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1992 (5) TMI 206
Issues:
- Imposition of penalty under section 18(2) of the Foreign Exchange Regulation Act, 1973 for failure to realize export proceeds.
- Challenge to the findings of the Adjudicating Officer in Appeal No. 535 of 1989.
- Similar grounds raised in Appeal No. 533 of 1989.
- Examination of whether reasonable steps were taken to recover the export value of the goods.
- Consideration of change in terms of payment from COD to 90 days grace period.
- Legal tenability of not realizing reduced value of goods offered by the buyer.
- Requirement of taking all reasonable steps to repatriate export value to avoid violation of section 18(2).
- Review of documents and correspondence to determine if all relevant facts were considered.
- Exercise of discretion in imposing penalties and the need for a judicious decision.
Analysis:
The judgment involves the imposition of a penalty under section 18(2) of the Foreign Exchange Regulation Act, 1973 for the failure to realize export proceeds totaling US $4,530. The Adjudicating Officer found the appellants guilty based on various grounds, including the non-realization of export proceeds, unauthorized change in payment terms, and lack of evidence showing sincere efforts to recover the amount. The appellants challenged these findings in Appeal No. 535 of 1989, citing errors in law and fact, asserting they made efforts to recover the proceeds, and disputing the allegations of non-compliance. Similar arguments were raised in Appeal No. 533 of 1989, indicating a commonality in the grounds of challenge.
The judgment delves into the requirement of taking all reasonable steps to recover the export value of goods, emphasizing the need for compliance with statutory provisions. It discusses the change in payment terms from COD to 90 days grace period, highlighting that such changes may not necessarily indicate a lack of sincere efforts to realize export proceeds. The legal tenability of not realizing a reduced value offered by the buyer without RBI permission is also examined, stressing that actions contrary to statutory provisions cannot be deemed reasonable under section 18(3).
Furthermore, the judgment scrutinizes the documents and correspondence submitted by the parties to assess whether all relevant facts were considered in the adjudication process. It points out discrepancies in the Adjudicating Officer's analysis of the letters and the need for a comprehensive review of the evidence before reaching a decision. The judgment underscores the importance of exercising discretion judiciously in imposing penalties, emphasizing the necessity of considering all pertinent facts to render a legally sound decision.
Ultimately, the Appellate Tribunal remands both cases back to the Adjudicating Officer for a fresh order within three months, directing a reevaluation of the evidence and affording parties a fresh opportunity to present their case. Failure to comply with the timeline may result in the refund of the penalty deposited by the appellant, underscoring the significance of a fair and thorough review process in legal proceedings.
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1992 (5) TMI 205
Issues Involved:
1. Validity of the rejection of building plans based on new building restrictions.
2. Applicability of the new building restrictions to plans submitted before their enforcement.
3. Payment of conversion charges and its impact on the validity of building plans.
4. Legislative history and authority of the Cantonment Board and GOC-in-Chief in imposing building restrictions.
5. Environmental and urban planning considerations in the enforcement of building restrictions.
Issue-wise Detailed Analysis:
1. Validity of the rejection of building plans based on new building restrictions:
The Supreme Court upheld the rejection of building plans by the Cantonment Board based on new building restrictions imposed by the GOC-in-Chief, Southern Command. The Court noted that the petitioners were informed that their building plans could only be sanctioned after the conversion of old grants into freehold tenure and payment of conversion charges. The new scheme of restrictions, which came into force on 24.12.1982, mandated minimum open spaces and floor space index (FAR) requirements. The petitioners' refusal to comply with these new restrictions led to the rejection of their plans. The Court emphasized that no plans could be sanctioned until the conversion was accepted and the conversion charges were fully paid.
2. Applicability of the new building restrictions to plans submitted before their enforcement:
The Court ruled that the new building restrictions, effective from 24.12.1982, were applicable to all building plans not sanctioned before this date. The petitioners argued that their plans, submitted before the enforcement of the new restrictions, should be approved under the old regulations. However, the Court held that the new restrictions were legislative in nature and would prevail over the earlier bye-laws. The Court further stated that the building plans could only be sanctioned according to the building regulations prevailing at the time of sanctioning, which in this case were the new restrictions.
3. Payment of conversion charges and its impact on the validity of building plans:
The Court found that many petitioners had not paid the conversion charges or had only made partial payments. The payment of conversion charges was a condition precedent for the sanctioning of building plans. The Court noted that until the conversion charges were fully paid, the conversion could not be deemed to have been made, and hence, the building plans could not be sanctioned. The Court emphasized that the petitioners did not acquire any legal right in respect of building plans until they paid the total amount of conversion charges and obtained the conversion of their land into freehold tenure.
4. Legislative history and authority of the Cantonment Board and GOC-in-Chief in imposing building restrictions:
The Court reviewed the legislative history and the authority of the Cantonment Board and the GOC-in-Chief in imposing building restrictions. The Pune Cantonment is governed by the Cantonments Act, 1924, and the building bye-laws made in 1947. The GOC-in-Chief issued new building restrictions on 24.12.1982 and 26.3.1984 under Section 181A of the Act. These restrictions were aimed at preventing overcrowding and ensuring sanitation. The Court held that the new restrictions were valid and binding, as they were made in larger public interest and for the benefit of the entire population of Pune.
5. Environmental and urban planning considerations in the enforcement of building restrictions:
The Court highlighted the importance of environmental and urban planning considerations in enforcing building restrictions. The thrust of population in urban cities and the problem of basic amenities necessitated long-term planning. The Court noted that the Union Ministry of Environment, State of Maharashtra, National Commission on Urbanization, and expert working groups had all taken notice of the environmental and urban planning issues in Pune. The new building restrictions were made to address these issues and prevent environmental degradation. The Court emphasized that the builders' interest in maximizing construction should be subservient to the larger public interest of maintaining environmental and urban planning standards.
Conclusion:
The Supreme Court dismissed the special leave petitions, holding that the new building restrictions imposed by the GOC-in-Chief and the Cantonment Board were valid and binding. The Court emphasized the importance of compliance with these restrictions and the payment of conversion charges for the sanctioning of building plans. The decision reaffirmed the authority of the Cantonment Board and the GOC-in-Chief in regulating building activities in the larger public interest and for the benefit of the entire population of Pune.
