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Showing 1 to 20 of 1912 Records
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2016 (12) TMI 1916
Dishonour of Cheque - application for condonation of delay - complaint filed under Section 138 of the Negotiable Instruments Act (NI Act) was within the prescribed period of limitation as per Section 142(1)(b) of the NI Act or not - registration of complaint without deciding the condonation application - violation of principles of natural justice - HELD THAT:- Section 138, Negotiable Instruments Act would deal with bad cheques. Section 142, Negotiable Instruments Act would deal with taking of cognizance of the offence. Section 142(1)(b), Negotiable Instruments Act would specify the time limit within which a complaint is required to be filed for the offence under section 138, Negotiable Instruments Act. Under section 142(1)(b), Negotiable Instruments Act a complaint is required to be filed within one month from the date of which the cause of action has arisen as per clause (c) of the proviso to section 138, Negotiable Instruments Act.
Admittedly, in the case on hand, the learned JMFC has registered the complaint without deciding the condonation application. Under the circumstances, a valuable right has accrued to the petitioner to defend his case on the ground of delay. The provisions of section 142(1)(b), Negotiable Instruments Act will have to be read in tandem with section 142(1)(a), Negotiable Instruments Act which starts with a non obstante clause that no Court shall take cognizance of any offence punishable under section 138, Negotiable Instruments Act except upon a complaint in writing made by the payee or as the case may be the holder in due course of the cheque. Section 142(1)(b) specifies that such complaint shall be made within one month of the date on which cause of action arises under clause (c) of the proviso to section 138, Negotiable Instruments Act.
When there is a delay in filing the complaint, it is mandatory for the complainant to file an application for condonation of delay. When such application is filed, a notice will have to be issued to the accused before the order is passed either allowing the condonation application or declining the same.
Reliance placed decision rendered by the Karnataka High Court in the case of Sajjan Kumar Jhunjhunwala v. M/s. Eastern Roadways Pvt. Ltd., [2006 (7) TMI 747 - KARNATAKA HIGH COURT]. In that case, the complaint under section 138, Negotiable Instruments Act was filed with a condonation application seeking condonation of delay of only three days. The learned JMFC allowed the condonation application without hearing the accused. It is held that it was mandatory for the learned JMFC to provide an opportunity to the accused to argue on the merits of the condonation application. Thereupon, the Karnataka High Court quashed the proceedings against the accused and directed the trial Court to decide the condonation application affording an opportunity to the accused to oppose the same.
Conclusion - i) When there is a delay in filing the complaint, it is mandatory for the complainant to file an application for condonation of delay. ii) The learned JMFC has registered the complaint without deciding the condonation application. His said act is certainly contrary to the principles of natural justice and provisions to sub-clause (b) of clause (1) of section 142, Negotiable Instruments Act.
The petition is partly allowed and the order of registration of complaint and the framing of charge under section 138, Negotiable Instruments Act against the petitioner are quashed. The matter stands remitted to the learned JMFC with directions to adjudicate the condonation application with a speaking and reasoned order after hearing the parties thereon.
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2016 (12) TMI 1915
Winding up of company - Whether the Respondent-Company is liable to repay the sum of Rs. 10,00,000/- to the Petitioner as a loan or if it was paid as demurrage charges on behalf of M/s. Indicaa Company? - HELD THAT:- It is an admitted position that the statement of account did not disclose the said aspect but, however, such amounts are shown to have been received from the Petitioner. It is also not disputed that the demurrage charges and detention charges were otherwise payable by the Respondent-Company on the consignment supplied by the Indicaa Company. Once this aspect is not disputed, it cannot be comprehended how the Respondent-Company is not liable to pay the said amount to the Petitioners. To verify the said fact, this Court called upon the Respondent- Company to produce the books of Accounts and the learned Senior Advocate was unable to show any entry in the books of accounts which remotely show that the amounts received from the Petitioners were shown to have been received from M/s Indicaa Company. Even in the balance sheets and the books for the final year 2013-14, the Indicaa Company is not shown as the debtor of the Respondent- Company. On perusal of the financial statement of the year ending of March 2014, neither in the list annexed thereto M/s. Indicaa Company is shown as a debtor in connection with the subject transaction.
Upon prima facie consideration of the material on record and taking note of the reluctance on the part of the Respondents in producing the complete financial records of the Respondent-Company, it is opined that the matter requires consideration and is not liable to be summarily dismissed. Admittedly, the amount has been received from the Petitioner by the Respondent-Company, the claim that the amount has been received on behalf of Indicaa Company has not been established by the Respondents. In such circumstances, it cannot be said that the Respondents have shown any bonafide dispuite with regard to the claim put forward by the Petitioners. The Respondent- Company received a notice and only sought documents from the Petitioner though the fact that the amount was received from the Petitioners by the Respondent- Company was clearly found from the books of account maintained by the Respondent.
Conclusion - A company must demonstrate a bona fide dispute and provide substantial evidence to avoid winding up due to an inability to pay debts. Respondent-Company is directed to deposit in this Court Rs. 10,00,000/- within three months from today.
Petition disposed off.
