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2009 (7) TMI 1254 - ITAT KOLKATA
Appeal filed against the order of the CIT - order passed by the CIT u/s. 263 is arbitrary, without proper reasons, invalid and bad in law - The return was processed u/s. 143(1). The case was selected for scrutiny and notice u/s. 143(2) was issued on 12th Jan., 2005. AO has investigated the issues thoroughly and after examination he has made certain disallowances. assessee filed appeal against this order of the AO before the CIT(A), The CIT(A) partially allowed the relief from disallowance from carrying charges paid to C.S. Bohra where TDS was deducted. The AO disallowed ₹ 71,339 and the CIT(A) sustained only ₹ 26,399. This order of the CIT(A) has been asserted by the Department as well as by the assessee. Hence, this appeal.
HELD THAT:- The CIT has mentioned in his order that the AO has passed an order in haste without making any inquiry on the issues. In this connection, we hold that the case was selected on a scrutiny on 12th Jan., 2005 fixing the hearing on 20th Jan., 2005. The order was passed on 13th Dec., 2006. Thus there was a time of two years for investigation of the case. The details on the order sheet are placed in the paper book at pp. 8 to 17.
We find that the questionnaire has been issued and that too under the direction of the Addl. CIT which is evident from p. 9 of the paper book which is a note sheet dt. 19th Jan., 2005. The various notings in the note sheets show that the assessee has produced the books of account, bills and vouchers which have been verified by the AO. The questionnaires issued to the assessee calling details are also evident from pp. 18, 19, 20, 21, 53, 54 and 55 of the paper book. Thus these facts show that the AO has issued the details of questionnaires on the various issues which had been replied by the assessee which is evident from pp. 56 and 57 of the paper book.
Sundry creditors - we find that the AO has himself verified these sundry creditors by calling information u/s. 133(6) and they have replied to the AO by confirming the transaction. Thus after inquiry the AO has reached to the conclusion not to make addition on this issue. Thus the AO has adopted one course of two courses permissible in law. The AO had taken one view where two views are plausible and such view cannot make the order erroneous and prejudicial to the interest of the Revenue. The CIT's view cannot be invoked to substitute the view of the AO. The assessment also does not become erroneous where queries raised during the assessment proceedings are not recorded in the final assessment order. The queries were raised during the assessment proceedings which have been answered by the assessee and the AO has taken a view and on that the order passed by the AO does not become ipso facto erroneous and prejudicial to the interest of the Revenue.
regarding the payments made in cash - we find that the AO has made specific queries in respect of the land and building expenditure which is capital in nature of ₹ 8,93,337 in his questionnaire dt. 11th Jan., 2005 which is evident from page No. 18 of the paper book. Thus the necessary inquiry in this regard appears to have been made by the AO and after examination he has not made any addition on this account. Similarly the expenses debited under the head "Travelling and conveyance expenses"
we find that necessary details were submitted which is evident from p. 60 of the paper book and after verification the AO did not make any addition on this account. Similarly in the case of carrying charges the AO asked the details which is evident from p. 12 of the paper book. The assessee furnished the information and details in this regard during the assessment proceedings which are evident from pp. 60 and 62 of the paper book and after the examination the AO arrived at a conclusion and made the addition @ 1 per cent of the total expenses at ₹ 71,339 against which the assessee filed an appeal before the CIT(A) and after verification the addition has been reduced to ₹ 26,399. Thus this issue has not only been examined by the AO but also by the CIT(A) and after the verification the CIT(A) granted partial relief to the assessee.
Thus this issue cannot be made a basis for invoking the revisionary power by the CIT. Similarly in respect of the labour expenses, after verification, the AO made certain additions and in the appeal the CIT(A) had deleted the addition after verification. As far as the site Peditar expenses are concerned, we find that the AO made a specific query in his questionnaire dt. 19th Oct., 2006 which is evident from page No. 53 of the paper book. After the verification the AO made same addition and this issue cannot be made a basis to invoke the revisionary powers u/s. 263.
regarding the genuineness of the sub-contracts - we find that the amount was paid and the AO in his questionnaire dt. 19th Oct., 2006 has specifically made a query in this regard which is evident from page No. 54 of the paper book and the assessee submitted details and information in this regard. Audited accounts also show that the sub-contract made to the sister concern M/s M.K. Agarwal & Co. was made on the prevailing market price. As far as TDS on this account is concerned, the assessee has submitted TDS return which was also verified by the AO which is evident from page No. 55 of the paper book.