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1992 (5) TMI 204
Issues Involved:
1. Violation of Article 22(1) of the Constitution of India
2. Violation of Article 22(2) of the Constitution of India
3. Compliance with Section 50 of the Cr. P.C.
4. Validity of remand orders
Detailed Analysis:
Violation of Article 22(1) of the Constitution of India:
- Sher Bahadur's Case: The petitioner was arrested on 27-4-1992, and there was a dispute regarding his production before the Magistrate on 28-4-1992. The court found no reliable evidence of compliance with Article 22(1) as no general diary or case diary entries were produced. Thus, Sher Bahadur's detention was deemed improper, and he was ordered to be released forthwith.
- Ashwani Kumar's Case: The recovery memo prepared at the time of arrest indicated that the reasons for arrest were disclosed to Ashwani Kumar. The court found that the provisions of Article 22(1) were complied with.
- Israr Ahmad's Case: The petitioner alleged arrest on 8/9-4-1992, but the State argued he was arrested on 16-4-1992. The court found the State's explanation plausible and held that the reasons for arrest were disclosed as per the recovery memo.
- Zakir's Case: The petitioner claimed non-disclosure of arrest reasons on 24-1-1992. The State provided a recovery memo indicating the reasons were disclosed. The court found compliance with Article 22(1).
Violation of Article 22(2) of the Constitution of India:
- Sher Bahadur's Case: The court found no valid remand order and thus, a violation of Article 22(2).
- Ashwani Kumar's Case: The remand orders were found lawful, with initial remand on 1-5-1992 and subsequent remand on 14-5-1992. No violation of Article 22(2) was found.
- Israr Ahmad's Case: The court dismissed the petition based on the finding that the arrest and subsequent remand were lawful.
- Zakir's Case: The petitioner was produced before the Magistrate within 24 hours, and the court found no violation of Article 22(2).
Compliance with Section 50 of the Cr. P.C.:
- Sher Bahadur's Case: No entries from the general diary or case diary were produced to prove compliance with Section 50. The court ruled in favor of the petitioner.
- Ashwani Kumar's Case: The recovery memo indicated compliance with Section 50.
- Israr Ahmad's Case: The court found that the recovery memo and general diary entries indicated compliance with Section 50.
- Zakir's Case: The recovery memo handed over to Zakir indicated compliance with Section 50.
Validity of Remand Orders:
- Sher Bahadur's Case: The court found discrepancies in the affidavits and no valid remand order, leading to the petitioner's release.
- Ashwani Kumar's Case: The remand orders from 1-5-1992 to 14-5-1992 and subsequent remand were found valid.
- Israr Ahmad's Case: The court found the remand orders lawful and dismissed the petition.
- Zakir's Case: The court found the initial and subsequent remand orders lawful and dismissed the petition.
Conclusion:
- Sher Bahadur: The petition succeeded due to non-compliance with Article 22(1) and the absence of a valid remand order. He was ordered to be released forthwith.
- Ashwani Kumar: The petition failed as the court found compliance with Article 22(1) and valid remand orders.
- Israr Ahmad: The petition failed as the court found lawful arrest and remand.
- Zakir: The petition failed as the court found compliance with Article 22(1) and valid remand orders.
Final Orders:
- Sher Bahadur: Released forthwith unless wanted in any other case.
- Ashwani Kumar, Israr Ahmad, Zakir: Petitions dismissed. Each party to bear their own costs.
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1992 (5) TMI 203
Issues:
1. Habeas Corpus petition filed under Article 226 of the Constitution of India for illegal detention.
2. Request for a certificate to appeal to the Supreme Court under Article 133 of the Constitution.
3. Questions of law regarding constitutional provisions and Criminal Procedure Code.
4. Validity of the procedure adopted for pronouncing the judgment.
Analysis:
1. The petitioner filed a Habeas Corpus petition alleging illegal detention by the Station House Officer. The Division Bench reserved judgment after hearing both parties.
2. The counsel for the petitioner requested a certificate for appeal to the Supreme Court under Article 133, citing substantial questions of law on constitutional provisions and the validity of remand orders.
3. The counsel argued that the case raised questions on the interpretation of Articles 21(1) and 22(2) of the Constitution, Sections 50(1), 57, and 167 of the CrPC, and the legality of remand orders by the Magistrate.
4. The judgment highlighted that the arrest was lawful, the petitioner had eloped, and the reasons for arrest were disclosed as required by law. The court found compliance with constitutional provisions and the CrPC.
5. The court emphasized that questions raised were propositions of law and did not warrant a certificate for appeal. The interpretation and effect of laws were settled by higher courts.
6. Regarding the procedure for pronouncing judgment, the court stated it was permissible under court rules, and the petitioner faced no prejudice as notice was served, allowing the counsel to make the necessary application.
7. The court concluded that no substantial question of law of general importance necessitating Supreme Court intervention was present, rejecting the application for a certificate to appeal.
8. Ultimately, the petition was dismissed, and the request for a certificate for appeal to the Supreme Court was rejected, as the case was deemed unfit for appeal.
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1992 (5) TMI 202
Issues Involved:
1. Validity of the First Information Report (FIR).
2. Directions regarding the disposal of the bail application.
3. Directions to prevent the arrest of the petitioner.
Detailed Analysis:
1. Validity of the First Information Report (FIR):
The petitioner sought quashing of the FIR lodged against him, alleging misappropriation of funds while functioning as pradhan of gram sabha Jamunaha, an offense punishable under Section 409 of the Indian Penal Code (IPC). The petitioner argued that the FIR was initiated at the instance of the Sub-Divisional Magistrate without any inquiry. However, the court found that an inquiry was indeed conducted, as evidenced by the communication from the Sub-Divisional Magistrate to the Block Development Officer, which was based on a report by the Additional District Magistrate. The court concluded that even if no inquiry had been conducted, it would not imply that the allegations in the FIR were false. The court determined that the FIR contained specific allegations which, if proven, would constitute an offense. Therefore, there was no reason to quash the FIR or stop the investigation.
