accused right to be released on bail and the court is not competent to take cognizance of the offence on incomplete charge-sheet. Charge sheet is not complete unless it is accompanied by requisites contemplated under Section 173(5) of the Code.
In the present case, the incomplete challan has been presented without having any Chemical Examiner's Report and even the charges were framed as the Chemical Examiner's Report is of subsequent date. The petitioner is in custody since 21.11.2013.
The trial Court is directed to send its report explaining therein as to how the charges have been framed without having any Chemical Examiner's Report as the Chemical Examiner's Report is of subsequent date of the order of framing of charge. The necessary explanation be submitted before this Court within a period of two weeks from the date of receipt of copy of this Order.
Adjourned to 30.10.2014.
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2014 (9) TMI 1283
Seeking enlargement on bail during the trial - bail sought on the ground of parity - HELD THAT:- This Court is of the view that the applicant has made out a case for grant of bail on the ground of parity.
Let the applicant, Mitthan Yadav be released on bail on his executing a personal bond and furnishing two sureties each in the like amount to the satisfaction of the court concerned in Case Crime No. 237 of 2013, under sections 147, 148, 149, 302, 307, 394, 411, 454, 506, 120B and 34 I.P.C., P.S. Kavinagar, district-Ghaziabad with the conditions imposed - application allowed.
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2014 (9) TMI 1282
Illegal gratification - prosecution has failed to prove the offence Under Section 7 of Prevention of Corruption Act, 1988 - HELD THAT:- When PW1 Ramesh himself had disowned what he has stated in his initial complaint in Exh.P1 before PW4 Inspector Santosh Kumar and there is no other evidence to prove that the accused had made any demand, the evidence of PW3 Kumaraswamy and the contents of Exh.P1 complaint cannot be relied upon to conclude that the said material furnishes proof of demand allegedly made by the accused. The High Court was not correct in holding the demand alleged to be made by the accused as proved. Mere possession and recovery of the currency notes from the accused without proof of demand will not bring home the offence Under Section 13(1)(d) of the Act and the conviction and sentence imposed on the Appellant are liable to be set aside.
The conviction and sentence imposed on the Appellant/accused Under Section 13(1)(d) read with Section 13(2) of the Act are set aside and he is acquitted of the charges - Appeal allowed.
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2014 (9) TMI 1281
Money Laundering - Embezzlement of huge funds from the Exchange - irregularities in the allotment of shares of NMCE to NOL, including misuse/misappropriation of Exchange funds - Misuse of Exchange funds - Illegal payments from NMCE to his family members and other - HELD THAT:- It is informed that the petitioner evaded arrest from 26-4-2012 to 30-3-2013. His son, who is one of the main accused, is refusing to join investigation. The petitioner made a statement that his son will return to India to join investigation and this statement was recorded by the High Court in its order dated 30-7-2013. But till date, the assurance given to the High Court is not fulfilled. Even this Court had directed the petitioner to facilitate his son's coming back to India to join investigation, however, there is no positive response from the petitioner. His approach is evasive. There is no doubt that his purpose is to shield his son. The petitioner is, therefore, in breach of the condition imposed on him while granting provisional bail that he will cooperate with the investigating agency. The provisional bail was granted to him with the hope that the petitioner will cooperate with the Police. His conduct is to the contrary. The provisional bail, therefore, deserves to be cancelled and is accordingly cancelled. His bail bond stands cancelled.
The High Court has rightly declined bail to the petitioner. In our opinion, it is not necessary to interfere with the impugned order. Therefore, the Special Leave Petition is dismissed.
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2014 (9) TMI 1280
Deduction u/s 80P(2)(a)(i) - assessee, is a Co-operative Credit Society in terms of Banking Regulation Act, 1949, and is engaged in providing credit facilities to its members - AO has treated the assessee society as a Agricultural Rural Development Bank and after applying Explanation appended to Section 80P(4) has disallowed deduction claimed, as exempt u/s 80P(2)(a)(i) - HELD THAT:- D.R. has relied on the order of Jaipur Bench rendered in the case of Kekri Sahakari Bhumi Vikas Bank Ltd. Vs ITO [2012 (6) TMI 407 - ITAT JAIPUR] a copy of which has been filed on record. We have carefully treaded through this order. In that case the facts indicated that it was involved in lending activities and, therefore, the matter was restored back to the file of ld. CIT(A). Therefore, no specific ratio decidendi is revealed from this order.