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2016 (12) TMI 1914
Oppression and mismanagement - whether the matter fixed before the Delhi Bench was heard only on the two Company Application nos. 122 and 133 of 2015 and the disposal of the main Company Petition was in breach of the principles of natural justice? - HELD THAT:- The records clearly reveal that the Company Petition filed by the Respondent nos. 1 and 2 was before the Bench at Mumbai, In fact, the Company Law Board Regulations of 1991 clearly provides in Regulation (7) that all proceedings other than the proceedings before the Principal Bench under Regulation 4 shall be instituted before the Bench within whose jurisdiction the registered office of the Company is situated or at any other place outside the region with the consent of the parties. In such circumstances, the Petition was filed in Mumbai which had jurisdiction to entertain such Petition. An Order was passed dated 29.06.2015 by the Government in exercise of the powers contained in sub- Section 4(B) of Section 10(E) of the Companies Act 1956 read with Regulation 4 of the Company Law Board Regulations 1991 thereby constituting the benches for the purpose of exercising and discharging the Board's powers and functions in the manner specified therein.
In the present case, in consonance with the said Orders, the Company Application nos. 122 of 2015 and 133 of 2015 wherein the Appellants on one hand and the Respondent nos. 1 and 2 on the other hand, filed applications for interim reliefs and in view of the urgency shown by the parties, the matter was placed for hearing on such application before the Bench at New Delhi - No doubt, the learned Board has elaborately examined the material on record whilst passing the impugned Judgment but the law recognizes that a view has to be taken after giving an appropriate notice and opportunity to the parties to advance their arguments. The ultimate decision taken by the Company Law Board would affect the substantive rights of the parties and, such rights, cannot be defeated or taken away without giving the parties an effective hearing on the issues involved.
Without going into the merits of the rival contentions raised by the Appellants and the Respondents in the main Petition, it is found appropriate and in the interest of justice to quash and set aside the impugned Judgment passed by the Company Law Board and direct the Company Law Board to decide the Company Petition and the said two Applications afresh after hearing the parties in accordance with law.
The impugned Order/Judgment dated 25.04.2016 is quashed and set aside - Company Petition no. 18 of 2015 and Company Application nos. 122 of 2015 and 133 of 2015 are restored to the file of the learned Company Law Board, Mumbai Bench - appeal disposed off.
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2016 (12) TMI 1913
Development Commissioner jurisdiction to act as an adjudicating authority under the provisions of the Customs Act or the Central Excise Act to impose Anti-Dumping Duty (ADD) - HELD THAT:- In the light of the stand taken in the affidavit filed by the Development Commissioner, agreeing for transfer of the files to the jurisdictional Customs Officer, this Court does not propose to examine the factual or legal contentions put forth on either side and they have been set out in the preceding paragraph with a view to keep the jurisdictional Customs Officer informed about the contentions raised by the petitioner though not elaborately, but to give a broad over view of the respective contentions. Thus, developments and taking note of the affidavits referred to above, the writ petitions are disposed of by issuing the following directions.
First respondent/Development Commissioner shall transfer all the files to the jurisdictional Customs Officer to enable the jurisdictional Customs Officer to take up the cases for adjudication as a regular case based on merits and in accordance with law. The files pertaining to the show cause notice shall also be transferred to the jurisdictional Customs Officer.
The jurisdictional Customs Officer shall afford the petitioner an opportunity to submit their objections and thereafter take up the show cause notices for adjudication. The jurisdictional Customs Officer, while adjudicating the show cause notices, shall adjudicate as to whether the Development Commissioner has jurisdiction to issue the show cause notices or to adjudicate the matter in issue.
Apart from the same, the other issues which have been raised in the show cause notices shall also be adjudicated. For this purpose, the Development Commissioner shall be heard by the jurisdictional Customs Officer.
It is made clear that in the preceding paragraph, the legal position as canvassed by the petitioner and as counted by the respondent/Development Commissioner has been set out and it is for the adjudicating authority to adjudicate upon those legal issues as well, after considering the submissions of the parties.
Development Commissioner has sought for a direction upon the petitioner to continue to pay ADD till the adjudication process is over.
Now that the show cause notices have been directed to be adjudicated, pending adjudication, no conditions or fetters can be imposed on the petitioner for the clearances that may be effected by them to the Domestic Tariff Area Unit from the Flextronics Special Economic Zone and it shall await the final adjudication of the show cause notices and the order in original to be passed. It is made clear that this Court has not expressed any opinion on the factual issues raised and the legal issues which have been canvassed, have been set out in the preceding paragraph to give a broad over view of the contentions of the parties and it is the jurisdictional Customs Officer who has to adjudicate the show cause notices as would be regularly done by him in other cases.
Since the Revenue implication appears to be large and the learned Additional Solicitor General requests some protection for the Revenue, this Court is of the view that the jurisdictional Customs Officer shall endeavour to complete the adjudication as expeditiously as possible, preferably within a period of two months from the date of receipt of a copy of this order, and the petitioner shall extend full co-operation.
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2016 (12) TMI 1912
Infringement of copyright - photocopying of copyrighted publications - Interpretation of Section 52(1)(i) of the Copyright Act, 1957 - fair use and reproduction by a teacher or pupil in the course of instruction - HELD THAT:- The appeal is disposed of setting aside the impugned judgment and decree holding that no triable issue on fact arises.
