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2008 (5) TMI 703
Issues involved: Estimation of net profit for undisclosed sales and unexplained investment in business.
Estimation of Net Profit: The case involved a search conducted on the premises of the Assessee, who was in the business of trading in "Saria" and other steel items through two concerns, Kamal Steel-I and Kamal Steel-II. The Assessing Officer noted undisclosed sales of Rs. 8 crores and estimated the net profit at 5%, leading to tax imposition. The Commissioner of Income Tax (Appeal) disagreed with the Assessing Officer and reduced the estimated net profit to 2.5%. Upon further appeal, the Tribunal accepted the Assessee's disclosed net profit of 0.75% for certain years and estimated it at 1.5% for other years. The Tribunal found no material to support the Assessing Officer's initial 5% estimation, ultimately concluding that no substantial question of law arose regarding the net profit estimation.
Unexplained Investment: Another issue raised was the unexplained and undisclosed investment of Rs. 10 lakhs in the business of steel items under Kamal Steel-II. The Assessing Officer estimated this amount without concrete evidence, while the Assessee argued that due to goodwill with vendors, no capital investment was necessary. The CIT (A) reduced the estimated investment to Rs. 5 lakhs. The High Court noted the lack of evidence supporting the investment estimate and the regular filing of returns by the Assessee, indicating that any investments could have been investigated through regular returns rather than block assessment. Ultimately, the Court found no substantial question of law regarding the unexplained investment issue.
Judgement: The High Court dismissed the appeal, affirming the Tribunal's decisions on both the estimation of net profit and the unexplained investment, stating that no substantial question of law arose in either matter.
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2008 (5) TMI 702
Issues involved: Challenge to preventive detention at the pre-execution stage, delay in filing the application.
Challenge to preventive detention: The appeal concerns a challenge to preventive detention at the pre-execution stage dating back to 1991. The Respondents claimed that the detention order could not be executed due to the Appellant's alleged methods to evade service. The Appellant denied adopting any such methods. The court refrained from delving into these conflicting claims at this stage. The Appellant was directed to appear before the Deputy Director, Directorate of Enforcement, for the order to be served after over 15 years. The Respondents were instructed not to take coercive steps against the Appellant for 10 days following the service of the order.
Delay in filing the application: The court condoned the delay in filing the application and restored the appeal, which was previously dismissed, to its original number. The Appellant's presence in court led to directions for the service of the order, along with reasons and other documents, on a specified date. The court emphasized that the Appellant should take advantage of any available remedies. The appeal and related criminal miscellaneous application were disposed of accordingly.
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2008 (5) TMI 701
Trade mark - Delay in filing the application for rectification - registration of mark 'Peter Scot' - Persons aggrieved - commencement of the rectification proceedings - locus standi - Delay and Acquiescence/Waiver - term 'Scot' would itself be a sufficient ground to form an opinion that the mark 'Peter Scot' is deceptive or confusing - onus of proof - infringement of a registered trade mark - HELD THAT:- A notice was issued in relation to an attempt made by the appellant to get the name Hogmanay registered. If such an opposition had been made even in relation to the registered proprietors trade mark Peter Scot, as it did in the case of Hogmanay, it could have withdrawn its application. It would have known its position as to where it stood. It could have started manufacturing Whisky of the same quality with a different brand name. We may furthermore place on record that not only in respect of Hogmanay, opposition was also made in relation to 'Old Angus' in Class 32 which bears the name of a county in Scotland and, therefore, evocative of Scottish origin although the product was a 'Rum' and not 'Whisky'. If the respondent No. 1 took such actions in respect of trade marks 'Hogmanay' and 'Old Angus' in 1974 and 1979, one fails to understand as to why a similar action was not taken in relation to Peter Scot.
The principles of waiver and acquiescence in a case of this nature are applicable. Apart from the ordinary rule of waiver of a right expressly provided for in a case of passing off, the court has consistently been noticing development of law in this field.
Holding that the cause of action filed in the suit in question was not the same on which the earlier suit was passed and further opining that the cause of action for filing the suit was a continuous and recurring, infringement of the plaintiff's trade mark by the respondents continuously till the date of filing of the second suit, it was held that the presence in the register of a mark was a continuous wrong. However, it is not necessary to delve deep into the matter any further as we have held heretobefore that the provisions of the Limitation Act, 1963 will have no application in the instant case.
Whereas on the one hand Mr. Desai objects to the evidence that was produced before the learned Single Judge with regard to the increase in the volume of sale of Peter Scot, on the other hand, it was urged that if a comparison is made of the Indian whisky and Scotch Whisky it would appear that some Indian whiskies are costlier than some of the Scottish brands. The stand taken by the respondents is self contradictory. We think that their stand is not fair.
We, therefore, are of the opinion that action of the respondents is barred under the principles of acquiescence and/ or waiver.
Where the class of buyers, as noticed hereinbefore, is quite educated and rich, the test to be applied is different from the one where the product would be purchased by the villagers, illiterate and poor. Ordinarily, again they, like tobacco, would purchase alcoholic beverages by their brand name. When, however, the product is to be purchased both by villagers and town people, the test of a prudent man would necessary be applied. It may be true that the tests which are to be applied in a country like India may be different from the tests either in a country of England, United Sates of America or Australia. We however, do not mean to suggest that in a case of this nature, the Heightened Scrutiny Test should be applied as urged on behalf of the appellant. Bollinger, J. and Ors. v. Costa Brava Wine Coy., Ld. 1960 (1) RPC 16, whereupon Mr. Desai has strongly relied upon, makes such a distinction. Bollinger, J. (supra) was a case on demurrer. It was concerned with sale of Spanish Champagne.
But then we are concerned with the class of buyer who supposed to know the value of money, the quality and content of Scotch Whisky. They are supposed to be aware of the difference of the process of manufacture, the place of manufacture and their origin. Respondent No. 3, the learned Single Judge as also the Division Bench of the High Court, therefore, failed to notice the distinction, which is real and otherwise borne out from the precedents operating in the field.
