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2012 (11) TMI 1342
1. ISSUES PRESENTED and CONSIDERED The core legal questions considered by the Tribunal were: - Whether the Commissioner of Income Tax erred in refusing registration to the appellant trust under section 12AA(1)(b)(ii) of the Income Tax Act, 1961, based on the objects and activities of the trust. - Whether the refusal of registration was justified on the grounds that the trust's objects, other than promoting dental education, were not charitable or ancillary but related to other objects of public utility. - Whether the Commissioner properly considered the submissions and documents furnished by the appellant, including the amended dissolution clause. - The scope and extent of the Commissioner's powers under section 12AA of the Act in granting or refusing registration to a trust claiming charitable status, particularly in the context of educational institutions. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of refusal to grant registration under section 12AA(1)(b)(ii) of the Act Relevant legal framework and precedents: Section 12AA of the Income Tax Act empowers the Commissioner of Income Tax to grant registration to a trust or institution if satisfied that the trust's objects are genuine and charitable as defined under section 2(15) of the Act. The Commissioner's role is to verify genuineness of objects and activities, not to act as an Assessing Officer. The Tribunal's earlier decision in Surya Educational & Charitable Trust Vs. CIT-II, Chandigarh established that the Commissioner's scope at the registration stage is limited to verifying genuineness of objects and activities; the presence or absence of surplus or profit is not relevant at this stage. The Punjab & Haryana High Court in CIT, Bhatinda Vs. Baba Deep Singh Educational Society reiterated this principle, emphasizing that registration can be granted with the rider that it may be cancelled if activities deviate from objects. Court's interpretation and reasoning: The Tribunal noted that the appellant trust was established for promoting dental education and related educational activities, which fall within the ambit of charitable purposes under section 2(15). The Commissioner's refusal was primarily based on the observation that apart from the main object of dental education, other objects were distributive and unrelated to education. However, the Tribunal found that these ancillary objects supported the main educational purpose and were not separate or unrelated activities. The Tribunal also observed that the appellant had taken steps to establish the educational institution, including purchase of land and construction of buildings, as evidenced in the audited accounts. Key evidence and findings: The appellant's Memorandum and Articles of Association, registration certificate, audited accounts showing investment in land and building, and recognition and affiliation documents for the dental college were examined. The amended dissolution clause was also considered, addressing the Commissioner's earlier objection. Application of law to facts: Applying the legal principles, the Tribunal held that the appellant's objects were genuinely educational and charitable. The Commissioner's role was limited to satisfaction regarding genuineness, not detailed scrutiny of activities or financial surplus at the registration stage. The appellant's activities were consistent with its objects, and no evidence was presented to show deviation or engagement in non-charitable activities. Treatment of competing arguments: The Revenue argued that the trust was a private enterprise engaged in multiple objects beyond education and that the dissolution clause was open-ended. The Tribunal rejected these contentions as premature and unsubstantiated, noting the appellant's amendment of the dissolution clause and lack of evidence of activities outside the educational purpose. Conclusions: The Tribunal concluded that the Commissioner's refusal to grant registration under section 12AA was not justified. The appellant was entitled to registration as the objects and activities were genuine and charitable. 3. SIGNIFICANT HOLDINGS The Tribunal held: "Where the objects of the trust were genuine i.e. of providing education and the activities undertaken by it were also genuine as it had started constructing the building in which such dental college has to be established, the claim of the assessee for grant of registration under section 12AA of the Act for carrying on the objects of running the educational institute is thus allowed." "The Commissioner of Income Tax shall thus pass consequential order of registration under section 12AA of the Act to the assessee society. The plea of the Revenue that it was engaged in other objects being distributive and not charitable is premature as no such objects carried on by the assessee, had been brought to our notice." The Tribunal reaffirmed the legal principle that the Commissioner's power under section 12AA is limited to examining genuineness of objects and activities, not detailed financial or operational scrutiny, which is reserved for assessment proceedings under sections 11 and 12. The final determination was to allow the appeal, direct the Commissioner to grant registration under section 12AA, and reject the Revenue's contention that ancillary objects negated charitable status.
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2012 (11) TMI 1341
1. ISSUES PRESENTED and CONSIDERED The core legal questions considered in this judgment are: - Whether the proposed scheme of arrangement between the transferor and transferee companies can be sanctioned under Sections 391 to 394 of the Companies Act, 1956.
- Whether the meetings of the secured creditors were necessary and properly convened.
- Whether the scheme is just, fair, and reasonable to all stakeholders, including creditors and bondholders.
- Whether the scheme is in compliance with statutory requirements and not against public interest.
- Whether the necessary disclosures as required under the Companies Act were made.
- Whether the scheme violates any legal provisions or public policy.
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Sanction of the Scheme of Arrangement - Relevant legal framework and precedents: Sections 391 to 394 of the Companies Act, 1956, govern the sanctioning of schemes of arrangement. The court referred to precedents such as Miheer H. Mafatlal v. Mafatlal Industries Ltd to outline the court's role as supervisory rather than appellate in nature.
- Court's interpretation and reasoning: The court emphasized that it must ensure the scheme is fair, just, and reasonable and that statutory provisions are complied with. The court must also consider whether the scheme is in the public interest.
- Key evidence and findings: The court found that meetings of secured creditors were not held, and necessary consents were not obtained. The scheme failed to provide for the payment of dues to creditors other than bondholders.
- Application of law to facts: The court applied the legal standards to the facts and found that the scheme did not meet the statutory requirements and was not fair to all creditors.
- Treatment of competing arguments: The petitioners argued that the scheme was approved by the majority of shareholders and bondholders. However, the court found that the scheme was misleading and did not adequately protect the interests of all creditors.
- Conclusions: The court concluded that the scheme could not be sanctioned as it was not fair, just, or reasonable and was against public interest.
Issue 2: Meetings of Secured Creditors - Relevant legal framework and precedents: Section 391(1) of the Companies Act requires meetings of creditors to be convened when their interests are affected by a scheme.