The suit is restored for trial on the issue of fact and for which parties would be permitted to lead expert witness testimony. The learned Single Judge has dismissed the application seeking interim injunction against the defendants and simultaneously on the reasoning that no triable issue arises the suit has been dismissed. Having restored the suit and identifying the triable issue warranting evidence, interim injunction cannot be granted to the appellants but respondent No.1 is directed to maintain a record of course packs photocopied by it and supplied to the students. Every six months the statement of number of course packs photocopied and supplied shall be filed in the suit.
The suit would now be listed for directions before the learned Roster Judge on January 04, 2017.
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2016 (12) TMI 1911
Revision u/s 263 - Computation of capital gain - LTCG or STCG - “transfer” in relation to a capital asset - whether agreement/deed of allotment granting of possession after completing all the payment formalities should be taken as date of transfer for the purpose of computation of capital gains or the date of registration of sale deed? - HELD THAT:- Revenue has initiated proceedings u/s 154 and thereafter dropped the same after receiving the assessee’s reply. Thereafter on the same issue, show cause notice for reopening u/s 148 was issued. Upon assessee’s explanation the AO was satisfied and so far no reopening u/s 148 has been done. The above facts make it clear that the explanation by the assessee is plausible.
AO had applied his mind in the assessment order also. It is settled law that the issue on which two views are possible and the AO has adopted one of the views, assumption of jurisdiction u/s 263 by the CIT is invalid. In this regard we find support from Max India Ltd. [2007 (11) TMI 12 - SUPREME COURT] - In this case it was held that where two views are possible and the ITO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue, unless the view taken by the ITO is unsustainable in law.
LTCG or STCG - whether agreement/deed of allotment granting of possession after completing all the payment formalities should be taken as date of transfer for the purpose of computation of capital gains or the date of registration of sale deed? - We find that this issue is no more res-integra. Hon’ble Apex Court in the case of Shri Sanjeev Lal Etc. [2014 (7) TMI 99 - SUPREME COURT] wherein held once an agreement to sell is executed in favour of one person, the said person gets a right to get the property transferred in his favour by filing a suit for specific performance and therefore, without hesitation we can say that some right, in respect of the said property, belonging to the appellants had been extinguished and some right had been created in favour of the vendee/transferee, when the agreement to sell had been executed.
Thus we find that in this case the assessee has obtained the possession of the land vide deed of allotment on 16-12-2005. Upon this date all the payments had been done. No case has been made by the Revenue that any of the payment was due after this date. In such circumstances on the anvil of aforesaid case law of the above said Apex Court decision the date of transfer qua the purchase for computation of capital gains is 16-12-2005 and not the date on which the sale deed was registered i.e. on 01-09-2009.
Thus, AO having been conscious of the facts of the case has applied a view which has the mandate of Hon’ble Apex Court. In such view of the matter, treatment of the assessment order as prejudicial and erroneous to Revenue by the learned CIT is not at all sustainable. Here again the above decision of Hon’ble Apex Court in Max India Ltd. support this view. Hence we have no hesitation in quashing the 263 order passed by the learned CIT. Decided in favour of assessee.
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2016 (12) TMI 1910
Deduction u/s 80P(2)(d) - interest earned out of surplus funds lying deposited with the post office and bank - HELD THAT:- These very questions have been answered by a Division Bench of this Court in Cooperative Cane Development Union Ltd. [2012 (9) TMI 1250 - ALLAHABAD HIGH COURT] relying on a decision in the case of Totgar's Cooperative Sale Society Ltd. [2010 (2) TMI 3 - SUPREME COURT] wherein it was clearly spelt out by the Apex Court that the investment in securities is not a primary object of the cooperative credit society and the objects of the society do not provide for investment of money in post office or bank and thereby earned interest. Any such interest earned from such deposits would necessarily be chargeable to tax under Section 56 - Decided against assessee.
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2016 (12) TMI 1909
Deduction u/s 80P(2)(d) - interest earned out of surplus funds lying deposited with the post office and bank - HELD THAT:- These very questions have been answered by a Division Bench of this Court in Cooperative Cane Development Union Ltd. [2012 (9) TMI 1250 - ALLAHABAD HIGH COURT] relying on a decision in the case of Totgar's Cooperative Sale Society Ltd. [2010 (2) TMI 3 - SUPREME COURT] wherein it was clearly spelt out by the Apex Court that the investment in securities is not a primary object of the cooperative credit society and the objects of the society do not provide for investment of money in post office or bank and thereby earned interest. Any such interest earned from such deposits would necessarily be chargeable to tax under Section 56 - Decided against assessee.
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2016 (12) TMI 1908
Maintainability of appeal - low amount involved in the appeal - Manufacture - Demand of differential duty - it was held by CESTAT that 'process undertaken by the respondents do not amount to manufacture as the MS rods, plates, angles etc. remain the same even after the process have been carried out. Therefore, there is no new manufacturing process involved.'
HELD THAT:- In view of the low tax effect, it is not required to entertain this appeal. Consequently the Appeal is dismissed.