Had these tests been applied the matter might have been different. In a given case probably we would not have interfered but we intend to do so only because wrong tests applied led to a wrong result.
So far as the applicability of the 1999 Act is concerned, having regard to the provisions of Sections 20(2) and 26(2), we are of the opinion that the 1999 Act will have no application.
Thus, the impugned judgment is set aside. The appeal is allowed.
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2008 (5) TMI 700
Issues Involved:
1. Applicability of the principles of Res Judicata and Order II Rule 2 of the Code of Civil Procedure.
2. Entitlement to the management of the Gaddi.
3. Validity of the Will executed by Mahant Mani Ram Swami.
4. Bar of the suit by limitation.
5. Principle of issue estoppel.
Issue-Wise Detailed Analysis:
1. Applicability of the Principles of Res Judicata and Order II Rule 2 of the Code of Civil Procedure:
The primary issue in this case was whether the principles of Res Judicata and Order II Rule 2 of the Code of Civil Procedure barred the subsequent suit for possession filed by the first respondent. The trial court initially opined that the suit was barred by Res Judicata as the issues in the new suit were directly and substantially the same as those in the previous suit. However, the first appellate court reversed this decision, holding that neither Res Judicata nor Order II Rule 2 applied, given the Supreme Court's earlier observation that allowed the plaintiff to file a suit for possession. The Supreme Court clarified that the judgment of a court should not be interpreted as a statute and that the ratio of the decision, rather than mere observations, is binding. It was concluded that the issues determined in the earlier suit were binding on the parties, thus invoking Section 11 of the Code, which recognizes Res Judicata and bars the jurisdiction of the court in terms of Section 12.
2. Entitlement to the Management of the Gaddi:
The dispute centered around who was entitled to manage the Gaddi at Kalanaur. The appellant claimed entitlement under a Will purportedly executed by Mahant Mani Ram Swami, while the first respondent claimed to be the 'Pota Chela' of Mahant Mani Ram Swami. The trial court dismissed the suit, holding that the first respondent was not entitled to manage the Gaddi. The first appellate court also found that the first respondent failed to prove his appointment as Mahant by the Bhaik according to the prevailing custom. The Supreme Court upheld these findings, emphasizing that the first respondent's claim to the Gaddi had been conclusively determined in the earlier litigation.
3. Validity of the Will Executed by Mahant Mani Ram Swami:
The validity of the Will executed by Mahant Mani Ram Swami was a significant issue. The trial court found that although Mahant Nitya Nand executed the Will in a sound disposing mind, he was not competent to do so as his interest in the properties was limited to the tenure of his office as Mahant. This finding was upheld by the first appellate court and was not reversed by the Supreme Court, reinforcing that the Will did not grant the first respondent entitlement to the Gaddi.
4. Bar of the Suit by Limitation:
The appellant contended that the suit should have been barred by limitation. However, this issue was not extensively discussed in the judgment. The Supreme Court's focus remained on the principles of Res Judicata and issue estoppel, which were deemed sufficient to bar the subsequent suit, thereby indirectly addressing the limitation concern.
5. Principle of Issue Estoppel:
The principle of issue estoppel was also discussed. The Supreme Court noted that once an issue has been finally determined, parties cannot re-litigate the same issue. The court referred to precedents, including Sheodan Singh v. Daryao Kunwar and State of U.P. v. Nawab Hussain, to illustrate that issue estoppel prevents reassertion of a cause of action and bars subsequent litigation on the same issues. The court concluded that the issues in the subsequent suit were directly and substantially the same as those in the earlier suit, thereby applying issue estoppel.
Conclusion:
The Supreme Court set aside the impugned judgment of the High Court, holding that the subsequent suit was barred by the principles of Res Judicata and issue estoppel. The appeal was allowed with costs, and the judgment of the first appellate court was restored. The court emphasized that the legal principles underlying Res Judicata and issue estoppel are based on public policy to prevent re-litigation of the same issues, thereby ensuring finality in judicial decisions.
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2008 (5) TMI 699
Issues Involved:
1. Interpretation of Section 145(2) of the Negotiable Instruments Act.
2. The right of the accused to summon and examine the complainant who has filed evidence on affidavit.
3. The applicability and interpretation of Section 296 of the Cr.P.C. in relation to Section 145 of the Negotiable Instruments Act.
4. The purpose and legislative intent behind Chapter XVII of the Negotiable Instruments Act.
5. The procedural aspects and rights of the accused in the context of evidence given on affidavit.
Issue-wise Detailed Analysis:
1. Interpretation of Section 145(2) of the Negotiable Instruments Act:
The petitioner challenged the order of the Metropolitan Magistrate, which dismissed the application under Section 145(2) of the Negotiable Instruments Act. The petitioner argued that the language of Section 145(2) is clear and mandates the court to summon and examine any person giving evidence on affidavit upon application by the prosecution or the accused. The court, however, held that the term "any person" includes the complainant, but the right to summon and examine such a person is primarily for cross-examination purposes and not for re-examining the complainant or witness who has already given evidence on affidavit.
2. The right of the accused to summon and examine the complainant who has filed evidence on affidavit:
The petitioner contended that the accused has an undeniable right to summon and examine the complainant who has given evidence on affidavit. The court disagreed, stating that the right under Section 145(2) is mainly for cross-examination. The court emphasized that allowing the accused to summon and re-examine the complainant or witness would defeat the purpose of the provision, which aims to expedite the trial process under Section 138 of the Negotiable Instruments Act.