- Court's interpretation and reasoning: The court emphasized the necessity of convening meetings to ascertain the wishes of creditors whose interests are affected.
- Key evidence and findings: The court found that meetings of secured creditors were not convened, and their consent was not obtained.
- Application of law to facts: The absence of meetings and consents from secured creditors was a significant factor in the court's decision not to sanction the scheme.
- Treatment of competing arguments: The petitioners failed to provide evidence of creditor consent, and the court found their arguments unpersuasive.
- Conclusions: The court concluded that the failure to convene meetings of secured creditors was a violation of statutory requirements.
Issue 3: Compliance with Statutory Requirements and Public Interest - Relevant legal framework and precedents: The court referred to Sections 391 and 393 of the Companies Act, which require full disclosure and compliance with statutory requirements.
- Court's interpretation and reasoning: The court found that the scheme lacked full and frank disclosure and failed to meet the mandatory requirements of Section 393(1)(a).
- Key evidence and findings: The court noted the lack of updated financial statements and auditor reports, which are required for transparency.
- Application of law to facts: The court found that the scheme's lack of transparency and failure to adhere to statutory requirements rendered it unsanctionable.
- Treatment of competing arguments: The petitioners' arguments were insufficient to overcome the statutory deficiencies identified by the court.
- Conclusions: The court concluded that the scheme's non-compliance with statutory requirements and lack of transparency were grounds for refusal.
3. SIGNIFICANT HOLDINGS - Preserve verbatim quotes of crucial legal reasoning: "The court must scrutinize the scheme to find out whether it is an arrangement which can, by reasonable people conversant with the subject, be regarded as beneficial to those who are likely to be affected by it."
- Core principles established: The court emphasized the necessity of full compliance with statutory requirements, transparency, and the protection of creditor interests in sanctioning schemes of arrangement.
- Final determinations on each issue: The court dismissed the company petitions and refused to sanction the scheme due to non-compliance with statutory requirements, lack of creditor consent, and the scheme being against public interest.
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2012 (11) TMI 1340
Unexplained investment/ purchases u/s 69 - bogus purchases - Held that:- The purchases made by the assessee are real and genuine for which the payments have been made through banking channels. Further it is confirmed that the sales made by the assessee were effected and the consideration was received by cross order cheques. Hence additions made by the AO deserves to be deleted in its entirety - Decided in favor of Assessee
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2012 (11) TMI 1338
1. ISSUES PRESENTED and CONSIDERED The legal judgment from the Madras High Court primarily revolves around the following core legal questions: - Whether the application for convening a meeting of creditors under Section 391(1) of the Companies Act can be moved ex parte without notice to creditors, particularly when a winding-up petition is pending.
- Whether the stay of legal proceedings against the company pending approval of a scheme of arrangement can be granted without notice to the petitioner in the winding-up petition, as per Section 391(6) of the Companies Act and Rule 71 of the Companies (Court) Rules, 1959.
- Whether the objections raised by creditors, particularly regarding the bona fides and feasibility of the proposed scheme of arrangement, should be considered at the threshold stage of issuing directions for convening a meeting.
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Ex parte Application for Convening Meeting of Creditors - Relevant legal framework and precedents: Section 391(1) of the Companies Act and Rules 67-69 of the Companies (Court) Rules, 1959, govern the procedure for convening meetings of creditors. The Supreme Court's judgments in Rainbow Denim Ltd. and Chembra Orchard Produce Ltd. provide guidance on whether such applications should be heard ex parte.
- Court's interpretation and reasoning: The court concluded that applications under Section 391(1) can be moved ex parte, as Rule 67 explicitly states that such summons shall be moved ex parte, unless the company is not the applicant.
- Key evidence and findings: The court found that the company had complied with the procedural requirements of Rule 67 by submitting the necessary affidavits and documents.
- Application of law to facts: Since the company was the applicant, the court held that no prior notice was required to be given to creditors at the threshold stage.
- Treatment of competing arguments: The objections raised by creditors regarding the scheme's bona fides were deemed premature at this stage.
- Conclusions: The court allowed the application for convening the meeting of creditors ex parte, as per Rule 67.
Issue 2: Stay of Legal Proceedings Without Notice - Relevant legal framework and precedents: Section 391(6) of the Companies Act and Rule 71 of the Companies (Court) Rules, 1959, require notice to be given to the petitioner in a pending winding-up petition before granting a stay of proceedings.
- Court's interpretation and reasoning: The court held that notice to the petitioner in the winding-up petition is mandatory under Rule 71, and failure to provide such notice renders the stay application unsustainable.
- Key evidence and findings: The court noted that the company had not given notice to the petitioner in the winding-up petition, as required by Rule 71.
- Application of law to facts: The court applied Rule 71 and found that the company's failure to notify the petitioner invalidated the stay application.
- Treatment of competing arguments: The court dismissed the company's argument that notice was unnecessary, citing precedents from the Bombay High Court.
- Conclusions: The court dismissed the stay application for non-compliance with Rule 71.
Issue 3: Consideration of Objections at Threshold Stage - Relevant legal framework and precedents: The court considered whether objections to the scheme's bona fides should be heard before convening meetings, referencing judgments like Sakamari Steel & Alloys Ltd.
- Court's interpretation and reasoning: The court held that at the threshold stage, the focus is on procedural compliance rather than substantive objections to the scheme's merits.
- Key evidence and findings: The court found no procedural irregularities in the company's application for convening meetings.
- Application of law to facts: The court determined that objections regarding the scheme's feasibility should be raised during the creditors' meeting or subsequent court proceedings.
- Treatment of competing arguments: The court acknowledged the creditors' concerns but emphasized the procedural nature of the current stage.
- Conclusions: The court allowed the convening of creditors' meetings without addressing substantive objections at this stage.
3. SIGNIFICANT HOLDINGS - The court affirmed that under Rule 67, applications for convening meetings of creditors can be moved ex parte, provided the company is the applicant.
