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2010 (10) TMI 1259
Issues Involved:
1. Entitlement to the benefits of the Indo-UAE Double Taxation Avoidance Agreement (DTAA).
2. Interpretation of the term "liable to tax" under the DTAA.
3. Impact of the absence of actual tax liability in the UAE on treaty benefits.
4. Judicial precedents and international interpretations regarding DTAA provisions.
5. Amendments to the Indo-UAE DTAA and their implications.
Issue-wise Detailed Analysis:
1. Entitlement to the benefits of the Indo-UAE Double Taxation Avoidance Agreement (DTAA):
The core issue in this appeal is whether the assessee, a resident of the United Arab Emirates (UAE), is entitled to the benefits of the Indo-UAE DTAA. The Assessing Officer (AO) denied the benefits on the grounds that the assessee, being a proprietary concern, does not fall under the definition of a "chargeable person" as per the Dubai Income Tax Decree, which defines it as a body corporate. The Commissioner of Income Tax (Appeals) [CIT(A)], however, held that the assessee is entitled to the benefits of the DTAA, relying on the precedent set by the ITAT in the case of ACIT v. Green Emirates Shipping & Travels, which established that the right to tax by the other Contracting State suffices for treaty benefits, irrespective of whether that right is exercised.
2. Interpretation of the term "liable to tax" under the DTAA:
The Tribunal explored the interpretation of "liable to tax" within the context of the DTAA. It was noted that the term does not necessarily require actual tax payment in the Contracting State but includes scenarios where the Contracting State has the right to tax the individual or entity. This interpretation aligns with the Tribunal's earlier decision in Green Emirates Shipping & Travels and was further supported by international precedents, such as the Federal Court of Canada's decision in John N. Gladden vs. Her Majesty the Queen, which emphasized that the potential for taxation suffices for treaty applicability.
3. Impact of the absence of actual tax liability in the UAE on treaty benefits:
The AO's argument that the absence of actual tax liability in the UAE disqualifies the assessee from claiming DTAA benefits was rejected. The Tribunal reiterated that actual taxation is not a prerequisite for treaty benefits, as the DTAA aims to prevent both current and potential double taxation. The Tribunal upheld that as long as the UAE has the right to tax the assessee, the DTAA benefits are applicable, regardless of the exercise of that right.
4. Judicial precedents and international interpretations regarding DTAA provisions:
The Tribunal heavily relied on judicial precedents, particularly its own decision in Green Emirates Shipping & Travels, and international interpretations, including the Dutch High Court's decision, to support its stance. The Tribunal emphasized the importance of consistency in interpreting international tax treaties and noted that interpretations by foreign courts should be respected unless contradicted by binding judicial forums or other compelling reasons.
5. Amendments to the Indo-UAE DTAA and their implications:
The Tribunal acknowledged the amendments to the Indo-UAE DTAA, which clarified the definition of "resident" and reinforced the principle that actual taxability in one Contracting State is not a sine qua non for availing treaty benefits in the other. The protocol, effective from April 2008, supports the Tribunal's interpretation that treaty benefits are accessible based on fiscal domicile rather than actual tax payments. This amendment aligns with the Tribunal's approach and provides clarity on the eligibility for treaty benefits.
Conclusion:
The Tribunal upheld the CIT(A)'s decision, affirming that the assessee is entitled to the benefits of the Indo-UAE DTAA. The appeal filed by the revenue was dismissed, reinforcing the interpretation that the right to tax by a Contracting State suffices for treaty benefits, and actual tax liability is not a prerequisite. This judgment aligns with international practices and recent amendments to the Indo-UAE DTAA, promoting consistency and clarity in the application of international tax treaties.
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2010 (10) TMI 1258
Issues:
Claim of workmen for dues and benefits in a company facing financial distress and proceedings under SARFAESI Act and RDBFI Act.
Analysis:
The petitioners, claiming to be workmen of a company facing financial difficulties, sought relief due to potential job loss and unpaid benefits if the company's assets were auctioned under the SARFAESI Act. They argued that the bank should settle all dues, including gratuity and EPF contributions, as per section 13(9) of the SARFAESI Act. The petitioners also alleged collusion between the company and the bank to evade liabilities. However, the court noted that the petitioners were not parties to the loan transaction and their dues were not quantified by relevant labor authorities. The court questioned the entitlement of the petitioners to halt SARFAESI Act proceedings or claim priority in asset distribution without the company being in liquidation.
The petitioners relied on section 13(9) of the SARFAESI Act and section 529A of the Companies Act, 1956 to support their claims. Section 13(9) addresses rights of secured creditors in case of multiple creditors, specifying distribution of sale proceeds in liquidation scenarios. Section 529A of the Companies Act deals with asset distribution priorities in winding-up cases. The court clarified that since the company was not in liquidation, the provisions of section 13(9) did not apply. Legal precedents highlighted that workmen's priorities in asset distribution are relevant only in winding-up situations, emphasizing the need for adherence to procedural requirements.
The court rejected the writ petition's maintainability challenge raised by the respondent's counsel but delved into the legal complexities surrounding section 13(9) of the SARFAESI Act. It emphasized that workmen's claims for priority in asset distribution under the Companies Act were not enforceable unless the company faced liquidation proceedings. The court underscored the limited scope for workmen to obstruct SARFAESI Act or RDBFI Act proceedings without a winding-up order. Consequently, the petition to quash the Debts Recovery Tribunal proceedings and demand immediate payment of dues from recovered amounts was dismissed.
