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2016 (11) TMI 1768
Suit for specific performance of an agreement of sale or in the alternative for refund of the advance amountwith accrued interest thereon and for creating a statutory charge over the suit properties under Section 55 (6)(b) of the Transfer of Property Act, 1882, for proper payment of the said amount - relief of specific performance is barred by limitation or not - HELD THAT:- Perusal of Article 54 and 62 of the Limitation Act would certainly indicate that both are not acting on the same field and on the other hand, they are to be applied only in respect of the suit for which respective Article is meant for. Needless to say that as per Article 54 of the Limitation Act, a suit for specific performance of a contract has to be filed within a period of three years from the date fixed for the performance or if no such date is fixed, from the date of the refusal of such performance.
At the same time, it is to be noted that the plaintiff is not precluded from seeking an alternative prayer for refund of the advance amount. Such alternative prayer, certainly, is not a consequential prayer to the other relief of specific performance and on the other hand, such alternative prayer itself will have the character of the main relief, however, alternatively sought for. If such alternative prayer for refund of advance amount is also sought for in a suit for specific performance, certainly, the period of limitation to be considered in respect of that relief is concerned, Article 62 of the Limitation Act alone has to be applied and not the limitation period fixed for specific performance. Article 62 of the Limitation Act grants 12 years time for enforcing payment of money secured by a mortgage or otherwise charged upon immovable property.
The question, that in an agreement for sale in respect of an immovable property, whether a statutory charge is created on such property in favour of the buyer/the agreement holder is answered by the relevant statute itself under Section 55(6)(b) of the Transfer of Property Act. Under the said provision of law, the statutory charge is created on the subject matter property in an agreement for sale, unless a contract to the contrary is specifically referred to in the said agreement itself or in a circumstance where the buyer has improperly declined to accept the delivery of the property. The creation of such statutory charge under Section 55(6)(b) of the Transfer of Property Act and consequently, the application of Article 62 of the Limitation Act have been, in clear and categorical terms, dealt with by the Apex Court in Delhi Development Authority's case, thereby holding that 12 years is the time limit for enforcement of the charge and not three years.
The first defendant did not dispute his signature in the suit agreement but he contended that such signature was obtained by the plaintiff in blank stamp papers and that there was no passing of consideration. When that being the admitted position, it is for the defendants to disprove such contention by letting in evidence in support of such contra pleading. Except by examining the first defendant as DW1, they have not examined any other independent witnesses. Therefore, the lower appellate court erred in shifting the burden on the plaintiff to disprove the contention of the defendants - when the initial burden is discharged by the plaintiff by marking Ex.A1 and examining the attesting witness and the scribe apart from examined himself as PW1, the onus is then shifted on the defendants to prove their case, which they miserably failed to do in this case.
Conclusion - i) The suit for refund of the advance amount is not barred by limitation, as it falls under Article 62 of the Limitation Act, providing a 12-year period due to the statutory charge created under Section 55(6)(b) of the Transfer of Property Act. ii) The first Appellate Court erred in its findings on limitation and the execution of the agreement, resulting in the reversal of its judgment and reinstatement of the trial court's decree.
The questions of law are answered in favour of the appellant - appeal allowed.
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2016 (11) TMI 1767
Seeking direction upon the respondents 2 to 4 to renew the customs broker license issued to the petitioner - HELD THAT:- It is seen that the petitioner's application for renewal was well within the period of limitation and it was submitted on 08.12.2015. On 14.12.2015, the petitioner submitted 10 documents and requested the third respondent to consider the same and renew the customs broker license. After receipt of those documents, the fourth respondent issued a notice, dated 22.01.2016 returning the petitioner's application for reasons stated therein. The petitioner re-presented the application along with their letter dated 25.02.2016, giving clarification for the queries pointed out. It is thereafter, once again, the fourth respondent issued another communication dated 01.04.2016 stating that there are deficiencies and discrepancies in the application for renewal and returned the application - the petitioner has not specifically clarified the deficiencies and discrepancies pointed out in the communication dated 01.04.2016 of the third respondent, but has requested the third respondent to refer to his reply dated 25.02.2016. However, the said reply, dated 25.02.2016 has not been appended to this Writ Petition and therefore this Court is not in a position to readily examine as to what was the contents of the reply.
Conclusion - The petitioner re-presented the application on 11.04.2016, but failed to clarify the pointed discrepancies, instead referring to the earlier reply dated 25.02.2016, which was not included in the petition.
Petition disposed off.
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2016 (11) TMI 1766
TDS u/s 194A - assessee cooperative society engaged in the business of banking had made interest payments to other cooperative societies without deducting tax at source - whether a cooperative society engaged in banking is required to deduct tax at source on interest payments made to other cooperative societies? - HELD THAT:- We find that identical issue has been decided in the case of The Punjab State Coop Bank Ltd., Chandigarh [2016 (7) TMI 205 - ITAT CHANDIGARH] wherein it was held that on reading of memorandum of Finance Bill, 2015, the exemption provided u/s 194A(3)(v) with regard to deduction of tax at source from interest payments by a cooperative society to another cooperative society existed before the amendment and continued to apply even after the amendment.
Thus assessee would enjoy immunity from deduction of tax at source under the provisions of section 194A(3)(v) of the Act on such payments of interest i.e. from one cooperative society to another cooperative society - Assessee is not an assessee in default under section 201(1) of the Act and consequently interest under section 201(1A). Decided in favour of assessee.
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2016 (11) TMI 1765
Deduction of TDS/withholding tax u/s 40(a)(i) - assessee company has made payment to the Malaysia company for services rendered in the financial year as per the agreement these payments - HELD THAT:- As perused the provisions of section 9(1)(vii) of the Act where the fees for technical services have been considered and the services being international transaction the DTAA agreement between India and Malaysia shall come into effect. In Article 13 of DTAA " fees for technical services for services being rendering of any managerial, technical or consultancy services and includes the provision of services for technical or other which does not include payment for services mentioned in Article 15 , 16 of the agreement.