To the contrary, apart from assessee’s own case orders in other similar cases passed by this very Bench are available. In the case of Jodhpur Sahakari Bhoomi Vikas Bank Ltd., Mandore Road, Jodhpur Vs ITO [2014 (8) TMI 1238 - ITAT JODHPUR] the view favourable to the assessee has been taken. In assessee’s own case for other years the A.O. himself has allowed similar claim. Accordingly, we allow assessee’s claim, by following our earlier orders and in the consistency of finding by the A.O. and dismiss revenue’s appeal.
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2014 (9) TMI 1279
Preferential allotment - Under valuation of shares under Section 397/398 proceedings - major thrust of the submissions of the petitioners is based on the concept of equal shareholding of the parties, which has been claimed to exist since the inception of the company - HELD THAT:- The original partnership for running Glamor Polish Industries (GPI) which was subsequently taken over by the respondent company was not set up by joint participation of Late father of petitioner No. 1 and Late father of respondent No. 2. Further, the father of petitioner No. 1 became director in the company only on 14.10.1958, while the company was established in 1950. No further evidence has been brought on record by the petitioners to justify setting of the company jointly by the Late father of petitioner No. 1 and Late father of respondent No. 2. Therefore, the contentions of the petitioners that the company has been run on quasi-partnership principle having equal shareholding between the petitioners group and the respondents group are not acceptable.
Allotment of shares - HELD THAT:- There is no loss of negative control of the petitioners group as a result of impugned allotment. The case of Clemens is distinguishable because in that case, there were only two shareholders and a closely held family company between an aunt (55%) and a niece (45%) unlike the present case where there are numbers of shareholders and also directors, some of whom are outsiders. It is also pertinent to mention that the Articles of Association in the Clemens case, contained a negative covenant that provided non-transfer of shares unless a family member declines to accept the same which is not the case in the instant petition. Thus, the relevant case is of no assistance to the petitioners.
Time limitation - HELD THAT:- The petitioners did not challenge the impugned allotment within the limitation period as prescribed in law which is three years. In the case of ABP [2008 (1) TMI 967 - COMPANY LAW BOARD], it has been held that wrongful allotment of shares can have continuous effect so as to support a case of this nature. However, it is an admitted position in the instant case that post 1995 allotment, petitioner No. 1 and petitioner No. 2 have continuously accepted dividends based on their changed shareholdings without any opposition and thus, have acquiesced to the same and accordingly, are now estopped from raising any contention to the contrary - the petitioners have failed to make out any case against the rights issue of shares made in 1995 and therefore, no interference is called for on this aspect.
Preferential allotment of 4,00,000 equity shares of₹ 10/- each in consequence of an EoGM dated 21.08.2009 for cash at a premium of ₹ 5/- per share - HELD THAT:- With the evidence placed on records, it can be safely presumed that notice was received by petitioner No. 1 who chose not to attend as has been his practice of not attending any general meeting since 1999 - there is no plausible reason available to the petitioner to contend that notice was not received in 2009. Further emphasis has been placed by the respondents on the fact that majority of other shareholders have received such notices under UCP and had attended the meetings.
Allotment of 2,00,000 equity shares made on 23.03.2011 - HELD THAT:- The notices for convening of EoGM dated 23.03.2011 were duly received by petitioner No. 1 and petitioner No. 2 and the explanatory statements were also sent along with such notices. Special Resolution under Section 81(1A) of the Companies Act, 1956 was adopted in EoGM held on 23.03.2011 and the minutes in this regard clearly show that special resolutions were passed unanimously. Petitioner No. 1 and petitioner No. 2 did not attend such EoGM in spite of receipt of notices and did not place any objection to the passing of resolutions in the said meeting.
Valuation of shares arrived at by the company - HELD THAT:- Since the special resolutions have been passed by requisite number of shareholders and there has been strict compliance of Unlisted Public Companies (Preferential Allotment) Rules, 2013, duly certified by statutory auditors towards the allotment of shares and in absence of any ulterior motive which can be imputed on the respondent group of shareholders, no interference is called for towards preferential allotment of shares as per EoGM dated 23.03.2011.
Issue of bonus shares - HELD THAT:- There cannot be any complaint with regard to bonus shares as it was issued to all shareholders including petitioners. The bonus shares appear to have been issued in accordance with law and no ground has been made out by petitioners to show that issue of such bonus shares are in violation of the provisions of the Companies Act, 1956. Accordingly, no Interference is called for against such issue of bonus shares and the ground raised by the petitioners in this respect fails.