The judgment clarified that if the company faced winding-up proceedings in the future, the petitioners could seek relief as per relevant laws. It ensured that the judgment did not hinder the petitioners from claiming surplus amounts recovered by the respondents in ongoing proceedings against the company. The court's decision highlighted the necessity for adherence to legal procedures and the limited scope for workmen to claim priority in asset distribution without the company being in liquidation.
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2010 (10) TMI 1257
The petitioner sought a direction for the restoration of power supply to premises G-13, Brigade Gardens, Bangalore-1. The company-in-liquidation vacated the premises, and the applicants are now the owners. The Official Liquidator had instructed BESCOM to disconnect the power supply. The court directed the Official Liquidator to instruct BESCOM to restore power supply, with the applicants bearing expenses. The application is disposed of.
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2010 (10) TMI 1256
Issues Involved:
1. Reduction of trading addition and applicability of Section 145(3).
2. Sustaining the addition on account of arm's length price (ALP).
Detailed Analysis:
1. Reduction of Trading Addition and Applicability of Section 145(3):
The Department objected to the reduction of the trading addition by Rs. 10,66,430 by reducing the GP rate by 2%, while the assessee contested the applicability of Section 145(3) and the sustaining of the trading addition of Rs. 10,68,433 by directing to apply a GP rate of 22% on declared export sales.
The assessee, engaged in the business of manufacturing and trading jewelry and precious stones, declared a GP rate of 19.93% on a turnover of Rs. 5.15 crores for the year under consideration, compared to a GP rate of 26.63% on a turnover of Rs. 4.17 crores in the previous year. The AO rejected the books of account and estimated a GP rate of 24%, leading to an addition of Rs. 20,98,800. The CIT(A) reduced the GP rate to 22%.
The Tribunal found that the assessee maintained regular books of account, and no significant defects were found by the AO, except for the lower GP rate compared to the previous year. The Tribunal noted that the purchases were genuine, and the rejection of books was not justified. The Tribunal referenced a similar case for the assessment year 2005-06, where the trading addition was deleted, and the rejection of books was deemed unjustified. Consequently, the Tribunal directed the deletion of the trading addition sustained by the CIT(A) and rejected the Department's ground.
2. Sustaining the Addition on Account of Arm's Length Price (ALP):
The AO noted that the assessee had entered into international transactions with an AE, M/s Sunshine Exim Traders Ltd., and adopted the Transactional Net Margin Method (TNMM) for calculating the ALP. However, the AO held that the TNMM was not applicable due to the absence of comparable data and used the profit split method instead, resulting in an addition of Rs. 11,20,786.
The CIT(A) confirmed the AO's order, stating that the provisions of Sections 92 and 92A to 92F were applicable from the assessment year 2002-03 onwards. The Tribunal, however, found that the AO had committed an error by applying the profit split method and not considering the comparable cases cited by the assessee. The Tribunal referenced the case of Addl. CIT vs. Tej Diam, where the TNMM was deemed applicable.
The Tribunal concluded that the assessee was correct in adopting the TNMM, as the net profit margins realized from international transactions were computed in relation to costs incurred, sales effected, or assets employed. The Tribunal found that the AO had not provided sufficient reasoning for rejecting the TNMM and applying the profit split method. Consequently, the Tribunal directed the deletion of the addition made on the basis of the ALP.
Conclusion:
The Tribunal dismissed the Department's appeal and allowed the assessee's appeal, directing the deletion of the trading addition and the addition made on the basis of the ALP.
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2010 (10) TMI 1255
Issues Involved:
1. Application for bail under Section 439 of the Code of Criminal Procedure.
2. Allegations against the applicant in connection with the fake encounter and disappearance of Kausarbi.
3. Arguments by the applicant's counsel for bail.
4. Opposition by the Central Bureau of Investigation (CBI).
5. Court's evaluation of the evidence and allegations.
6. Previous orders and observations on similar bail applications.
7. Legal precedents and principles governing bail applications.
Issue-wise Detailed Analysis:
1. Application for Bail under Section 439 of the Code of Criminal Procedure
The applicant, a former Sub-Inspector with the Anti-Terrorist Squad (ATS) in Ahmedabad, sought bail under Section 439 of the Criminal Procedure Code. The application was made in connection with a complaint registered with the ATS Police Station, Ahmedabad, concerning the fake encounter of Sohrabuddin and the disappearance of his wife, Kausarbi.
2. Allegations Against the Applicant
The applicant was accused of being involved in a conspiracy to destroy Kausarbi's dead body after setting it on fire. The charges included offences under Sections 201, 120B, 193, and 34 of the Indian Penal Code. The applicant was alleged to have driven a tempo loaded with firewood to Illol, where Kausarbi's body was cremated to destroy evidence.
3. Arguments by the Applicant's Counsel for Bail
The applicant's counsel argued that:
- The applicant had been in jail for over three years without the conclusion of the investigation.
- The charges against the applicant, at most, could be under Section 201 of the IPC, which is bailable.