Malaysia Company (BASC) provides services under Article 13 r.w.s Article 5 and Article 7 of DTAA. The Article 5 deal with permanent establishment defined as the fixed place of business through which the business of enterprise is wholly or partly carried on. The facts are not disputed by the Revenue that there is no PE of the Malaysia Company in India and the services are rendered outside the country.
Whereas, the Article 7 deals with the profits of establishment taxable through PE of foreign company having operations. Considering the apparent facts, provisions of law, DTAA and undisputed facts that there is no PE in India and the services are in the nature of data operating entry of Accounts and Human Resource (HR) Service duly supported with evidence of samples invoices and Journal voucher produced, we found that the services of BASC Malaysia does not fall in the category u/s. 9(1)(vii) of the Act and provisions of section 40(a)(i) are not applicable, we found Ld. CIT (A) has dealt on this disputed issue exhaustively in his order Vis-a-vis explanations of the assessee and passed reasoned order in treating the services as not in the nature of technical services and provision of section 40(a)(i) of the Act are not applicable and we uphold the same and dismiss the Revenue appeal.
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2016 (11) TMI 1764
Default in repayment of loan - Validity of auction sale - it is common ground that the debtor did not prefer application for setting aside the sale, inconformity with the remedy provided in that behalf in terms of Section 89A of the Karnataka Cooperative Societies Act, 1959 read with Rule 38 of the Karnataka Cooperative Societies Rules - HELD THAT:- The debtor cannot be heard to claim benefit of the proceedings in the form of Writ Petitions followed by Writ Appeals filed by the auction purchaser and the Bank. For, it is noticed that the Division Bench in its order dated 24th August 2011 determined the liability of the debtor to pay Rs. 59,46,965/- along with solatium and interest thereon. At least in terms of that decision, the debtor ought to have paid the entire amount. However, there was still a shortfall of Rs. 18,75,791.40. The debtor, instead, represented before the ARCS that he was not liable to pay any further amount in excess of the amount already deposited by him until 22nd September 2011 totalling Rs. 61,89,125/-. In the facts of the present case, it is only upon deposit of the entire awarded amount, the request of the debtor to absolve him of his liability could be entertained.
Once the auction sale is confirmed by the Competent Authority, it is not open to the Authority to exercise power under Rule 38(6), to set aside the sale. That would be against the spirit of legislative intent of giving finality to the auction sale process upon passing of an order of confirmation of sale.
The writ appeal having been disposed of, in the guise of clarification, the Division Bench could not have passed any order at the instance of the debtor who had failed to challenge the decision of the Deputy Registrar. The writ appeals were filed by the auction purchaser and the Bank assailing the wrongful rejection of their Writ Petitions by the learned Single Judge. As the decision of the Deputy Registrar deserves to be set aside, the debtor cannot succeed on the basis of some observations made in the impugned judgments of the Division Bench or for that matter by the learned Single Judge and including some infirmity in the letter of the Assistant Registrar (CS) dated 21st December 2011.
The order passed by the Deputy Registrar (dated 18.7.2009); and of the High Court (dated 11.01.2010; 24.8.2011, 8.6.2012 and 29.6.2012) confirming the order of the Deputy Registrar of setting aside the sale of the subject mortgage property in favour of the auction purchaser, are hereby set aside - Appeal allowed.
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2016 (11) TMI 1763
Non-resident liability to pay interest u/s 234B and 234C - delay and deferment of advance tax liability - ssessee was a non resident assessee and given the fact that all the monies brought to tax in the hands of the assessee were received from Indian assessees who were obliged to deduct applicable tax at source from the related payments - HELD THAT:- The judicial views on the proposition that Section 234 B and 234 C cannot be invoked in the cases of non resident assesses where taxes are deductible from all the receipts brought to tax in the hands of the assessee, particularly where no malafides are alleged on the conduct of the assessee, are consistently in favour of the assessee. The plain words of the statue support this interpretation and Hon’ble Courts above have unanimously held so. Such being the circumstances, there is no scope of two views on this issue. The proviso to Section 209(1), brought on the statue with effect from 1st April 2012, does alter the legal position but then right now we are dealing with the pre-amendment period.
In our considered view, the interest u/s 234B and 234 C cannot be levied at all in the cases in which the assessee is a non resident assessee and in which all the monies brought to tax in the hands of the assessee were received from Indian assesses who were obliged to deduct applicable tax at source from the related payments. Learned representatives fairly agree that in the event of this issue, in principle, being decided in favour of the assessee, the assessee succeeds in these appeals. We, therefore, uphold the grievance of the assessee and direct the Assessing Officer to delete the impugned levies of interest under section 234B and 234C. Assessee appeal allowed.
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2016 (11) TMI 1762
Suit for recovery - liability of defendants under the lease agreement and guarantee deed - applicability of Section 141 and Section 137 of the Indian Contract Act, 1872 - Whether the choice exercised by the plaintiff of not taking such action would be “mere forbearance” within the meaning of Section 137 or an act on the part of the plaintiff of “losing or parting with such security” within the meaning of Section 141? - HELD THAT:- Considering the facts and circumstances of the present case i.e. the agreement between the parties, the practicality of removing the leased equipment from the factory premises of the defendant No.1 and the value of such leased equipment even if had been taken into custody / possession, the same would fall within the meaning of “mere forbearance” in Section 137 and not of “losing or parting with the security” within the meaning of Section 141.