Allegation of lack of fiduciary duty on the part of the respondents to acquire a BMW car costing ₹ 51 lakhs when the average profit of the company was ₹ 35.06 lakhs per year - HELD THAT:- The necessary explanation has been provided by the respondents as recorded in para 3 (xxiv) of this order and there are no irregularity or defect in acquiring such BMW car for official use in running the business affairs of the company and there has been no financial impropriety or lack of probity in such acquisition of car resulting in alleged mismanagement of the company.
On determination of the value, in case the respondent group is willing to purchase the shares held by the petitioner group, they should pay the consideration within four weeks thereafter. Otherwise, the respondent company will purchase the shares and reduce the share capital of the company to the extent of the face value of the shares. On receipt of consideration, the petitioners shall hand over the shares along with transfer deeds duly signed for further necessary action in accordance with law.
After carrying out the mutual obligations cast on the petitioners and respondents as per this order, an affidavit of compliance shall be drawn by both the parties within 7 days of such compliance and the same should be produced before the Bench Officer for taking the same on record. The statutory auditor, after complying with the directions contained in this order, shall draw an affidavit to the said effect and furnish the same to the Bench Officer within 7 days of such compliance for keeping the same on record also.
Petition disposed off.
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2014 (9) TMI 1278
Professional misconduct - company was posting losses year after year, though according to her, profits were being earned - Family dispute - HELD THAT:- The record does not disclose that the complainant made any effort to question the persons in management of the company, such as Managing Director or other Directors about the state of affairs. Unfortunately, the respondent is being made scapegoat in the family disputes of the owners of the company. On a perusal of the report of the Disciplinary Committee and the resolution of the Council, we find that they have mechanically arrived at the conclusions as to the misconduct
It is added here that every inadvertent omission cannot be treated as an act of misconduct. The implication of even the minute punishment imposed against a Chartered Accountant is far-reaching.
The complaint is dismissed.
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2014 (9) TMI 1277
Revision u/s 264 - assessee submitted that the appeal has been wrongly filed by his client against the order passed by the ld. CIT u/s 264 on wrong advice
HELD THAT:- Upon careful consideration we are of the view that the file has been wrongly filed by the assessee against the order passed by the ld. CIT u/s 264 of the Act and hence the appeal is dismissed as withdrawn.
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2014 (9) TMI 1276
Seeking execution of the award against the claimant who is the Award Debtor in the arbitration - Violation of Section 25.1 of the Arbitration Agreement - Violation of Section 8 of the FEMA.
Violation of Section 25.1 of the Arbitration Agreement - HELD THAT:- The agreement between the parties or the enforcement of such agreement by the arbitral tribunal cannot require either of the parties to do any act prohibited under the law relating to foreign trade controls, export controls embargoes or international boycotts. The award which would require any of these would fall foul of the contract between the parties. An award which grants any amount to or against any party under the law and which would have to be paid in foreign exchange by one of the parties would not be included within the mischief of clause 21 of the contract.
There is, therefore, nothing that the learned Arbitral Tribunal has decided against any of the terms of the contract between the parties. Once that aspect has been determined as per the law governing the parties, this Court, in enforcement of the award which has been passed, cannot interfere with it.
Violation of Section 8 of the FEMA - HELD THAT:- Reliance placed upon the judgment in the case of Director of Enforcement Vs. MCTM Corporation Pvt. Ltd. and Ors. [1996 (1) TMI 351 - SUPREME COURT] to show that the same analogy was applied under Section 10 of the FERA, 1947 which was analogous to Section 16 of the FERA, 1973 so that the person, who had the right to receive FE could not refrain from doing or taking any action which would have effect of delaying or ceasing the receipt of such FE. It is held that the default would be complete on the failure to get FE receivable in India repatriated within the reasonable time after the right to receive the same accrues. It is observed that the reasonable time would depend upon the circumstances of each case and cannot depend upon any general formula. It is observed that if the delay in repatriation was not unreasonable there would be no contravention of Section 10(1)(a) of FERA.
In this case the delay in receiving the amount due is of 7 weeks with a corresponding consideration of payment of lesser amount if the negotiations fructified and the amended contract or new contract was executed - There would, therefore, be no contravention of Section 8 of FEMA.
The award dated 17th January, 2011 is seen to be enforceable and must be enforced by the Court.
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