Regarding the payments made to the persons as specified in s. 40A(2)(b), we find that there was no deviation from the policy followed by the assessee in the past years. Thus from the above facts we are of the view that the invoking of the provisions of s. 263 by the CIT is not justified. In holding so, we also get the strength and support from the following decisions : CIT vs. Max India Ltd [2007 (11) TMI 12 - SUPREME COURT].
"The phrase 'prejudicial to the interests of the Revenue' in s. 263 of the IT Act, 1961, has to be read in conjunction with the expression 'erroneous' order passed by the AO. Every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interests of the Revenue. For example, when the AO adopts one of two courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the AO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the Revenue, unless the view taken by the AO is unsustainable in law."
The issue that has been raised is that, since the assessment order adverted to only MN property and was silent with respect to the properties located at GE and DC: on this short ground alone the revisional order of CIT ought to be sustained.
We, therefore, set aside the order of the CIT and the appeal of the assessee is accordingly allowed.
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2009 (7) TMI 1253 - BOMBAY HIGH COURT
... ... ... ... ..... the case of CWT vs. HUF of H.H. Late Shri J.M. Scindia (2008) 217 CTR (Bom) 531 (2008) 5 DTR (Bom) 19 (2008) 300 ITR 193(Bom). In this view of the matter, no substantial question of law is involved in this appeal. The appeal is accordingly dismissed with no order as to costs.
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2009 (7) TMI 1252 - ITAT DELHI
... ... ... ... ..... correctly deleted the addition. 5. We have considered rival contentions and gone through the records. In our view the order of the CIT(A) does not require any interference. First of all the assessee has produced all details in respect of its transactions. Copies of the contract notes and bills, that were issued to it, were all made available. The Assessing Officer has not verified these details and in respect of the material, which has been relied upon by him, he has not provided any findings of the investigation to the assessee. Therefore, in these circumstances, the addition made by the Assessing Officer cannot be said to be on the basis of some evidence that was put to the assessee in the course of assessment proceedings. The learned CIT(A) has correctly deleted the addition and we decline to interfere. Accordingly, order of CIT(A) on the issue in question is upheld. 6. In the result, revenue ‘s appeal is dismissed. Order pronounced in open court on 17th July 2009.
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2009 (7) TMI 1251 - ITAT NAGPUR
Sale and purchase of shares - Long-term capital gain - assessees claimed/offered long-term capital gains on sale of shares of various listed companies - Assessment proceedings u/s 153A - genuineness of transactions - Addition made by the AO u/s 68 - HELD THAT:- We find substantial merit in the view of the learned CIT(A) that it is this fact which has resulted into such action of the AO. We have also noted that voluminous documentary evidences have been filed by the assessee to prove its claim which support the genuineness of the transaction. However, the AO has utilized the statements of the persons who were not cross-examined by the assessee. Hence, as per the settled judicial principle, such statements cannot be given any weightage. On appreciation of documentary evidences submitted by the assessee, the genuineness of the transactions appears to be established.
As regards the aspect of off market transactions, it is noted that neither these are illegal nor prohibited and only some of the compliances have to be made by the brokers. As regard the aspect of such compliances, we find that it is not the case that all the off market transactions have not been reported by the concerned brokers to the stock exchange as per rules and even otherwise, any failure on the part of the brokers in doing such compliance cannot make the contract between the assessee and the broker illegal or void as the broker may face the consequences for his default under relevant statute. It is also noted that all the transactions are not off market transactions, hence, the AO's approach to pick and choose the only such instances which are favourable to him cannot justify such addition.