2. Directions regarding the disposal of the bail application:
The petitioner requested that the court direct the lower court to dispose of his bail application on the same day it is moved. The petitioner also sought directions for his release on a personal bond if the bail application could not be disposed of the same day, or alternatively, to direct the police not to arrest him until the bail application was decided. The court noted that the directions sought were in the nature of mandamus, which can only be issued to enforce a statutory duty. The court cited the case of Bihar Eastern Gangetic Fishermen Co-operative Society Ltd. v. Sipahi Singh, emphasizing that a writ of mandamus can only be granted where there is a statutory duty imposed on the officer concerned and a failure to discharge that duty. The court held that it could not direct any subordinate court to act contrary to the provisions of law, as doing so would undermine the rule of law.
The court examined the provisions of Sections 437 and 439 of the Criminal Procedure Code (Cr. P.C), which govern the determination of bail applications. Section 439(1) specifically requires notice to be given to the Public Prosecutor in certain cases before deciding a bail application. The court reasoned that directing the lower court to decide the bail application the same day would deny the prosecution the opportunity to present relevant material, thus frustrating a just consideration of the bail application. The court also noted that the process of granting bail is a judicial process guided by considerations such as the availability of the accused for trial, the likelihood of tampering with evidence, and the previous history of the accused. These factors can only be brought to the court's attention by the prosecution, necessitating notice to the prosecution. The court concluded that it could not issue directions that would compel the lower court to violate statutory provisions and procedural fairness.
3. Directions to prevent the arrest of the petitioner:
The petitioner sought directions to prevent his arrest pending the disposal of his bail application. The court noted that bail applications can only be moved by a person in custody, and the provisions of Section 438 Cr. P.C, which allow for anticipatory bail, are not applicable in the state. The court held that the law does not envisage a situation where a person who has moved a bail application is not in custody. The court cited a Full Bench decision in Ram Lal Yadav v. State, which held that the High Court may not stay the arrest of a person by the police for the purposes of investigation. The court concluded that directing the Magistrate not to arrest the petitioner or to release him on a personal bond would be contrary to the provisions of law and would amount to an unauthorized exercise of legislative function.
The court emphasized that the Criminal Procedure Code is exhaustive in matters specifically provided by it, including the manner in which bail can be granted. Any direction to act contrary to these provisions would be unlawful. The court also noted that previous cases where similar directions were issued did not provide reasons or consider the legality of such directions. The court concluded that it could not issue directions that would violate statutory provisions and subvert the process of bail determination.
Conclusion:
The court dismissed the petition, emphasizing that the provisions of bail must be used in a manner that is just and reasonable, and that the process of bail should be expeditious without unnecessary encroachments on liberty. The court suggested administrative measures to simplify the bail process and reduce unnecessary hardships. The petition was dismissed with the expectation that the bail application, if moved, would be disposed of without undue delay.
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1992 (5) TMI 201
The appellants sought waiver of pre-deposit of MODVAT credit of Rs. 1,12,822.53. The issue was whether they were entitled to take notional credit immediately or subsequently. The Tribunal allowed the application, waived the pre-deposit, and set aside the impugned order, allowing the appeal with consequential relief.
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1992 (5) TMI 200
Issues:
1. Liability of guarantors in a loan recovery suit when the debtor defaults on payments.
2. Interpretation of Section 128 of the Indian Contract Act regarding the liability of sureties.
3. Effect of debtor's solvency on the liability of guarantors.
4. Court's discretion in granting payment by instalments and its impact on the liability of guarantors.
Detailed Analysis:
1. The plaintiff, a bank, filed a suit to recover a loan amount from the debtor and the guarantors. The trial court did not hold the guarantors jointly and severally liable with the debtor, leading to the appeal by the plaintiff.
2. The plaintiff bank granted a cash credit loan to the debtor, who had guarantors. The guarantors did not dispute the plaintiff's assertions but requested payment by instalments due to the industry's sickness. The trial court decreed the suit against the debtor for monthly instalments, absolving the guarantors based on the debtor's promise to pay in instalments.
3. The appellant argued that the guarantors cannot be absolved of liability based on the debtor's solvency, citing legal precedents. Section 128 of the Indian Contract Act was discussed, emphasizing that the liability of a surety is co-extensive with that of the principal debtor, and the surety's liability is immediate, not deferred.
4. The court referred to previous decisions to assert that the liability of a surety is co-extensive, and a decree against the surety cannot be executed until the principal debtor pays the dues. The court held that the trial court should have decreed the suit against all defendants, making them jointly and severally liable for the amount decreed.
In conclusion, the appeal was allowed, and the court decreed the suit against all defendants, holding them jointly and severally liable for the amount decreed. The court emphasized that the decree directing payment by instalments suspends action against the sureties, and failure by the principal debtor to comply allows execution of the decree against all judgment-debtors.
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1992 (5) TMI 199
Issues:
- Challenge to duty demand for excess filling of retail packings of Ultramarine Blue
- Allegation of evasion of duty by filling packs with more weight than marked
- Imposition of penalty of Rs. 5,000
- Interpretation of duty payment basis: ad valorem vs. weight basis
- Compliance with the Weights and Measures Act
- Justification for over-packing by the appellant
- Revenue significance of over-packing
- Assessment of duty linked to value, not quantity
- Consideration of penalty imposition without mens rea
- Comparison with relevant legal precedents
Analysis:
The case involved two appeals challenging the duty demand and penalty imposed by the Additional Collector for alleged excess filling of retail packings of Ultramarine Blue. The appellant argued that the duty is ad valorem based and not on weight, justifying the over-packing as a precaution to comply with the Weights and Measures Act and ensure customer satisfaction without price increase. The Departmental Representative contended that the over-packing resulted in loss of potential revenue for the Department. The Tribunal analyzed the situation, emphasizing that duty assessment is linked to value, not quantity, thus the charge of misstatement regarding the packed weight loses significance. The Tribunal noted the absence of data on actual weight loss during transit and storage, suggesting a review of the over-packing practice by the appellant. The Tribunal found the duty demand projection unjustified and the penalty imposition unsupported, citing legal precedents regarding mens rea in penalty cases. The Tribunal allowed the appeals, setting aside the penalty and duty demand, dismissing the Department's Cross Objection for penalty enhancement.
