Benefit of exemption u/s 10(23C)(iiiab) - HELD THAT:- The materials on record discloses that the assessee exists only for educational purposes and it has not existed for any private purpose. The institute is controlled by the Board appointed by the Government. Government of Karnataka granted 23 acres of land to the assessee which was valued at the relevant point of time is Rs. 50.00 crores. The institution has been built up by the funds granted by the Karnataka Government and UGC to the extent of Rs. 8.75 crores upto 31.03.2005.
Therefore, the assessee being only the owner and subsequently, financed by the Government as per legislative sanction given to the university in Schedule-XXIII is entitled to receive any contribution or grant made by the State Government; University Grants Commission or the Central Government; any contribution made by the Bar Council of India; Bar Council of India Trust or the State Bar Councils etc.,
The findings of the Tribunal that the assessee is subsequently financed by the Government and therefore, the assessee is entitled to the benefit of exemption u/s 10(23C)(iiiab) cannot be found fault with. Decided against the Revenue.
Seeking for initiation of proceedings for winding up - company was unable to pay its debt - Section 434 of the Companies Act, 1956 - HELD THAT:- The copies of the demand notice as well as the receipt of such notice have been duly averred and substantiated by the petitioner. As the respondent has failed to remain present despite of the said notice, the averments in the petition would have to be accepted. In such circumstances, the respondent has not raised any bonafide dispute with regard to the said debt payable to the petitioner.
The non payment of the admitted liability despite of the said notice would result to the statutory consequences. Hence, the petition deserves to be admitted.
Failure of the Company Law Board, Chennai Bench, to issue a prior notice and hear them on the quantum of compounding fees required to be paid by them under Section 621A of the Companies Act, 1956 - compounding the offences - HELD THAT:- This Court has expressed its view that the function of the Company Law Board, while acting under Section 162(1) of the Act, is quasi judicial in nature and that the same can be said to have been properly discharged only if it passes an order in writing as mandated by Regulation 29 of the Regulations.
Having regard to the affidavit of the Bench Officer as referred to above, the company appeal is closed. As the application for compounding the offence is pending adjudication by the Company Law Board, the interim order of stay granted by this Court on 18.06.2014 shall continue till the disposal of the said application.
Winding up of company - breach of the express covenants of the Novation Agreement For Assumed Contracts - Section 433 and 434 of the Companies Act, 1956 - HELD THAT:- It is to be borne in mind that a debt is a sum of money which is now payable or will be payable in future by reason of a present obligation debitum in prasenti solvendum in futuro. Furthermore, a debt must be a determined or definite sum of money payable immediately or at a future date. A contingent debt or a conditional liability is not a debt when the contingency or condition has already happened.
It may not be out of place for this Court to point out that if a Court of Law is satisfied that a debt upon which a petition to wind up is founded is a hotly contested debt and also doubtful, then, it should not make up a winding up order based upon such debt. 'Bona fide' dispute implies the existence of a substantial ground for the dispute raised. Where the company has a bona fide/genuine dispute, the Petitioner cannot be regarded as a creditor of the company for the purposes of winding up - the power of winding up is to be exercised judicially and with most circumspection. No wonder, the proceedings under Section 433 and 434 are not the proceedings to recover debts due from any particular company.
It is to be noted that the ingredients of Section 434 of the Companies Act, 1956 enjoins that when a notice is served in that Section in the manner specified and if the payment is not made within a period of three weeks, it will be presumed that the company is unable to pay its debts, but, in the considered opinion of this Court, this gives only a presumption that the company is unable to pay debts. However, the said presumption is a rebuttable one in the manner known to law and in accordance with law. As such, the nonissuance of reply to a statutory notice of the Respondent by the Appellant cannot be considered as an adverse circumstance against the Appellant, when it has raised defences, which are substantial and one of substance in so far as the present case is concerned.
This Court holds that the Appellant/Respondent has raised a substantial and tangible defences by raising contentious factual and legal issues which required detail investigation. Also that, the defences raised by the Appellant/ Respondent are not a mere cover or empty disputes with a view to cover up its real inability. In short, this Court is subjectively satisfied that the defences raised by the Appellant/Respondent in the present case are bona fide and genuine one. As a matter of fact, these contested mixed questions of Facts and Law are to be adjudicated only by a Civil Court. As such, the proper remedy for the Respondent/ Petitioner is to approach the competent Civil Court for resolving the mixed questions of Facts and Law in regard to the bona fide dispute of Debt and its liability. Further, in a summary proceedings, under Section 433 of the Companies Act, 1956, the divergent stand taken by the respective parties cannot be gone into and bona fide disputes being raised by them. Therefore, this Court directs the Respondent/ Petitioner to approach the competent civil forum for recovery of the amount/debt from the concerned parties.