We are further of the view that economic consequences as a result of off market transactions or otherwise have taken place and, therefore, such transactions cannot be treated as sham merely for some discrepancies or for the view of the AO in regard to genuineness of these transactions. Thus, we are of the view that the share transactions cannot be considered as ingenuine/sham and, therefore, the sale proceeds of such share transactions cannot be taxed u/s 68 of the Act.
Treatment of transactions - We find that the learned CIT(A) has examined the factual details of these transactions on the basis of various parameters like frequency, volume, line of trade in which the assessee is mainly engaged and we are of the view that the decision of the learned CIT(A) is correct in law on that count also. Before parting from this aspect, we may add that this plea of the AO during the course of appellate stage itself contradicts and weakens the stand of the AO regarding his action of making addition under s. 68 because such plea results into an inference that the genuineness of the transaction cannot be doubted in absolute terms.
Thus, we hold that there is no merit in any ground of this appeal of the Revenue. Hence, we dismiss all the grounds raised by the Revenue.
In the result, the appeal filed by the Revenue stands dismissed.
Addition u/s 68 - Statement recorded on oath during the search operations - HELD THAT:- It is noted that the sole basis for making this addition is the statement of Shri Tilak Singh Parmar which has been retracted by him subsequently also. It is also noted that the said person is working in the capacity of peon/office boy. Hence, how his statement only can be a proper basis for making such addition. We further find that the entries recorded in such diary have been reconciled by the assessee from the books of account of various group concerns/assessees. Hence, in our opinion, the order of the learned CIT(A) in deleting the addition is correct in law. Thus, ground No. 3 of the Revenue's appeal is also dismissed.
In the result, Revenue's appeal is dismissed.
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2009 (7) TMI 1250 - DELHI HIGH COURT
... ... ... ... ..... s 1984 145 ITR 2921 the I.T.A.T. has rightly held the that payment made for use of the aforesaid goodwill for a period of 2 years was of revenue in nature. Since the agreement was for a period of two years and payment was also made in two years, it is rightly treated as revenue expenditure following the judgment of the Madhya Pradesh High Court in the case Umbrella Industries (Supra). 4. In view of this it is not necessary to go into the other issues as the period of agreement, namely, two years clinches the issue. It being a fact of finding, no substantial question of law arises. 5. Dismissed.
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2009 (7) TMI 1249 - ITAT MUMBAI
Assess the house property income on actual receipt basis OR reasonable rent basis - difference of opinion between the ld' JM and the ld' AM - Third Member Appointment - determination of annual letting value of the house property - Whether the standard rent fixed under the Rent Control Act can be adopted as annual value while computing the income from the property for the assessment years 2000-01, 2002-03 and 2003-04 in the case of the assessee - Whether the earlier order of the Tribunal in assessee’s own case was necessarily to be followed or not - The ld JM restored the matter to the file of the AO to pass a fresh order in light of the order of the Tribunal decided for earlier year whereas the ld AM was of the view that the computation made by the AO is correct - Three appeals by the department against the order of the CIT(A) relating to assessment years 2000-01, 2002-03 and 2003-04.
The assessee, in the returns of income had disclosed annual letting value of the property on the basis of actual rent received. The assessee was asked to explain the discrepancy in the monthly rental of the property. AO noticed that the Municipal valuation of the property was ₹ 38,860 only per annum and since the actual rent received was more than the Municipal valuation, the annual value of the property has been adopted on the basis of actual rent received u/s 23(1)(a).
AO adopted the annual letting value of the property on the basis of rent received by the assessee for the four months in the previous year relevent to assessment year 2000-01. For the subsequent years also the same annual letting value of the property has been adopted by the AO.
The CIT(A), relying upon the decision of the Hon’ble Bombay High Court in the case of CIT v. J.K. Investors (Bombay) Ltd.[1999 (7) TMI 675 - ITAT MUMBAI], held that notional interest on the interest free deposit was not to be taken into account in working out the annual letting value of the property insofar as the Municipal valuation of the property was less than the actual rent received. He accordingly accepted the annual value of the property as declared by the assessee.
