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2012 (5) TMI 877
Issues Involved:
1. Validity of the demand notice issued by the Postal Authority for alleged deficit postage.
2. Applicability of Section 11 and Section 12 of the Indian Post Office Act, 1898.
3. Compliance with conditions of the franking license and relevant provisions of the Post Office Guide.
4. Liability for payment of postage-whether it lies with the sender or the addressee.
5. Authority of the Postal Authority to recover alleged dues from the sender after delivery of postal articles.
Issue-wise Detailed Analysis:
1. Validity of the Demand Notice:
The primary issue was the validity of the demand notice dated 10.9.1999, where the Postal Authority demanded Rs. 1,83,89,410/- from the Company for the period between 1.6.1997 and 29.10.1998. The notice was challenged on the grounds that it was contrary to Section 11(2) of the Indian Post Office Act, 1898. The learned Single Judge initially held the demand notice to be invalid, as the Postal Authority had no power to demand such an amount without proper adjudication or authority. The Division Bench, however, upheld the demand notice, stating that the Postal Authority was empowered to recover the outstanding sum. The Supreme Court ultimately set aside the demand notice, ruling it was improper and illegal.
2. Applicability of Section 11 and Section 12 of the Indian Post Office Act, 1898:
Section 11 of the Act stipulates that the addressee is liable to pay postage upon accepting delivery unless the article is returned unopened. If refused or undeliverable, the sender becomes liable. Section 12 allows the Postal Authority to recover unpaid dues as if they were fines. The Supreme Court found that since there was no refusal or return of the postal articles by the addressees, the Company (sender) could not be held liable under Section 11. Consequently, Section 12 was also not applicable, as there was no due amount recoverable from the sender.
3. Compliance with Conditions of the Franking License and Relevant Provisions of the Post Office Guide:
The Postal Authority did not allege any breach of the franking license conditions by the Company. The Supreme Court noted that Clause 11(10)(xv) and Clause 34 of the Post Office Guide, which relate to breaches of license conditions and recovery of dues, were not applicable as no breach was alleged. The Division Bench erred in applying these provisions to justify the demand notice.
4. Liability for Payment of Postage:
The liability for payment of postage was contested, with the Company arguing that it lay with the addressees, as per Section 11 of the Act. The Supreme Court agreed with the Company, emphasizing that liability under Section 11 arises for the sender only if the addressee refuses or returns the article, which was not the case here. Therefore, the Company was not liable for the alleged deficit postage.
5. Authority of the Postal Authority to Recover Alleged Dues from the Sender:
The Postal Authority's demand was based on a revised postal tariff, which the Company had initially followed based on a letter from the Postal Authority itself. The Supreme Court found that the Postal Authority's failure to ensure correct postage and its misleading communication to the Company precluded it from recovering the alleged deficit from the Company. The demand notice was thus deemed improper.
In conclusion, the Supreme Court allowed the appeals, setting aside the demand notice and the Division Bench's order. The Court directed the refund of Rs. 50 lakhs deposited by the Company with interest, reinforcing that the Postal Authority's actions were not justified under the applicable legal framework.
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2012 (5) TMI 876
Issues:
Petition for leave to appeal against orders of MRTP Commission and Competition Appellate Tribunal; Validity of order recalling possession directive; Jurisdiction of MRTP Commission to direct possession; Timeliness of Review Application filing; Consent order contention; Interpretation of MRTP Act provisions.
Analysis:
The case involves petitions under Article 136 of the Constitution seeking leave to appeal against orders of the Monopolies and Restrictive Trade Practices Commission (MRTP) and the Competition Appellate Tribunal. The dispute arose from the allotment of industrial land in Greater NOIDA, where the petitioners were allotted a plot but faced issues regarding possession due to alleged outstanding dues. The MRTP Commission initially directed the respondents to hand over possession but later recalled this directive through a review application. The petitioners argued that the original possession order was a consent order and thus could not be reviewed. They also contended that the Review Application was filed beyond the prescribed period. On the other hand, the respondents argued that the possession directive was beyond the MRTP Commission's jurisdiction and could only be granted by a Civil Court in a specific performance decree.
The MRTP Commission's order dated 13.09.2007, directing possession, was found not to be a consent order as claimed by the petitioners. The Commission's ability to entertain the Review Application beyond the 30-day period was supported by Section 13(2) of the MRTP Act, which allows for orders to be amended or revoked "at any time." The Commission's power to modify or revoke interim orders was upheld, stating that final relief, such as possession, could be considered at the final adjudication stage. The MRTP Commission acknowledged the jurisdictional question raised by the respondents but deferred it to the final adjudication stage.
Ultimately, the Supreme Court declined to grant special leave to appeal against the MRTP Commission and Competition Appellate Tribunal's orders, finding no merit in the petitions. The dismissal was made without any order as to costs, concluding the legal proceedings in this matter.
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2012 (5) TMI 875
Issues Involved:
1. Legality of the appellant's insurance activities in India under the Insurance Act, 1938 and the Insurance Regulatory and Development Authority Act, 1999.
2. Applicability of Indian insurance laws to foreign insurance policies issued in India for coverage abroad.
3. Requirement of registration and licensing for the appellant under Indian insurance regulations.
4. The extra-territorial application of Indian insurance laws.
5. The impact of prohibiting the appellant's activities on Indian citizens traveling abroad.
Issue-wise Detailed Analysis:
1. Legality of the Appellant's Insurance Activities:
The primary issue was whether the appellant's activities of selling foreign insurance policies in India, for coverage in Ukraine and Belarus, constituted carrying on the business of insurance in India. The respondent IRDA had determined that the appellant was engaged in the business of insurance by collecting premiums and issuing certificates on behalf of foreign state insurance companies, thus requiring registration and licensing under Indian laws. The appellant argued that the insurance policies were only operative outside India and thus not subject to Indian insurance regulations.