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1992 (5) TMI 198
Issues:
1. Jurisdiction of the Income Tax Officer to rectify assessment under section 154 after the order of the Commissioner (Appeals).
2. Applicability of High Court decisions on income tax authorities.
3. Merger of orders in the assessment process.
Analysis:
Issue 1: Jurisdiction of the Income Tax Officer
The case involved a dispute regarding the jurisdiction of the Income Tax Officer (ITO) to rectify an assessment under section 154 of the Income-tax Act, 1961, after the order of the Commissioner (Appeals). The ITO had initially rectified the assessment to tax the assessee at a concessional rate as an industrial company. However, the Commissioner under section 263 set aside this order, stating that the ITO had no jurisdiction to amend the assessment order as it had merged with the order of the Commissioner (Appeals). The Tribunal upheld the Commissioner's order, emphasizing that the ITO could not rectify the assessment once the appellate authority had decided on the status of the assessee.
Issue 2: Applicability of High Court Decisions
The assessee argued that the ITO was bound to follow the High Court's decision and rectify the assessment accordingly. The assessee relied on the Allahabad High Court decision in Omega Sports & Radio Works v. CIT, which held that a High Court decision binds income tax authorities in that state. However, the Tribunal held that the provisions of section 154(1A) prevented the ITO from amending the order on a point already decided by the appellate authority for the same assessment year. The Tribunal distinguished the Omega Sports case, stating it was not applicable to the facts of the present case.
Issue 3: Merger of Orders
The High Court observed that the order of the ITO seeking to provide relief to the assessee as an industrial company was beyond jurisdiction, as the Commissioner (Appeals) had already upheld the assessment treating the assessee as a non-industrial company. The High Court emphasized that unless the appellate order is set aside by the Tribunal on further appeal, the ITO had no authority to rectify the assessment order concerning the status of the assessee. Therefore, the Tribunal's decision to uphold the Commissioner's order under section 263 was deemed correct based on the facts and circumstances of the case.
In conclusion, the High Court affirmed the Tribunal's decision, holding that the ITO lacked jurisdiction to rectify the assessment once the Commissioner (Appeals) had decided on the status of the assessee. The High Court answered the reference question in the affirmative and in favor of the revenue, with no order as to costs.
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1992 (5) TMI 197
Issues Involved:
1. Deduction of accrued interest on deferred payment basis.
2. Disallowance of interest for non-business purposes.
3. Addition under section 40A(7) related to LIC payments.
4. Withdrawal of deductions for travelling expenses under Rule 6D.
5. Disallowance of bonus payments.
6. Verification and deduction of unpaid sales tax and provident fund under section 43B.
7. Applicability of section 43B to family pension fund and ESI.
8. Interest paid for late payment of sales tax.
9. Deduction under section 80-I without separate books of accounts.
10. Disallowance of travelling expenses under Rule 6D.
Comprehensive Issue-wise Detailed Analysis:
1. Deduction of Accrued Interest on Deferred Payment Basis:
The assessee company claimed deduction of Rs. 1,00,900 as accrued interest under the mercantile system of accounting. The ITO allowed only Rs. 26,600 based on actual payment. The Commissioner (Appeals) dismissed the claim on the grounds that accrued interest was not due/payable in the relevant year and was not debited to the P&L account. The Tribunal held that since the interest was excluded from the actual cost due to retrospective amendment, it should be allowed as revenue expenditure. The ITO was directed to allow the deduction of Rs. 1,00,900 subject to verification.
2. Disallowance of Interest for Non-Business Purposes:
The ITO disallowed Rs. 35,351 out of interest, claiming the assessee diverted borrowings for non-business purposes. The Commissioner (Appeals) deleted this disallowance, which was upheld by the Tribunal, citing that the debit balances in the accounts of the two concerns were due to business transactions and no interest was charged on such balances. The Tribunal also noted consistent treatment in earlier and subsequent years.
3. Addition under Section 40A(7) Related to LIC Payments:
The Commissioner (Appeals) deleted an addition of Rs. 30,389 under section 40A(7), supported by the Tribunal's decision in associated cases. The Tribunal upheld this, confirming that the payment to LIC was actual and not merely a provision, thus not hit by section 40A(7).
4. Withdrawal of Deductions for Travelling Expenses under Rule 6D:
The ITO's action under section 154 to disallow travelling expenses was challenged. The Commissioner (Appeals) and the Tribunal both held that the ITO's method was contrary to the Tribunal's decision in S.V. Ghatalia v. ITO, which required considering all tours made by a person during the year, not individual tours.
5. Disallowance of Bonus Payments:
The Commissioner (Appeals) deleted an addition of Rs. 1,12,753 out of bonus payments, supported by the Tribunal's decision in the assessee's own case for earlier years. The Tribunal confirmed this, noting the consistent application of the 20% bonus rate and rejection of the Department's reference application.
6. Verification and Deduction of Unpaid Sales Tax and Provident Fund under Section 43B:
The Commissioner (Appeals) directed verification of challans for unpaid sales tax and provident fund and allowed deductions if payments were made within due dates. The Tribunal upheld this, citing the Tribunal's decision in Chandulal Venichand v. ITO.
7. Applicability of Section 43B to Family Pension Fund and ESI:
The ITO added Rs. 4,718 and Rs. 1,035 for ESI and family pension under section 43B. The Commissioner (Appeals) held these were not covered by section 43B. The Tribunal confirmed this, noting the amounts were deductions from employees' salaries, deposited within prescribed times, and not applicable under section 43B for the year in question.
8. Interest Paid for Late Payment of Sales Tax:
The Commissioner (Appeals) allowed the deduction of Rs. 23,326 for interest on late payment of sales tax. The Tribunal upheld this, agreeing that the interest was compensatory and not penal, supported by various judicial decisions.