3. The applicability and interpretation of Section 296 of the Cr.P.C. in relation to Section 145 of the Negotiable Instruments Act:
The court discussed the applicability of Section 296 of the Cr.P.C., which allows evidence of a formal character to be given by affidavit. The court noted that the Supreme Court's interpretation of Section 296(2) in the State of Punjab v. Naib Din case supports the view that the court has a duty to call such persons for examination or cross-examination upon application. However, the court clarified that this does not extend to re-examining the complainant or witnesses who have already provided evidence on affidavit.
4. The purpose and legislative intent behind Chapter XVII of the Negotiable Instruments Act:
The court highlighted that Chapter XVII of the Act was introduced to provide greater efficacy to cheque transactions and to ensure speedy disposal of cases involving dishonoured cheques. The provisions, including Section 145, are designed to make the trial process less cumbersome and more efficient. The court emphasized that interpreting Section 145(2) to allow re-examination of the complainant would contradict the legislative intent of expediting the trial process.
5. The procedural aspects and rights of the accused in the context of evidence given on affidavit:
The court explained that the evidence given on affidavit by the complainant is valid throughout the trial and not just at the pre-summoning stage. The accused has the right to cross-examine the complainant and any witnesses who have given evidence on affidavit. The court rejected the petitioner's argument that the complainant must be re-examined in person, stating that such an interpretation would prolong the trial unnecessarily and go against the objective of Chapter XVII of the Act.
Conclusion:
The court dismissed the petition, upholding the Magistrate's decision to reject the application under Section 145(2) of the Negotiable Instruments Act. The court clarified that while the term "any person" in Section 145(2) includes the complainant, the provision primarily grants the right to cross-examine, not to re-examine the complainant or witnesses who have already given evidence on affidavit. This interpretation aligns with the legislative intent to expedite the trial process under Section 138 of the Negotiable Instruments Act.
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2008 (5) TMI 698
Issues: Non-compliance with mandatory pre-deposit requirement while filing an appeal against adjudication order imposing penalty for remitting foreign exchange without RBI exemption.
In this judgment by the Appellate Tribunal for Foreign Exchange, the appeal was filed against an adjudication order imposing a penalty for remitting foreign exchange without prior RBI exemption. The appellant failed to appear despite being directed to deposit the penalty amount within 30 days. The respondent requested dismissal of the appeal due to non-compliance. The Tribunal highlighted the mandatory pre-deposit requirement under Section 52(2) of the Act, emphasizing that legal provisions cannot be circumvented to avoid hardship, citing the Nasiruddin v. Sita Ram Agarwal judgment. The Tribunal had previously allowed the appellant to deposit the penalty amount but the appellant failed to comply with the order, showing no genuine effort to meet the conditions. Consequently, the appeal was dismissed for non-compliance with the judicial order, with no equity in favor of the appellant.
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2008 (5) TMI 697
Issues Involved:
1. Maintainability of the Petition u/s 397 and 398 of the Companies Act, 1956.
2. Transmission of Shares.
3. Alleged Oppressive Allotment of Additional Shares.
4. Mismanagement and Financial Misconduct.
5. Illegal Appointment of Additional Director.
Summary:
1. Maintainability of the Petition u/s 397 and 398:
The respondents argued that the petitioners did not meet the minimum requirement u/s 399(1)(a) of the Act, as they did not hold at least 1/10th of the issued share capital. The petitioners contended that the shareholding of P-1 and the consenter amounted to 22.5% of the unchallenged paid-up capital of 2000 shares. The Board held that the petition was maintainable, as the shareholding of P-1 and the consenter met the eligibility criteria, and the issue of further shares would be examined first.
2. Transmission of Shares:
The petitioners requested the transmission of shares held by deceased shareholders. The respondents argued that the petitioners did not produce necessary documents like Probate or Succession Certificate. The Board directed that, given the closely held nature of the company, transmission should be done after obtaining indemnity bonds, as non-transmission without reason is an act of oppression.
3. Alleged Oppressive Allotment of Additional Shares:
The petitioners challenged the allotment of 3000 additional shares to the respondents, alleging it was done without notice and proper procedure. The Board found the allotment oppressive, as it reduced the petitioners' shareholding from 50% to 20%. The Board set aside the increase and allotment of shares, restoring the status quo ante, and held that the petitioners' challenge was not barred by limitation, as the allotment was a continuous act of oppression.
4. Mismanagement and Financial Misconduct:
The petitioners alleged that the respondents retained cash in hand for personal use and did not maintain a bank account. The Board directed the respondents to credit the amount to the company's bank account with 12% interest. The petitioners also alleged non-recovery of dues and mismanagement of company assets. The Board found these allegations uncontroverted and indicative of mismanagement.
5. Illegal Appointment of Additional Director:
The petitioners challenged the appointment of R-3 as an additional director, arguing it was done without proper procedure. The Board found that R-2 alone could not convene a board meeting to appoint R-3 after the death of S. Ajit Singh Jhikka. The Board set aside the appointment of R-3 and directed the reconstitution of the Board in the next AGM, giving due representation to the petitioners.
Conclusion:
The petition was disposed of with directions for the transmission of shares, setting aside the allotment of additional shares, crediting misappropriated funds to the company's bank account, and reconstituting the Board. All CAs were disposed of, and interim orders vacated, with no orders as to cost.
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2008 (5) TMI 696
Offence Punishable u/s 138 Negotiable Instruments Act - Dishonour of the cheques - forged and fabricated cheques - alteration by changing figure in digit - legally recoverable debt or not - High Court convicted the appellant - HELD THAT:- We find that the learned Single Judge has not addressed himself on the legal question raised before him by the appellant that the criminal liability of the appellant under the provisions of Section 138 of the Act are attracted only on account of the dishonour of the cheques issued in discharge of liability or debt, but not on account of issuance of security cheques.