- The tempo was arranged by another accused who had been dropped by the CBI.
- There was no evidence of the applicant's involvement in the larger conspiracy to kill Sohrabuddin and Kausarbi.
- The applicant's case was similar to that of another accused who had been granted anticipatory bail.
4. Opposition by the Central Bureau of Investigation (CBI)
The CBI opposed the bail application, arguing that:
- The present application was a successive bail application with no changed circumstances since the previous rejection.
- The investigation was still ongoing, and the applicant's release could lead to tampering with evidence.
- The applicant's involvement was established through statements and evidence, indicating his presence and participation in the conspiracy.
- The applicant managed the firewood for disposing of Kausarbi's body and was aware of the entire conspiracy.
5. Court's Evaluation of the Evidence and Allegations
The court considered the supplementary chargesheet and the evidence collected, which indicated the applicant's involvement in the conspiracy. The court noted:
- The case involved three parts: the conspiracy to bring Sohrabuddin to Ahmedabad, the fake encounter, and the post-encounter events, including Kausarbi's death.
- The applicant's presence and actions indicated his awareness and participation in the conspiracy.
- The ongoing investigation by the CBI and the potential for new evidence justified denying bail.
6. Previous Orders and Observations on Similar Bail Applications
The court referred to its earlier order rejecting the applicant's bail application, considering the nature of the accusations, the seriousness of the offences, and the potential for tampering with evidence. The court highlighted:
- The gravity of the charges against police officers involved in fake encounters and evidence destruction.
- The reasonable apprehension of tampering with evidence if the applicant were released on bail.
7. Legal Precedents and Principles Governing Bail Applications
The court cited several Supreme Court decisions outlining the principles for granting bail, emphasizing:
- The nature and gravity of the accusations.
- The severity of the punishment.
- The likelihood of tampering with evidence or witnesses.
- The prima facie satisfaction of the court regarding the charges.
Conclusion
The court concluded that no case was made out to release the applicant on bail, given the prima facie evidence against him and the ongoing investigation. The application was dismissed, and the rule was discharged.
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2010 (10) TMI 1254
Issues:
1. Challenge to the order treating period of absence as duty
2. Validity of suspension and entitlement to financial benefits during absence
3. Interpretation of Rule 4(2)(a) of Maharashtra Civil Services (Discipline and Appeal) Rules, 1979
Detailed Analysis:
1. The petitioners challenged the order treating the period of absence of the original respondent as duty, which was from 3-9-1975 to 10-4-1987. The original respondent, an Accountant, was initially suspended due to a criminal case but was later acquitted. The petitioners argued that the respondent did not report to duty and was guilty of misconduct for not submitting leave applications. The Maharashtra Administrative Tribunal had ruled in favor of treating the absence period as duty for all purposes.
2. The petitioners contended that the respondent's suspension was valid due to serious misconduct as he did not report to duty without intimation and did not submit leave applications. They argued that the tribunal's decision to regularize the suspension period lacked merit. The respondents, on the other hand, supported the tribunal's decision based on Rule 4(2)(a) of the Maharashtra Civil Services (Discipline and Appeal) Rules, 1979.
3. The key issue revolved around the interpretation of Rule 4(2)(a) regarding the deeming provision of suspension when a government servant is detained in police custody for more than 48 hours. The petitioners argued that the appointing authority must pass a suspension order, while the respondents relied on precedents like Union of India v. Rajiv Kumar and Anami Narayan Roy v. Suprakash Chakravarthy to support the immediate deeming of suspension upon completion of the detention period.
4. The court clarified that Rule 4(2)(a) creates a legal fiction where suspension is deemed to have occurred upon detention exceeding 48 hours, regardless of a formal order. Citing relevant judgments, the court emphasized that the appointing authority's discretion lies in modifying or revoking the suspension, not in initiating it. The court upheld the tribunal's decision that the suspension period post-acquittal should be considered as permissible leave, entitling the respondent to financial benefits.
In conclusion, the court dismissed the petition, affirming the tribunal's ruling that the suspension period after acquittal should be treated as permissible leave, and the respondent was entitled to receive his salary and benefits for that period.
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2010 (10) TMI 1253
Issues Involved:
The judgment involves the challenge of an order rejecting the representation for one-time regularization of daily wagers in the Forest Department. The issues include non-application of mind in the order, violation of natural justice principles, bias of the deciding authority, and constitutional violations.
Issue 1: Representation for Regularization
The petitions filed by the Unions on behalf of daily wagers sought to quash the order rejecting their representation for regularization. The Court directed the State Government to formulate a scheme for granting permanent or quasi-permanent status to the daily wagers based on their length of service.
Issue 2: Grounds for Challenging the Order
The impugned order was challenged on various grounds, including total non-application of mind, violation of natural justice principles, bias of the deciding authority, pre-determined decision, mockery of court directions, and alleged violations of constitutional provisions.
Issue 3: Decision on Representation
The Court found that the deciding authority should not have passed the same order as previously quashed. It highlighted the nature of work performed by the daily wagers and compared it to other departments where daily wagers were made permanent. The Court emphasized the need for a scheme for Forest Department daily wagers similar to other departments.