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2016 (12) TMI 1907
Principles of Legitimate expectation and promissory estoppel - Levy of EDC - Scope and extent of exemptions claimed to have been granted under the Industrial Policy, 2003 - amount paid in lieu of EDC and cess - Refund sought on the premise that the petitioner has been exempted from such levies under the Industrial Policy, 2003 - requirement to obtain NDC from GMADA as a pre-condition for approval of Layout and Zoning Plans - prayer for grant of extension of time towards completion of the project on account of delays having been caused by the respondents.
Whether the phrase ‘cost of infrastructure development’ as contained in para 5 (iv)(q) of the Agreement dated 11.10.2006 is synonymous to the expression ‘External Development Works’ as defined in Section 2(p) of PAPRA, 1995? - If so, whether the petitioner is exempted from payment of External Development Charges/Cost of Infrastructure Development in view of para 5(iv)(j) of the Agreement dated 11.10.2006 whereunder its project has been exempted from PAPRA, 1995? - HELD THAT:- The petitioner’s contention that there is no statutory backup to levy the cost of infrastructure development, for there is no such provision in the PAPRA, 1995, is wholly misconceived. Once the petitioner’s project is exempted from PAPRA, 1995, the affairs of the parties shall be governed by the terms and conditions of the Agreement dated 11.10.2006. Further, since the External Development Works stand included in the infrastructure development works, there can be no escape but to hold that the petitioner is liable to pay such charges as per the binding contract read with Section 5 of the PAPRA, 1995. It is clarified that since the exemption from PAPRA, 1995 granted to the petitioner was subject to its liability to pay proportionate cost towards infrastructure development works, hence, there was no exemption to it in legal parlance from the levy of ‘external development charges’ as defined in Section 2(p) read with Section 5 of PAPRA, 1995.
What is the effect of para-6 of the Agreement dated 11.10.2006 on the petitioner’s claim for exemption from payment of EDC and other charges? - Whether the time prescribed for completion of the project is the essence of contract, and if so, whether it would have any adverse effect on the petitioner’s claims after the expiry of the extended period? - HELD THAT:- It is undeniable that as per para (6) of the Agreement dated 11.10.2006 if the petitioner-company was unable to comply with provisions of para 5(i), 5(ii) and 5(iii) within the stipulated period of three years commencing from 29.03.2006 (which was later on extended upto 28.03.2012, with a further renewal offer under the new policy decision dated 06.02.2015), the concessions enumerated in para 5(iv) were liable to be automatically withdrawn - Since it is viewed that the petitioner is liable to pay the proportionate costs towards infrastructure development works which include the ‘External Development Works’ within the meaning of Section 5 of PAPRA, 1995, it is not necessary to dwell upon the implications of petitioner’s failure to make an investment of ₹ 952 crore within the initially agreed and/or subsequently extended period.
Since the respondents themselves are not keen to adhere to the time schedule, we hold that GMADA has no authority to assume the role of State Government or to invoke Para 6 of the Agreement to say that the petitioner has lost its right to claim concessions due to the ‘expiry’ of time period, within which the project was required to be completed.
Whether the respondents are bound by the principles of ‘legitimate expectation’ and ‘promissory estoppel’ and consequently are debarred from levying EDC on the petitioner? - HELD THAT:- The State Government while granting special package of incentives on 05.05.2006, expressly informed the petitioner of its liability towards proportionate cost of infrastructure development and it was thereafter that both the parties knowing fully well the implications of such clause, entered into the Agreement dated 11.10.2006. The petitioner having agreed with open eyes to pay the proportionate cost of infrastructure development cannot turn around and invoke the principle of ‘promissory estoppel’ against the respondents as what the petitioner has been asked to pay is necessarily a component of the cost towards infrastructure development works only. So long as the respondents have not withdrawn the exemption from PAPRA, 1995 which might result into levy of other statutory charges on the petitioner, it cannot be said that the respondents have acted contrary to their promise. Similarly, the petitioner cannot be heard to say that it ‘legitimately expected’ not to pay the proportionate cost of infrastructure development works even after it agreed to share such liability while entering into agreement. We thus do not find any merit in this contention as well.
Whether the action of the respondents in levying EDC/CLU/licence fee etc. is discriminatory, based upon arbitrary and irrational considerations? - HELD THAT:- The petitioner is liable to pay proportionate cost towards infrastructure development works and all the ‘External Development Works’ as defined in PAPRA, 1995 are by implication included in the infrastructure development works. The inescapable consequence would be that the impugned recovery notices served on the petitioner are fully justified.
The respondents may be right to an extent in contending that the petitioner lacks the financial capability to fulfill the promise for which it entered into the Agreement or that it has consistently failed to honour the commitment towards payment of due charges. At the same time, it has to be kept in view that the petitioner has already invested more than ₹ 150 crores. If all the doors are closed for the petitioner on a hyper-technical plea that the time limit extended under the policy dated 06.02.2015 already stands expired, the drastic consequence would be that the petitioner’s project would suffer hammer blow. It serves no one’s purpose.
The petitioner has also laid challenge to the acquisition of a small part of its land, by way of a miscellaneous application in the second case. Since such acquisition is a subsequent event, no views expressed on its merits and the petitioner’s application is disposed off with liberty to initiate appropriate separate proceedings in that regard, if so advised.
Petition disposed off.