HELD THAT:- It is evident from the plain reading of section 23 that the annual letting value of the house property is first to be determined on notional basis as the amount at which the property might be expected to be let from year to year. It is settled law that where the property is subjected to Rent Control Act, the fair market rent should not exceed the standard rent.
The appeals relate to assessment years 2000-01, 2002-03 and 2003-04. The appeal for the assessment year 2001-02 has already been decided by the Tribunal and the issue has been remanded back to the AO for determination of the standard rent to be adopted as the annual letting value for purposes of section 23(1)(a) and assessing the annual letting value of the property in accordance with the provisions of sections 23(1)(a) and 23(1)(b).
The earlier Bench of the Tribunal did not consider the fact that the property in question was not subject to Rent Control Act and therefore the annual letting value was not to be restricted to the standard rent as per the Rent Control Act. The ld JM has not doubted the correctness of the decision of the Tribunal in assessee’s own case for the assessment year 2001-02 and therefore has followed the same and set aside the issue and directed the AO to determine the standard rent. However, the ld AM has pointed out that the earlier Bench of the Tribunal has ignored the important factor in this case in deciding that the annual letting value of the property u/s 23(1)(a) was to be adopted as the standard rent as per Rent Control Act.
Therefore, I agree with the ld AM, that the earlier decision of the Tribunal did not constitute a binding precedent on the facts and in the circumstances of this case. Though in my personal opinion when the earlier decision of the Coordinate Bench is doubted, it is preferable to make a Reference to the Hon’ble President for constitution of the Larger Bench, yet in the light of the Third Member decision of the Tribunal in the case of Napar Drugs (P.) Ltd.[2005 (11) TMI 195 - ITAT DELHI-B], the Coordinate Bench can deviate from the earlier decision in certain circumstances and since the present case falls in the exceptions, the course adopted by the ld AM cannot be said to be illegal or highly improper.
Admittedly, the assessee, apart from the rent received from Deutsche Bank AG and Bombay Stock Exchange, has received interest free deposits from the tenants. As per the decision of the Bombay Bench of the Tribunal in the case of J.K. Investors (Bombay) Ltd.[1999 (7) TMI 675 - ITAT MUMBAI], the benefit derived by the assessee from the interest free deposit could be taken into consideration for determination of fair rental value u/s 23(1)(a).
In my considered view, the benefit derived by the assessee from the interest free deposit could not be more than the lending rate at which the deposits were available in the market at the particular point of time. Even if that is taken into account, the fair rental value of the property does not work out to the amount determined by the AO and confirmed by the ld AM. Therefore, partly agree with the ld. AM that the annual letting value in this case cannot be limited to standard rent but I do not agree with him that the fair rent adopted by the AO is justified. I partly agree with the ld JM that the matter has got to go back to the AO instead of adopting the value determined by the AO. I hold accordingly.
Since this case is peculiar insofar as I have partly agreed with ld AM and partly with ld JM, I would like to give the following opinion :-
That in this case the annual letting value cannot be limited to the standard rent as workable under the Rent Control Act but the fair rental value shall have to be determined. The fair rental value determined by the AO however is not reasonable.
The ld JM had proposed to set aside the order of the AO. To that extent I have agreed with him. So however, I have not agreed with him that the standard rent is to be determined and adopted as annual letting value u/s 23(1)(a).
The ld AM has held that the standard rent is not to be adopted. I have agreed with him to this extent. So however, I have not agreed with him that the fair rental value has to be adopted as adopted by the AO.
The issue shall be set aside and restored to AO for determination of the fair rent to be adopted as the annual letting value.
We agree with the findings of the Third Member; accordingly these appeals are to be taken as disposed of in view of the decision of the Third Member. The orders of the ld. JM and ld. AM and the Third Member will be treated as part of this order which are annexed herewith.