Seeking initiation of criminal contempt proceedings against the respondent - guilty of suppression and manipulation of the Company Law Board proceedings - HELD THAT:- Filing of an application by a party for being deleted from the array of parties does not tantamount to the situation that the applicant does not want to be heard in the matter. The application for being deleted from the array of parties is filed on the premise that the party is neither necessary nor a proper party. The application for being deleted from the array of parties can never be construed as if the applicant does not wish to be heard in the matter. The effect of such an application is that if the application is allowed, the applicant would be deleted from the array of parties and if the application is dismissed, the applicant would continue to remain a party and would be entitled to be heard in all proceedings.
The submission of the appellant that when a notice is issued in a petition and the respondent instead of filing a reply on the merits of the petition, files an application seeking deletion from the array of parties, amounts to opting not to be heard in the matter, in my view, is again meritless. If a party chooses not to respond to the factual averments of the main petition, the court is entitled to deal with the application or the petition as if the facts have gone unrebutted and appropriate orders would be passed.
In the present case, the appellant himself had dropped the respondents from the array of parties thereby implying that the respondents were neither necessary nor proper parties to the proceedings and had been incorrectly arrayed in the first instance.
No ground is made out to initiate any criminal proceedings against the respondents. There is no merit in the application. The application is accordingly dismissed.
Demand of service tax under the category Commercial and Industrial Construction Services - declining to give the benefit of Notification No. 1/2006-ST - alternative claim of the appellant for benefit of Notification No. 12/2003 is also declined on the ground that the value of the goods and materials sold was not properly justified by producing evidences.
HELD THAT:- Before the Tribunal, appellant produces some records and prima-facie, it shows some kind of sale of materials. This sale of material needs to be gone into detail which can be done only by the adjudicating authority by scrutinizing the records, if any, that may be produced by the appellant.
At the same time, we are also deprecate the attitude of the appellant for having not produced these documents before the adjudicating authority and producing the same before us for the first time.
In the interest of justice, we find that the adjudicating authority should be given an opportunity to verify and scrutinize the documents as to the claim of the appellant for benefit of Notification No. 12/2003-ST.
The High Court of Telangana dismissed the appeal on an identical issue, with no order as to costs. The judgment was delivered by Chief Justice Sri Kalyan Jyoti Sengupta.
Benefit u/s 43(5) clause (d) - speculative loss - derivative transactions - derivative transactions between July, 2005 to September, 2005 were not eligible - Rule 6 DDA and Rule DDB were subsequently enacted to prescribe conditions and procedure for notification of a recognized stock exchange - National Stock Exchange and Bombay Stock Exchange were notified vide notification dated 25th January, 2006 - Notification No.2/2006 dated 25th January, 2006, issued by the Central Board of Direct Taxes does not specify any particular date and simply notifies the National Stock Exchange India Ltd. and Bombay Stock Exchange, Mumbai under proviso (d) to clause (5) to Section 43 of the Act.
As decided by HC [2013 (9) TMI 733 - DELHI HIGH COURT] we agree with the tribunal that the delay occasioned, as procedure and formalities have to be complied with, should not disentitle and deprive an assessee, specially, when the transactions were carried through a notified stock exchange. The rule and notification issued in the present case effectuate the statutory and the legislative mandate. There is no good ground or reason why the notification in question should not be given effect from 1st April, 2006.
HELD THAT:- Delay condoned. The special leave petition is dismissed.
Power of the TPO to determine ALP transaction as sham - HELD THAT:- By the impugned judgment and order of the learned Tribunal[2014 (2) TMI 673 - ITAT HYDERABAD] which is sought to be appealed against, the Tribunal held, following the ratio of the decision in the case of L.G. Polymers India (P) Ltd. v. A.C.I.T. [2011 (9) TMI 259 - ITAT VISAKHAPATNAM]Transfer Pricing Officer is not empowered to hold the transaction as sham transaction. Reading the provision of law, the aforesaid conclusion in our view is not erroneous.