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2016 (12) TMI 1906
Dishonour of Cheque - acquittal of accused - mistakenly typing of the cheque number - discharge of debt/liability - HELD THAT:- As far as the present case is concerned, in the complaint, the Appellant/Complainant, at paragraph 8 and 12 had mentioned the number of the cheque as '361868' dated 22.03.2013, but at paragraph 9 of the complaint, the cheque number was mentioned as '361838'. In fact, in Ex. R1 - Legal Notice dated 17.04.2013 (issued to the Respondent/Accused), the cheque number was mentioned as '361868' but at paragraph 5 of the said notice, the cheque that was deposited on 22.03.2013, described as '361838'. Even though incorrect mentioning of the Cheque number in Ex. R1 - Legal Notice dated 17.04.2013 is a mistake or ancillary or incidental one, since the transaction between the Appellant/Accused viz., supply of chickens, the evidence of P.W.1 indicates that the Respondent/Accused had issued the cheque in favour of the Appellant/Complainant towards security for the outstanding amount. At this stage, this Court aptly points out that if the cheques were issued not for discharge of any debt or liability, but they were issued by way of security, the Applicant could not be held liable under Section 138 of the Negotiable Instruments Act.
An entry in an account is a self serving one as it is an admission by the maker thereof, in his favour. The crucial test would be whether the entries in a particular account are honest or otherwise. An account book is to be established by a person who had written it and if he is alive or by some other person who is competent to speak about its veracity/genuineness. It cannot be gainsaid that before an extract from 'Account Book' is admitted in evidence, it must be legally proved.
In the instant case, even though the Appellant/Complainant, at paragraphs 8 & 12, in the complaint, had mentioned the cheque number as '361868' and mentioned the cheque number incorrectly as '361838' in Ex. P3 - Notice, this Court is of the considered view that there is no mist or cloud or shroud or any manner of simmering doubt in regard to the language employed in Section 138 of the Negotiable Instruments Act. Admittedly, notice will have to be read in entirety. In the present case, there was no correction notice communicated/issued on behalf of the Appellant/Complainant to the Respondent/Accused - the incorrect mentioning of the cheque in Ex. P3 - Notice is not fulfilling the requirement under Section 138(b) of the Negotiable Instruments Act. In as much as Ex. P3 - Notice is not in conformity with Ex. P1 - Cheque, as a logical corollary, the complaint filed by the Appellant/Complainant is per se not maintainable in Law.
This Court comes to a consequent conclusion that the Appellant/Complainant had not established his case beyond all reasonable doubt. Therefore, the resultant view taken by the trial Court in finding the Respondent/Accused not guilty and acquitting him under Section 255(1) Cr.P.C. is free from any flaw. Consequently, the Criminal Appeal fails.
Appeal dismissed.
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2016 (12) TMI 1905
Violation of principles of natural justice - Termination of service - entitlement to service benefits except back wages which were limited to 50 per cent, from the date of termination to the date of superannuation - HELD THAT:- On facts, it is clear that the High Court has gone wrong in holding that the Labour Court did not follow the procedure. It is seen from the award that the management had not sought for an opportunity for leading evidence. And despite granting an opportunity, no evidence was adduced after the Labour Court held that the findings of the inquiry officer were perverse. Therefore, the Labour Court cannot be faulted for answering the Reference in favour of the Appellant.
The Labour Court, on the available materials on record, found that the termination was unjustified on the basis of a perverse finding entered by the inquiry officer. There was no attempt on the part of the management before the Labour Court to establish otherwise - It appears that the High Court itself has granted compensation since the Court felt that the termination was unjustified and since reinstatement was not possible on account of superannuation. In case, the High Court was of the view that termination was justified, it could not have ordered for payment of any compensation.
In order to deny gratuity to an employee, it is not enough that the alleged misconduct of the employee constitutes an offence involving moral turpitude as per the report of the domestic inquiry. There must be termination on account of the alleged misconduct, which constitutes an offence involving moral turpitude.
The judgment of the High Court cannot be sustained - Appeal allowed.
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2016 (12) TMI 1904
Petition posted for orders on this day, for not having represented the batta with petition - HELD THAT:- This Court having granted time till 23-12-2016 as condition precedent and the said Advocate not having complied with the said direction of this Court, it is ordered that this petition do stand dismissed against the respondent.
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2016 (12) TMI 1903
Deemed dividend under section 2(22)(e) - assessee is registered and also beneficial shareholder and also Director of MCPL(a private limited company in which public are not substantially interested) holding 50% shares of MCPL, as well the assessee is partner in partnership firm MRED having 50% share in the profits of the afore-said partnership firm - HELD THAT:- As partners of MRED who are also the registered and beneficial shareholders of MCPL holding 50% shares each had not benefited out of the funds transferred by MCPL to MRED will be an fallacious argument and is hereby rejected keeping in view facts and circumstances of this case as set out above in preceding para’s. It is one of the direct case whereby the partners of the firm MRED has benefited out of the huge interest-free advances being given by MCPL to MRED and hence it is thus, the direct infringement / violation of the provisions of section 2(22)(e) of the Act. In our considered view , the AO has rightly invoked the provisions of Section 2(22)(e) of the Act and has brought to tax the said loans and advances granted by MCPL to MRED, within the deeming fiction of Section 2(22)(e) of the Act by terming the same as deemed dividend in the hands of the partners of the firm MRED i.e. Mr. Peter Vaz and Mr.Edgar Braz Afonso who are registered as well beneficial shareholder of MCPL and being beneficiaries of the amount advanced by MCPL to MRED as set out above , on substantive basis keeping in view the decision of Hon’ble Bombay High Court in the case of CIT v. Universal Medicare Private Limited [2010 (3) TMI 323 - BOMBAY HIGH COURT]
Assessee could not prove the business nexus and business purpose for advancing huge amount of loan and advances by MCPL to MRED to the tune of Rs. 50.99 crores from assessment year 2006-07 to assessment year 2012-13 and in any case the Assessing Officer has given set off / credit for all the inter-se transactions between MCPL and MRED wherein business nexus was established / proved by the assessee and also the AO has duly taken note of restricting the additions u/s 2(22)(e) of the Act keeping in view accumulated profits held by MCPL as per mandate of Section 2(22)(e) of the Act .