2. Applicability of Indian Insurance Laws:
The court examined whether the Indian insurance laws applied to the foreign insurance policies sold by the appellant. It was noted that the Insurance Act and IRDA Act did not explicitly cover insurance policies that were only effective outside India. The court found no legislative intent to apply these laws extra-territorially, especially when the insurance coverage was for risks incurred outside India.
3. Requirement of Registration and Licensing:
The court analyzed whether the appellant needed to be registered or licensed under the Insurance Act and IRDA Act to sell foreign insurance policies in India. The IRDA had argued that any person carrying on insurance business in India required a valid license. However, the court concluded that since the insurance policies were not effective in India, the appellant's activities did not constitute carrying on insurance business in India, thus not necessitating registration or licensing.
4. Extra-territorial Application of Indian Insurance Laws:
The court considered the extra-territorial application of Indian insurance laws and referred to the Supreme Court's decision in Vodafone International Holdings B.V. v. Union of India, which stated that Indian laws are generally not intended to apply outside Indian territory unless explicitly stated. The court found no provision in the Insurance Act or IRDA Act indicating an intention to regulate insurance business conducted outside India.
5. Impact on Indian Travelers:
The court addressed the practical implications of prohibiting the appellant's activities, highlighting the inconvenience and increased costs for Indian travelers to Ukraine and Belarus who would otherwise have to purchase insurance policies at the destination at a higher price. The court deemed this an arbitrary and unreasonable restriction on travel, emphasizing that the appellant's activities provided a beneficial service to travelers.
Conclusion:
The court allowed the appeal, setting aside the orders of the learned Single Judge and the IRDA. It held that the provisions under which the IRDA acted were not applicable to the appellant's activities. The court clarified that if the government wished to regulate such activities, it should enact specific laws or regulations. The decision underscored the need for a clear legislative framework to address the unique nature of foreign insurance policies sold in India for coverage abroad. No costs were awarded.
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2012 (5) TMI 874
The Appellate Tribunal ITAT Chennai confirmed the treatment of the assessee's income as "income from house property" instead of "income from business". The appeal was dismissed based on earlier Tribunal orders. The decision was pronounced on May 16, 2012, in Chennai. [Case: 2012 (5) TMI 874 - ITAT CHENNAI]
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2012 (5) TMI 873
Issues Involved:
1. Constitutional validity of the Kerala Tax on Luxuries Act, 1976 (KTL Act), particularly Sections 4, 10, 15, and 16.
2. Challenge to revised assessment orders under Section 6(5) of the KTL Act.
3. Inclusion of charges for Ayurveda treatment, Laundry services, Beauty parlor, Boating, Travel arrangements, and Swimming pool in taxable turnover.
4. Retrospective application of Section 6(5) of the KTL Act.
5. Alleged discrimination in taxing services provided by outside agencies through hotels.
6. Interpretation and application of the proviso to Section 4(2) of the KTL Act.
7. Validity of the assessment orders based on change of opinion.
8. Alleged violation of principles of natural justice.
9. Limitation period for revised assessment orders.
10. Liability for interest on revised tax assessments.
Detailed Analysis:
1. Constitutional Validity of the KTL Act:
The primary challenge was against the constitutional validity of Sections 4, 10, 15, and 16 of the KTL Act. The court upheld the validity of the statute, stating that the power of the State to tax luxury under Entry 62 of List II of the 7th Schedule is distinct from the Central Government's power to tax services under Entry 92C of List I. The court referenced the Supreme Court's decision in Federation of Hotel & Restaurant Association of India and Others v. Union of India and Others, which upheld similar state enactments.
2. Challenge to Revised Assessment Orders under Section 6(5):
The revised assessment orders were challenged on the grounds that Section 6(5) was introduced only on 28/08/2005 and could not be applied retrospectively. The court found that the original assessment orders were passed after this date, making the revised assessments valid. The court emphasized that the provision for assessing escaped turnover was meant to protect revenue and was applicable to turnovers that escaped earlier assessments.
3. Inclusion of Charges in Taxable Turnover:
The court held that charges collected for Ayurveda treatment, Laundry services, Beauty parlor, Boating, Travel arrangements, and Swimming pool were exigible to luxury tax. The court referenced previous judgments, including Casino Hotels v. State of Kerala and Kovalam Ashok Beach Resort Hotel v. Sales Tax Officer, which confirmed that such charges were part of the taxable turnover under the KTL Act.
4. Retrospective Application of Section 6(5):
The court rejected the argument that Section 6(5) could not be applied retrospectively. It noted that the original assessment orders were passed after the provision was enacted, and thus, the revised assessments were valid. The court referenced the General Clauses Act and relevant case law to support its conclusion.
5. Alleged Discrimination in Taxing Services:
The petitioners argued that services provided by outside agencies through hotels should not be taxed. The court dismissed this argument, stating that the services provided by the hotel, whether directly or through outside agencies, were part of the taxable turnover. The court emphasized that the statute's broad definition of "luxury" included all amenities and services provided in a hotel.
6. Proviso to Section 4(2) of the KTL Act:
The court examined the proviso added to Section 4(2) by the Finance Act, 2007, which excluded charges for services rendered outside the hotel premises from luxury tax. The court held that this proviso was declaratory and applicable only from 01/04/2007, not retrospectively.