Issue 4: Directions for Consideration
In the interest of justice, the Court quashed the impugned order and directed the authority to reconsider the regularization of the daily wagers. The authority was instructed to evaluate each case individually, consider framing a scheme for quasi-permanent status, and provide detailed reasons if benefits cannot be granted.
Conclusion:
The Court allowed the petitions, set aside the impugned order, and directed the State Government to reevaluate the regularization of daily wagers within two months. The judgment emphasized the need for fairness and consideration of the daily wagers' long service in determining their status.
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2010 (10) TMI 1252
Issues Involved:
1. Jurisdiction of the court to entertain the complaint.
2. Whether the offence was committed within the jurisdiction of the court.
3. Applicability of domestic criminal law to acts committed outside India.
4. Allegations of forum shopping and abuse of process of court.
Detailed Analysis:
1. Jurisdiction of the Court to Entertain the Complaint:
The primary issue was whether the IX Metropolitan Magistrate, Saidapet, Chennai had jurisdiction to entertain the complaints. The petitioners contended that neither they nor their business operations were within the jurisdiction of the court, and all relevant actions (issuance, dishonour, and payment failure of the cheques) occurred in the United States. The court concluded that the mere presentation of the cheques in a bank in Chennai did not confer jurisdiction on the Saidapet court. The Supreme Court's rulings in *Shri Ishar Alloy Steels Ltd v. Jayaswals Neco Limited* and *M/s. Harman Electronics (P) Ltd. v. National Panasonic India Ltd.* supported this position, emphasizing that jurisdiction is tied to where the cheque is made payable and where the statutory notice is served, not merely where it is presented for collection.
2. Whether the Offence was Committed within the Jurisdiction of the Court:
The court examined whether any part of the offence under Sections 138 and 141 of the Negotiable Instruments Act, 1881 occurred within its jurisdiction. It found that all actions, including issuance and dishonour of the cheques, took place in the United States. The court cited several precedents, including the Supreme Court's decision in *Ahuja Nandkishore Dongre v. State of Maharashtra*, which held that jurisdiction should be based on where the cheque is intended to be paid, not where it is presented for collection.
3. Applicability of Domestic Criminal Law to Acts Committed Outside India:
The court noted that the Negotiable Instruments Act, 1881 and the Criminal Procedure Code, 1973 do not have extra-territorial application unless explicitly stated. The cheques in question were foreign instruments governed by the law of the place where they were issued and payable, i.e., the United States. The court referred to Sections 134 to 137 of the Negotiable Instruments Act, which deal with the law governing foreign instruments and concluded that Indian law did not apply to the cheques made and payable in the United States.
4. Allegations of Forum Shopping and Abuse of Process of Court:
The court found that the respondent's actions amounted to forum shopping and abuse of process. The respondent presented the cheques in Chennai and filed complaints there to leverage the criminal provisions of the Negotiable Instruments Act, 1881 for a quicker resolution. The court emphasized that such actions undermine the judicial process and cannot be allowed. The judgment in *Trilux Technologies Singapore P. Ltd. v. Boon Technologies* was distinguished on the grounds that it did not consider the larger bench ruling in *Shri Ishar Alloy Steels Ltd v. Jayaswals Neco Limited*.
Conclusion:
The court concluded that the IX Metropolitan Magistrate, Saidapet, Chennai did not have jurisdiction to entertain the complaints as the offences were not committed within its jurisdiction. The complaints were quashed to prevent miscarriage of justice and abuse of process. The criminal proceedings in C.C. Nos. 1506, 1507, and 1505 of 2007 were quashed, and the connected miscellaneous petitions were closed.
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2010 (10) TMI 1251
Issues involved:
The judgment involves issues related to the methodology for calculating the number of subscribers for determining the licence fee, charging interest on the licence fee, entitlement to reduction in unit call rate, and levy of penal interest on the licence fee.
Methodology for calculating number of subscribers:
The Tribunal clarified that the basis for calculating the number of subscribers for determining the licence fee shall be the total figure of IMSI in the Home Location Register. The appellant's acceptance of the Migration Package, which included a clause abandoning disputes related to the Licence Agreement up to July 31, 1999, prevented them from raising any issues related to the pre-migration period. The Tribunal's view was upheld by the Court, citing the principle that one cannot approbate and reprobate, and once benefits are accepted, disputes cannot be raised later.
Charging interest on licence fee:
The Tribunal held that the respondent was entitled to recover licence fee with interest up to July 1999, but not advance quarterly licence fee for July-September 1999 and revenue-sharing fees for August and September 1999 as per the Migration Package. This decision was not challenged by the appellant or the Government, and the Tribunal's order was upheld.
Reduction in unit call rate:
The Tribunal interpreted the relevant clause in the Licence Agreement regarding the unit call rate revision, stating that the revision was limited to 75% of the overall increase in the unit rate. It was concluded that the revision was only envisaged in case of an increase in the unit call rate, not for a decrease. The appellant did not provide evidence or raise the issue of unit call rate before or after the licence was issued, and the Tribunal's decision was upheld.
Levy of penal interest:
The Tribunal's decision to allow the recovery of interest on the outstanding licence dues for the period of default was upheld by the Court. It was deemed appropriate for the respondent to charge simple interest on the overdue amount to keep the licence valid instead of terminating it for default. The Court found no reason to interfere with the Tribunal's order or the directions issued for re-working the dues along with interest.