A Division Bench of the High Court of Karnataka in Karnataka Bank Ltd. Vs. Gajanan Shankararao Kulkarni [1976 (7) TMI 174 - KARNATAKA HIGH COURT] held that mere passive inactivity or passive negligence on the part of the creditor by failing to realise the debt from the collateral security is not sufficient in itself to discharge the surety, because the surety can himself avoid consequences of such passivity by himself paying the debt and becoming subrogated to the rights of the creditor and because in the absence of a contract to the contrary, the creditor is under no obligation of active diligence for the protection of the security, so long as the surety himself remains inactive.
The action / inaction of the plaintiff on account of which the defendant No.2 claims to have been discharged do not fall within the ambit of Section 141 of the Contract Act and are within the ambit of Section 137 of the Contract Act.
As far as the contention of the counsel for the defendant No.2, of Section 446 of the Companies Act is concerned, on 26th October, 2016 it is already prima facie observed that once permission under Section 22(1) of SICA has been granted and the order of winding up is in pursuance to the order of BIFR, Section 446 of the Companies Act would not be applicable.
The plaintiff is entitled to a decree against the defendants as sought. However, having found the Deed of Guarantee executed by the defendant no.2 to be limiting the amount to be recovered thereunder to Rs. 109.75 lacs, the decree insofar as against the defendant no.2 has to be limited to the said amount - a decree is passed in favour of the plaintiff and against the defendant no.1 for recovery of Rs. 1,20,49,597.24p with pendente lite and future interest at the rate of 2% per annum compounded with monthly rests.
Application disposed off.
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2016 (11) TMI 1761
Seeking release of amount deposited erroneously - HELD THAT:- The Registrar General is directed to release the sum of ₹13,54,27,067 along with interest if any in favour of DH No.2 on the necessary approvals being furnished. A sum of ₹3,84,076/- shall be released to the JD forthwith. In addition, the Registrar General shall also release any further sums which are lying with the Registrar General of this Court along with interest, if any, to the DH No.2, as requested by the learned counsel for the DHs. This is subject to the DH No. 2 furnishing the necessary approvals, if any.
Since the amount of ₹13,54,27,067 was deposited within a period of seven days as indicated in the order dated 20.10.2016, no further orders are required to be passed in this petition.
The petition is, accordingly, disposed of.
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2016 (11) TMI 1760
Seeking grant of bail - extortion of money - Shahrukh was alleged to have hit the complainant with iron rod on his head and Salman also assaulted the complainant and ran behind the brother of the complainant with knife to kill him - Section 439 of the Code of Criminal Procedure, 1973 - HELD THAT:- Indisputably, the jurisdiction under Section 439 of Cr.P.C. for grant of bail is the concurrent jurisdiction of High Court as well as the Court of Session. But it would always be advisable to approach the court of session first to avail this remedy and further in the High Court under Section 439 of Cr.P.C.
In the considered opinion of this court is not inclined to comment upon the submissions and contentions raised on behalf of the petitioner at this stage, especially when the petitioner has remedy to take all pleas before the court of session - this court is not inclined to entertain the present bail application at this stage. However, the petitioner will be at a liberty to approach the Court of Session and to take all pleas, as taken in the present petition.
The present petition is disposed of with direction to the petitioner to approach the Court of Session for seeking regular bail.
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2016 (11) TMI 1759
Exemption u/s 11 - scope of amended provisions of section 2(15) of the Act - assessee is a society registered u/s 12A was, inter alia, engaged in the activity of “micro finance” - assessee secured loan from banks and advanced loan to Self Help Groups, thus generated surplus and also profit from income generation programmes - deduction u/s. 11 denied on the ground that the activity was carried out in commercial lines - CIT(A) deleted addition - HELD THAT:- As in view of the decisions of the Tribunal in the case of Bharatha Swamukhi Samsthe [2008 (12) TMI 310 - ITAT BANGALORE] and Spandana (Rural & Urban Development Organisation) [2010 (2) TMI 1166 - ITAT VISAKHAPATNAM] the activity under consideration falls under the expression “relief to poor” as envisaged under section 2(15) of the Act.
Therefore, in my considered view simply because an activity undertaken in commercial line in pursuance to furtherance of the object of society to poor does not make the activity non-charitable within the meaning of section 2(15) of the Act. No good reason to interfere with the conclusion of the ld. CIT(A). Hence, this ground of the revenue is dismissed.
Addition made on account of violation of provisions of section 40(a)(ia) by not deducting tax at source on advertisement expenses when the assessee is not eligible for exemption u/s. 11 of the Act in view of the violation of the proviso to section 2(15) of the Act - HELD THAT:- As decided in MAHATMA GANDHI SEVA MANDIR [2012 (5) TMI 396 - ITAT MUMBAI] section 40(a) will only go to enhance the business profit of an assessee whose income is assessable under section 28 and not otherwise. Hence, provisions of section 40(a) are not applicable in case of charitable trust or institution where income and expenditure is computed in terms of section 11 - Decided against revenue.
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2016 (11) TMI 1758
Method of accounting adopted by the assessee for the concerned assessment year - HELD THAT:- Though the ‘AO’ had rejected the assessee’s explanation, concurrently the Appellate Authorities i.e. the CIT(A) and ITAT ruled in its favour. This Court also notices that the ITAT’s ruling is based upon several previous judgments on this Court and is also based on rule of consistency vis-a-vis the previous years. Therefore, no question of law arises.
Applicability of deduction u/s 80(IB)(10) - As ITAT has remitted the matter for factual determination by the CIT(A). In this circumstances, no questions of law on that account arises.