9. Deduction under Section 80-I without Separate Books of Accounts:
The Commissioner (Appeals) directed the ITO to work out the deduction under section 80-I despite the absence of separate books for the new unit. The Tribunal upheld this, noting the bifurcation of income was verified and consistent with commercial accounting principles. The loss in the old unit did not disqualify the deduction for the new unit, supported by the Supreme Court's decision in Canara Workshops Pvt. Ltd.
10. Disallowance of Travelling Expenses under Rule 6D:
The ITO disallowed Rs. 15,714 under Rule 6D. The Commissioner (Appeals) directed recalculating the disallowance by considering total expenditure for the year. The Tribunal confirmed this, aligning with the decision in S.V. Ghatalia v. ITO.
Conclusion:
The Tribunal allowed the assessee's appeals and dismissed the Revenue's appeals, confirming the detailed and consistent application of relevant legal principles and precedents.
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1992 (5) TMI 195
Issues Involved:
1. Constitutional validity of Section 25-N of the Industrial Disputes Act, 1947.
2. Whether the right to retrench workmen is an integral part of the right to carry on business under Article 19(1)(g) of the Constitution.
3. Reasonableness of restrictions imposed by Section 25-N under Article 19(6).
Summary:
1. Constitutional Validity of Section 25-N:
These appeals and writ petitions challenge the constitutional validity of Section 25-N of the Industrial Disputes Act, 1947, on the grounds of violation of the right guaranteed under Article 19(1)(g) of the Constitution. The validity of Section 25-N was questioned due to conflicting decisions by various High Courts. The Andhra Pradesh High Court upheld its validity, while the Madras and Rajasthan High Courts declared it unconstitutional.
2. Right to Retrench Workmen:
The Court examined whether the right to retrench workmen is an integral part of the right to carry on business under Article 19(1)(g). It was argued that the right to retrench is essential for organizing business efficiently. However, the Court noted that the right to retrench should be considered as a peripheral or concomitant right facilitating the exercise of the fundamental right to carry on business.
3. Reasonableness of Restrictions:
The Court assessed whether the restrictions imposed by Section 25-N are reasonable under Article 19(6). It emphasized that restrictions promoting Directive Principles can be presumed reasonable. Section 25-N requires prior permission for retrenchment, aiming to prevent hardship to workmen and maintain industrial peace. The Court highlighted that the power under Sub-section (2) involves a quasi-judicial function, requiring an objective consideration of relevant facts and a speaking order with reasons. The absence of an appeal or revision provision was not deemed unreasonable, as judicial review under Article 226 is available.
Conclusion:
The Court rejected the contentions against Section 25-N, holding that it does not violate Article 19(1)(g) and is saved by Article 19(6). The decisions of the Madras and Rajasthan High Courts declaring Section 25-N unconstitutional were not upheld. The matters were referred to a Division Bench for further consideration in light of this judgment.
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1992 (5) TMI 194
Issues:
1. Condonation of delay in filing an application under section 256(2) of the Income-tax Act.
2. Interpretation of the provisions of the Limitation Act in relation to condonation of delay.
3. Merits of the petition under section 256(2) regarding the deductibility of certain expenditures.
Analysis:
Issue 1: Condonation of Delay
The petitioner filed an application under section 256(2) seeking reference of questions to the Court. The application was filed one day late due to a misunderstanding about the Court's opening date. The respondents contended that the Court lacked the power to condone the delay. However, the Court disagreed, stating that while the Act specifies a limitation period for filing under sections 256(1) and 256(2), the power to condone delay is not explicitly excluded under section 256(2). The Court referred to the provisions of the Limitation Act and held that section 5 of the 1963 Act allowed for the condonation of delay in filing applications required in Court.
Issue 2: Interpretation of Limitation Act Provisions
The Court analyzed the provisions of the Limitation Act, emphasizing that section 5 of the 1963 Act permits the condonation of delay even for applications required to be filed in Court. The Court cited section 29(2) of the Limitation Act, which allows for the application of section 3 to special or local laws unless expressly excluded. The Court concluded that it had the jurisdiction to exercise powers under section 5 of the 1963 Act, as confirmed by a previous decision of the Gauhati High Court.
Issue 3: Merits of the Petition under Section 256(2)
Regarding the deductibility of expenditures, the Court considered two questions. The first question related to the allowability of a portion of technical know-how expenditure as revenue expenditure. The Court directed the Tribunal to refer this question to the Court. The second question concerned the deductibility of a payment made by the assessee to an association as business expenditure. Citing a previous decision, the Court found the answer to the second question self-evident based on established principles and declined to refer it to the Court. The Court's decision was influenced by the application of Supreme Court decisions in similar cases.
In conclusion, the Court allowed the application for condonation of delay, directed the Tribunal to refer the first question to the Court, and declined to refer the second question based on established legal principles.
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1992 (5) TMI 193
Issues Involved:
1. Limitation of the award.
2. Adverse possession by the mortgagee.
3. Sale of the land by the Collector.
4. Award of mesne profits by the executing court.
Summary:
1. Limitation of the Award:
The appellants contended that the award is barred by limitation, citing a full bench judgment of the Gujarat High Court in Ramanbhai Trikamlal v. Vaghri Vaghabhai Oghabhai & Anr., which stated that execution for possession must be laid within 12 years. The respondents laid their applications after 22 years. The Supreme Court found no force in this contention, explaining that the Bombay Agricultural Debtors Relief Act, 1947 (the Act) is a complete code in itself and does not prescribe a period of limitation for execution. Section 29(2) of the Limitation Act, 1963, was discussed, and it was clarified that the Act does not prescribe any period of limitation for recovery of possession. Therefore, the application for possession is not barred by limitation.
2. Adverse Possession by the Mortgagee:
The appellants claimed that they had perfected their title by adverse possession. The Supreme Court rejected this contention, stating that there was no evidence to show when the appellants asserted adverse title to the property to the knowledge of the respondents. The court emphasized that the doctrine of adverse possession requires hostile title to be asserted and proved, which was not done in this case.