- The court emphasized that Rule 71 mandates notice to the petitioner in a winding-up petition before granting a stay of proceedings under Section 391(6).
- The court held that substantive objections to the scheme's bona fides should be considered at later stages, not at the threshold stage of issuing directions for meetings.
- Final determinations: The court ordered the convening of creditors' meetings and dismissed the stay application for non-compliance with notice requirements.
The judgment provides clarity on procedural requirements under the Companies Act and emphasizes the importance of adhering to statutory rules before seeking court orders affecting creditors' rights.
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2012 (11) TMI 1337
1. ISSUES PRESENTED and CONSIDERED The judgment primarily revolves around the following legal issues: - Whether the Respondent Company is in breach of the terms and conditions of the Sanction Letter and if such breach warrants a winding-up order under Section 433(e) and (f) of the Companies Act.
- The validity and enforceability of the settlement agreement reflected in the Sanction Letter dated 17 September 2009 and its addendum.
- Whether the Petitioner is entitled to convert the Optionally Convertible Redeemable Bonds (OCRBs) into equity shares.
- Whether the Petitioner can invoke the winding-up jurisdiction of the Court given the alleged breach and subsequent settlement between the parties.
- Determination of the bona fide nature of the dispute between the parties and whether the Respondent's defenses are substantial and genuine.
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Breach of Sanction Letter and Winding-Up Order - Legal Framework and Precedents: The Petitioner invoked Sections 433(e) and (f) read with Sections 434(1)(a) and 439 of the Companies Act, seeking a winding-up order based on the alleged breach of the Sanction Letter.
- Court's Interpretation and Reasoning: The Court noted that the breach of the Sanction Letter, after the settlement between the parties, is a fundamental aspect to consider before passing any winding-up order.
- Key Evidence and Findings: The Petitioner had withdrawn some legal proceedings but not all, which constituted a breach of the Sanction Letter.
- Application of Law to Facts: The Court emphasized the need to adjudicate the entitlement of the Respondent to specific performance of the Sanction Letter before considering winding-up.
- Treatment of Competing Arguments: The Respondent argued that they had complied with the settlement terms and that the Petitioner had failed to perform their reciprocal obligations.
- Conclusions: The Court concluded that the breach of the Sanction Letter and the subsequent settlement need to be adjudicated before considering the winding-up petition.
Issue 2: Validity of the Settlement Agreement - Legal Framework and Precedents: The settlement was reflected in the Sanction Letter dated 17 September 2009 and its addendum.
- Court's Interpretation and Reasoning: The Court recognized the settlement as a binding agreement that both parties had acted upon.
- Key Evidence and Findings: Payments and issuance of OCRBs were made in accordance with the settlement terms.
- Application of Law to Facts: The Court noted substantial compliance with the settlement, which precluded reopening the original claim.
- Treatment of Competing Arguments: The Petitioner argued for reopening the claim based on the original Sanction Letter, which the Court found unjustified.
- Conclusions: The settlement agreement was deemed valid and enforceable, limiting the Petitioner's ability to pursue the original claim.
Issue 3: Conversion of OCRBs into Equity - Legal Framework and Precedents: The Petitioner sought to convert OCRBs into equity shares as per the terms of the Sanction Letter.
- Court's Interpretation and Reasoning: The Court noted that the conversion rights were contingent upon compliance with the settlement terms.
- Key Evidence and Findings: The Respondent had issued OCRBs worth Rs. 23.67 crores, which the Petitioner accepted.
- Application of Law to Facts: The Court highlighted the need for the Petitioner to fulfill their obligations before exercising conversion rights.
- Treatment of Competing Arguments: The Respondent contended that the Petitioner had not fulfilled their reciprocal obligations.
- Conclusions: The Court deferred the issue of conversion pending resolution of the underlying disputes.
Issue 4: Bona Fide Nature of Dispute - Legal Framework and Precedents: The Court referred to the Supreme Court's ruling in IBA Health (India) Private Limited Vs. Info Drive Systems SDN. BHD. regarding bona fide disputes.
- Court's Interpretation and Reasoning: The Court emphasized that a bona fide dispute must be genuine and not a mere wrangle.
- Key Evidence and Findings: The Respondent demonstrated solvency and creditworthiness, challenging the Petitioner's claims.
- Application of Law to Facts: The Court found that the dispute was substantial and genuine, warranting further adjudication.
- Treatment of Competing Arguments: The Petitioner argued for a winding-up order, while the Respondent demonstrated compliance and solvency.
- Conclusions: The Court dismissed the winding-up petition, recognizing the bona fide nature of the dispute.
3. SIGNIFICANT HOLDINGS - Verbatim Quotes of Crucial Legal Reasoning: "A dispute would be substantial and genuine if it is bona fide and not spurious, speculative, illusory or misconceived."
- Core Principles Established: The Court must determine the bona fide nature of disputes before granting a winding-up order; settlement agreements must be honored unless adjudicated otherwise.
- Final Determinations on Each Issue: The Court dismissed the winding-up petition, emphasizing the need for adjudication of the underlying disputes and recognizing the validity of the settlement agreement.
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2012 (11) TMI 1336
Issues:
- Validity of notice u/s 148 of the Income-tax Act, 1961
- Nexus between facts of the case and reasons for reopening the case u/s 148
- Genuineness of gift received
- Charging of interest u/s 234B, 234C, 244A(3) & 234D
Analysis:
Validity of Notice u/s 148:
The appeal arose from the order of the CIT(A) for the assessment year 2001-02. The appellant contended that the notice u/s 148 issued by the Assessing Officer (AO) was illegal, invalid, and void ab-initio. The appellant argued that the conditions laid down under section 148 were not fulfilled, rendering the order bad in law. The appellant also claimed that there was no nexus between the facts of the case and the reasons recorded for reopening the case, making the notice illegal. The Tribunal held that the AO did not have any material or had wrong material to suggest that the appellant's income had escaped assessment. Consequently, the Tribunal quashed the reassessment proceedings, deeming the notice issued u/s 148 as bad in law.