7. Validity of Assessment Orders Based on Change of Opinion:
The court found that the revised assessment orders were not based on a mere change of opinion but were necessitated by the realization that a significant portion of the turnover had escaped assessment. The court noted that the same officer who passed the original orders issued the revised assessments, further validating the process.
8. Alleged Violation of Principles of Natural Justice:
The court addressed the petitioners' claim that they were not given a proper opportunity for a personal hearing. It found that the petitioners did not request a personal hearing in their objections and that the revised orders were passed based on the available records. The court concluded that there was no violation of natural justice.
9. Limitation Period for Revised Assessment Orders:
The court rejected the plea of limitation, stating that the revised assessment orders were issued within the prescribed time limits. It referenced the second proviso to Section 6(4) and sub-section (5) of Section 6, which allowed assessments to be completed within five years.
10. Liability for Interest on Revised Tax Assessments:
The court held that interest could only be demanded for the actual period of default, as clarified in Casino Hotels v. State of Kerala. It ordered the assessing officer to revise the demand for interest accordingly.
Conclusion:
The court dismissed all writ petitions challenging the validity of the KTL Act and the revised assessment orders. It upheld the statute's constitutionality and the revised assessments, with a directive to adjust the interest demand as per the established legal principles.
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2012 (5) TMI 872
Issues involved:
1. Whether Section 22 SICA bars proceedings seeking to recover amounts pursuant to decrees made against guarantors.
2. Is it open to B.K. Modi to urge that execution proceedings against him are barred since the debt arising from the award against him was covered by a sanctioned scheme under SICA.
3. Is a guarantor's liability limited by virtue of Section 128, Contract Act.
4. Is the impugned judgment to the extent it grants liberty to B.K. Modi to apply for excluding the Amrita Shergill Marg property from execution proceedings justified in law.
Summary:
Point No. 1:
Section 22 SICA does not bar execution proceedings against guarantors. The Court held that "execution proceedings against guarantors are maintainable" as the legislative intent was clear in restricting the scope of Section 22 in respect of guarantors, only barring "suits for recovery of money or enforcement of security...or of any guarantee in respect of loans." The Court preferred the reasoning in *Kailash Nath Agarwal v Pradeshiya Industrial and Investment Corporation of UP* over *Paramjeet Singh Patheja vs ICDS Ltd*, concluding that execution against a guarantor is legal and maintainable.
Point No. 2:
B.K. Modi's contention that execution proceedings against him are barred under SICA due to the sanctioned scheme was dismissed. The Court noted that this issue had already attained finality as it was previously adjudicated and rejected in various proceedings, including appeals and special leave petitions before the Supreme Court.
Point No. 3:
The Court rejected B.K. Modi's argument that his liability as a guarantor is limited by the pending proceedings of the principal debtor before the Supreme Court. The Court emphasized that the liability of a surety is co-extensive with that of the principal debtor, and the surety can be independently pursued for the debt as per Section 128 of the Contract Act. The principle was supported by precedents like *Maharastra State Electricity Board v Official Liquidator, High Court* and *Bank of Bihar Ltd. v. Damodar Prasad and another*.
Point No. 4:
The Court found that the property at Prithviraj Road, claimed to be B.K. Modi's main dwelling house, was not substantiated with sufficient evidence. The Court held that the property at Amrita Shergill Marg should not be excluded from execution proceedings. The Court directed that the Prithviraj Road property also be subject to attachment in execution proceedings.
Conclusion:
The appeal by B.K. Modi (EFA (OS) No. 23/2011) was dismissed, subject to the direction that execution proceedings against him would proceed for recovery of the interest liability (Rs. 13 crores). The appeal by Morgan Securities (EFA (OS) No. 26/2011) was allowed, directing attachment of the Prithviraj Road property.
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2012 (5) TMI 871
Issues involved: Suit for recovery of overdue amount, limitation period for filing the suit, acknowledgment of debt u/s 18 of the Limitation Act, abuse of process of law.
Summary:
The appellant, a seller of batteries, filed a Regular First Appeal challenging the trial Court's dismissal of a suit for recovery of overdue amounts totaling to &8377; 7,49,729/-. The main contention revolved around the ambiguity in the appellant's arguments regarding the status of the 17 bills subject to the suit, which were allegedly part of previous arbitration proceedings. The respondent, Union of India (UOI), raised the defense of the suit being time-barred and disputed the acknowledgment of debt in another contract. The trial Court found the suit barred by limitation and lacking in clarity, leading to its dismissal.
On the issue of limitation, the trial Court held that the suit was filed after the prescribed period of 3 years from the date the amount became due, as evidenced by a notice issued by the plaintiff. The appellant's argument of the respondent's inaction and negligence was rejected, emphasizing the plaintiff's delay in pursuing legal action or arbitration despite the bills being withheld since 1978. The absence of any written acknowledgment within the statutory period further weakened the appellant's case.
The High Court concurred with the trial Court's findings, emphasizing the lack of any valid acknowledgment of debt within the limitation period. The Court criticized the appellant for attempting to exploit an alleged admission of payment in an unrelated execution proceeding, despite the bills being subject to prior arbitration and an Award. The appeal was dismissed as meritless, with costs imposed on the appellant for wasting judicial time and attempting to circumvent legal processes.
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2012 (5) TMI 870
Murder - Offence punishable u/s 120B r/w Section 302 Indian Penal Code - inordinate and unexplained delay in lodging the FIR - Time of occurrence cannot be validly related to the expert medical evidence - Plea of Alibi - Challenge the Conviction Judgment of the High Court as well as that of the Trial Court - HELD THAT:- It is a settled principle of criminal jurisprudence that mere delay in lodging the FIR may not prove fatal in all cases, but in the given circumstances of a case, delay in lodging the FIR can be one of the factors which corrode the credibility of the prosecution version. Delay in lodging the FIR cannot be a ground by itself for throwing away the entire prosecution case. The Court has to seek an explanation for delay and check the truthfulness of the version put forward. If the Court is satisfied, then the case of the prosecution cannot fail on this ground alone. Shubh Shanti Services Ltd. V. Manjula S. Agarwalla and Ors.[2005 (5) TMI 324 - SUPREME COURT].