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2009 (7) TMI 1248 - ITAT NAGPUR
... ... ... ... ..... present case and that too by creating a material by the learned CIT himself. We further state that the case of the assessee falls under the jurisdiction of central circle wherein generally group cases are centralized and assessments are completed generally under s. 143(3) of the Act and that too under the supervision of superior authority like CIT and the fact that the assessment being completed under their supervision generally does not come on record so that the action under s. 263 of the Act can be taken in future because in some of the cases, a view had been expressed by the judicial institutions that where the assessment is completed under the supervision of the CIT, the same cannot be revised under s. 263 of the Act. 26. Thus, in view of this legal position and having regard to ground realities, as stated hereinabove, we are of the view that finality of concluded assessment should not be disturbed in this manner. 27. In the result, assessee's appeal stands allowed.
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2009 (7) TMI 1247 - DELHI HIGH COURT
... ... ... ... ..... sed during the year in comparison to the last year. Sales trading results are not disturbed. This finding of AO remained undisturbed before the CIT(A) as well and has been accepted by the ITAT. Proceeding on this basis, the ITAT observed that the sales, purchases as well as gross profits as disclosed by the assessee have been accepted by the Assessing Officer. Once this is accepted, we are of the opinion that the approach of the ITAT was correct inasmuch as the Assessing Officer did not consider this aspect while making additions of the sundry creditors under Section 68 of the Income Tax Act. As there was no case for disallowance for corresponding purchases, no addition could be made under Section 68 inasmuch as it is not in dispute that the creditors outstanding related to purchases and the trading results were accepted by the AO. We are, therefore, of the opinion that no substantial question of law arises for consideration in this case. The appeal is accordingly dismissed.
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2009 (7) TMI 1246 - SUPREME COURT
Whether the High Court correct to upheld the order of conviction passed against the appellant herein for the offence punishable under Section 15 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (hereinafter referred to as ‘the NDPS Act’) and sentenced her to undergo rigorous imprisonment for a period of ten years, and to pay a fine of ₹ 1 lac, and in default of payment of the same to undergo rigorous imprisonment for another period of two years, for having found in possession of 2 bags containing 61 Kgs. of poppy husk, without any permit or licence?
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2009 (7) TMI 1245 - ITAT AHMEDABAD
... ... ... ... ..... rse the same in so far as it relates to the brokerage income. The first ground of the department is partly allowed. The other two grounds being general, no decision is required. 13. So far as the CO of the assessee is concerned, the first ground is that the CIT(A) did not adjudicate upon the ground that the Assessing Officer erred in not allowing the carried forward losses of earlier years which are determined as allowed to be carried forward in the earlier assessment proceedings and that the Assessing Officer ought to have accordingly reduced the business income to ‘Nil’. We restore this ground to the Assessing Officer for a fresh decision in accordance with law after due opportunity to the assessee. 14. The second ground against the interest charged u/s 234B is consequential. The Assessing Officer is directed to give consequential relief, if any. 15. In the result, both the appeal and the CO are partly allowed. Order pronounced in Open Court on 24th July, 2009.
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2009 (7) TMI 1244 - SUPREME COURT
Whether as vacancies are not available in the department, there can be no question of regularizing the services of the respondents?
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2009 (7) TMI 1243 - GUJARAT HIGH COURT
... ... ... ... ..... creditors as well as unsecured creditors of the applicant company therein has been dispensed with on the ground that the company is making profit and there are huge net worth of millions of rupees of the assets of the company. 5. Considering the above, it appears that the applicant is a profit making company and as per the balance sheet the net assets are of ₹ 13,149,954,512/- as on 31st December, 2008, copy whereof is produced at page 108 (Annexure - F). 6. Further, as per the scheme, no compromise is offered to any unsecured creditors and the liabilities are not to be transferred to the transferee company and is to be retained by the applicant company and as recorded earlier the company is making huge profit and as the assets are running into about more than ₹ 1300 crores, no prejudice will be caused to the unsecured creditors by the proposed scheme. 7. Hence, the meeting of the unsecured creditors is also dispensed with. 8. Application disposed of accordingly.