3. Sale of the Land by the Collector:
The appellants argued that they had purchased the hypotheca at an auction conducted by the Collector and thus became the owners. The Supreme Court found no force in this contention, noting that the best evidence, such as the notification to conduct the sale, sale proceedings, and the certificate of sale, was not placed on record. The court concluded that the appellants remained in possession as mortgagees and that the property remains subject to the charge until the debt is discharged.
4. Award of Mesne Profits by the Executing Court:
The appellants contended that the executing court had no power to award mesne profits. The Supreme Court held that the civil court has the power and jurisdiction to award mesne profits as a concomitant of the order for delivery of possession. The court found that the appellants continued in possession after the discharge of the debt and enjoyed the property, with the income derived being Rs. 5,000 per year. Therefore, the appellants were liable to pay mesne profits from the date of discharge of the debt until the date of possession.
Conclusion:
The appeal was dismissed with costs quantified at Rs. 3,000, to be paid to the Supreme Court Legal Aid Committee within three months. In default, the civil court was directed to execute the decree for costs suo motu and make over the amount to the credit of the Supreme Court Legal Aid Committee.
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1992 (5) TMI 192
Issues Involved:
1. Whether the lb50m payment by the taxpayer company was a capital or revenue expenditure.
2. Whether the payment was laid out wholly and exclusively for the purposes of the taxpayer company's trade.
Detailed Analysis:
1. Nature of the lb50m Payment: Capital or Revenue Expenditure
General Commissioners' Decision:
The general commissioners found that the lb50m payment was made to preserve the trade of the taxpayer company from collapse and was of a revenue nature. They further found that the payment was not converted into a payment of a capital nature by the circumstance that it was associated with the disposal of the J.M.B. shares.
Vinelott J. and Court of Appeal:
Vinelott J. concluded that the lb50m was paid to get rid of the shares, stating that the purpose of the taxpayer company's board was to preserve its business. However, the means to achieve this was to transfer the shares of J.M.B. to the Bank of England and pay lb50m to J.M.B. These elements could not be severed. The Court of Appeal affirmed this decision, with Fox L.J. stating that the payment was to enable the taxpayer company to get rid of a capital asset.
House of Lords:
The House of Lords disagreed with Vinelott J. and the Court of Appeal. They reasoned that the payment was made to preserve the taxpayer company's trade and not to dispose of a capital asset. Lord Keith of Kinkel emphasized that the payment was a contribution required by the Bank of England towards its planned rescue operation and not the price for getting rid of a burdensome asset. Lord Templeman and Lord Goff of Chieveley supported this view, stating that the payment was made to enable the taxpayer company to continue trading and was not for the disposal of the shares. The payment was therefore characterized as a revenue expenditure.
2. Purpose of the Payment: Wholly and Exclusively for Trade
General Commissioners' Decision:
The general commissioners found that the taxpayer company's disbursement of lb50m to J.M.B. was wholly and exclusively laid out for the purposes of the taxpayer company's platinum trade. The disbursement was made for the purpose of preserving that trade and for no other purpose.
House of Lords:
The House of Lords agreed with the general commissioners' finding. They emphasized that the payment was made to preserve the taxpayer company's existing business from collapse, which is a revenue nature expenditure. The payment was not made to acquire or dispose of a capital asset but to remove an obstacle to successful trading.
Conclusion:
The House of Lords allowed the appeal and restored the decision of the general commissioners. They concluded that the lb50m payment was a revenue expenditure laid out wholly and exclusively for the purposes of the taxpayer company's trade. The payment was made to preserve the taxpayer company's business and not to dispose of a capital asset. The appeal was allowed with costs, and the determination of the general commissioners was restored.
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1992 (5) TMI 191
Issues Involved:
1. Whether a person can be remanded to police custody after the expiry of the initial period of 15 days u/s 167(1) Cr.P.C.
Summary:
Issue 1: Remand to Police Custody after Initial 15 Days
The primary issue was whether a person arrested and produced before the nearest Magistrate u/s 167(1) Cr.P.C. can be remanded to police custody after the initial period of 15 days. The Supreme Court considered the legislative history and the scope of Section 167 Cr.P.C., which allows a Magistrate to authorize the detention of an accused in such custody as he thinks fit, but not exceeding 15 days in the whole. The proviso to Section 167(2) states that further detention beyond 15 days can only be in judicial custody.
The Court examined various judgments, including the Delhi High Court's decision in State (Delhi Admn.) v. Dharam Pal, which held that after 15 days, the accused could only be in judicial custody. The Supreme Court agreed with this view, emphasizing that the custody after the first 15 days must be judicial.
Arguments and Interpretation
The Additional Solicitor General argued that police custody could be granted even after the initial 15 days if necessary for the investigation. However, the Court noted that the legislative intent was to limit police custody to protect the accused from potential abuse. The Court highlighted that the scheme of Section 167 is to ensure that police custody is limited and judicial custody is preferred after the initial period.
Clarification on Different Offences
The Court clarified that if an accused is involved in a different case arising from a different transaction, the police can seek custody for that separate case. However, for the same transaction, police custody cannot be extended beyond the initial 15 days, even if new offences are discovered later.
Conclusion
The Supreme Court concluded that the total period of police custody cannot exceed 15 days in the whole, and any further remand must be in judicial custody. The Court dismissed the appeals, affirming that the interpretation aligns with the legislative intent to protect the accused and ensure a fair investigation process.
Final Observations
The Court summarized its conclusions, stating that after the initial 15 days, further remand during the investigation must be in judicial custody. The period of 90 days or 60 days for completing the investigation is computed from the date of the Magistrate's order of detention, not from the date of arrest. The Court also noted that different considerations might apply if there are State amendments enlarging the periods of detention.
Appeals dismissed.