The appeal was dismissed without any order as to costs.
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2010 (10) TMI 1250
Issues involved: Appeal against order of Ld. CIT(A) for Assessment Year 2007-08 regarding deletion of addition of Rs.3,74,85,859 and confirmation of disallowances on account of personal use of motor car and communication devices.
Revenue Appeal (ITA No. 1513/Kol/2010): The revenue challenged the deletion of Rs.3,74,85,859 addition by Ld. CIT(A). The Assessing Officer noted a variance in total receipts admitted in P & L Account and TDS certificates. The revenue argued that the difference represented income and not mere receipts, urging to set aside Ld. CIT(A)'s order. The assessee, a firm of Advocates and Solicitors, maintained that the amount in question was reimbursement of out of pocket expenses by clients, not income. The Ld. CIT(A) held in favor of the assessee, citing the firm's accounting practices and treatment of expenses as out of pocket expenses. The Tribunal upheld Ld. CIT(A)'s decision, emphasizing that the expenses were not understated and the advances subject to TDS could not be treated as income.
Cross Objection (CO No. 127/Kol/2010): The assessee contested disallowances for personal use of motor car and communication devices. The Ld. CIT(A) confirmed the disallowances, but the assessee argued that expenses related to personal use were already deducted before debiting the firm's account. The Tribunal upheld the disallowance for motor car, telephone, and mobile phone expenses but deleted the disallowance for FAX expenses.
In conclusion, the Tribunal dismissed the revenue's appeal and partly allowed the assessee's Cross Objection, maintaining the Ld. CIT(A)'s decision on the deletion of addition and confirming disallowances except for FAX expenses.
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2010 (10) TMI 1249
Issues involved:
The classification of imported goods under Customs Tariff Head CTH 7204.49.00 versus CTH 7308.90.10, non-compliance with court directions, filing of Contempt Case, review of judgment, permission to clear goods pending appeal.
Classification of imported goods:
The petitioner imported a consignment of 'heavy melting scrap' under CTH 7204.49.00, but the respondents argued that the goods were 'channels' classifiable under CTH 7308.90.10. An adjudication order demanded duty under CTH 7308.90.10. The petitioner sought clearance of goods pending appeal, leading to a court direction for partial payment of duty, bank guarantee, and bond u/s 143 of the Customs Act.
Non-compliance and Contempt Case:
The goods were not cleared before the appeal was dismissed, resulting in the petitioner filing Contempt Case No.1070 of 2010 for alleged non-compliance with court directions. Respondents filed a review petition stating the appeal had been dismissed before goods could be cleared, seeking a review of the judgment.
Permission to clear goods pending second appeal:
The petitioner filed a writ petition stating a further appeal before the 4th respondent Appellate Tribunal and requested permission to clear goods pending this appeal. The court permitted clearance on payment of 50% duty, bank guarantee, and bond u/s 143 of the Customs Act, similar to the earlier judgment.
Disposition:
The writ petition was disposed of with permission granted to clear goods pending the second appeal. No further orders were deemed necessary in the Contempt Case and Review Petition, which were subsequently closed.
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2010 (10) TMI 1248
The Kerala High Court judgment addressed whether unexplained cash credits as income under Section 68 qualify for exemption under Section 10(23C) and Section 11 of the Income Tax Act. The court found the respondent, a charitable institution, eligible for exemption under both sections, following a decision of the Delhi High Court. The department's appeal was dismissed.
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2010 (10) TMI 1247
Issues Involved:
1. Whether the High Court was correct in declining to exercise its jurisdiction under Section 482 of the Code of Criminal Procedure to quash the criminal complaint.
2. Whether a prima facie case under Sections 192 and 199 read with Section 34 of the Indian Penal Code is made out against the appellants.
3. Whether appellant No. 2 can be held vicariously liable for the alleged offences.
4. Whether the arbitral award being set aside affects the criminal complaint.
Issue-wise Detailed Analysis:
1. Jurisdiction under Section 482 of the Code of Criminal Procedure:
The Supreme Court reiterated that the inherent powers of the High Court under Section 482 of the Code are wide but not unlimited. These powers should be exercised sparingly and with caution to secure the ends of justice and prevent abuse of the court process. The Court emphasized that these powers should not be used mechanically or routinely but with care and caution, only when a clear case for quashing is made out. The Court cited precedents such as *R.P. Kapur v. State of Punjab* and *Rupan Deol Bajaj v. Kanwar Pal Singh Gill* to underscore this principle.
2. Prima Facie Case under Sections 192 and 199 read with Section 34 IPC:
The Court examined the relevant statutory provisions and the complaint's allegations. Section 192 IPC pertains to fabricating false evidence, while Section 199 IPC deals with making false statements in declarations receivable as evidence. The Court noted that the complaint alleged that a fabricated document was tendered in evidence before the Arbitral Tribunal. The Tribunal had observed that the MSEB had tampered with the commissioning reports. The Court found that a prima facie case of offences under Sections 192 and 199 IPC was made out against appellant No. 1, as the document could have influenced the Tribunal's decision.