The learned Single Judge has also not given cogent, satisfactory and convincing reasons for disbelieving and discarding the pre-charge evidence of the appellant corroborated by the evidence of the expert opinion in regard to the interpolation in and fabrication of the cheques by adding one more figure '0' to make ₹ 30,000/- to ₹ 3,00,000/- and similarly adding one more figure '0' to make ₹ 40,000/- to ₹ 4,00,000/-. In the backdrop of the facts of these cases, we are of the opinion that the judgments and orders of the High Court cannot be sustained on the premise that the High Court has not addressed itself on the above-said two legal questions raised by the appellant and, therefore, the impugned judgments and orders dated 25.01.2007 and 19.02.2007 are set aside.
The matters are remitted to the High Court to decide the appeals filed by the respondent against the appellant and criminal miscellaneous petitions seeking for quashing the first information reports registered against the respondent and his wife.
Needless to say that any observation made by us in this judgment shall not be construed as an expression of opinion on the merits of the cases, which shall be decided by the High Court on their own merits in accordance with law.
Appeals shall stand disposed of.
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2008 (5) TMI 695
Issues Involved:
1. Validity of the assessment orders being time-barred under section 153(2) of the Income-tax Act.
2. Computation of the limitation period for completing reassessment.
3. Applicability of amended provisions of section 153(2) as per Finance Act, 2001.
4. Exclusion of the period during which assessment proceedings were stayed by the court.
5. Relevance of the date of the court's order versus the date of receipt of the court's order by the Assessing Officer.
Detailed Analysis:
1. Validity of the Assessment Orders Being Time-Barred:
The appeals were filed by the revenue against the orders of CIT(A) for the assessment years 1994-95, 1995-96, and 1996-97, contending that the assessment orders passed by the Assessing Officer were null and void as they were time-barred under section 153(2) of the Income-tax Act. The CIT(A) held that the assessment orders were time-barred after considering the period of stay granted by the Hon'ble Allahabad High Court and the relevant provisions of section 153(2).
2. Computation of the Limitation Period for Completing Reassessment:
The CIT(A) observed that the period available to the Assessing Officer to complete reassessment was one year from the end of the financial year in which the notice under section 148 was served, excluding the period of stay granted by the court. The CIT(A) rejected the Assessing Officer's contention that the period of stay should be deemed extended until the date of knowledge of the dismissal of the writ petition by the Assessing Officer. The CIT(A) emphasized that the material date was the date of the court's order, not the date of its receipt by the Assessing Officer.
3. Applicability of Amended Provisions of Section 153(2) as per Finance Act, 2001:
The CIT(A) applied the amended provisions of section 153(2) brought by the Finance Act, 2001, which reduced the time limit for completing reassessment to one year. The CIT(A) cited departmental circulars and judicial precedents to support the application of the amended provisions. The ITAT agreed with the CIT(A) that the amended provisions were applicable at the time of framing the assessment, and not the provisions as they stood when the notice under section 148 was served.
4. Exclusion of the Period During Which Assessment Proceedings Were Stayed by the Court:
The CIT(A) excluded the period of stay granted by the Hon'ble Allahabad High Court while computing the limitation period. The CIT(A) noted that the stay orders were vacated on specific dates, and the remaining period for completing the assessment had to be calculated from the date of the court's order. The CIT(A) concluded that the assessments were time-barred as they were completed beyond the permissible period after excluding the stay period.
5. Relevance of the Date of the Court's Order Versus the Date of Receipt of the Court's Order by the Assessing Officer:
The CIT(A) and the ITAT both held that the relevant date for computing the limitation period was the date of the court's order, not the date of receipt of the order by the Assessing Officer. The CIT(A) emphasized that the date of pronouncement in open court was material, and the date of knowledge of the order by the Assessing Officer was immaterial.
Conclusion:
The ITAT upheld the CIT(A)'s decision that the assessment orders were time-barred under section 153(2) of the Income-tax Act. The ITAT agreed with the CIT(A) on the computation of the limitation period, the applicability of the amended provisions of section 153(2), and the exclusion of the stay period. The ITAT confirmed that the relevant date for computing the limitation period was the date of the court's order. Consequently, the appeals of the revenue were dismissed.
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2008 (5) TMI 693
Investment in shares for earning dividend income - addition made u/s 14A - expenditure on interest paid on borrowed funds - whether expenditure incurred on borrowed funds which are invested in the shares of other companies, the dividend income therefrom is exempt, would be allowable as deduction against other income which is taxable - CIT held that the claim of assessee is allowable as a business expenditure as it was inclined on grounds of commercial expediency.
Whether it would make any difference to the application of Section 14A if the borrowed funds were earlier accounted for in the merged companies and after merger they are accounted for in the assessee company - HELD THAT:- In our considered view, it will not make any difference in the applicability of Section 14A in the case of assessee company. It is undisputed fact that the claim of expenditure is debited in the accounts of the assessee company, therefore, allowability of this claim has to be examined only in the hands of assessee company. It is immaterial from where funds are borrowed into the assessee company or whether those funds were held by any other companies which merged into the assessee company and finally as a result of merger assessee company look over the assets and liabilities including the liability of borrowed funds and thereby committing to make payments of financial charges in respect of such borrowed funds.
Similarly, where dividend income is earned from the shares then such income would be taxable in the hands of the assessee in subsequent years when dividend income is held taxable. In any case, the taxability of exemption of dividend income has to be examined only in the hands of assessee company in the light of Section 10(33)/115O of the Act. Similarly, claim of expenditure: in relation to such exempted income will have to be examined in the hands of assessee company. Therefore, the first argument of the Assessee is rejected.
Whether expenditure was actually incurred or not also does not arise? - Once expenditure is actually incurred then the only question that remains is whether it can be allowed against other business income if no dividend income is earned? - HELD THAT:- Merely because the assessee docs not earn anything his entire expenditure in relation to such dividend income would be set off against other taxable income whereas if another assessee earns from dividend and then his expenditure incurred in relation thereto could not be set off against other taxable income. In a similar situation, Hon'ble Supreme Court in Rajendra Prasad Moody's case (supra) observed that such a result is highly strange and anomalous.