It is a case where the ocular evidence of PW11 is corroborated by medical evidence and is also partially supported by the statement of PW10, the husband of the deceased. Thus, in our considered view, the statements of PW10 and PW11 cannot be said to be doubtful or which cannot be believed by the Court. Their presence at the place of occurrence was natural and what they have stated is not only plausible but completes the chain of events in the case of the prosecution.
The accused in the present appeal had also taken the plea of alibi in addition to the defence that they were living in a village far away from the place of occurrence. This plea of alibi was found to be without any substance by the Trial Court and was further concurrently found to be without any merit by the High Court also. In order to establish the plea of alibi these accused had examined various witnesses. Some documents had also been adduced to show that the accused Pawan Kumar and Sunil Kumar had gone to New Subzi Mandi near the booth of DW-1 and they had taken mushroom for sale and had paid the charges to the market committee, etc. Referring to all these documents, the trial court held that none of these documents reflected the presence of either of these accused at that place.
On the contrary the entire plea of alibi falls to the ground in view of the statements of PW-10 and PW-11. The statements of these witnesses have been accepted by the Courts below and also the fact that they have no reason to falsely implicate the accused persons. Once, PW-10 and PW-11 are believed and their statements are found to be trustworthy, as rightly dealt with by the Courts below, then the plea of abili raised by the accused loses its significance.
The proposition of law advanced by the counsel for the Appellants cannot be disputed. The fact of the matter remains that statement of Ratti Ram u/s 313 Code of Criminal Procedure is part of the judicial record and could be used against Ratti Ram for convicting him, if the prosecution had proved its case in accordance with law. Ratti Ram, unfortunately, died during the pendency of the proceedings. The part of his statement that supports the case of the prosecution as well as the statement of PW-10 and PW-11 can be relied upon by the prosecution to a limited extent. This statement may not be used against the present accused as such, but the fact that the statement of Ratti Ram u/s 313 Code of Criminal Procedure supports the case of the prosecution cannot be wiped out from the record and would have its consequences in law. Without using the statement of Ratti Ram against these accused, the courts below have correctly relied upon the statement of PW-10 and PW-11 and the medical evidence. This finding recorded by the Courts cannot, therefore, be faulted with.
The present accused have not been convicted on the basis of a mere suspicion. The prosecution has been able to establish its case beyond reasonable doubt by ocular, documentary and medical evidence. The bangles which were recovered from the place of occurrence and the injuries that were inflicted upon the body of the deceased clearly show that she struggled for life and was murdered at the hands of accused. Thus, it is not a case of mere suspicion.
We have noticed that Pawan Kumar had preferred a separate appeal which came to be dismissed by this Court on the ground of delay as well as on merits. of course, dismissal of the SLP at the admission stage itself may not adversely affect the case of the present Appellants. We do not intend to dwell on this issue any further.
We also do not propose to rely upon the dismissal of the SLP filed by Pawan Kumar since we have come to an independent conclusion on merits that the prosecution in the present case has been able to bring home the guilt of the Appellants-accused and the judgment of the High Court under appeal does not call for any interference.
Thus, both the above appeals are dismissed.
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2012 (5) TMI 869
Issues involved:
Multiple appeals related to block assessments and protective assessments u/s 132 of the Income-tax Act, 1961, involving undisclosed income determination and subsequent challenges before the Income-tax Appellate Tribunal and the High Court.
Block Assessment and Undisclosed Income Determination:
The appeals encompassed various assessment years and block periods, stemming from a search u/s 132 on a former minister leading to undisclosed income estimations. The Assessing Officer determined a total undisclosed income of Rs. 5,40,07,340, comprising direct income, related income, and post-search additions. The Tribunal partially allowed the appeal, reducing the undisclosed income to Rs. 65,52,405 in the hands of the minister.
Protective Assessments:
Protective assessments were made on relatives and associates of the minister, based on investments found in their names but attributed to the minister. These assessments were a consequence of the substantive block assessment on the minister, leading to challenges by the relatives and associates in the appeals.
High Court Judgment:
The Revenue contested the Tribunal's decision granting substantial relief to the minister, arguing lack of opportunity regarding additional evidence. The High Court set aside the Tribunal's order, directing a fresh assessment by the Assessing Officer considering the additional evidence. Consequently, the block assessment on the minister was remanded for fresh disposal, necessitating a similar reevaluation of the protective assessments in light of the High Court's ruling.
Conclusion:
All appeals, both by the assessees and the Revenue, were treated as allowed for statistical purposes, with the cases remitted back to the assessing authority for reconsideration in accordance with the High Court's judgment. The substantive block assessment and protective assessments were to be reassessed following the court's directives, ensuring a comprehensive review of the undisclosed income determinations.
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2012 (5) TMI 868
Issues Involved:
1. Prima Facie Case for Temporary Injunction
2. Balance of Convenience
3. Irreparable Injury
4. Specific Performance of Contract
Summary:
1. Prima Facie Case for Temporary Injunction:
The Supreme Court examined whether the Respondent No. 1 (Aditya Birla Nuvo Ltd.) had a prima facie case. The Court noted that Liberty Agencies had given a warranty u/s B-2 of the agreement to retain possession of the suit schedule property until the expiry of the agreement. The agreement duration was twelve years from the date of the agreement, expiring in 2017, and only Respondent No. 1 had the right to terminate it after six years. The breach by Liberty Agencies was evident when they sent a letter on 26.02.2010, indicating a breach of clause B-2. Thus, the trial court and the High Court were correct in concluding that Respondent No. 1 had a prima facie case.