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2016 (11) TMI 1757
Maintainability of Regular First Appeal or Civil Revision or petition under Article 227 of the Constitution of India against the order passed by the Wakf Tribunal - Jurisdiction of Wakf Tribunal vs. Civil Court in suit for eviction and recovery of use and occupation charges against a person, who, admittedly, is a tenant - Section 83(9) of the Wakf Act, 1995, read with Article 227 of the Constitution of India - HELD THAT:- Sections 6 and 7 of the Act provides for determination of certain disputes regarding wakf properties only by the Wakf Tribunal. But the question arises that after determining the dispute by the Tribunal, what remedy is available to the aggrieved party.
Sub Section 9 of Section 83 of the Act provides that no appeal shall lie against any decision or order whether interim or otherwise, passed by the Tribunal established under the Act. Still, it is astonishing that Writ Petitions and Regular First Appeals are being preferred by the aggrieved parties before this Court challenging the decisions rendered by the Tribunals constituted under the Act. It is also not understandable how such appeals or writ petitions are being entertained once there is specific bar in terms of Section 83(9) of the Act that no appeal will lie against the order of the Tribunal - In terms of proviso to Sub Section (9) of Section 83 of the Act, any person aggrieved by the orders of the Tribunals can invoke the revisional jurisdiction of the High Court. Thus, remedy is provided to the aggrieved person by way of filing revision petition and not by the medium of appeal.
In a similar case, the High Court of Andhra Pradesh in case titled as Mohd. Abdul Kareem And Anr. v. Andhra Pradesh State Wakf Board [2004 (2) TMI 743 - ANDHRA PRADESH HIGH COURT], held that the jurisdiction of the High Court in disputes pertaining to Wakfs can be invoked by way of filing revision petition and not by the medium of a writ petition.
Whether a suit for eviction and recovery of use and occupation charges against a person, who, admittedly, is a tenant, will lie before the Wakf Tribunal or before the Civil Court? - HELD THAT:- Reliance placed in judgment rendered by the Apex Court in FASEELA M. VERSUS MUNNERUL ISLAM MADRASA COMMITTEE AND ORS. [2014 (3) TMI 1224 - SUPREME COURT], wherein it was held by their Lordships that suit for eviction from wakf property is triable by a civil court and not by the Wakf Tribunal since the Act does not provide determination of dispute of eviction by the Tribunal.
Thus, the suit for eviction against the tenant in regard to wakf property is triable by the Civil Court.
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2016 (11) TMI 1756
Revision u/s 263 - TP Adjustment - “exist cost” of TBA-10 machines which was considered by Assessee as an extraordinary item and therefore not considered as part of operating profit, was allowed without any discussion - other reason that assessee’s claim in respect of depreciation, amortization and impairment, loss of sale on assets etc. needs verification and addition, if any.
HELD THAT:- On perusing the order of TPO and the submission made by the assessee before TPO, it is seen that the submission of Assessee with respect to “exist cost” was found acceptable to the TPO as no addition/adjustment on that account was made by TPO. At this moment we would like to refer the decision of Malabar Industrial Company Ltd [2000 (2) TMI 10 - SUPREME COURT] wherein as held that CIT has to be satisfied of twin conditions namely i) the order of the A.O. sought to be revised is erroneous ii) by virtue of being erroneous prejudice has been caused to the interests of the Revenue for invoking the provisions of Sec. 263. If one of them is absent – if the order of ITO is erroneous but is not prejudicial to the interest of Revenue or if it is not erroneous but is prejudicial to the interest of Revenue - recourse cannot be had to Sec. 263(1).
AO had passed order u/s 143(3) and with respect to the adjustments to the international transactions, addition was made as per the order of TPO’s order that was passed u/s 92CA(3) of the Act. As per the provisions of Sec. 94CA(4) the order passed by TPO is binding on A.O.
In the present case, thus it is seen that A.O. has followed the adjustments directed by TPO in the order dt. 30.09.2008 passed under Sec. 92CA(3) of the Act. There is nothing on record which points out that the order of TPO dt. 30.09.08 has been revised or the order was not in existence when AO passed the order u/s 143(3) of the Act. Therefore in the present case, since the A.O. has followed the order of TPO passed u/s 92CA(4), it cannot be said that there is any error in the order passed by the A.O., u/s 143(3) of the Act.
On the merits of the case of excluding “Exist cost” while computing the operational margin, being of an extra-ordinary and exceptional in nature, we find force in the argument of the learned A.R. for its exclusion in the light of the ratio of the decision of Marubeni India Pvt. Ltd [2013 (6) TMI 104 - DELHI HIGH COURT] as upheld the exclusion of payment of compensation for closure of Indian units by the associated enterprise by considering it to be an abnormal item of expenses and excluding it while computing operating profits. We are of the view that the ratio of the aforesaid decision is squarely applicable to the present case.
Before us, the Revenue has not placed any contrary binding decision nor has brought any material on record to demonstrate that the view taken by the A.O. was contrary to law or was an impermissible view or was upon application of wrong legal principles and therefore required initiating the exercise of revisionary powers under Sec. 263 - Thus CIT was not justified in resorting to the revisionary powers under Sec. 263 - Appeal of assessee is partly allowed.
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2016 (11) TMI 1755
Murder - Reversal of acquittal - Manipulated FIR - Ante-timing of the FIR and delayed dispatch of the FIR to the court of the Magistrate - reliability on eye-witnesses - HELD THAT:- The present is the case, where recording of the FIR on 16th June, 2000 itself has been proved, accepted by the trial court also, thus mere dispatch of the FIR on 22nd June, 2000 from the police station to the Magistrates' Court has no bearing on the basis of which any adverse presumption can be drawn. From the above discussion, it is clear that the FIR was genuine FIR and trial court committed an error in drawing adverse inference against the prosecution and refusing to attach value to the FIR - The conclusion of the learned Sessions Judge that the FIR was manipulated is thus found to be erroneous. FIR has been proved by the evidence. Thus, one of the basis of the decision of the Sessions Judge for discarding the prosecution case is knocked out.