Once the assessee has invested money in shares for earning dividend income then computation of dividend income has to be carried out separately under a separate head. The expenditure relating thereto has to be accounted for as per Section 57(iii). This computation may lead to a positive income or may lead In negative income depending upon whether receipts are higher or expenditure is higher. Even if there is no income from dividend still then expenditure relating there to will have to be accounted for u/s 57(iii) only.
If dividend income is not exempt then loss arising as a result of computation of dividend income under the head 'income from oilier sources' will fall for set off against 'other income'. It dividend income is exempt u/s 10(33) of the Act then loss arising as a result of computation of dividend income would not be available for set off by virtue of Section 14A. In other words, by computing dividend income in accordance with Sections 56 to 59 under the head 'income from other sources' the resulting figure, whether positive or negative, will be considered as exempt u/s 10(33) i.e. it will not be available for inclusion while computing total income of the assessee.
ITAT Mumbai Bench in the case of ACIT v. City Corp Finance Ltd.[2007 (10) TMI 446 - ITAT MUMBAI] held that the expenditure incurred in relation to dividend income would not be allowable as deduction against other income. Similar view was held by the Hon'ble ITAT Mumbai Bench in the cases of Mohanlal M Shah v. Dy. CIT [2006 (8) TMI 229 - ITAT BOMBAY-G], Harish Krishnakant Bhatt v. ITO[2004 (8) TMI 342 - ITAT AHMEDABAD], ACIT v. Dakshesh S Shah [2003 (2) TMI 434 - ITAT MUMBAI] and D.J. Mehta v. ITO [2006 (3) TMI 205 - ITAT BOMBAY-I].
As a result, we hold that in view of majority of the decisions of various Benches of the Tribunal that expenditure incurred in relation to earning exempted income would not be allowable as deduction against other income, the expenditure will not be allowed to be set off against other business income as it is incurred in relation to dividend income which is not includible in the total income. Further for the purposes of allowability or disallowability of such expenditure it is immaterial whether any income (which is exempt Under Section 10(33)) is actually earned or not.
As a result, we allow the appeal of the Revenue.
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2008 (5) TMI 692
The Supreme Court dismissed the appeal as the Tribunal had ruled in favor of the assessee based on a previous decision, and the Revenue did not appeal the judgment.
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2008 (5) TMI 691
Issues Involved:
1. Interpretation of Section 4 of the Indian Penal Code (IPC) and Section 188 of the Code of Criminal Procedure (CrPC).
2. Jurisdiction of Indian courts over offences committed outside India by non-citizens.
3. Requirement of sanction u/s 188 CrPC for prosecuting offences committed outside India.
Summary:
Issue 1: Interpretation of Section 4 IPC and Section 188 CrPC
The appeal concerns the interpretation of Section 4 of the IPC and Section 188 of the CrPC. The appellant, a citizen of Mauritius, challenged the cognizance taken by the Chief Judicial Magistrate, Navsari, on a complaint alleging physical and mental torture by her son and herself, with the entire cause of action arising in Kuwait. The appellant argued that the complaint was bad in law due to the lack of requisite sanction u/s 188 CrPC.
Issue 2: Jurisdiction of Indian Courts Over Offences Committed Outside India by Non-Citizens
The Court held that the provisions of Section 4 IPC and Section 188 CrPC extend the jurisdiction of Indian courts to try offences committed outside India only if the accused is a citizen of India or if the offence is committed on an Indian-registered ship or aircraft. Since the appellant is a citizen of Mauritius and the alleged offences occurred in Kuwait, the Indian courts lack jurisdiction. The Court referenced Central Bank of India Ltd. vs. Ram Narain [AIR 1955 SC 36], emphasizing that jurisdiction is based on the accused's citizenship at the time of the offence.
Issue 3: Requirement of Sanction u/s 188 CrPC
The Court noted that the requirement for sanction u/s 188 CrPC is mandatory for prosecuting offences committed outside India. In Ajay Agarwal vs. Union of India [AIR 1993 SC 1637], it was clarified that no sanction is required for conspiracy charges. However, this case did not involve conspiracy, and thus, the lack of sanction rendered the cognizance order illegal.
The Court concluded that the appellant's fundamental right u/s 21 of the Constitution was violated as the offence was not committed within India's territorial limits, making the provisions of IPC and CrPC inapplicable. The entire proceedings were deemed null and void due to lack of jurisdiction, and the principle of res judicata was held inapplicable in criminal cases involving jurisdictional issues.
Conclusion:
The Supreme Court set aside the impugned judgment, allowing the appeal with costs assessed at Rs. 25,000, emphasizing that jurisdictional issues can be raised at any stage of the proceedings.
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2008 (5) TMI 690
The Gujarat High Court directed the Deputy Commissioner, Central Excise, Division-III, Silvassa to adjudicate a show cause notice dated 15.02.2006 for the petitioners, without being influenced by a previous order. The order should be passed expeditiously, preferably within one month. The application was disposed of accordingly.
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2008 (5) TMI 689
Issues Involved:
1. Parameters within which the Writ Court can provide protection at the pre-execution stage of preventive detention orders.
2. Territorial jurisdiction of the High Court.
3. Delay in the passing and execution of preventive detention orders.
4. Validity of the detention order based on the grounds of over-invoicing and abetment.
5. Impact of the Settlement Commission's order on the preventive detention order.
6. Applicability of Section 188 of the Criminal Procedure Code to offences committed outside India.
Issue-wise Detailed Analysis:
1. Parameters within which the Writ Court can provide protection at the pre-execution stage of preventive detention orders:
The Court highlighted the five exceptions from the case of *Addl. Secy. to the Govt. of India v. Alka Subhash Gadia* under which courts may interfere with detention orders at the pre-execution stage: (i) the order is not passed under the relevant Act, (ii) it is executed against the wrong person, (iii) it is passed for a wrong purpose, (iv) it is based on vague, extraneous, or irrelevant grounds, or (v) the authority lacked the power to pass the order. The Court emphasized that these exceptions are exhaustive and must be strictly adhered to.