We are of the considered view that under S.2(22)(e) of the Act liability to tax attaches to any amount taken as loan and advance by the share holder from a controlled company to the extent it possesses accumulated profits at the moment the loan is borrowed and it is immaterial whether the loan is repaid before the end of the accounting year , as was held by Hon’ble Apex Court in the case of Smt Tanulata Shyam [1977 (4) TMI 3 - Supreme Court].Decided against assessee.
Additions have been made in the case of Model Real Estate Developers on the protective basis , while substantive additions have been made in the hands of Mr Peter Vaz and Mr Edgar Braz Afonso and their spouse, wherein we have confirmed the substantive additions made by Revenue in the hands of Mr Peter Vaz and Mr Edgar Braz Afonso and their spouse with respect to loans and advances granted by MCPL to MRED, as per detailed discussions and reasoning as set out in preceding paras’ of this orders. Since, we have confirmed substantive additions the protective additions made by Revenue on the identical issue in the hands of MRED shall not survive w.r.t. to loans and advances granted by MCPL to MRED. Thus, we order deletion of additions made on protective basis in the hands of MRED for the assessment years 2007-08 to 2012-13
Transfer of funds to the assessee by SIPL - As per AO huge amounts have been advanced by the said company SIPL to the assessee without any business purposes/nexus and hence is clearly hit by deeming fiction created u/s 2(22)(e) of the Act to be treated as deemed dividend - HELD THAT:- We do not find any infirmity in the order of the AO as the AO has rightly brought to the tax said advances which are in the nature of loan and advances being given out of the accumulated profits by the company SIPL for the individual benefit of its registered cum beneficial share holder Mr. Edgar Braz Afsono’ i.e. the assessee, which loans and advances were disbursed by SIPL to the assessee-shareholder instead of declaring dividends out of accumulated profits and hence dividend distribution tax is evaded to be paid to the Government had the said amount of advances would have been distributed by SIPL as dividend to its shareholders. We have also observed that the appellate order of the learned CIT(A) does not hold merit and hence cannot be upheld as learned CIT(A) merely accepted the contentions of the assessee without any evidences , which in-fact pained us after reading the appellate orders of the learned CIT(A). We, therefore , order that the appellate order of learned CIT(A) be set aside as the same is not sustainable at law as the learned CIT(A) merely accepted the contentions of the assessee without any evidences and has not brought on record material to disprove the contentions of the AO , while on the other hand the AO has elaborately explained with cogent reasons in his assessment order as to why the provisions of Section 2(22)(e) of the Act are applicable in this instant case of the assessee and how the said loans and the advances which were given without any business purposes by SIPL to the assessee out of its accumulated profits will be hit by the Section 2(22)(e) of the Act to be brought to tax as deemed dividend, and hence we set aside the order of the ld.CIT(A) and uphold/affirm the assessment order of the AO and since Mr. Edgar Braz Afonso is the registered and beneficial share holder of the company SIPL holding substantial interest in the said company SIPL holding 50% of shares of SIPL (a company in which public are not substantially interested) , the ratio of the decision of t.Universal Medicare Private Limited [2010 (3) TMI 323 - BOMBAY HIGH COURT] is directly applicable to the instant case and hence the AO has rightly brought to tax the said amount of loans and advances granted by SIPL in favour of the assessee without any business purposes and nexus, within the ambit of section 2(22)(e) of the Act by bringing to tax the same as deemed dividend , to the extent SIPL possessed accumulated profits, which assessment order of the Assessing Officer we confirm and sustain. Decided against assessee.
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2016 (12) TMI 1902
Levy of penalty u/s. 271(1)(c) - addition on account of purchase of NSC and saving bank interest - Defective notice u/s 274 - non specification of clear charge - HELD THAT:- A show cause notice u/s. 274 of the Act was issued. The Assessing officer has not stated specifically whether the show cause is for concealment of income by the assessee or furnishing of inaccurate particulars of income. Therefore, following case of Suvaprasanna Bhatracharya [2015 (12) TMI 43 - ITAT KOLKATA], thus hold that the order imposing penalty is invalid and consequently the imposition of penalty is deleted. Decided in favour of assessee.