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1992 (5) TMI 190
Issues Involved:
1. Legislative Competence and Vires of the Amending Act
2. Promissory Estoppel
3. Classification and Tariff Rates
4. Validity of Revised Tariff and Billing
Summary:
1. Legislative Competence and Vires of the Amending Act:
The appellants challenged the Karnataka Electricity (Supply) (Karnataka Amendment) Act, 1981, arguing it was ultra vires due to legislative incompetence and repugnancy with Central laws. The High Court upheld the Act, referencing Entries 52 and 54 of List I, and Entries 26 and 27 of List II, concluding that the State Legislature had the competence to enact the amendment. The Court relied on precedents such as *Tika Ramji v. State of U.P.*, *State of Uttar Pradesh & others v. Synthetics and Chemical Limited and others*, and *Hoechst Pharmaceuticals Ltd. v. State of Bihar & Ors.*, emphasizing that the amendment did not conflict with Central legislation and was valid under Article 254(2) of the Constitution.
2. Promissory Estoppel:
The appellants argued that the principle of promissory estoppel should prevent the Karnataka Electricity Board from revising tariffs contrary to the 1976 agreement. The High Court rejected this, noting that promissory estoppel cannot be invoked against statutory provisions. The Court cited *Excise Commissioner, U.P. v. Ram Kumar* and *Union of India v. Godfrey Philips India Ltd.*, concluding that the statutory power under Section 49(5) of the Electricity (Supply) Act overrides any agreement.
3. Classification and Tariff Rates:
The appellants contended that the smelter plant should not be classified with other power-intensive industries due to its unique electricity requirements. The High Court held that broader classification based on power intensity was reasonable and not arbitrary, as the smelter plant was categorized under HT-IA since 1978 without any protest from the appellants. The Court found no violation of Article 14, stating that uniform tariff rates were justified under the amended Section 49.
4. Validity of Revised Tariff and Billing:
The appellants challenged the revised tariffs and supplementary bills issued by the Board. The High Court, noting the Board's willingness to correct any errors in billing, dismissed the claim. The Court emphasized that the revised tariffs were in accordance with the statutory provisions and applicable uniformly to all consumers in the same category.
Conclusion:
The Supreme Court, endorsing the High Court's reasoning, upheld the vires of the Karnataka Amendment Act, dismissed the applicability of promissory estoppel, validated the classification and uniform tariff rates, and found no merit in the challenge to the revised tariffs and billing. The appeal was dismissed, with no order as to costs. The Court also suggested a pragmatic approach by the Central and State Governments to balance the interests of the electricity boards and the aluminium industry.
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1992 (5) TMI 189
Issues Involved:
1. Legality of detention orders under COFEPOSA, 1974.
2. Validity of proceedings under SAFEMA, 1976.
3. Timeliness and maintainability of petitions challenging detention orders and SAFEMA notices.
4. Existence and communication of grounds of detention.
Issue-wise Detailed Analysis:
1. Legality of Detention Orders under COFEPOSA, 1974:
The petitioners challenged the original detention orders under COFEPOSA, 1974, on the grounds that these orders were illegal, invalid, and unconstitutional. It was argued that the grounds of detention were not formulated or furnished to the detenues at the time of or before the issuance of the detention orders. The court found that in several cases, the grounds of detention were indeed not in existence when the detention orders were passed, rendering the detention orders purely illusory and invalid. The court cited the Supreme Court decision in Krishna Murari Aggarwala v. Union of India, which emphasized that detention orders must be based on contemporaneously prepared grounds.
2. Validity of Proceedings under SAFEMA, 1976:
The petitioners contended that valid proceedings under SAFEMA presuppose valid detention orders under COFEPOSA. Since the detention orders were revoked or found invalid, the subsequent SAFEMA proceedings were also invalid. The court referenced the Supreme Court decision in Union of India v. Haji Mastan Mirza, which established that SAFEMA applies only if the detention order under COFEPOSA has not been set aside by a court of competent jurisdiction. As the original detention orders were revoked in several cases, the court concluded that the SAFEMA proceedings could not have been validly instituted.
3. Timeliness and Maintainability of Petitions:
The respondents argued that the petitions were not maintainable as they were filed late and the detention orders were not challenged in due course. However, the court rejected this preliminary objection, referencing its own earlier decisions and the Supreme Court's ruling in Union of India v. Haji Mastan Mirza, which allowed for the challenge of detention orders when used as a basis for SAFEMA proceedings. The court concluded that the petitions were maintainable despite the delay.
4. Existence and Communication of Grounds of Detention:
The court found that in many cases, the grounds of detention were not formulated at the time of passing the detention orders. This non-compliance with the constitutional mandate under Article 22(5) of the Constitution of India rendered the detention orders invalid. The court cited its own decision in Parshottam Dahyabhai Chunara v. State of Gujarat, which held that the grounds of detention must exist on the day the order is passed, and if recorded subsequently, the order is bad in law.
Conclusion:
The court allowed the group of 7 petitions, quashing and setting aside the impugned detention orders under COFEPOSA and the consequent notices under SAFEMA. The court ruled that the proceedings under SAFEMA were invalid due to the lack of valid detention orders under COFEPOSA and the non-existence of grounds of detention at the time of issuing the detention orders. The petitions were deemed maintainable, and no costs were ordered.
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1992 (5) TMI 188
Issues Involved:
1. Validity of the no-confidence motion passed u/s 87-A of the U.P. Municipalities Act.
2. Alleged statutory arbitrariness of Sections 47-A and 87-A of the Act.
3. Reduction of the period for tabling a no-confidence motion from two years to one year.
Summary:
1. Validity of the No-Confidence Motion Passed u/s 87-A:
The appellant challenged the validity of the no-confidence motion passed on 28th March 1990, u/s 87-A of the U.P. Municipalities Act, arguing it was violative of democratic principles. The Supreme Court held that the right to remove an elected representative must stem from the statute and is not a fundamental or common law right. The Court emphasized that the recall of an elected representative is a legislative power and should be tested on statutory provisions rather than political philosophy. The Court found that the provisions for the election and removal of a President in the Act were constitutionally valid and did not violate democratic norms.