2. Territorial jurisdiction of the High Court:
The Court addressed the objection regarding territorial jurisdiction, noting that the Union Government's presence throughout India does not allow a litigant to choose any court arbitrarily. The significant part of the cause of action should arise within the territorial jurisdiction of the chosen court. The Court referenced *Kusum Ingots and Alloys Ltd. v. Union of India* and other cases to clarify that the doctrine of forum conveniens should guide the exercise of jurisdiction. The Court concluded that while the Bombay High Court would be the appropriate forum, it would still proceed with the case due to the limited nature of arguments permissible at the pre-execution stage.
3. Delay in the passing and execution of preventive detention orders:
The Court rejected the argument of inordinate delay, citing *Sunil Fulchand Shah v. UOI* and other cases, which established that the validity of a detention order is determined at the time of its passing, not by subsequent events. The Court noted that any delay orchestrated by the petitioner himself would not entitle him to relief.
4. Validity of the detention order based on the grounds of over-invoicing and abetment:
The Court examined the Settlement Commission's order and found that the petitioner was involved in over-invoicing, which is a violation of the Customs Act. The Court disagreed with the Commission's reasoning that the petitioner could not be penalized for acts committed outside India, emphasizing that abetment of an offence committed in India can attract liability. The Court referenced *Union of India v. Sampat Raj Duggar* to support its conclusion.
5. Impact of the Settlement Commission's order on the preventive detention order:
The Court noted that the Settlement Commission had granted immunity from penalty but not from prosecution. The Court clarified that preventive detention is distinct from prosecution and penalty proceedings, and the Settlement Commission's order did not affect the validity of the detention order.
6. Applicability of Section 188 of the Criminal Procedure Code to offences committed outside India:
The Court discussed Section 188, which deals with offences committed outside India, and concluded that abetment of an offence committed within India by a person outside India can be prosecuted under this section. The Court referenced *Ajay Agarwal v. Union of India* to support its interpretation.
Conclusion:
The Court dismissed the petitions, finding that the petitioners had not established any of the Gadia exceptions to warrant interference at the pre-execution stage. The Court emphasized the narrow scope of judicial review in such cases and refrained from imposing costs on the petitioners.
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2008 (5) TMI 688
Issues involved: Appeal against penalties under Rule 15 of Cenvat Credit Rules, 2004 and Section 11 AC of the Central Excise Act, 1944.
Summary:
Penalty under Rule 15 of Cenvat Credit Rules, 2004:
The Revenue appealed against the Commissioner (Appeals) order setting aside penalties of &8377; 25,000 under Rule 15 of Cenvat Credit Rules, 2004. The Revenue argued that the Respondents failed to submit copies of invoices with Returns, leading to the burden of admissibility of Cenvat Credit not being discharged. It was claimed that the Respondents had taken excess Cenvat Credit willfully, based on invoices, which was inadmissible. However, the Respondent's Counsel contended that the issue pertained to the interpretation of rules, favoring the Respondent based on a previous Tribunal decision. The Respondents had already paid the entire duty with interest, making the imposition of penalties unwarranted. The Judicial Member found that the penalties were set aside by the Commissioner (Appeals) due to an issue concerning the interpretation of Rule 3 (7) (a) of the Cenvat Credit Rules, 2004. Given that a previous Tribunal decision favored the Respondents on this issue and the duty had been paid with interest, the appeals filed by the Revenue were rejected.
Penalty under Section 11 AC of the Central Excise Act, 1944:
In addition to the penalty under Rule 15 of Cenvat Credit Rules, 2004, the Revenue also appealed against the setting aside of penalties amounting to &8377; 1,17,416 under Section 11 AC of the Central Excise Act, 1944. The arguments and findings mirrored those related to the penalties under Rule 15 of the Cenvat Credit Rules, 2004. The Judicial Member, after considering both sides and reviewing the records, upheld the decision of the Commissioner (Appeals) to set aside the penalties under Section 11 AC of the Central Excise Act, 1944. The basis for this decision was the same as for the penalties under Rule 15 of the Cenvat Credit Rules, 2004, namely, the issue of interpretation of Rule 3 (7) (a) of the Cenvat Credit Rules, 2004, which had been decided in favor of the Respondents in a previous Tribunal case. The fact that the duty had been paid with interest further supported the rejection of the Revenue's appeals.
Separate Judgement: No separate judgment was delivered by the judges in this case.
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2008 (5) TMI 687
Jurisdiction u/s 482 Cr.P.C - Victimisation and harassing of medical students by college authorities - Seeking for entrustment of further investigation of the cases to CBI - two separate petitions u/s 482 Cr.P.C. for quashing of the FIRs.
HELD THAT:- If the ingredients which establish the commission of the offence or misconduct exist then, the prosecution cannot fail merely because there was an animus of the complainant or the prosecution against the accused. Allegations of mala fides may be relevant while judging the correctness of the allegations or while examining the evidence. But the mere fact that the complainant is guilty of mala fides, would be no ground for quashing the proceedings. [See State of Maharashtra v. Ishwar Piraji Kalpatri [1995 (11) TMI 455 - SUPREME COURT]; Zhandu Pharmaceuticals Works Limited and Others v. Mohd. Sharaful Haque and Another [2004 (11) TMI 519 - SUPREME COURT]; State of Bihar & Anr. v. J.A.C. Saldanah [1979 (11) TMI 268 - SUPREME COURT]. There may be some exceptions to the said rule but we are not concerned with such a case.