Genuineness of Gift Received:
The appellant received a gift through a banking channel, supported by a counter-signed gift deed from the donor. The AO added the gift amount to the appellant's income, citing non-discharge of burden of proof regarding the genuineness of the gift. However, the Tribunal noted that the AO did not disprove the gift deed filed by the appellant. Relying on the decision of the Supreme Court in Mehta Parikh & Co. vs. CIT, the Tribunal found that the notice issued u/s 148 was bad in law. The Tribunal allowed all grounds related to the issue of the gift received.
Charging of Interest u/s 234B, 234C, 244A(3) & 234D:
The appellant argued that no interest should have been charged under the specified sections of the Income Tax Act, 1961, as no reasonable opportunity of being heard was allowed before charging the interest. The Tribunal, however, held that the charging of interest under these sections was mandatory and consequential in nature. Therefore, the Tribunal did not find grounds to cancel the interest charged under the mentioned sections.
In conclusion, the Tribunal allowed the appeal of the assessee, quashed the reassessment proceedings due to the invalid notice u/s 148, upheld the genuineness of the gift received, and maintained the charging of interest under the specified sections of the Income Tax Act, 1961.
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2012 (11) TMI 1335
Issues Involved:
1. Sentence awarded to the Appellants.
2. Leading judgments on the death penalty.
3. Issue of aggravating and mitigating circumstances.
4. Issue of crime and the criminal.
5. Standardization and categorization of crimes.
6. Issue of remission of sentence.
Detailed Analysis:
1. Sentence Awarded to the Appellants:
The Supreme Court issued notice limited to the question of the sentence awarded to the Appellants, who were given the death penalty, confirmed by the High Court. The Court opined that the Appellants should be awarded a life sentence, subject to the faithful implementation of the provisions of the Code of Criminal Procedure, 1973.
2. Leading Judgments on the Death Penalty:
The judgment references significant cases like Bachan Singh v. State of Punjab and Machhi Singh and Ors. v. State of Punjab. It explains the legislative change from the Code of Criminal Procedure, 1898 to the Code of Criminal Procedure, 1973, which reversed the previous stance and required special reasons for awarding the death penalty. The Constitution Bench in Bachan Singh laid down that the death penalty should be awarded only in the "rarest of rare cases" and when the option of life imprisonment is "unquestionably foreclosed."
3. Issue of Aggravating and Mitigating Circumstances:
The judgment discusses the shift from focusing solely on the crime to considering both the crime and the criminal. It critiques the balance sheet theory introduced in Machhi Singh, which compared aggravating circumstances of the crime with mitigating circumstances of the criminal. The Court notes that this approach has not been uniformly or consistently applied and highlights the need for a fresh look at the aggravating and mitigating circumstances approach.
4. Issue of Crime and the Criminal:
Despite Bachan Singh, primacy has often been given to the nature of the crime, with less consideration of the criminal's circumstances. The judgment cites several cases where the focus remained on the crime, such as Ravji v. State of Rajasthan, which was rendered per incuriam. The Court emphasizes the need to consider both the crime and the criminal in sentencing.
5. Standardization and Categorization of Crimes:
The judgment discusses the attempt at standardization and categorization of crimes in Machhi Singh and its critique in Swamy Shraddananda. It notes that the Constitution Bench in Jagmohan Singh and Bachan Singh had refrained from such attempts, and even though Machhi Singh provided useful guidelines, they could not be taken as inflexible or absolute.
6. Issue of Remission of Sentence:
The judgment explores the power of remission under Section 432 of the Code of Criminal Procedure, noting that it cannot be exercised arbitrarily. It emphasizes that remission can be granted only on a case-by-case basis and not in a wholesale manner. The Court also discusses the procedural and substantive checks on the exercise of this power, including the requirement of obtaining the opinion of the presiding judge of the convicting or confirming Court.
Conclusion:
The Supreme Court concluded that there is considerable uncertainty in awarding punishment in capital offences, whether it should be life imprisonment or the death sentence. Due to this uncertainty, awarding a sentence of life imprisonment is not unquestionably foreclosed. Therefore, the death penalty awarded to the Appellants is converted into a sentence of life imprisonment.
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2012 (11) TMI 1334
Issues:
1. Challenge against the order of Debt Recovery Tribunal II, Mumbai and Debts Recovery Appellate Tribunal, Mumbai.
2. Possessory lien over office premises under SARFAESI Act.
3. Dispute over charge registration with Registrar of Companies.
4. Claim of possession by petitioner against mortgage by borrower.
5. Interpretation of Section 65-A of the Transfer of Property Act.
Issue 1: Challenge against Tribunal Orders
The petitioner challenged the orders of Debt Recovery Tribunal II and Debts Recovery Appellate Tribunal, Mumbai. The petitioner contended that the possession of the office premises should not have been revoked under the SARFAESI Act due to a default by the borrower. The petitioner claimed to have a possessory lien over the premises, disputing the charge registered with the Registrar of Companies by the respondent banks.
Issue 2: Possessory Lien under SARFAESI Act
The petitioner argued that they had a possessory lien over the office premises, preventing eviction by the respondent under the SARFAESI Act. The petitioner claimed to be in possession since 1997 due to non-repayment of dues by the borrower. The respondent banks, however, asserted that the borrower had mortgaged the premises to them, creating a legal charge registered with the Registrar of Companies.
Issue 3: Dispute over Charge Registration
The petitioner contended that the Tribunal erred in holding that the respondent had registered their charge with the Registrar of Companies. The petitioner claimed that only State Bank of India had a charge over the premises, supported by a Certificate of Registration of Mortgage under the Companies Act. The Tribunal's finding was challenged as incorrect and legally unsound.
Issue 4: Claim of Possession against Mortgage
The respondent argued that the borrower had mortgaged the office premises to the consortium banks, including State Bank of India, creating a legal charge. The petitioner, not being a tenant or lessee, claimed a right over the premises based on a possessory lien. The court analyzed whether the mortgagor could permit the petitioner to occupy the mortgaged premises after creating a mortgage, considering the provisions of Section 65-A of the Transfer of Property Act.