The mere fact that the witness did not name the person whom he tried to catch does not lead to any contradiction since all eye-witness have stated that four persons came by 2 bicycles one of whom shoot Debol Ghosh.
PW 2 stated that he tried to catch one person of the aforesaid and omission not to name the person does not lead to any contradiction nor can result in discarding the evidence. The observation of learned Sessions Judge that the evidence suffers from the improbability and cannot be relied is also not based on any valid reason.
High Court was conscious that the case where acquittal has been made, while entertaining an appeal over an order of acquittal if two views are possible on making proper appreciation of available evidence the view going in favour of accused have to given importance. It is well settled that in case where an order of acquittal has been made on improper and erroneous appreciation of evidence, it is always open to the court of appeal to make proper and reasonable appreciation evidence and differ from the order of acquittal and in such event, it shall never hesitate in reversing the same.
The findings and conclusion recorded by the High Court are based on the correct appreciation of evidence and do not suffer from any error. The judgment of the High Court reversing the acquittal recorded by learned Sessions Judge needs no interference. There are no merits in this appeal. The appeal is dismissed.
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2016 (11) TMI 1754
Apportionment of tax liability - Apportionment of assets and liabilities between Uttar Pradesh and Uttaranchal Forest Corporations - State of Uttarakhand created its own Forest Development Corporation - treatment to interest accrued on the FDR of the AOP(Trust) - Asset specific liability of the erstwhile Corporation shall pass on to the Successor Corporation of the Successor State to which the asset has been allocated or not? - Registration was granted to the respondent corporation as AOP(Trust) on 17.12.2012 and the tax which has been charged has not been exempted, and income tax department is still levying tax on respondent corporation treating it as ‘assessee’
HELD THAT:- The fact is under no dispute that the money has been kept in the reserve fund of the U.P. Forest Corporation. This fact is also under no dispute that when two States were carved out from the parent State, the successor State of Uttarakhand created its own Forest Development Corporation which became functional from 01.04.2001. Apportionment of the assets of the statutory corporations, therefore, became imminent.
The successor States tried to made an attempt to settle their dispute relating to their Forest Corporations by mutual agreement, but when they failed to settle the same through mutual agreement, Central Government stepped in and issued a Notification on 13.02.2004 to the effect that reserve and surplus as reflected in the balance sheet of the erstwhile corporation for the year ending 31.03.2001, will be apportioned between the successor corporations of Uttar Pradesh and Uttaranchal in the ratio of 46:54. On the representation of the Government of Uttar Pradesh, the Government of India, vide order dated 28.07.2004 clarified that the MHA order dated 13.02.2004 does not warrant any change / modification. It also directed that the division of liabilities of the erstwhile Uttar Pradesh Forest Corporation is since sub-judice, therefore, the order of the Court will have overriding effect on the orders of MHA and therefore, status quo will have to be maintained until the Court pronounces orders in such matter.
Sufficient water has flown in river Ganges since then. This writ petition itself was filed in the year 2007. Before that, another writ petition was filed in the year 2000, a reference of which has been given in Para 2 of this judgment. The Court cannot permit the status quo to be maintained for all times to come. Stalemate has to be broken.
The assets are to be apportioned between the successor corporations of Uttar Pradesh and Uttaranchal in the ratio of 46:54 as per order of MHA. As per the balance sheet of the Uttar Pradesh Forest Corporation, a sum of Rs. 425.11 crores was shown as reserved, as on 31.03.2001 and, therefore, according to the Central Government Notification, the petitioner corporation is entitled to 54% of the same. So far as the liability, as projected by the respondent corporation, is concerned, this Court is of the view that there is no tax liability as such in the light of exemption granted to the U.P. Forest Corporation under Section 12AA of the Income Tax Act on its being registered as AOP(Trust).
The money which is projected to be the liability part on behalf of the U.P. Forest Corporation is interest accrued on the FDRs and therefore cannot be said to be a liability on the respondent corporation. Writ Court is not expected to go into the calculation, but in the instant case, since the arithmetic is quite simple that as per MHA Notification the reserve and surplus as reflected in the balance sheet of the erstwhile Forest Corporation for the year ending 31.03.2001 will be apportioned between the successor corporations of Uttar Pradesh and Uttaranchal in the ratio of 46:54, therefore, the respondent corporation should be made to pay (as per calculation) a sum of Rs. 229.55 crores without further loss of time.
Writ petition, succeeds.
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2016 (11) TMI 1753
Authenticity of the sale deed - entitlement to compensation - Burden of Proof vs. Onus of Proof - Forgery and Fictitious Documents - the court dismissed the suit and ruled in favor of the defendant-respondents for compensation of the disputed land - Section 6(e) of Transfer of Property Act, 1882.
The plaintiffs argued the sale deed was void and forged, while the defendants claimed it transferred their right to compensation.
Whether sale deed transfers disputed land to the purchasers or only right to receive compensation was transferred? - HELD THAT:- Once it is said that the vendors have collected entire compensation of disputed land, this factum that such compensation may have been enhanced in litigation after that was transferred, in our view, will bring the deed in question as transferring "a mere right to sue" and would be hit by Section 6 (e) of Act 1882 - The stipulation contemplates a chance of higher compensation in litigation and intends to transfer the same. This is evidently a mere 'right to sue' and not any interest in the disputed land - the question is answered against defendant-respondents and in favour of appellants.