2. Balance of Convenience:
The Court considered whether the balance of convenience was in favor of the Plaintiff (Respondent No. 1). The trial court and the High Court had found that if the temporary injunction was not granted, Liberty Agencies might lease or sub-lease the property, leading to multiplicity of proceedings and hardship for Respondent No. 1. However, the Supreme Court noted that Respondent No. 1, being a limited company, would primarily suffer financial losses, which could be compensated by damages.
3. Irreparable Injury:
The Court emphasized that even if a prima facie case exists, a temporary injunction should be refused if the Plaintiff would not suffer irreparable injury. The Respondent No. 1 had claimed damages of Rs. 20,12,44,398/- in the plaint, indicating that the injury could be compensated monetarily. The Supreme Court held that the Respondent No. 1 would not suffer irreparable injury as they could be compensated by damages if they succeeded in the suit.
4. Specific Performance of Contract:
The Appellants argued that the agreement was an agency contract and could not be specifically enforced u/s 14(1)(b), (c), and (d) of the Specific Relief Act, 1963. The Respondent No. 1 countered that specific performance could be decreed in exceptional cases and cited Section 42 of the Specific Relief Act, 1963, which allows for the enforcement of negative agreements. However, the Supreme Court did not delve into these contentions, stating that temporary injunctions are regulated by the Code of Civil Procedure, not the Specific Relief Act, 1963.
Conclusion:
The Supreme Court set aside the order of temporary injunction passed by the trial court and the High Court, stating that the Respondent No. 1 would not suffer irreparable injury as they could be compensated by damages. The appeals were allowed with no order as to costs.
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2012 (5) TMI 867
Issues Involved:
1. Allowance of bad debts u/s 36(1)(vii) and 36(2)
2. Disallowance u/s 14A read with Rule 8D
3. Addition on account of royalty
Summary:
1. Allowance of Bad Debts u/s 36(1)(vii) and 36(2):
The first issue was whether the CIT(A) erred in allowing bad debts of Rs. 23,35,53,232/- relating to defaulting prized subscribers as a deduction while computing the income of the assessee. The Assessing Officer (AO) disallowed the bad debts, arguing that the conditions u/s 36(1)(vii) read with 36(2) were not satisfied, as the assessee did not offer the debt as income in the current or previous years and the business was not money lending but chit business. The CIT(A) allowed the claim, following the Tribunal's order in the assessee's own case for earlier years. The Tribunal upheld the CIT(A)'s decision, referencing its consistent rulings in favor of the assessee in similar cases, and recognizing the commercial prudence and business requirements for the assessee to step in for defaulting subscribers to maintain the chit business.
2. Disallowance u/s 14A read with Rule 8D:
The second issue was whether the CIT(A) erred in restricting the disallowance u/s 14A to Rs. 3,80,402/- as against Rs. 10,43,600/- disallowed by the AO. The AO applied Rule 8D to disallow expenses incurred in respect of exempt income. The Tribunal, referencing the Hon'ble Bombay High Court's decision in Godrej & Boyce Mfg. Co. Ltd. v. DCIT [328 ITR 81], held that Rule 8D is applicable only from the assessment year 2008-09. Therefore, for the assessment year 2007-08, the AO should reasonably estimate the expenses attributable to earning exempt income without applying Rule 8D. The Tribunal set aside the lower authorities' orders and directed the AO to make a reasonable estimate.
3. Addition on Account of Royalty:
The third issue was whether the CIT(A) erred in deleting the addition of Rs. 82,93,635/- on account of royalty. The DR conceded that this issue was covered in favor of the assessee by the Tribunal's order in the assessee's own case. The Tribunal, following its earlier orders, held that royalty expenses are allowable as revenue expenditure. The Tribunal referenced its decision in the case of ACIT v. M/s. Shriram Chits Tamil Nadu Pvt. Ltd., where it was held that payments for the non-exclusive use of a logo based on turnover are revenue in nature and not capital expenditure.
Conclusion:
The Tribunal upheld the CIT(A)'s decisions on the issues of bad debts and royalty expenses, while it directed the AO to reasonably estimate expenses attributable to earning exempt income for the disallowance u/s 14A. The appeal of the Revenue was partly allowed.
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2012 (5) TMI 866
Issues involved:
The issue involves the entitlement of a trust registered u/s 12AA of the Income Tax Act, 1961 to set-off brought forward losses against income, specifically focusing on the application of income towards charitable purposes.
Summary:
Issue 1: Entitlement for set-off of brought forward losses
The revenue appealed u/s 260A of the Income Tax Act, 1961 against the Tribunal's order regarding the set-off of brought forward losses. The assessee, a trust running an educational institution, claimed depreciation and carry forward of losses which was initially disallowed. The CIT (A) allowed the claim, leading to the revenue's appeal. The Tribunal, relying on judgments of the Bombay and Gujarat High Courts, upheld the allowance of set-off. The High Court concurred with the Tribunal's decision, stating that the issue was concluded against the revenue based on the mentioned judgments. Therefore, the appeal was dismissed.
Conclusion:
The High Court upheld the Tribunal's decision regarding the entitlement of the trust to set-off brought forward losses against income, based on legal precedents from the Bombay and Gujarat High Courts.