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2016 (12) TMI 1901
Revision u/s 263 - validity of assessment was framed u/s 143(3) - HELD THAT:- As in Tribunals order [2016 (12) TMI 863 - ITAT MUMBAI] whereby the order of CIT-8, Mumbai for the A.Y. 2006-07 was quashed stating the record of proposal to take action by the AO u/s 154 of the Act was before the CIT before issuing notice u/s 263 and hence the order of the AO cannot be termed as erroneous so far as prejudicial to the interest of Revenue as the word ‘records’ used in Section 263 of the Act shall also contemplate including the record pertaining to proceedings u/s 154 arising subsequently out of the assessment order passed by the AO u/s 143(3) of the Act and such record was before ld CIT before he issued notice u/s 263 on 11.03.2011.
Thus, in our considered view, the assessment order dated 23.12.2008 passed by the A.O. u/s 143(3) of the Act is neither erroneous nor it is prejudicial to the interest of Revenue, and the CIT has not correctly invoked the provisions of section 263 hence, the order of the CIT in our considered view is not sustainable in law and is hereby ordered to be quashed.
Assessee stated that the consequential assessment framed u/s 143(3) r. w. s. 263 dated 30-08-2011 will not survive and accordingly, the order of CIT(A) will not survive. We find from the above that the Tribunal has quashed the revision order of CIT-8, Mumbai dated 30-03-2011 and once the basic order is quashed, the consequential orders will not survive. Accordingly, we set aside the orders of the lower authorities and allow the appeal of the assessee.
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2016 (12) TMI 1900
Income taxable in India - attributed 15% of the assessee’s income to India by Tribunal - applicability of the Galileo rule - Assessee, a Delaware, USA based limited partnership concern and a tax resident of the USA, provides online airline booking services - HELD THAT:- A reference was made to the observations of the ITAT recording that the parties were in broad agreement as to the applicability of the Galileo rule, both with respect to the PE question as well as the rule of attribution.
In the present case, the AO had based his conclusions and determined the income based upon figures furnished by the assessee, as is apparent from a plain reading of the order. In the circumstances, the ITAT, in our opinion, ought not to have disturbed that order, without a finding.
This Court has also in its order [2017 (1) TMI 1160 - DELHI HIGH COURT] between the same parties. Accordingly, the present appeal is disposed off with a direction to the ITAT to render specific findings on the questions urged after hearing both the parties.
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2016 (12) TMI 1899
Denial of benefit of House rent allowance (HRA) to both husband and wife - recovery from the leave encashment to be paid to the petitioner of house rent was for the period from February 1986 up to March 2014, when the petitioner retired - both the petitioner and his wife have been residing in the same house belonging to the late father of the petitioner, but house rent allowance has been paid to the wife of the petitioner from February 1986 as well as to the petitioner too - whether wife was an employee of Oriental Bank of Commerce and was receiving house rent allowance? - HELD THAT:- It is not in dispute that the wife of the petitioner was an employee of Oriental Bank of Commerce from February 1986 and that she has been receiving the house rent allowance - both the petitioner and his wife have been residing in the same accommodation.
Government Order specifically provides that if both the husband and wife are in government service and if they are residing in the same accommodation, then house rent allowance can be claimed only by one of them. Also provides that the same conditions would apply if the spouse was employed in Local Bodies, Educational Institutions, Universities, Public Enterprises, Corporations etc, etc. The same condition was reiterated in the Government Order dated 28 April 2000.
The wife of the petitioner was an employee of the Oriental Bank of Commerce. This is an enterprise of the Central Government. It cannot, therefore, be contended that the conditions set out in the Government Order dated 28 February 1984 would not apply to the petitioner. This is what has also been observed by the Appellate Authority.
The Government Order on which reliance has been placed by the learned counsel for the petitioner will not come to the aid of the petitioner. It is only in relation to the government servants and provides that house rent allowance will be payable to both husband and wife, even if they are government servants and reside in the same house. As clarifies that earlier cases will not be reopened. The wife of the petitioner was not in government service. The communication dated 11 February 2015 will not, therefore, help the petitioner in any manner. The case of the petitioner would be covered by the Government Order dated 28 February 1984.
As not possible for us to accept the contention advanced by petitioner that opportunity was not provided to the petitioner. In view of the complaint, a notice was sent to the petitioner to submit his reply and on consideration of the reply submitted by the petitioner, the order for recovery of the amount was passed against the petitioner. Even otherwise, it is an admitted fact that the wife of the petitioner was in service in the Oriental Bank of Commerce and she was receiving house rent allowance from February 1986 upto March 2014. Thus, no prejudice has been caused to the petitioner at all. WP dismissed.
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2016 (12) TMI 1898
Reassessment u/s. 148 - addition by estimating the income of the assessee @ 4% in place of 2.2% shown by the assessee - HELD THAT:- As find from the reassessment order framed by the AO that no addition was made by him on the ground of the above reasons recorded but the addition was made by the AO by estimating the income of the assessee @ 4% in place of 2.2% shown by the assessee. Therefore, the decision in the case of Mohd Juned Dadani [2013 (2) TMI 292 - GUJARAT HIGH COURT] & case of jet Airways (I) Ltd. [2010 (4) TMI 431 - HIGH COURT OF BOMBAY] clearly apply to the facts of the assessee’s case.
Thus assuming jurisdiction to frame an assessment u/s. 147 of the Act, what is essential is a valid reopening of a previously closed assessment. If the very foundation of the reopening is knocked out, any further proceedings in respect to such assessment naturally would not survive. Decided in favour of assessee.