Whether Sale-deed dated 8.2.1994 is a forged and fictitious document, as claimed by plaintiff-appellants or Court below has rightly held it a genuine document? - HELD THAT:- When a document is registered in the office of Sub-Registrar, thumb impressions and signatures are obtained by Sub-Registrar on its own Register also. Defendant-respondents made no effort to get appropriate record summoned from the office of Sub-Registrar, particularly when document was challenged forged and fictitious, obtained by impersonation. It was also not signed by one of two witnesses as well as author - Court below has erred in law, firstly by stretching burden of proof of the factum of fraud and misrepresentation of aforesaid document on plaintiff-appellants on the ground that no witnesses of document were examined as plaintiffs' witnesses. plaintiff-appellants when challenged document as a forged and fictitious one, they never admitted that any person was accepted by them as a witness to such document. Hence, question of producing such witnesses by plaintiffs could not have arisen. Benefit of document was claimed by defendant-respondents. Hence onus to produce witnesses to prove document lay upon them. There is a distinction between "burden of proof" and 'onus' - question answered in favor of appellants.
Whether Court below has rightly held that defendant-respondent are entitled to payment of compensation of disputed land? - HELD THAT:- There is neither any evidence on record nor otherwise, from which it can safely be inferred that there was any interest or right to receive compensation available on 8.2.1994 which could have been transferred by plaintiff-appellants to defendant-respondents. Moreover when they themselves claimed compensation @ Rs. 400/- per square yard, would have agreed to give up such contest on meager consideration of Rs. 60,000/- is highly improbable unless there is some reason - the question is answered against defendant-respondents.
The judgement and decree, dated 16.9.1998 and 29.9.1998 respectively, passed by Sri Devendra Kumar Jain, XIIth Additional District Judge, Ghaziabad in Original Suit N. 47 of 1996 read with Land Acquisition Reference under Section 30 of Act, 1894 are hereby set side - appeal allowed.
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2016 (11) TMI 1752
Refund of service tax - case of petitioner is that invoices produced by them in respect of detention charges which are for storage and warehousing of the goods are not cleared and does not establish that the same are for the detention charges - HELD THAT:- In as much as the legal issue is decided in favour of the assessee, the impugned orders in both the cases is set aside and the matter remanded to the original adjudicating authority for examination of the documents. As the refund claim is involved, we expect the adjudicating authority to do the needful as early as possible and preferably within a period of three months from today. Both the appeals are disposed of in above manner.
Appeal disposed off by way of remand.
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2016 (11) TMI 1751
Nature of expenses - Right to use technical know-how - Disallowance of claim u/s 37(1) and allowing only 1/6th u/s 35AB - HELD THAT:- As decided in own case [2013 (1) TMI 1057 - ITAT MUMBAI] there are overlapping areas between the donations given by the assessee and the business expenditure incurred by the assessee - there can be certain amounts, though in the nature of donations, and nonetheless, these amounts may be deductible under section 37(1) as well. Therefore, merely because an expenditure is in the nature of donation, or, to use the words of the CIT(A), 'promoted by altruistic motives', it does not cease to be an expenditure deductible under section 37(1).
Even if the contributions by the assessee is in the forms of donations, but if it could be termed as expenditure of the category falling in section 37(1), then the right of the assessee to claim the whole of it as a deduction under section 37(1) cannot be defined. What is material in this context is whether or not the expenditure in question was necessitated by business considerations or not. Once it is found that the expenditure was dictated by commercial expediencies, the deduction under section 37(1) cannot be declined - Decided in favour of assessee.
Provision towards post retirement medical benefit - Disallowance u/s 37(1) - HELD THAT:- As decided in [2013 (1) TMI 1057 - ITAT MUMBAI] for AYs 2000-01, 2001-02 and 2002-03 wherein held leave encashment is not a contingent liability. Taking the same cue, that post retirement medical benefit is also a liability which gets attached to the company the moment, the service contract is signed, we hold that the revenue authorities erred in disallowing the provision under this head. Having held so in principle, neither we have been able to gather the year wise breakup of the Actuarial valuation made by the Actuary as un 31.03.1997, nor the Senior Counsel, was able to apprise us on the valuation, pertaining to the year under consideration.
Taking into account the above reason, we deem it fit to restore the issue to the file of the AO, who shall call for the year wise valuation and then allow the claim accordingly. We, therefore, set aside the order of the CIT(A) on this issue and direct the AO to allow the claim of provision after verification of the Actuary's report pertaining to the current year. Thus we set-aside the matter to the file of AO to verify the Actuarial Valuation Report and then allowed the claims of assessee in accordance with the order supra
Notional disallowance u/s 14A against Income earned from an AOP - CIT(A) while considering this ground of appeal observed that while passing order for AY 1999-2000 confirmed the disallowance @ 3% of tax free interest - HELD THAT:- The assessee received exempt income from AOP, the assessee was required to associate with the activities of PIL (AOP) to spend its resources for its successful functioning, therefore, section 14A is squarely applicable but the CIT(A) descended regarding the interest expenditure attributable to earn exempt income and concluded that assessee invested out of composite fund and associated in functioning of AOP with its resources and granted the partial relief. We have seen that during the year, the assessee has received an amount of Rs. 1,62,85,873/- as a share of profit from PIL. PIL is being assessed separately as per the provisions of section 86 and as per proviso of section 86, the share of Member shall not be included in the total income as the AOP is charged at the maximum marginal rate, thus, no disallowance for earning from AOP/PIL was warranted, thus, we direct the AO to delete the entire addition.
Disallowance of deduction claimed u/s 80M - HELD THAT:- The assessee has made no expenses in relation to dividend income. Neither the AO nor the CIT(A) brought on record the actual expenditure, if any incurred by assessee in relation to dividend income. The assessee is claiming throughout that the amount of investment was out of surplus available with them, thus, considering the peculiarity of the case, the disallowance made by AO and sustained by ld. CIT(A) are deleted. In the result, this ground of appeal raised by assessee is allowed.