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2012 (5) TMI 865
Issues involved: Transfer of Criminal Case u/s 406 CrPC from Delhi to Thane for convenience of parties and witnesses.
Details of the Judgment:
1. The petitioners, a husband and wife facing prosecution under the Prevention of Corruption Act, sought transfer of their case from Delhi to Thane, Maharashtra, due to convenience issues. The case involved assets disproportionate to income acquired by the husband while posted in Delhi. The charge-sheet listed 92 witnesses, with 88 from Maharashtra, causing inconvenience to the accused and witnesses traveling to Delhi for trial.
2. The Respondent opposed the transfer, citing the husband's posting in Delhi during the check period as justification for filing the chargesheet there. However, it was acknowledged that 88 out of 92 witnesses were from Maharashtra, supporting the petitioners' claim of inconvenience in attending court proceedings in Delhi.
3. The Supreme Court, considering the provisions of Section 406 CrPC, emphasized the need to meet the ends of justice in deciding on the transfer of cases. The Court noted the inconvenience faced by the accused and witnesses due to the trial being Delhi-centric, despite most witnesses being from Maharashtra.
4. The Court referred to previous judgments highlighting the importance of fairness in trials and the relevance of convenience of parties and witnesses in transfer petitions. It was emphasized that the convenience of all stakeholders, including the prosecution, accused, and witnesses, should be considered in deciding on transfers for the fair and impartial dispensation of justice.
5. Considering the circumstances of the case, including the location of witnesses and the accused, the Court allowed the petition and transferred Criminal Case No. 45 of 2008 from the Court of Special Judge, CBI Cases, Rohini Courts, New Delhi to the Court of Special Judge, CBI Cases, Court of Sessions at Thane, Maharashtra, for expeditious disposal of the trial and convenience of all parties involved.
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2012 (5) TMI 864
Issues Involved:
1. Legality of the ISI prescription endorsement on the manufacturing license.
2. Whether the manufactured items are misbranded cosmetics.
3. Applicability of the Drugs and Cosmetics Act and Rules.
4. Validity of the summoning order and prosecution.
Summary:
1. Legality of the ISI Prescription Endorsement on the Manufacturing License:
The petitioners challenged the summoning order dated 28.4.1994 u/s 482 Cr.P.C. They argued that the ISI prescription was not within the domain of the Drug Controller and was made applicable only from 27.10.1993. However, the court found that ISI specifications for testing toilet soaps were prevalent since 1978 (IS: 286-1978 for Breeze and IS: 2536-1978 for Lux). The Drug Controller's endorsement was valid, and the manufacturing had to conform to these standards. The court held that the endorsement was not without authority of law.
2. Whether the Manufactured Items are Misbranded Cosmetics:
The petitioners argued that their products were not misbranded cosmetics. Section 17C of the Act defines misbranded cosmetics as those with false or misleading labels. The court found that the fatty contents displayed on the wrappers did not match the actual contents (33.77% vs. 50% for Breeze and 50.82% vs. 60% for Lux). Hence, the products were misbranded as per the Act.
3. Applicability of the Drugs and Cosmetics Act and Rules:
The petitioners contended that the ISI prescription was not applicable before 27.10.1993 and that the Drug Controller's act amounted to legislation. The court rejected this, stating that Rule 150A of the Rules required cosmetics to conform to IS specifications. The court also noted that the petitioners did not apply for retesting u/s 25(4) of the Act. The court upheld the applicability of the Act and Rules, emphasizing public safety and health.
4. Validity of the Summoning Order and Prosecution:
The court found no illegality in the summoning order. The petitioners' reliance on various case laws was not applicable as the facts differed. The court emphasized that branded companies have a responsibility to maintain public trust and that the petitioners' company had committed fraud by displaying incorrect fatty contents. The court dismissed the petition, allowing the prosecution to proceed.
Conclusion:
The petition was dismissed, and the court upheld the validity of the ISI prescription endorsement, the classification of the products as misbranded cosmetics, and the applicability of the Drugs and Cosmetics Act and Rules. The summoning order was found to be legal, and the prosecution was allowed to continue.
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2012 (5) TMI 863
Issues involved: Appeal against deletion of penalty u/s 271(1)(c) of IT Act for Assessment Year 2006-07.
Summary:
The sole issue pertains to the deletion of penalty amounting to Rs. 13,29,194/- imposed u/s 271(1)(c) of the Act. The assessee had initially claimed a long term capital loss on the sale of a flat, which was subsequently revised due to a clerical error in the indexed cost calculation. The Assessing Officer (AO) initiated penalty proceedings based on this revision. The assessee contended that the revised calculation did not affect the tax liability, and it was a bona fide mistake. The Commissioner of Income-tax (Appeals) (CIT(A)) observed that the revised computation was beneficial to the revenue and deleted the penalty, except for a minor amount related to the difference in Minimum Alternate Tax (MAT) income.
During the appeal, the Revenue argued that the assessee's mistake in indexing the cost of acquisition led to the penalty imposition, while the assessee maintained that all necessary facts were disclosed, and the revision was made voluntarily. The Tribunal noted that the difference in opinion regarding the date of property acquisition was inconsequential as the income was ultimately assessed under MAT provisions. Citing the decision in CIT vs. Reliance Petroproducts Ltd., it was emphasized that penalty under sec. 271(1)(c) requires inaccurate particulars, which were not found in this case. The Tribunal upheld the CIT(A)'s decision to delete the penalty, as the revised computation did not result in under-assessment of income.
In conclusion, the appeal by the Revenue was dismissed, affirming the deletion of the penalty u/s 271(1)(c) by the CIT(A) in relation to the capital gains computation.