The entire details of the facts of the present case do indicate that the appellants during their study of MBBS Course had some problems with the second respondent; some staff of the College and the then SHO of P.S. Vijay Nagar, whose daughter was also studying in the same College. The record would reveal that both the appellants being NRI candidates have undergone physical and mental agony and torture during their students career in pursuing the MBBS course. They had spent most of their precious time in litigation in the courts fighting for their genuine and legitimate claims. They may be lacking in some indiscipline activities in the College for which they have been facing criminal proceedings for the past about 3 years.
Looking to the entire backdrop of the peculiar facts of countless incidents having faced by the appellants during their primary life as MBBS students and the nature of the offences alleged against them in the above mentioned crime cases lodged by Mrs. Indra Mohini Sharma and Rajender Kuntal in Police Station Vijay Nagar, Ghaziabad and allegations and counter allegations in various complaints made by the parties against each other and coupled with the tenor and contents of the apology tendered by the appellants, we are of the view that it is a fit case where we should exercise our jurisdiction under Article 142 of the Constitution of India.
We are conscious of the well- settled law that in case of persons against whom prima facie case is made out and charge sheet is filed in the competent court, it is that court which will then deal with the case on merits in accordance with law and the High Court should not except in extraordinary circumstances exercise its jurisdiction u/s 482 Cr.P.C. so as to quash the prosecution proceedings after they have been lodged.
Therefore, taking into consideration the future career of the appellants who by this time might have joined the noble medical profession and owing to the reasons and observations above stated, this appeal is allowed as a result thereof the order of the High Court impugned in this appeal is set aside subject to the directions contained herein - We, are of the opinion that it is a fit case where we should exercise our discretionary jurisdiction under Article 142 of the Constitution of India so as to bring the dispute between the parties to an end.
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2008 (5) TMI 686
Renewal of a Mediclaim Policy - entitled to automatic renewal - Cheque towards payment of the premium for the purpose of renewal of the policy, refused on the purported ground of `high claim ratio' - `State' within the meaning of Article 12 of the Constitution - contract of insurance is no longer in the realm of contract?.
HELD THAT:- If it is a `State' its action must be fair and reasonable. It has been so held in a catena of decisions of the Court as for example Life Insurance Corporation of India v. Consumer Education and Research Centre [1995 (5) TMI 247 - SUPREME COURT].
There cannot be any doubt that Directive Principles of State policy by themselves per se are not enforceable in a court of law. [See Kesavananda Bharati v. State of Kerala[1973 (4) TMI 114 - SUPREME COURT].
The action on the part of the authorities of the appellant was highly arbitrary. Respondents though were not entitled to automatic renewal, but indisputably, they were entitled to be treated fairly. We have noticed hereinbefore some of the clauses contained in the prospectus as also the insurance policy. When a policy is cancelled, the conditions precedents therefor must be fulfilled. Some reasons therefor must be assigned.
When an exclusion clause is resorted to, the terms thereof must be given effect to. What was necessary is a pre-existing disease when the cover was inspected for the first time. Only because the insured had started suffering from a disease, the same would not mean that the said disease shall be excluded. If the insured had made some claim in each year, the insurance company should not refuse to renew insurance policies only for that reason. The words `incepts for the first time' as contained in clause 4.1 as also the words `continuous and without break' if the renewal premium is paid in time, must be kept in mind as also the reasons for cancellation as contained in clause 7(1)(n) thereof.
Renewal of a mediclaim policy subject to just exceptions should ordinarily be made. But the same does not mean that the renewal is automatic. Keeping in view the terms and conditions of the prospectus and the insurance policy, the parties are not required to go into all the formalities. The very fact that the policy contemplates terms for renewal, subject of course to payment of requisite premium, the same cannot be placed at par with a case of first contract.
It is essential that the Regulatory Authority must lay down clear guidelines by way of regulations or otherwise. No doubt, the regulations would be applicable to all the players in the field. The duties and functions of the Regulatory Authority, however, are to see that the service provider must render their services keeping in view the nature thereof. It will be appropriate if the Central Government or the General Insurance Companies also issue requisite circulars.
Appellants before us being subsidiaries to General Insurance Corporation cannot ignore the statutory provisions. They are bound by the directions issued by the Central Government.
We would request the IRDA to consider the matter in depth and undertake a scrutiny of such claims so that in the event it is found that the insurance companies are taking recourse to arbitrary methodologies in the matter of entering into contracts of insurance or renewal thereof, appropriate steps in that behalf may be taken.
These appeals are dismissed with costs.
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2008 (5) TMI 685
Issues Involved:
1. Recovery of wages due to employees of SPL under the Uttar Pradesh Industrial Peace (Timely Payment of Wages) Act, 1978.
2. Procedural irregularities in the auction of SPL's property.
3. Validity of the auction notice and sale proclamation.
4. Compliance with mandatory provisions of the Uttar Pradesh Zamindari Abolition & Land Reforms Rules, 1952.
5. Adequacy of the property valuation and notice period.
6. Timely deposit of auction sale amount.
7. High Court's directions for action against officers involved in the auction.
Issue-wise Detailed Analysis:
1. Recovery of Wages Due to Employees:
The judgment notes that SPL, a sick unit, was unable to pay wages to its employees, leading to several applications under the Uttar Pradesh Industrial Peace (Timely Payment of Wages) Act, 1978. A recovery certificate was issued under Section 3(1) of the 1978 Act, and the authorities proceeded to recover the amounts due as arrears of land revenue.
2. Procedural Irregularities in the Auction of SPL's Property:
The auction of SPL's property was challenged on the grounds of procedural irregularities. The High Court observed that SPL had repeatedly failed to pay the dues, and procedural defects pointed out could be challenged under Rule 285(i) of the Uttar Pradesh Zamindari Abolition & Land Reforms Rules, 1952.
3. Validity of the Auction Notice and Sale Proclamation:
The High Court found that the auction notice dated 22nd April 2005 and the sale proclamation were not valid. The notice did not disclose property details, estimated value, or the auction date. The Court highlighted that the service of the sale proclamation on the Chowkidar was not proper service on the defaulter.