3. Vicarious Liability of Appellant No. 2:
The Court held that vicarious liability under criminal law requires specific statutory provision, which Sections 192 and 199 IPC do not incorporate. The complaint did not contain specific allegations against appellant No. 2, who was the Chairman of MSEB, regarding his personal involvement in the alleged fabrication and submission of false evidence. The Court cited *S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla* and *S.K. Alagh v. State of Uttar Pradesh* to emphasize that a person cannot be held vicariously liable without specific statutory provision and clear averments of their role in the offence. Consequently, the Court found no prima facie case against appellant No. 2.
4. Effect of the Arbitral Award Being Set Aside:
The Court dismissed the argument that the setting aside of the arbitral award affects the criminal complaint. It held that the offences under Sections 192 and 199 IPC exist independently of the final arbitral award. Therefore, the criminal complaint remains valid irrespective of the arbitral award's status.
Conclusion:
The Supreme Court dismissed the appeal concerning appellant No. 1, holding that a prima facie case under Sections 192 and 199 IPC was made out. However, the Court allowed the appeal for appellant No. 2, quashing the complaint against him due to the lack of specific allegations and the absence of vicarious liability under the relevant IPC sections. The order of the Magistrate taking cognizance against appellant No. 2 was quashed.
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2010 (10) TMI 1246
Issues Involved:
1. Condonation of delay in filing the complaint.
2. Interpretation of Section 473 Cr. P.C.
3. Application of judicial mind by the ASJ.
4. Speedy trial as a guarantee under Article 21 of the Constitution of India.
Summary:
1. Condonation of Delay in Filing the Complaint:
The petitioner challenged the order dated 23rd December 2006 by the Additional Sessions Judge (ASJ) dismissing the revision against the Metropolitan Magistrate's (MM) order, which condoned a 142-day delay in filing the complaint under the Official Secrets Act. The CBI explained that the delay was due to seeking legal opinions from the Attorney General and Additional Solicitor General, which was necessary to determine if the corporate entity could be made an accused. The CMM accepted this explanation, and the ASJ upheld it, finding no negligence or inaction by the CBI.
2. Interpretation of Section 473 Cr. P.C.:
Section 473 Cr. P.C. allows a court to take cognizance of an offence after the expiry of the period of limitation if the delay is properly explained or if it is necessary in the interests of justice. The Supreme Court in Smt. Venkata Reddy and Ors. Vs. Vanka Venkata Reddy and Ors. clarified that the word "OR" in Section 473 should not be read as "AND". The court emphasized that the provision has an overriding effect on Section 468, allowing cognizance if either the delay is explained or it is necessary for justice.
3. Application of Judicial Mind by the ASJ:
The petitioner argued that the ASJ did not apply judicial mind and erred in relying on the Madhya Pradesh High Court decision in Krishna Sanghai Vs. State of Madhya Pradesh. The petitioner also cited the Supreme Court decision in State of Himachal Pradesh Vs. Tara Dutt, which requires a twin test for condonation of delay. However, the court clarified that the statutory provision uses "OR" and not "AND", and the test laid down in Venkata Reddy's case should be applied.
4. Speedy Trial as a Guarantee under Article 21 of the Constitution of India:
The petitioner cited Abdul Rehman Antulay Vs. R.S. Nayak to argue that indiscriminate condonation of delay violates the right to a speedy trial under Article 21. The court acknowledged the systemic issues in ensuring speedy trials, particularly for powerful individuals, but found the CBI's explanation for the delay valid and dismissed the petition as devoid of merits.
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2010 (10) TMI 1245
The Supreme Court of India dismissed the appeal in the case with citation 2010 (10) TMI 1245. Justices Mukundakam Sharma and Anil R. Dave were part of the judgment.
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2010 (10) TMI 1244
Issues Involved:
1. Jurisdiction of the Sessions Court to entertain appeals against acquittal.
2. Applicability of Section 378(4) and Proviso to Section 372 Code of Criminal Procedure (CrPC).
3. Interpretation of statutory provisions post-amendment.
Summary:
1. Jurisdiction of the Sessions Court to entertain appeals against acquittal:
The accused questioned the filing of Criminal Appeal Nos. 12 of 2009 and 13 of 2009 before the III Additional Sessions Judge (Fast Track Court) at Gadwal, Mahabubnagar District. The complainant filed these appeals against the judgments of acquittal passed by the Additional Judicial Magistrate of the First Class, Alampur. The accused contended that the appeals should have been filed in the High Court u/s 378(4) CrPC, not in the Sessions Court.
2. Applicability of Section 378(4) and Proviso to Section 372 CrPC:
The complainant argued that the recent amendment to Section 372 CrPC introduced a proviso allowing a victim to file an appeal to the Sessions Court against an acquittal recorded by the Magistrate. The court noted that prior to the 2009 amendment, the only remedy for a complainant was to file an appeal u/s 378(4) CrPC to the High Court. However, the amendment enlarged the field, allowing a victim to file an appeal to the Sessions Court or the High Court, depending on the trial court's order.
3. Interpretation of statutory provisions post-amendment:
The court emphasized the importance of plain and simple reading of statutory provisions. It found no conflict between Section 378(4) and the proviso to Section 372 CrPC. The court held that both provisions could operate simultaneously, allowing a victim who is also a complainant to choose between filing an appeal to the High Court u/s 378(4) CrPC or to the Sessions Court/High Court under the proviso to Section 372 CrPC. The court concluded that the appeals filed before the Sessions Court were maintainable.