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2009 (7) TMI 1242 - SC ORDER
Cenvat - Fraudulent availment of credit - the decision in the case of INDIAN SPECIAL CASTING PVT. LTD. Versus COMMR. OF C. EX., LUDHIANA [2009 (2) TMI 434 - PUNJAB & HARYANA HIGH COURT] contested - Held that: - This is not a fit case for interference under Article 136 of the Constitution - appeal dismissed.
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2009 (7) TMI 1241 - ADVANCE RULING AUTHORITY
Whether, on the facts and circumstances of the case, FactSet Research Systems Inc. (‘FactSet’ or ‘the applicant’) will not be taxable in India under the Income-tax Act, 1961, with respect to the subscription fees?
Whether, on the facts and circumstances of the case, the applicant will not be taxable under the Double Taxation Avoidance Agreement entered into between the Government of India and the Government of United States of America with respect to the subscription fees?
Whether, on the facts and circumstances of the case, if the applicant is not taxable in India for the subscription fees, its customers in India will be required to withhold taxes under section 195 of the Act on subscription fees paid to the applicant?
Assuming that the applicant has no other taxable income in India, whether, on the facts and circumstances of the case, the applicant will be absolved from filing a tax return in India, under the provisions of section 139 of the Act with respect to the subscription fee?
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2009 (7) TMI 1240 - RAJASTHAN HIGH COURT
... ... ... ... ..... no order continuing the interim order. This Court would not like to make much comment on such an opinion for the same having been stated before passing of this order; but the proposition of the learned counsel for the respondents about the said interim order having come to an end cannot be accepted. It is, of course, to be made clear that in this petition only a show cause notice has been issued and the petition is to be heard for admission again. No observation herein shall have any bearing or relevance for the purpose of consideration of case on the merits. However, looking to the overall circumstances of the case and the nature of dispute; in order to put the record straight; and in the interest of justice, it is considered necessary that the interim order as passed in this case be extended until further orders while placing the petition for admission. Ordered accordingly. The application (IA No.10881/2009) stands disposed of. List this matter for admission on 12.08.2009.
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2009 (7) TMI 1239 - MADRAS HIGH COURT
... ... ... ... ..... hat in the event of an opportunity being extended to the appellants, the appellants would ensure that they will proceed with the hearing of the appeals before the Tribunal at Chennai without seeking any further adjournment. 13. Recording the affidavits of undertaking filed by the appellants as well as the statement made by the learned counsel for the appellants, we allow the appeals on the question of law raised hereinabove by setting aside the orders impugned in the above appeals, remit the matter back to the Tribunal at Chennai for a de novo hearing and dispose of the appeals on merits and in accordance with law. We make it clear that the appellants shall not seek any adjournment of the hearing of the appeals. In the interest of justice, we feel that it will be appropriate if the Tribunal disposes of the appeals expeditiously, preferably within a period of three months from the date of receipt of a copy of the judgment. The appeals are allowed on the above terms. No costs.
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2009 (7) TMI 1238 - SC ORDER
... ... ... ... ..... t shall be indicated in the notice that the matter may be remanded to the Tribunal for better adjudication of the factual aspects." In the terms of the above order dated 6 March, 2006, the matter is remitted to the Tribunal for de novo consideration in accordance with law. Appeal is, accordingly, allowed. No order as to costs.
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2009 (7) TMI 1237 - ANDHRA PRADESH HIGH COURT
... ... ... ... ..... an, JJ. ORDER Appeal dismissed.
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2009 (7) TMI 1236 - SC ORDER
Recovery of sums due to Government - Section 11 of the Central Excise Act, 1944 - Held that: - the decision in the case of UNION OF INDIA Versus SICOM LTD. [2008 (12) TMI 53 - SUPREME COURT] referred - SLP dismissed.
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2009 (7) TMI 1235 - SUPREME COURT
Whether the allegations of malice made are vague in character?
Whether the appellant was entitled to raise all his contentions including the aforementioned contention before the authorities under the 1981 Order?
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