Issue 5: Interpretation of Section 65-A of Transfer of Property Act
The court referred to a decision by the Madras High Court regarding Section 65-A of the Transfer of Property Act. The court emphasized that the duration of a lease by a mortgagor cannot exceed three years to protect the rights of the mortgagee. In this case, the petitioner's claim based on a possessory lien without a lease or tenancy agreement did not meet the requirements of Section 65-A, leading to the dismissal of the petition.
The High Court of Bombay dismissed the petition, ruling against the petitioner's claims of possessory lien over the office premises under the SARFAESI Act. The court upheld the respondent banks' legal charge on the premises, emphasizing the importance of complying with the Transfer of Property Act's provisions, particularly Section 65-A regarding leases and tenancies concerning mortgaged properties.
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2012 (11) TMI 1333
Issues Involved:
(a) Whether issuance of successive declarations is permissible under the Act?
(b) Whether delay in issuing notification u/s 28(4) of the Act and passing award, vitiates acquisition proceedings?
Summary:
POINT (a): SUCCESSIVE DECLARATIONS
The petitioners argued that successive notifications are not permissible under the law, relying on the judgment of the Apex Court in Vishnu Prasad Sharma's case. The Supreme Court had interpreted Sections 4, 5A, and 6 of the Land Acquisition Act, 1894, to mean that once a declaration u/s 6 is made, the notification u/s 4(1) is exhausted. However, the Parliament amended the Land Acquisition Act in 1967 to allow for successive notifications. The Karnataka Industrial Areas Development Act, 1966 (the Act) does not have similar amendments. The Court noted that the provisions of the Act are not in pari materia with the Land Acquisition Act. The Act does not require submission of one report or consideration of all objections together. The Court held that successive declarations u/s 28(4) of the Act are permissible as the Act allows for consideration of objections from each owner separately and issuance of notifications accordingly. The learned Single Judge's decision upholding the issuance of successive declarations was justified.
POINT (b): DELAY IN ISSUING NOTIFICATION UNDER SECTION 28(4) OF THE ACT AND PASSING AWARD, VITIATES ACQUISITION PROCEEDINGS
The petitioners contended that the delay in issuing the final notification and passing the award vitiates the acquisition proceedings. The Court acknowledged that compensation pegged to the date of the preliminary notification could be unjust due to market value escalation. However, the Court noted that the petitioners had sold their property shortly after the preliminary notification, thus losing their standing to challenge the acquisition on these grounds. The Court held that while the Act does not specify a time limit for issuing final notifications or passing awards, such actions must be completed within a reasonable time. The Court referred to the Parliament's intention in the Land Acquisition Act, which prescribes one year for final declarations and two years for awards as reasonable timeframes. The Court concluded that the delay in this case did not affect the petitioners' interests as they had already sold the land. The learned Single Judge's decision to dismiss the writ petitions was upheld, and the appeals were dismissed.
The Court also addressed the petitioners' contention that possession of the land was not taken and no developmental activity had occurred. The Court found no justification to quash the acquisition proceedings on this basis, given that the petitioners had alienated the property and received consideration.
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2012 (11) TMI 1332
Issues involved: Challenge to judgment and order of acquittal u/s 138 of the Negotiable Instruments Act.
Issue 1: Facts and Background
The appellant advanced loans to the accused and received cheques which bounced due to insufficient funds, leading to the filing of complaints u/s 138 of the NI Act.
Issue 2: Trial Proceedings
Complainant and accused were examined, documents were presented, and the Trial Court acquitted the accused, prompting the filing of appeals.
Issue 3: Contention of Appellant
Appellant argued that the Trial Court erred in allowing respondents to file affidavits instead of chief examination, contrary to the law, and sought to set aside the acquittal orders.
Issue 4: Respondents' Defense
Respondents' counsel contended that the Trial Court followed correct procedure and there was no need to remit the matter back for further examination.
Issue 5: Legal Provision
Section 145 of the NI Act allows the complainant to give evidence by affidavit, but this provision does not extend to the accused.
Issue 6: Precedent and Interpretation
Citing a Supreme Court decision, it was highlighted that the legislative intent does not permit accused to give evidence on affidavit, emphasizing the importance of following statutory procedures.
Judgment:
The High Court held that the Trial Court erred in accepting affidavits from the accused instead of requiring them to enter the witness box. The acquittal orders were set aside, and the matters were remitted back to the Trial Court for proper examination of the accused. The Court directed expedited disposal of the case within three months.
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2012 (11) TMI 1331
Issues involved:
The judgment involves the cancellation of anticipatory bail granted to accused 6 and 7 by the High Court, based on allegations of harassment leading to suicide, theft of gold ornaments, and interference with the course of justice.
Details of the Judgment:
Issue 1: Allegations of Harassment and Suicide
The complainant alleged that accused 6 and 7 threatened the deceased and accused 5, leading to suicide. The deceased was disturbed due to non-return of money by Baban Devlate and accused 5 taking away jewelry. The High Court canceled the bail, citing the need for custodial interrogation and improper exercise of discretion.
Issue 2: Legal Considerations for Bail Cancellation
The High Court emphasized the requirement to hear the Public Prosecutor before granting bail under Section 438 of the Code of Criminal Procedure. It found the objections of the investigating agency not adequately considered and highlighted the need for custodial interrogation due to the nascent stage of the investigation.
Issue 3: Court's Analysis and Decision
The Supreme Court refrained from expressing a final opinion on the case's merits but found the suicide notes' contents regarding accused 6 and 7 to be prima facie unnatural. It disagreed with the High Court's reliance on a previous case involving a former Minister, stating that the present accused were not influential individuals hindering the investigation.
Conclusion:
The Supreme Court quashed the High Court's order and confirmed the anticipatory bail for accused 6 and 7. It emphasized the importance of cooperation with the investigating agency and adherence to imposed conditions. The Court's observations on the case were deemed prima facie, and the trial court was directed to decide without influence from these observations.