2. Alleged Statutory Arbitrariness of Sections 47-A and 87-A:
The appellant contended that Sections 47-A and 87-A were irrational and violated Article 14 of the Constitution. The Court held that the provisions for the removal of a President by a no-confidence motion by the Board were consistent with the democratic principle of accountability. The Court noted that the Act provided a detailed framework for the election and removal of Presidents, and there was no constitutional challenge to these provisions. The Court also highlighted that the legislative history showed a consistent approach to the removal of Presidents by the Board, irrespective of whether they were elected by the Board or the electorate.
3. Reduction of the Period for Tabling a No-Confidence Motion:
The appellant challenged the reduction of the period during which a no-confidence motion could be tabled from two years to one year, arguing it was arbitrary and lacked a reasonable principle. The Court rejected this argument, stating that legislative actions are presumed to be valid unless proven otherwise. The Court noted that the period for moving a motion of no-confidence had been changed multiple times in the past and that such changes were within the legislative domain. The Court found no merit in the argument that the reduction was arbitrary or motivated by extraneous considerations.
Conclusion:
The Supreme Court dismissed the appeal, upholding the validity of the no-confidence motion passed u/s 87-A, the statutory provisions of Sections 47-A and 87-A, and the reduction of the period for tabling a no-confidence motion. The Court found no violation of democratic principles or constitutional provisions in the impugned actions. The appeal was dismissed with no order as to costs.
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1992 (5) TMI 187
Issues:
- Imposition of penalty under section 18(2) of the Foreign Exchange Regulation Act, 1973 for failure to realize export proceeds.
- Challenge to the findings of the Adjudicating Officer.
- Allegations of non-realization of export proceeds and efforts made by the appellants to recover the payment.
- Change of payment terms from COD to 90 days grace period without RBI permission.
- Legal interpretation of section 18(2A)(a)(i) and Rule 9 of the Foreign Exchange Regulation Rules, 1974.
- Consideration of reasonable steps taken by the exporter to recover payment.
- Adjudication Officer's failure to consider all relevant correspondence and documents.
- Exercise of discretion in imposing penalties.
Analysis:
The judgment by the Foreign Exchange Regulation Appellate Board pertains to an appeal arising from the imposition of a penalty of Rs. 50,000 on the appellants for contravening section 18(2) of the Foreign Exchange Regulation Act, 1973 by failing to realize export proceeds of US $4,530 from goods exported to Finland in 1987. The Adjudicating Officer found the appellants guilty based on various grounds, including the non-realization of export proceeds, change of payment terms without RBI permission, and lack of evidence showing sincere efforts to recover the payment.
The appellants challenged these findings on multiple grounds, asserting that they had taken all possible steps to recover the export proceeds, including approaching their bankers, the RBI, and the Ambassador of India in Finland. They argued that the change in payment terms was necessitated by business interests and that they had made continuous efforts to resolve the issue, contrary to the Adjudicating Officer's conclusions.
The Board analyzed the legal provisions under section 18(2A)(a)(i) and Rule 9 of the Foreign Exchange Regulation Rules, 1974, emphasizing that a mere change in payment terms may not necessarily indicate a lack of effort to realize export proceeds. It highlighted that steps taken must align with statutory provisions to be considered reasonable under section 18(3).
Furthermore, the Board noted discrepancies in the Adjudicating Officer's consideration of correspondence and documents provided by the appellants, indicating a failure to assess all relevant facts before imposing the penalty. The Board emphasized the need for a comprehensive review of all evidence and a judicious exercise of discretion in penalty imposition.
Consequently, the Board remanded both appeals to the Adjudicating Officer for a fresh order within three months, directing a reevaluation of the case in light of all evidence presented. Failure to comply would result in the refund of the penalty deposited by the appellant. The parties were granted a fresh opportunity to produce additional evidence, ensuring a fair and just conclusion based on a thorough examination of the facts.
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1992 (5) TMI 186
Issues:
1. Eligibility for tax exemption under Notification No. 1177-F.T. dated March 31, 1983 for sales of corrugated paper boards.
2. Interpretation of whether the manufacturing of the notified commodity must be exclusively done in the industrial unit.
3. Determining the significance of corrugation in the manufacturing process for tax exemption eligibility.
Analysis:
Issue 1: Eligibility for Tax Exemption
The applicant, engaged in manufacturing corrugated paper boards, sought an eligibility certificate under the West Bengal Sales Tax Act, 1954. The rejection of the certificate was based on the contention that a substantial part of the manufacturing process, specifically corrugation of paper, was outsourced, violating the conditions of Notification No. 1177-F.T. dated March 31, 1983. The applicant argued that the end-product was manufactured in their factory, except for corrugation, and thus, tax exemption should be granted.
Issue 2: Interpretation of Manufacturing Requirement
The crux of the dispute revolved around whether the manufacturing of the notified commodity, corrugated paper boards, had to be entirely conducted within the industrial unit to qualify for tax exemption. The respondents contended that since corrugation, a significant part of the process, was outsourced, the applicant did not meet the eligibility criteria. However, the applicant argued that as long as the final product was manufactured in their factory, tax exemption should apply, irrespective of where certain operations, like corrugation, were performed.
Issue 3: Significance of Corrugation in Manufacturing Process
The Tribunal analyzed the manufacturing activities required for producing corrugated paper boards. It was established that while the corrugated roll was procured externally, it was used as a raw material in the applicant's factory for further processing. The absence of a corrugation machine in the factory indicated that corrugation was not a mandatory operation to be conducted within the unit. The Tribunal concluded that as long as the industrial unit adhered to the manufacturing processes outlined in its registration, the outsourcing of corrugation did not disqualify the applicant from tax exemption.
In conclusion, the Tribunal held that the rejection of the eligibility certificate was unjustified, as the applicant's manufacturing activities aligned with the requirements for tax exemption. The orders of the Assistant Commissioner and Additional Commissioner were set aside, directing the issuance of the eligibility certificate if found eligible. The application was allowed, with no costs awarded.
This judgment emphasizes the importance of interpreting eligibility criteria for tax exemptions in line with the specific provisions of relevant notifications and the actual manufacturing processes undertaken by the industrial unit seeking exemption.
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