Conclusion:
The court transferred Criminal Appeal Nos. 12 of 2009 and 13 of 2009 from the III Additional Sessions Judge (Fast Track Court) at Gadwal, Mahabubnagar District to the High Court. The Registry was directed to post the appeals for admission before the appropriate bench.
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2010 (10) TMI 1243
Issues Involved:
1. Deletion of addition on account of provision for obsolescence.
2. Deletion of addition on account of proportionate aircraft redelivery charges.
3. Deletion of disallowance of heavy maintenance charges.
4. Deletion of disallowance of depreciation on aircraft taken on hire purchase.
5. Deletion of disallowance of repairs to furniture and fixture.
6. Deletion of addition on account of provisions for frequent flyer expenses.
7. Treatment of interest income on fixed deposits.
8. Allowance of additional claim for proportionate initial rent paid and other expenses on aircraft acquired on finance lease.
9. Deletion of addition on account of provision for obsolescence while computing book profits u/s. 115JB.
10. Deletion of addition on account of provision for doubtful debts while computing book profit u/s. 115JB.
11. Deletion of addition on account of provision for gratuity while computing book profit u/s. 115JB.
Issue-Wise Detailed Analysis:
1. Deletion of addition on account of provision for obsolescence:
The Assessing Officer (AO) disallowed Rs.18,27,38,472/- for provision for spares obsolescence, considering it an estimated liability. The CIT(A) allowed the claim following the Tribunal's earlier orders, which recognized the provision based on International Accounting Standards applicable to the aeronautic industry. The Tribunal upheld this view, emphasizing the nature of the business and the character of the claim.
2. Deletion of addition on account of proportionate aircraft redelivery charges:
The AO disallowed Rs.3,21,56,726/- for aircraft redelivery expenses, considering them contingent liabilities. The CIT(A) allowed the claim, referencing the Tribunal's previous decisions that such expenses are accrued liabilities due to the nature of the business. The Tribunal upheld this decision.
3. Deletion of disallowance of heavy maintenance charges:
The AO disallowed Rs.5,96,31,804/- for heavy maintenance charges, viewing them as contingent liabilities. The CIT(A) directed the AO to allow these expenses, following the Tribunal's earlier rulings. The Tribunal upheld this decision, recognizing the expenses as necessary due to the flying hours completed.
4. Deletion of disallowance of depreciation on aircraft taken on hire purchase:
The AO disallowed Rs.4,08,11,40,667/- in depreciation on aircraft taken on hire purchase, arguing the ownership remained with the seller. The CIT(A) allowed the depreciation, referencing the Tribunal's earlier decisions and the Madras High Court's ruling in Tamil Nadu Dairy Development Corporation Ltd. vs. CIT. The Tribunal upheld this view.
5. Deletion of disallowance of repairs to furniture and fixture:
The AO disallowed Rs.1,48,84,275/- for repairs to furniture and fixtures, considering them capital expenditures. The CIT(A) allowed the expenses as revenue expenditures, following the Tribunal's earlier decisions. The Tribunal upheld this decision, recognizing the expenses as necessary for providing a better working atmosphere and aesthetic look.
6. Deletion of addition on account of provisions for frequent flyer expenses:
The AO disallowed Rs.6,31,36,406/- for frequent flyer expenses, considering them contingent liabilities. The CIT(A) allowed the claim, referencing the Tribunal's earlier decisions and the Supreme Court's ruling in Bharat Earth Movers vs. CIT. The Tribunal upheld this decision, recognizing the provision as based on actual miles accumulated by passengers.
7. Treatment of interest income on fixed deposits:
The AO assessed Rs.30,63,78,087/- in interest income under 'income from other sources.' The CIT(A) directed the AO to treat it under 'profits and gains of business and profession,' following the Tribunal's earlier decisions. The Tribunal upheld this view, recognizing the interest as arising from business receipts.
8. Allowance of additional claim for proportionate initial rent paid and other expenses on aircraft acquired on finance lease:
The AO disallowed Rs.2,80,49,904/- for initial rent and other expenses due to the claim not being made through a revised return. The CIT(A) allowed the claim, referencing the Supreme Court's ruling in NTPC Limited and the CBDT Circular No.14(XL-35) of 1955. The Tribunal upheld this decision, recognizing the claim as legitimate and bonafide.
9. Deletion of addition on account of provision for obsolescence while computing book profits u/s. 115JB:
The AO added Rs.18,27,38,472/- for provision for obsolescence to the book profit. The CIT(A) allowed the claim, following the Tribunal's earlier decisions and the Supreme Court's ruling in Apollo Tyres. The Tribunal upheld this view, recognizing the provision as an ascertained liability.
10. Deletion of addition on account of provision for doubtful debts while computing book profit u/s. 115JB:
The AO added Rs.2,80,97,359/- for provision for doubtful debts to the book profit. The CIT(A) allowed the claim, but the Tribunal decided against the assessee due to the amendment made by the Finance (No.2) Act, 2009.