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2012 (11) TMI 1330
Issues involved: Challenge to order of Additional Sessions Judge rejecting revision application u/s 409, 420, 120B, 467, 468, 471/34 IPC in connection with Gardanibagh (Shastri Nagar) P.S. Case No. 860 of 2002.
Summary:
In the present case, the petitioner, a former member of the Indian Administrative Service, challenged the order passed by the Additional Sessions Judge, Patna, rejecting the revision application related to a criminal case involving financial irregularities. The FIR alleged that the petitioner, while serving as Administrator cum-Managing Director at Bihar State Housing Co-operative Federation Ltd., was involved in financial irregularities, specifically in granting loans to a private company. The petitioner contended that no offence was made out against him as there was no misappropriation of funds and no sanction was obtained u/s 197 Cr. P.C. before taking cognizance. The petitioner's counsel argued that all the money involved had been recovered by the Federation, thus no offence was committed.
On the other hand, the State argued that the FIR, when read in its entirety, established the offence against the petitioner and other accused individuals, indicating misappropriation of funds. The State emphasized that at the stage of cognizance, only a prima facie case needed to be established. The State also highlighted that the requirement of sanction u/s 197 Cr. P.C. depended on whether the allegations had a nexus with the petitioner's official duty.
The Court referred to a Supreme Court judgment and reiterated that the issue of sanction depended on the nature of the allegations and their connection to official duty. The Court found that the statement in the FIR constituted a prima facie case against the petitioner, and the recovery of money by the Federation did not absolve the petitioner of his actions as an Administrator. Consequently, all petitions were dismissed, with the petitioner retaining the liberty to raise points at the appropriate stage, including the applicability of sanction.
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2012 (11) TMI 1329
Issues involved: The judgment addresses the following issues:
1. Treatment of Guest House expenditure as Revenue expenditure u/s 37(4) of the Income Tax Act for Assessment Year 1993-94 and 1994-95.
2. Relief granted to the assessee for Guest House expenses for Assessment Year 1993-94 and 1994-95.
3. Deletion of disallowances for expenditure on community development and sports, recreation, and game expenses for Assessment Year 1993-94/1994-95.
Issue 1 - Guest House Expenditure: The Court considered whether the Income Tax Appellate Tribunal (I.T.A.T) was justified in treating part of Guest House expenditure as Revenue expenditure u/s 37(4) of the Income Tax Act for the relevant Assessment Years. The Court referred to a previous judgment in Tax Appeal No. 14/1999R and based its decision on that.
Issue 2 - Relief Granted: The Tribunal's decision to grant relief of Rs.1,27,42,000 and Rs.1,40,12,000 to the assessee in relation to Guest House expenses for the Assessment Years was reviewed. The Court relied on the decision in Tax Appeal No. 14/1999R to answer this issue.
Issue 3 - Deletion of Disallowances: The Court examined the deletion of disallowances for expenditure on community development and sports, recreation, and game expenses for the relevant Assessment Years. Citing judgments from the Delhi High Court, the Court found in favor of the assessee, stating that the issue had already been addressed by the Delhi High Court and agreed with their reasoning. Consequently, the Court ruled in favor of the assessee and dismissed the appeals.
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2012 (11) TMI 1328
Issues involved: Criminal Revision Petitions u/s 138 of the Negotiable Instruments Act - Liability of Managing Director without company being arraigned as an accused.
Summary:
The judgment pertains to three Criminal Revision Petitions filed by the accused, who is the Managing Director of a company, challenging their conviction under Section 138 of the Negotiable Instruments Act. The accused issued three cheques on behalf of the company, which were dishonored due to insufficient funds. The Magistrate convicted the accused, leading to the filing of Criminal Appeal Nos. 718, 719 & 720 of 2011, which were subsequently dismissed. The main contention raised by the accused was that a prosecution u/s 138 would not lie against the Managing Director without the company also being accused, citing a Supreme Court decision in Aneeta Hada v. Godfather Travels & Tours Pvt. Ltd.
The Court considered the arguments presented by both parties. The complainant contended that since the accused signed and issued the cheques, he is liable for prosecution under Section 138. However, the Court, in light of the Supreme Court decision referenced by the accused, held that the Managing Director cannot be prosecuted under Section 138 without the company being arraigned as an accused. As the company was not made an accused in this case, the judgments of the lower courts were set aside.
The Court acknowledged the evolving legal landscape on this issue, noting the differing opinions of judges prior to the Supreme Court's decision in Aneetha Hada's case. Therefore, the Court remanded the matter back to the Magistrate for fresh disposal, directing that the company should also be arraigned as an accused in the three cases. The accused were given the opportunity to continue the prosecution after complying with this requirement. The amounts deposited by the accused before the Magistrate would remain in deposit until the cases are disposed of afresh. The Criminal Revision Petitions were disposed of accordingly.
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2012 (11) TMI 1327
Issues Involved:
1. Deduction of Gratuity Premium Payment
2. Depreciation on Intangible Assets
3. Disallowance of Loan Amount Written Off
Summary:
1. Deduction of Gratuity Premium Payment:
The Assessing Officer (AO) disallowed the deduction of Rs. 4,57,215/- paid towards Group Gratuity Life Insurance Scheme, citing the lack of approval from the Commissioner of Income-tax as required u/s 36(1)(v) of the IT Act. The AO also rejected the claim u/s 37. The CIT(A) allowed the deduction, referencing previous ITAT and High Court decisions, which held that payments towards an unapproved gratuity fund could be deducted u/s 37. The ITAT upheld the CIT(A)'s decision, dismissing the revenue's appeal.
2. Depreciation on Intangible Assets:
The AO denied the depreciation claim on intangible assets amounting to Rs. 58,78,633/-, asserting that the additional amount paid was to compensate the shareholders of the amalgamating company and not for any 'intangible assets'. The CIT(A) allowed the claim, supported by previous ITAT decisions in the assessee's own case and other relevant case laws. The ITAT upheld the CIT(A)'s order, dismissing the revenue's appeal on this issue.