Correct head of income - Surrender of Tenancy rights treated as Income from other sources instead of capital Gain - HELD THAT:- There is no dispute that the assessee was in possession of a Flat in Alt View Co-op. Housing Society and the possession of assessee was protected under the provisions of Rent Control Act. The assessee received a sum on account of surrender of Tenancy right to its owner. It is settled legal position that amount received on account of surrender of tenancy right is a Capital Gain and not to be taxed as business receipt. Thus this ground of appeal is also allowed in favour of the assessee.
Nature of expenses - Expenditure on Railway Siding facilities - Disallowance u/s 37(1) - HELD THAT:- The Hon’ble Guwahati High Court in CIT vs. Bongaigon Refinery & Petro Chemicals P. Ltd. [1996 (6) TMI 64 - GAUHATI HIGH COURT] while dealing with almost on similar grounds base on similar facts held that expenditure as incurred on construction of Railway Track and siding is revenue expenditure and not a Capital expenditure. Thus, respectfully following the decision of Hon’ble Gujarat High Court, this ground of appeal is allowed in favour of assessee.
Denial of interest claimed u/s 36(1)(iii) - assessee argued that though the section was amended only from AY 2004-05 and was not applicable for the order under consideration and relied upon the decision of CIT vs. Core Health Care Ltd. [2008 (2) TMI 8 - SUPREME COURT] - CIT(A) while considering this ground concluded that capitalized interest is an integral part of cost of capital work-in-progress and sustained the disallowance - HELD THAT:- The Hon’ble Supreme Court in DCIT vs. Core Health Care Ltd. [2008 (2) TMI 8 - SUPREME COURT] held that section 36(1)(iii) is attracted when the assessee borrows the capital for the purpose of his business. It does not matter whether capital is borrowed in order to acquire a revenue asset or a capital asset, because all that the section requires is that the assessee must borrowed the capital for the purpose of his business. This dichotomy between the borrowing of a loan and actual application thereof in the purchase of a capital asset, seems to proceed on the basis that a mere transaction of borrowing does not, by itself bring any new asset of enduring nature into existence, and that it is the transaction of investment of the borrowed capital in the purchase of a new asset which brings that asset into existence. The transaction of borrowing is not the same as the transaction of investment. Thus assessee is entitled for deduction u/s 36(1)(iii).
Establishment expenditure - Disallowance u/s 37(1) - AO has treated the Administrative Expenses incurred on Engineering Project and the ld. CIT(A) while considering this ground of appeal concurred with the finding of AO - HELD THAT:- Hon’ble Supreme Court in Tuticorin alkali Chemicals and Fertilizers Ltd. v. Commissioner of Income-Tax [1997 (7) TMI 4 - SUPREME COURT]] held that when the question is whether a receipt of money is taxable or not, or whether certain deduction from receipt are permissible in law or not. The question has to be decided according to the principle of law and not in accordance with the Accounting practice.
Accounting Practices cannot be override section 56 or any other provisions of the Act. The assessee incurred expenses on various personnel/ employee in the project for supervision and monitoring the various project and marketing allocation and refineries which is certainly allowable as business expenditure u/s 37(1) of the Act. Expenses were made on account of salary, Dearness Allowance (DA), Conveyance Expenses, postal charges, bank charges, rent for housing accommodation, Motorcar etc. which is certain of revenue expenditure. Thus, the Ground No.8 raised by the assessee is allowed.
Levy of interest u/s 234D - assessee argued that the assessee is entitled to interest u/s 244A on the excess tax paid @ ½ % per month from 1st day of April to the date on which refund is granted - HELD THAT:- We have seen that section 234D was introduced w.e.f. 01.06.2003. Thus, the assessee is entitled for the interest as per section 234D w.e.f. 01.06.2003. Thus, the AO is directed to calculate the interest in accordance with the provisions of section 234D of the Act. Thus, this ground of appeal is allowed for statistical purpose
Deduction u/s 35(1)(ii) Contribution to LERC - HELD THAT:- As decided in [2013 (1) TMI 1057 - ITAT MUMBAI] identical grounds of appeal was allowed in favour of assessee directing the AO to examine the issue and allowed the claim in accordance with the provisions of law. Thus, this ground of appeal is allowed as mutatis mutandis passed by Tribunal. In the result, this ground of appeal is allowed for statistical purpose.
Admission of additional ground - Deduction u/s 37(1) towards Detailed Feasibility study expense - assessee argued that the assessee omitted to claim the relief in return of income - HELD THAT:- We have seen that the similar grounds of appeal was raised by the assessee in AY 2001-02 by way of additional ground and the same was not admitted in [2013 (1) TMI 1057 - ITAT MUMBAI]. Thus, keeping in view the order of earlier years, this ground of appeal is not admitted. Thus, this ground of appeal is rejected as un-admitted.
Nature of expenses - payment to club membership - HELD THAT:- This Ground of Appeal is no more res-integra on the basis of series of judgment on various High Courts held that Club Membership Fees for employees incurred by assessee is Business Expenses u/s 37 - Decided against revenue.
Adoption of value of power generated by the concerned captive power plant for the purpose of calculating deduction u/s 80IA - AO was not satisfied with the explanation held that APSEB would not be power at the rate from power producer and thereafter presumed margin @ 15% on the sale price of Rs.3.60 per unit charged by APSEB and accordingly reduced 15% from the value of electricity shown by assessee - HELD THAT:- CIT(A) while considered this Ground of Appeal, concluded that AO has not disputed that APSEB sales powers to its customer @ 3.60 per unit as assessee has deleted the rate to the value of power generated and consumed internally, there is no reason for the AO to doubt the assessee and the AO has needlessly made the exercise for estimating the profit of 15%.