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2016 (12) TMI 1897
Re-assessment/deemed assessment - power of re-assessment - change of opinion or not - reasons to believe - Classification of goods - composite pack of mobile phone along with mobile charger and other accessories - taxable at the rate specified for Entry 68 of Part 1 of Schedule-III read with Entry 14 of Part-II of the said Schedule or not - HELD THAT:- It is evident from the provisions of Section 31 of the Bihar VAT Act that sub-section (1) of Section 31 although not very happily worded, but is on the same lines as the earlier provisions of the Income-tax Act, 1961 prior to its amendment in 1987. Taking into account the said Section as a whole including sub-section (2), it is evident that two types of cases are envisaged therein; in both type of cases the prescribed authority must be satisfied that reasonable grounds exist to believe that there has been under assessment or escaped assessment or assessment to tax at a lower rate or any deduction has been wrongly made therein or an input tax credit has been wrongly claimed, in which cases within the statutory period of four years it can make an assessment or reassessment of the tax payable by such dealer - In the first category, such reassessment can be made irrespective of whether the dealer has concealed, omitted or failed to disclose full and correct particulars of such sale or purchase or input tax credit, whereas in the second category there has been such a failure to disclose on the part of the dealer. The same would flow from the harmonious reading of the provisions of sub-section (1) with sub-section (2) of Section 31 of the Act, which obliges the prescribed authority in the second category of cases to impose by way of penalty the sum equal to three times of the amount of tax which is or may be assessed on the turnover of sale or purchase which escaped assessment, whereas in the first category there would be a mere reassessment of the under-assessed or escaped tax, etc.
In the present matter, it is not in dispute at all that there has been no concealment, omission or failure to disclose full and correct particulars by the petitioners. Thus, the only issue is as to whether the assessing officer was justified in making reassessment under Section 31 of the Act with regard to the periods in issue - the provisions of the Act are on similar lines as the unamended provisions of Section 147 of the Income Tax Act and that they provide for two categories of cases; but even the provisions of Section 147 of the Income-tax Act amended in the year 1989 make it clear that there must be reason to believe that there has been under-assessment or escaped assessment, etc. and as has been held in the case of COMMISSIONER OF INCOME TAX, DELHI VERSUS M/S. KELVINATOR OF INDIA LIMITED [2010 (1) TMI 11 - SUPREME COURT] by the Apex Court, it should not be a mere change of opinion, otherwise it would amount to arbitrary exercise of power by the assessing officer to reopen the assessment - The said law emphatically laid down by the Supreme Court in Kelvinator's case is squarely applicable in the present matter also and it has to be held that reassessment cannot be made on a mere change of opinion.
Whether the decision of the Supreme Court subsequent to the assessments can be considered a mere change of opinion? - HELD THAT:- The law on this point is also very much clear, as held in the several decisions cited including that of DY. COMMISSIONER OF INCOME TAX & ORS. VERSUS M/S. SIMPLEX CONCRETE PILES (INDIA) LIMITED [2012 (9) TMI 516 - SC ORDER], a subsequent reversal of legal position by the judgment of the Supreme Court does not authorize the Department to reopen the assessment which stood closed on the basis of law at the relevant time.
It is evident that in the first category of 8 writ petitions assessment/reassessment had been made earlier under the provisions of Section 31 and/or Section 33 of the Act. It is also evident from the notice issued under Section 31 of the Act that the sole reason for initiation of proceedings under Section 31 of the Act is the decision of the Supreme Court in the case of STATE OF PUNJAB & OTHERS VERSUS NOKIA INDIA PVT. LTD. [2014 (12) TMI 836 - SUPREME COURT] - There was no other material which has come into the possession of the Department which was already not known to it. The fact that there had been earlier assessment/reassessment under Section 31 or Section 33 of the Act goes to show that any further issuance of notice under Section 31 of the Act in such matters without anything more, except the decision of the Supreme Court in Nokia's case would, on the same materials, amount to a mere change of opinion by the prescribed authority in the matter. Thus, any action on the said basis would clearly be without jurisdiction and therefore without authority of law.
So far as the remaining eight matters are concerned, admittedly they are cases of deemed assessments on the basis of the provisions of Section 26 of the Act or assessment under Section 27. No doubt under Section 25 of the Act, the prescribed authority is required to look into and scrutinize the return filed under Section 24 (1) and (3) of the Act but that is not the same thing as making a proper assessment. If the assessing authority had no occasion to form an opinion during the course of such deemed assessment of the returns filed by the petitioner, and subsequently a notice was issued under Section 31 (1) of the Act, or assessment made under Section 27, albeit on the ground of decision rendered by the Supreme Court, it could not be said that there has been any change of opinion - so far as the remaining eight cases are concerned, the plea of the petitioners regarding change of opinion is not applicable.
That being the position, considering the fact that various issues of facts, etc. will have to be dealt with before the question of liability can be decided, the writ jurisdiction does not appear to be a proper one to deal with such issues of fact which must be thrashed before the statutory authorities up to the Tribunal - no interference is called for in such cases where that has been no previous assessment/reassessment under Section 31 or Section 33 of the Act - Application allowed.
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