3. Disallowance of Loan Amount Written Off:
The AO disallowed the write-off of Rs. 2,27,52,698/- as a bad debt or u/s 37, arguing that the debt did not arise from the assessee's business activities but was an investment in a subsidiary. The CIT(A) confirmed the AO's decision, rejecting the assessee's reliance on the Tainwala Chemicals and Plastics India Ltd. case. The ITAT upheld the CIT(A)'s order, referencing the VST Industries Ltd. case, and dismissed the assessee's appeal.
Conclusion:
Both the appeals by the revenue and the assessee were dismissed. The ITAT upheld the CIT(A)'s decisions on all issues, maintaining the disallowance of the loan write-off and allowing the deductions for gratuity premium payment and depreciation on intangible assets.
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2012 (11) TMI 1326
Issues involved: Cross appeals filed by the assessee and the Revenue for the assessment year 2003-04 challenging the order of the Commissioner of Income-tax(Appeals)-IV at Chennai, dated 16-9-2011, arising out of the assessment completed u/s 143(3), read with section 147 of the Income-tax Act, 1961.
Assessee's Appeal:
1. The assessee contended that the action initiated by the Assessing Officer u/s 147 of the Act was without jurisdiction and time-barred. However, the Commissioner of Income-tax(Appeals) upheld the reopening, stating that the excess depreciation claimed by the assessee was known to the Assessing Officer before issuing the notice u/s 147, justifying the belief that income had escaped assessment. The Tribunal agreed with the Commissioner's view, rejecting this ground.
2. The second issue raised by the assessee was regarding the treatment of the project asset as 'building' instead of 'plant' for depreciation u/s 32 of the Income-tax Act, 1961. The Commissioner of Income-tax(Appeals) followed the Tribunal's order in previous cases, holding that the assessee was entitled to depreciation at 10% on roads, similar to buildings, and not at the rate applicable to plant and machinery. The Tribunal found no fault in the Commissioner's decision, thus rejecting this ground as well.
Revenue's Appeal:
1. The Revenue contended that the Commissioner of Income-tax(Appeals) erred in allowing depreciation on project assets at the rate of 10% applicable to buildings, arguing that the assessee was not the owner of the asset. However, the Commissioner's decision was supported by the Tribunal's rulings in similar cases, granting depreciation at the rate of 10%. Consequently, the Revenue's ground failed.
In conclusion, both the appeals filed by the assessee and the Revenue were dismissed by the Appellate Tribunal ITAT CHENNAI, upholding the orders of the Commissioner of Income-tax(Appeals)-IV at Chennai.
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2012 (11) TMI 1325
Issues Involved:
1. Disallowance of interest on TDS.
2. Disallowance u/s 14A read with Rule 8D.
3. Disallowance u/s 36(1)(iii).
Summary:
1. Disallowance of Interest on TDS:
The first ground of appeal for A.Y. 07-08 concerns the confirmation of disallowance of interest on TDS amounting to Rs. 1,05,005/-. The Assessee had claimed this interest, which was disallowed by the A.O. and upheld by the CIT(A) on the basis that such interest is compensatory for the late payment of TDS to the Government treasury. The Tribunal, referencing the case of East India Pharmaceutical Works Ltd. v. CIT, dismissed the appeal, affirming that the interest on late payment of TDS is compensatory and not allowable as a deduction.
2. Disallowance u/s 14A read with Rule 8D:
The second ground pertains to the disallowance u/s 14A read with Rule 8D amounting to Rs. 22,98,627/- for A.Y. 07-08 and Rs. 3,62,210/- for A.Y. 09-10. The A.O. found that the Assessee had taken loans and made investments that earned tax-free income. The disallowance was calculated under Rule 8D, which was contested by the Assessee. The CIT(A) upheld the disallowance, referencing the ITAT Special Bench decision in Daga Capital Management Pvt. Ltd. The Tribunal, however, allowed the appeal for A.Y. 07-08, stating that Rule 8D is prospective and applicable from A.Y. 08-09 onwards, and no direct nexus was established by the A.O. For A.Y. 09-10, the Tribunal confirmed the disallowance as Rule 8D was applicable and the Assessee did not point out any defect in the A.O.'s computation.
3. Disallowance u/s 36(1)(iii):
The remaining ground for A.Y. 09-10 involves the confirmation of disallowance amounting to Rs. 3,20,600/- u/s 36(1)(iii). The A.O. disallowed the interest on loans given to certain parties without charging interest, while the Assessee was paying interest on borrowed funds. The CIT(A) upheld the disallowance, stating that the Assessee failed to prove the nexus between interest-free advances and interest-free funds. The Tribunal, however, deleted the addition, noting that the Assessee had substantial interest-free funds and no direct nexus was established by the A.O. between the interest-bearing loans and the interest-free advances.
Conclusion:
In the combined result, the Assessee's appeals were partly allowed. The Tribunal dismissed the appeal on the disallowance of interest on TDS, allowed the appeal on disallowance u/s 14A for A.Y. 07-08, confirmed the disallowance u/s 14A for A.Y. 09-10, and deleted the disallowance u/s 36(1)(iii).
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2012 (11) TMI 1324
Issues involved:
1. Violation of principles of natural justice
2. Exceeding the jurisdictional limits set by the Division Bench in its previous order
3. Non-application of mind/non-fulfillment of Section 11C on facts
Summary:
Violation of principles of natural justice:
The appellant, DLF, argued that SEBI's order was made in violation of principles of natural justice as SEBI first heard the complainant in the absence of DLF and then asked DLF to make submissions separately. The court held that no right to hearing was required at the stage of SEBI deciding whether to direct an investigation or not. The court emphasized that the exercise of power in question was only inquisitorial and not adjudicatory. Therefore, the principles of natural justice were not violated as no charges were made against DLF by SEBI at this stage.