Judges: Shri Rajpal Yadav, Judicial Member and Shri K.D. Ranjan, Accountant Member
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2012 (5) TMI 862
Issues Involved:
1. Assumption of jurisdiction u/s 263 by the CIT.
2. Disallowance of net present value (NPV) as capital expenditure.
3. Disallowance of periphery development expenses as prior period expenses.
Summary:
1. Assumption of Jurisdiction u/s 263 by the CIT:
The appeals for AYs 2007-08 and 2008-09 challenge the CIT's orders u/s 263 of the I.T. Act, 1961, dated 1st March 2012. The assessee contends that the CIT's orders are not maintainable and should be quashed. The CIT issued a show cause notice u/s 263 questioning the allowance of NPV and periphery development expenses by the Assessing Officer (AO).
2. Disallowance of Net Present Value (NPV) as Capital Expenditure:
The CIT questioned the deduction of NPV paid to the Divisional Forest Officer (DFO), considering it capital in nature. The assessee argued that the NPV paid for deforestation on leased mining land cannot be considered capital expenditure as it does not create a capital asset. The ITAT, Cuttack Bench, in the case of Orissa Mining Corporation, held that such payments are revenue expenditures. The Tribunal found that the CIT's assumption of jurisdiction u/s 263 was void ab initio as the AO had already examined and allowed the expenditure, and no error prejudicial to the revenue was demonstrated.
3. Disallowance of Periphery Development Expenses as Prior Period Expenses:
The CIT also questioned the deduction of periphery development expenses, arguing they pertained to an earlier period. The assessee contended that these expenses were part of the lease agreement and were paid based on demand notices from the Government authorities, crystallizing only at the time of payment. The Tribunal held that the AO had verified and allowed these expenses correctly, and the CIT's assumption of jurisdiction u/s 263 was improper.
Conclusion:
The Tribunal quashed the CIT's orders for both AYs under consideration, allowing the appeals of the assessee. The Tribunal found that the CIT's assumption of jurisdiction u/s 263 was not proper and that the expenditures in question were rightly considered as revenue expenditures by the AO.
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2012 (5) TMI 861
Issues involved: The judgment involves the following issues: 1. Whether the payment towards live telecast of events constitutes royalty payments. 2. Whether the payments made to content providers can be said to arise in India under Article 12(7) of the treaty between India and Mauritius. 3. Whether the assessee was liable to the provisions of section 201(1) and 201(1A) of the Act.
Issue 1 - Live Telecast Payments: The Revenue appealed against the order of the Commissioner (Appeals) regarding the classification of payment towards live telecast of events as royalty payments. The Tribunal, based on a previous decision, upheld that such payments do not fall under u/s 9(1)(vi) of the Act, leading to the dismissal of the Revenue's appeal.
Issue 2 - Payments to Content Providers: The Revenue challenged the holding of the CIT(A) that payments made to content providers do not arise in India under Article 12(7) of the India-Mauritius treaty. Citing a previous case, the Tribunal ruled in favor of the assessee, emphasizing that the economic link between the payment of royalties and the Permanent Establishment (PE) in India was lacking, thus concluding that the royalties did not arise in India as per the treaty provisions. Consequently, the ground raised by the Revenue was dismissed.
Issue 3 - Liability under Section 201(1) and 201(1A) of the Act: The Revenue contended that the assessee was liable under section 201(1) and 201(1A) of the Act. However, this issue was deemed consequential in nature and was consequently dismissed.
In conclusion, the Appellate Tribunal ITAT MUMBAI upheld the decisions in favor of the assessee on both issues related to the classification of payments, based on previous rulings and the interpretation of relevant legal provisions. The Revenue's appeal was dismissed, and the order was pronounced on 18th May 2012.
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2012 (5) TMI 860
Issues Involved:
1. Validity of the decree for possession under Order XII Rule 6 of the Code of Civil Procedure.
2. Service of notice of termination.
3. Estoppel of tenant under Section 116 of the Indian Evidence Act.
4. Forfeiture of lease under Section 111(g)(2) of the Transfer of Property Act.
5. Imposition of costs for frivolous litigation.
Summary:
1. Validity of the Decree for Possession:
The Trial Court passed a decree for possession against the appellant u/s Order XII Rule 6 of the Code of Civil Procedure, which was challenged in this appeal. The appellant admitted the lease deed dated 7th November 2006, which expired on 6th November 2008, and the payment of rent to the respondent. The Court found that the admissions were unambiguous, clear, and unconditional, thus justifying the decree for possession.
2. Service of Notice of Termination:
The respondent sent a notice of termination dated 20th June 2009 by registered post to the appellant's correct addresses. The notice sent to the registered office was returned with remarks "left," whereas the notice sent to the Okhla address was duly served. The Court held that the original postal receipts and acknowledgment card raised a presumption of service u/s 27 of the General Clauses Act, 1897 and Section 114(f) of the Indian Evidence Act, 1872. The appellant's vague denial of the notice was insufficient to raise an issue.
3. Estoppel of Tenant:
The appellant disputed the respondent's title, which was barred by Section 116 of the Indian Evidence Act. The Court held that the appellant, being in possession, could not dispute the title of the landlord. The appellant's plea was thus dismissed.
4. Forfeiture of Lease:
The appellant's lease was forfeited u/s 111(g)(2) of the Transfer of Property Act due to renunciation of the lease by setting up a title in a third person. The Court held that this brought an end to the landlord-tenant relationship, making the appellant liable for eviction.
5. Imposition of Costs:
The Court imposed costs of Rs. 2,00,000/- on the appellant for raising frivolous pleas and dragging the litigation. The appellant's conduct was deemed as misuse of the judicial process, warranting penal costs to discourage such behavior in future litigations.