CIT(A) further concluded that assessee has reasonably adopted the rate of value of power generation by assessee whereby and cancelled the same and direct the AO to adopt the value of power generated by assessee as disclosed by it for the purpose of calculating the deduction. We have seen that the order of ld. CIT(A) is based on sound reasoning and does not require our interference thus, we affirmed the order of ld. CIT(A). In the result the Ground of Appeal raised by Revenue is dismissed.
Deduction on Leave Encashment u/s 43B - lower authorities has not considered the claim of the assessee holding that the claim was filed without filing the revise return of income - HELD THAT:- Hon’ble Apex Court in Goetz India Ltd. [2006 (3) TMI 75 - SUPREME COURT] held that whenever the assessee makes a mistake or omitted to lodge a legitimate claim , the appellate authority be it first appellate authority or the second appellate authority, has vide power to entertain the new grounds of appeal. Respectfully following the decision of Hon’ble Apex Court which has a binding precedent by virtue of Article 141 of the Constitution of India, we admits the grounds of appeal raised by the assessee and restore this ground of appeal to the file of AO to reconsider it afresh and pass order in accordance with law.
Valuation of raw-material on an eligible business u/s 80IB (9) - assessee has given sufficient documentary evidence in support of their claim for the cost of VGO considered by them for inter-unit product purchased cost which was much higher as compared to market value of VGO - HELD THAT:- As decided by CIT(A) since the market price is lower than the value adopted by the appellant there is no reduction of cost resulting in inflation of the profit of the eligible unit and thereby a claim of deduction under section 80I. In fact by adopting the value which is substantially higher than the market price, the appellant has increased its cost, reduced the profits of eligible unit and thereby has claimed a lesser reduction under section 80 IA then what could have been calculated if market price of the product was adopted. In such a scenario there was no region for the AO to disturb the calculation made by the appellant
We have seen that the ld Commissioner (Appeals) granted the relief after considering the entire fact related with the claim of assessee. We do not find any reason to differ with the finding of learned Commissioner (Appeals). Thus this ground of appeal is dismissed.
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2016 (11) TMI 1750
Revision u/s 263 - interest not offered to tax on accrual years - as submitted interest was offered to tax by the assessee during this A.Y. 2011-12 in spite of the fact that the same advance made by the assessee still exist as outstanding - HELD THAT:- We noticed that in this case there is a history of interest receipt which is a huge amount in the preceding year on the similar advances made by the assessee and inspite of this the AO had not made any inquiry and verification that no such interest was shown as accrued in the year under consideration in spite of the fact that the advance is still remained outstanding during this Assessment Year. AO has not made any enquiry on this issue during the course of assessment proceedings and even during the course of proceedings u/s. 263 the assessee failed to furnish any relevant supportive evidences and agreement to justify that such interest was not be charged during the year under consideration.
The case of Commissioner of Income Tax vs. Arihant Avenues & Credit Ltd (2014 (10) TMI 790 - GUJARAT HIGH COURT) relate to the facts where borrowed money without interest was given as interest free advance. In view of the above facts and findings, the ratio of the judgments quoted are not applicable to the facts of the assessee’s case. We considered that the AO has passed the order without making inquiry and verification as to why no interest has been offered to tax on accrual years.
Deduction claimed u/s. 80IA - We find that assessee has started to operate the eligible business from 12-03-2007 relevant to AY 2007-08 and assessee has not claimed any deduction u/s. 80IA of the Act before A.Y. 2010-11 when he has opted consequent ten years out of fifteen years for claim of deduction u/s. 80IA. These informations and facts are available in the assessment record of the assessee. We are not inclined to uphold the order of the Ld. Pr. Commissioner of Income Tax on the second issue regarding deduction u/s 80IA(5) of the act.
Assessee’s appeal is partly allowed.
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2016 (11) TMI 1749
Validity of order of punishment of compulsory retirement - Rule 14 of CCS (CCA) Rules, 1965 - Seeking grant of medical leave with permission to leave the station - principles of natural justice - HELD THAT:- Both the learned Single Judge and the Division Bench have heavily relied on the fact that before forwarding the copy of the report by letter dated 02.04.2008 the Disciplinary Authority-cum-Whole Time Members have already formed an opinion on 25.02.2008 to punish the writ Petitioner with major penalty which is a clear violation of principle of natural justice.
Before making opinion with regard to punishment which is to be imposed on a delinquent, the delinquent has to be given an opportunity to submit the representation/reply on the inquiry report which finds a charge proved against the delinquent. The opinion formed by the Disciplinary Authority-cum-Whole Time Members on 25.02.2008 was formed without there being benefit of comments of the writ Petitioner on the inquiry report. The writ Petitioner in his representation to the inquiry report is entitled to point out any defect in the procedure, a defect of substantial nature in appreciation of evidence, any misleading of evidence both oral or documentary. In his representation any inputs and explanation given by the delinquent are also entitled to be considered by the Disciplinary Authority before it embarks with further proceedings as per statutory rules.
There was violation of principle of natural justice at the level of Disciplinary Authority when opinion was formed to punish the writ Petitioner with dismissal without forwarding the inquiry report to the delinquent and before obtaining his comments on the inquiry report - the order of the High Court setting aside the punishment order as well as the Appellate order has to be maintained.
Thus, present is the case where the High Court while quashing the punishment order as well as Appellate order ought to have permitted the Disciplinary Authority to have proceeded with the inquiry from the stage in which fault was noticed i.e. the Stage Under Rule 15 of Rules - sufficient time has elapsed during the pendency of the writ petition before learned Single Judge, Division Bench and before this Court, however, in view of the interim order passed by this Court dated 31.08.2015 no further steps have been taken regarding implementation of the order of the High Court. The ends of justice be served in disposing of this appeal by fixing a time frame for completing the proceeding from the stage of Rule 15.
Appeal allowed in part.
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