Exceeding the jurisdictional limits set by the Division Bench in its previous order:
DLF contended that SEBI exceeded the jurisdictional limits set by the Division Bench in its previous order by considering additional materials outside the two original complaints. The court clarified that the Division Bench did not set any jurisdictional limits but only mandated SEBI to investigate the two complaints as the other material had never been placed before SEBI. The court held that SEBI was free to investigate and take into account any additional material in keeping with its plenary powers under the SEBI Act.
Non-application of mind/non-fulfillment of Section 11C on facts:
DLF argued that SEBI did not have "reasonable ground to believe" as required u/s 11C of the SEBI Act. The court held that SEBI's decision was based on relevant considerations and there was a direct nexus between the material considered and the conclusion reached. The court found that SEBI had considered the relations between DLF and Sudipti, failure to disclose the FIR against Sudipti, and the duty on DLF to disclose facts in the DRHP. The court concluded that SEBI's order was based on relevant factors and was not arbitrary or irrational.
Conclusion:
The appeal was dismissed as the court held against DLF on all three points, finding no violation of principles of natural justice, no exceeding of jurisdictional limits, and proper application of mind by SEBI in fulfilling the requirements u/s 11C.
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2012 (11) TMI 1323
Issues involved:
Petition filed u/s 482 Cr. P.C. seeking quashing of Criminal Complaint No. 650/NA/2012 u/s 138 read with 141 of Negotiable Instruments Act, 1881 and setting aside the summoning order dated 2nd July, 2012.
Details of the judgment:
Issue 1: Compliance with Section 202 Cr. P.C.
- Petitioners argued that the trial court did not comply with the mandatory requirement of Section 202 Cr. P.C.
- Cited judgment of K.T. Joseph vs. State of Kerala and Anr., (2009) 15 SCC 199 emphasizing the mandatory nature of the enquiry under Section 202 post the 2006 amendment.
- Court noted that the Magistrate had conducted an enquiry prior to issuance of summons as per Section 202 Cr. P.C.
- Held that the summoning order was valid as the Magistrate had perused all documents, heard arguments, and led evidence before issuing summons.
Issue 2: Allegations against the petitioners
- Complaint alleged that accused directors were responsible for day-to-day business and financial decision making of the company.
- Supreme Court precedent in K.K. Ahuja case stated that such allegations may be sufficient for issuing summons to directors.
- Court opined that the averments in the complaint were adequate for summoning the petitioners, allowing them to present evidence to prove their non-involvement in the company's management.
Conclusion:
- Court found no merit in the petitions and upheld the summoning order.
- Granted exemption from personal appearance to a petitioner due to age and retired status.
- Disposed of the petitions and pending applications accordingly.
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2012 (11) TMI 1322
Issues Involved:
1. Deletion of disallowance on account of proportionate interest attributable to advances given to subsidiary/group companies.
2. Deletion of disallowance on account of interest on share application money.
3. Deletion of addition on account of notional gain on conversion of foreign exchange deposit.
4. Assessee's claim for deduction u/s 80HHC for meals supplied to foreign airlines.
5. Assessee's claim for deduction on account of expenditure incurred on replacement of carpets.
6. Assessee's claim for deduction on account of expenditure incurred on replacement of linen.
7. Interest levied by the AO u/s 234D.
8. Addition on account of interest capitalized in the books treating the same as income.
Summary:
1. Deletion of disallowance on account of proportionate interest attributable to advances given to subsidiary/group companies:
The Tribunal upheld the CIT(A)'s deletion of the disallowance made by the AO on account of proportionate interest attributable to advances given by the assessee to its subsidiary/group companies at concessional or interest-free rates. This was based on the precedent set in earlier years where such advances were made wholly and exclusively for business purposes.
2. Deletion of disallowance on account of interest on share application money:
The Tribunal upheld the CIT(A)'s deletion of the disallowance made by the AO on account of interest on share application money. The CIT(A) accepted the assessee's contention that the share application money was paid out of non-interest-bearing funds, and thus, the disallowance was not justified.
3. Deletion of addition on account of notional gain on conversion of foreign exchange deposit:
The Tribunal upheld the CIT(A)'s deletion of the addition made by the AO on account of notional gain on conversion of foreign exchange deposit. The CIT(A) found that the shareholders' deposit was on capital account and akin to investment in shares, thus not taxable as per AS-11 and judicial precedents.
4. Assessee's claim for deduction u/s 80HHC for meals supplied to foreign airlines:
The Tribunal upheld the CIT(A)'s decision allowing the assessee's claim for deduction u/s 80HHC in respect of sale proceeds of meals supplied by its flight kitchen to foreign airlines, holding that the same constituted export eligible for deduction.
5. Assessee's claim for deduction on account of expenditure incurred on replacement of carpets:
The Tribunal upheld the CIT(A)'s decision allowing the assessee's claim for deduction on account of expenditure incurred on replacement of carpets, following consistent decisions in earlier years and judicial precedents.
6. Assessee's claim for deduction on account of expenditure incurred on replacement of linen:
The Tribunal upheld the CIT(A)'s decision allowing the assessee's claim for deduction on account of expenditure incurred on replacement of linen, following consistent decisions in earlier years.
7. Interest levied by the AO u/s 234D:
The Tribunal set aside the CIT(A)'s decision canceling the interest levied by the AO u/s 234D, noting the retrospective amendment by the Finance Act, 2012, making the provisions applicable to assessments completed after 01-06-2003.
8. Addition on account of interest capitalized in the books treating the same as income:
The Tribunal deleted the addition made by the AO and confirmed by the CIT(A) on account of interest capitalized in the books treating the same as income. The Tribunal found that the reversal of interest was done to comply with AS-10 and did not result in any benefit or cessation of liability.
Conclusion:
The appeals of the Revenue for assessment years 1994-95, 1998-99, 1999-2000, 2000-01, and 2002-03 were dismissed. The appeal of the Revenue for assessment year 2001-02 was partly allowed. The appeal of the assessee for assessment year 1994-95 was partly allowed, and all the cross objections of the assessee were dismissed.
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