Conclusion:
The appeal was dismissed, and the decree for possession was upheld. The appellant was directed to pay costs to the respondent within four weeks. The judgment emphasized the importance of truth in judicial proceedings and the need to discourage frivolous litigation through imposition of realistic costs.
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2012 (5) TMI 859
Issues Involved:
1. Territorial Jurisdiction
2. Locus Standi of the Petitioner
3. Merits of the Environmental Clearance Process
Summary:
1. Territorial Jurisdiction:
The petitioner argued that since the environment clearance was granted in Delhi and the NEAA is also situated in Delhi, this Court has jurisdiction. The respondent No.3 contended that the principle of forum convenience should apply, suggesting that the High Court of Chhattisgarh is a more appropriate venue due to the location of the project and related proceedings. The Court, referencing the Full Bench decision in M/s Sterling Agro Industries Ltd., held that while it has jurisdiction, it can refuse to entertain the petition if another court is more convenient. However, the Court found no compelling reason to transfer the case, noting that the issues raised are purely legal and not specific to the local context of Chhattisgarh. The Court rejected the challenge to its territorial jurisdiction.
2. Locus Standi of the Petitioner:
The petitioner claimed that the environment clearance was granted without completing the public hearing process and based on a faulty Environment Impact Study. The NEAA had dismissed the appeal on the grounds that the petitioner had no locus standi. The Court referenced the Division Bench decision in Vedanta Alumina Ltd, which interpreted Sec. 11 of the NEAA Act, 1997, to allow a broad definition of "aggrieved person," including organizations closely following environmental issues. The Court agreed with this interpretation, concluding that the petitioner had the locus standi to appeal.
3. Merits of the Environmental Clearance Process:
The petitioner argued that the public hearing was adjourned and not completed, yet the environment clearance was granted. The respondent No.3 countered that the public hearing was completed and that multiple legal remedies were being pursued by the petitioner in different courts, which should not be permitted. The Court found that the NEAA's dismissal of the appeal on the grounds of locus standi was incorrect. The Court set aside the NEAA's order and remanded the appeal for a decision on merits, emphasizing that the petitioner qualifies as an "aggrieved person" under the NEAA Act.
Conclusion:
The Court held that it has territorial jurisdiction to entertain the petition, recognized the petitioner's locus standi, and remanded the appeal to the NEAA for a decision on merits. No order as to costs was made.
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2012 (5) TMI 858
Issues Involved:
1. Eligibility conditions for Private Tour Operators (PTOs) in the 2012 Haj Policy.
2. Hajj Subsidy.
3. Goodwill Hajj Delegation.
4. Allocation of special quotas for Hajj.
Summary:
1. Eligibility Conditions for Private Tour Operators (PTOs):
- The dispute arose from the Government of India's 2011 Haj Policy requiring a "minimum office area of 250 sq. ft." for PTO registration. The Bombay High Court rejected the challenge but directed the allocation of certain seats to some petitioners. The Supreme Court stayed this direction.
- The Court examined the 2012 Haj Policy, noting the increase in PTO applications and the need for stringent conditions to ensure smooth and trouble-free Hajj for pilgrims.
- The Court upheld the conditions for PTO registration, including:
- Clause 4: Limiting registration to one family member, with preference to women or the oldest in the business.
- Minimum office area of 250 sq. ft.: To ensure genuine operators and prevent black marketing.
- Annual turnover of Rs. 1 crore: Reflecting the substantial business involved.
- Security deposit of Rs. 25 lakhs: To ensure financial soundness and accountability.
- Court cases: Disqualification only for cases against the PTO, not for enforcing rights.
- Online applications: Accepted with complete details.
- The Court approved the 2012 Haj Policy but suggested improvements, such as requiring applicants to disclose arrangements and charges for pilgrims, and considering a ceiling on PTO numbers with competitive selection.
2. Hajj Subsidy:
- The subsidy has increased over the years due to more pilgrims and higher travel costs. In 2011, the subsidy reached Rs. 685 crores.
- The Court noted that the subsidy covers the additional fare due to Saudi regulations, with pilgrims paying Rs. 16,000 and the government covering the rest.
- The Court directed the government to progressively reduce and eliminate the subsidy within 10 years, suggesting the funds be used for community upliftment in education and social development.
- The Court anticipated an increased demand for PTOs as the subsidy reduces, requiring a nuanced policy for PTO registration and quota allocation.
3. Goodwill Hajj Delegation:
- The delegation, first sent in 1967, was to counter anti-India propaganda but now serves to convey goodwill and oversee arrangements.
- The Court criticized the arbitrary selection of delegation members and the lack of clear criteria, finding it in violation of Article 14.
- The Court recommended stopping the current practice and suggested sending a leader and deputy leader, with the leader forming a representative team from Indian pilgrims in consultation with the Indian Ambassador and Consul General.
4. Allocation of Special Quotas for Hajj:
- The Court sought detailed information on the allocation of 11,000 special quota seats reserved for various categories, including Khadim-ul-Hujjaj, Mehram, Bohras, and others.
- The Court expressed reservations about allocating seats based on recommendations by dignitaries and eminent persons.
- The Court directed the Union of India and Haj Committees to file detailed affidavits on the selection process, charges, and facilities provided to pilgrims.
Conclusion:
The Supreme Court addressed multiple issues related to the 2012 Haj Policy, emphasizing the need for stringent conditions for PTO registration, reducing Hajj subsidies, reforming the Goodwill Hajj Delegation, and ensuring transparency in the allocation of special quotas. The Court's directives aimed at ensuring a smooth and fair Hajj process for Indian pilgrims.
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