4. Compliance with Mandatory Provisions of the Rules:
The Court emphasized that the Act and Rules prescribed a mandatory procedure for the recovery of arrears of land revenue, requiring strict compliance. It was found that there was no material on record to show that any attempt had been made to serve the demand notice on SPL properly.
5. Adequacy of the Property Valuation and Notice Period:
The Court observed that the sale proclamation did not comply with Rule 285, 286, and 283 of the Rules. The estimated value of the property was not properly determined, and a clear 30 days' notice of the proposed auction was not given. The property was sold at a price far below its market value.
6. Timely Deposit of Auction Sale Amount:
The auction purchaser, UPSIDC, was found to have deposited the balance 75% of the auction amount late, contrary to Rule 285-D of the Rules. The Court noted that it was impossible for the auction purchaser to have procured the bank drafts from Kanpur on the day of the auction, as the auction was conducted in Meerut.
7. High Court's Directions for Action Against Officers Involved in the Auction:
The High Court passed strictures against the district authorities involved in the auction and directed action against the officers responsible. However, the Supreme Court found these directions unjustified and expunged them, maintaining only the direction concerning costs.
Conclusion:
The Supreme Court dismissed the appeals with a minor modification, maintaining the High Court's direction regarding costs but expunging the directions for action against the concerned officers. The judgment highlights the importance of strict compliance with procedural requirements in auction proceedings and proper valuation and notice to ensure fair recovery of dues.
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2008 (5) TMI 684
Arbitration Proceedings - Construction of a compound wall and a bridge over a nala - clauses 18 and 34 of the contract - Payment of escalation charges as the work had not been completed within four months - delay had been caused by the opposite party - contractor served a notice on Pawanhans invoking the clause relating to arbitration - payment rejected by observing that as a "No Dues Certificate" had been submitted by the contractor - "No Dues Certificate" under duress - HELD THAT:- We are of the opinion, that it was open to the contractor to contend that it was liable to be compensated on account of the fact that delay had been occasioned on account of reasons attributable to Pawanhans. It is significant that the Division Bench of the High Court has been silent on this aspect of the matter and has not referred to the finding of the learned Single Judge with regard to the responsibility for the delay.
We are further of the opinion that clause 43 and 43 (1) and (2) when read together clearly visualize escalation of price on account of reasons beyond the control of the contractor and attributable to the other side. Moreover clause 43 (2) clearly states that the remedy under clause 43(1) would be in addition to such other remedy that may be open to the contractor under the other provisions.
It appears however that no steps were taken on which the contractor addressed a letter dated 2nd February 1993 for payment of dues and again stated that if the payment was not made, the dispute should be referred to the arbitrator. In response to this letter, Pawanhans in its letter dated 9th February 1993 replied that the matter was under scrutiny and it would take about 2 months for verification and that the contractor would be informed in due course. As no reply was received, a letter dated 21st May 1993 was addressed by the contractor relating to the undertaking that the enquiry would be completed within 2 months but complaining that nothing had been done and on the contrary on 8th June 1993 the claim for any payment was rejected by Pawanhans observing that as a "No Dues Certificate" had been submitted by the contractor, the question of any balance payment being due did not arise. It is at this stage that the contractor had invoked the clause for arbitration.
We have reproduced the correspondence in extenso to show that the contractor was compelled to issue a "No Dues Certificate" and in this view of the matter, it could not be said that the contractor was bound by what he had written. It is also clear that there is voluminous correspondence over a span of almost 2 years between the submission of the first final bill on 3rd June 1991 and the second final bill dated 2nd February 1993 and as such the claim towards escalation or the plea of the submission of a "No Dues Certificate" under duress being an after thought is not acceptable.
We are therefore of the opinion that the judgment of the Division Bench is erroneous and we accordingly set it aside. The judgment of the learned Single Judge is accordingly restored. In the facts and circumstances of the case, in that Pawanhans has taken advantage of a beleaguered contractor, and has behaved in a most unbecoming manner in pushing it ever deeper into the chasm, the contractor will have its costs which are computed at ₹ 10,000/-. The appeals are accordingly allowed.
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2008 (5) TMI 683
Issues involved:
The only issue in appeal relates to the disallowance of a sum of Rs. 3,90,267 by invoking the provisions of section 14A on account of attribution of expenses for earning dividend income which is exempt under section 10(33) of the Act.
Details of the Judgment:
Issue 1: Disallowance of expenses under section 14A
The assessee earned dividend income from mutual funds which was claimed as exempt under section 10(33) of the Act. The Assessing Officer disallowed a portion of expenses as incurred for earning dividend income, estimating 5% of the expenses. The Assessing Officer relied on the decision of the Hon'ble Supreme Court in the case of CIT v. United General Trust Ltd. [1993] 200 ITR 488 to make the disallowance.
Before the CIT(A), the assessee contended that no specific expenses were incurred for earning exempt income, therefore, no ad hoc disallowance should be made under section 14A. However, the CIT(A) upheld the disallowance, considering the increase in other income and investments in mutual funds, indicating efforts and resources applied to earn exempt income.
The assessee further appealed, arguing that under section 14A, only expenses directly related to earning exempt income can be disallowed. The counsel for the assessee emphasized the necessity of a nexus between incurring expenses and earning income for any disallowance to be valid.
The Tribunal held that there must be a direct connection between incurring expenses and earning exempt income to disallow them under section 14A. Estimation of expenses without such nexus is impermissible. The Tribunal referred to precedents like Wimco Seedlings Ltd. and Citicorp Finance (India) Ltd. to support this interpretation. It noted that the provisions for quantification of disallowance were inserted in 2006 and are not retrospective. As no method for computation was prescribed, the disallowance of expenses under section 14A was deleted.
In conclusion, the appeal was allowed, and the disallowance of Rs. 3,90,267 was deleted.
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