11. Deletion of addition on account of provision for gratuity while computing book profit u/s. 115JB:
The AO added Rs.3,86,21,638/- for provision for gratuity to the book profit. The CIT(A) allowed the claim, following the Tribunal's earlier decisions and the Jurisdictional High Court's ruling in CIT vs. Echjay Forgings Pvt. Ltd. The Tribunal upheld this view, recognizing the provision as an ascertained liability.
Conclusion:
The Tribunal upheld the CIT(A)'s decisions on most issues, rejecting the revenue's grounds except for the addition of provision for doubtful debts to book profit u/s. 115JB, which was allowed due to the legislative amendment. The appeal was partly allowed.
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2010 (10) TMI 1242
Issues Involved:
1. Liability of the Appellant-State of Goa for the negligence of Respondent No. 2-SBI.
2. Joint and several liability of Respondent No. 2-SBI with the Appellant.
Summary:
Issue 1: Liability of the Appellant-State of Goa for the negligence of Respondent No. 2-SBI
The Appellant-State of Goa floated a loan called "Goa State Development Loan, 2003" and appointed the Reserve Bank of India (RBI) as its manager. Respondent No. 1 applied for the loan within the prescribed time, but the designated branch of State Bank of India (SBI) failed to communicate the receipt of the application to the RBI on time. Consequently, the loan was allotted to a third party, and the money paid by Respondent No. 1 was refunded after 53 days without interest. The trial Court awarded interest at 13.5% per annum for 46 days against the Appellant, holding it liable for the delayed refund. The Appellant contended that it should not be held responsible for SBI's negligence. However, the Court held that the Appellant, as the principal, is liable for the negligence of its agent (SBI) during the course of employment, citing the principle that the principal should bear the risk for the acts committed by the agent in the course of employment.
Issue 2: Joint and several liability of Respondent No. 2-SBI with the Appellant
The trial Court had exonerated Respondent No. 2-SBI from liability, but the Appellant argued that the decree should have been joint and several. The Court agreed, stating that the principal's liability for the agent's negligence is vicarious, and the agent (SBI) should also be held liable. The Court referred to Order 41, Rule 33 of the Code of Civil Procedure, which allows the Appellate Court to pass any decree that ought to have been passed by the trial Court, even in the absence of an appeal or cross-objections by the Respondent No. 1. Consequently, the Court modified the decree to hold both the Appellant and Respondent No. 2-SBI jointly and severally liable to pay the amount of Rs. 16,16,301.40 with interest at 6% per annum from the date of the suit till payment and all costs of the suit.
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2010 (10) TMI 1241
Issues involved: Appeal against order of CIT(A)-I, Pune regarding disallowance of employee's contribution towards provident fund and ESIC paid beyond due dates.
Summary:
1. The appeal was filed by the assessee against the order of the CIT(A)-I, Pune confirming the disallowance of employee's contribution towards provident fund and ESIC paid beyond the due dates. The assessee contended that the amounts were paid before the end of the financial year.
2. The Ld. Counsel for the assessee argued that the employee's contributions were made before the due date of filing the return, citing a Delhi High Court decision in support of the claim. The DR relied on the Revenue's orders. Upon examining the Delhi High Court decision, it was found that its ratio applied to the case. Consequently, the order of the CIT(A) was to be reversed, and the appeal of the assessee was to be allowed.
3. The Tribunal allowed the appeal of the assessee, pronouncing the order on 8th October, 2010.
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2010 (10) TMI 1240
Issues Involved:
1. Maintainability of proceedings before the Debts Recovery Tribunal (DRT).
2. Definition of "Debt" u/s 2(g) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
3. Awarding of interest @ 18% p.a. by the Tribunal.
Summary:
1. Maintainability of proceedings before the Debts Recovery Tribunal (DRT):
The petitioner challenged the order of the Debts Recovery Appellate Tribunal, which confirmed the order of the Debt Recovery Tribunal, Mumbai, directing recovery of Rs. 11,20,14,000/- with interest @ 18% p.a. The petitioners contended that since no documents were executed, the transaction was fraudulent and not maintainable before the DRT. The court, however, held that the petitioners, having availed financial benefits fraudulently, were liable to repay the amount, and the proceedings before the DRT were maintainable.
2. Definition of "Debt" u/s 2(g) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993:
The petitioners argued that the transaction did not fall within the definition of "debt" u/s 2(g) of the Act as it was not a genuine business transaction. The court disagreed, stating that the definition of "debt" includes any liability claimed by a bank during the course of business activity, whether secured or unsecured. The court emphasized that even fraudulent transactions where financial benefits were utilized for business purposes fall within this definition.
3. Awarding of interest @ 18% p.a. by the Tribunal:
The petitioners contested the Tribunal's decision to award interest @ 18% p.a., arguing that the provisions of the Negotiable Instruments Act were not applicable as no documents were executed. The court upheld the Tribunal's decision, noting that the bank was entitled to charge interest as per the usual banking practice, and the Tribunal had taken a liberal view by awarding interest @ 18% p.a.
Conclusion:
The court dismissed the writ petition, upholding the Appellate Tribunal's order and confirming the maintainability of the proceedings before the DRT. The court also validated the awarding of interest @ 18% p.a., emphasizing the broad definition of "debt" under the Act and the petitioners' liability to repay the amount. The interim relief granted earlier was extended until 10-11-2010, and the civil application was disposed of accordingly.
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