Challenge to public notice imposing penalty - withdrawal of national award including plaque and recovery of award money and information thereof to the public, without being called upon to participate in any proceedings that might have been drawn up - HELD THAT:- To hold that service of an order or a notice on the addressee would never give rise to a cause of action to move the Court within whose territorial limits the order/notice is received, may not be reasonably sound. If service of an order or a notice is an event of substance i.e. an event which is a material, essential or integral part of the lis connected with the action that is impugned in a writ petition, there is no plausible reason as to why the same should not be construed as constituting a material, essential or integral part of the cause of action. The plea of affectation of right or interest by reason of such order/notice being served, if based on a substantial fact forming a part of the bundle of facts constituting the cause of action, would indeed be relevant for determination of the question as to whether the writ petition ought to be entertained or not. Here, the decision to withdraw the award and the plaque from the petitioner was never communicated to him prior to the public notice being published in the print media and it is such publication, the only one in the series to make the public aware of the penalty imposed on the petitioner, that vitally affects the reputation and respect that he has earned over the years.
Such affectation having taken place in Santiniketan, where the petitioner alleges he read the public notice for the first time and derived knowledge of the impugned decision of the Akademi (there being no material at least at this stage that the decision was formally served on the petitioner in any territory beyond West Bengal prior to the public notice being published), it is an integral, essential and material part of the lis constituting the cause of action to approach the Court and conferring jurisdiction on this Court to entertain the writ petition. The fact that the petitioners before the Allahabad High Court withdrew their writ petitions with liberty to approach the appropriate High Court is absolutely irrelevant and immaterial for a decision on the preliminary objection to the maintainability of this writ petition.
The decision to withdraw the award and the plaque were taken behind the petitioner's back - no interim protection is required and granted at this stage.
Validity of proceeding u/s 153C - AO completed the assessment by disallowing the agricultural income declared by the assessee in the original return of income filed by him treating it as unexplained credit - HELD THAT:- As assessment made by the AO is not with reference to any incriminating material found as a result of search. Therefore, respectfully following the M/s. Avinash Estates & Resorts Ltd [2014 (10) TMI 668 - ITAT VISAKHAPATNAM] decision of the coordinate bench, we quash the assessment order passed for all these assessment years. Decided in favour of assessee.
Validity of proceeding u/s 153C - reference to any incriminating material found as a result of search - AO completed the assessment by disallowing the agricultural income declared by the assessee in the original return of income filed by him treating it as unexplained credit - CIT(A) sustained 50% of the addition made by the assessing officer as unexplained credit - HELD THAT:- We have dealt with identical issue in case of another group company viz. M/s. Avinash Estates & Resorts Ltd [2014 (10) TMI 668 - ITAT VISAKHAPATNAM] as held that assessment made by the assessing officer is on the basis of the entries made in the books of accounts and income disclosed in the return of income much prior to search and which has no reference to any incriminating material found as a result of search and seizure operation, we are of the view that the proceeding initiated u/s 153C of the Act is invalid in law.
The matter can also be looked into from another angle. As rightly been stated by the Ld. A.R., on the date notice was issued u/s 153C of the Act, there is no assessment proceeding pending before the assessing officer for the aforesaid assessment year. Therefore, in absence of any incriminating material showing concealed/undisclosed income of the assessee, the assessing officer could not have proceeded to assess income which has already been reflected in the books of accounts and disclosed in the return of income filed by the assessee.
Even otherwise also, conclusion drawn by the assessing officer in the assessment order that the agricultural income is unexplained also found to be not on cogent material, because of the fact that the CIT(A) has accepted 50% of the income shown as agricultural income against which the department is not in appeal. Also in the remand report, the assessing officer himself has accepted that the assessee has earned income from coconut trees and casurina plantation which can be considered as agricultural income. In aforesaid view of the matter, the proceeding initiated u/s 153C of the Act in absence of any incriminating material and only on the basis of the material already disclosed by the assessee is invalid and consequently the assessment orders passed are also unsustainable in law.
In present case also assessment made by the AO is not with reference to any incriminating material found as a result of search. Therefore, respectfully following the aforesaid decision of the coordinate bench, we quash the assessment order passed for all these assessment years. Decided in favour of assessee.
Unexplained credits - Peak balance of the credits - credit of surrendered income - suppression of gross profit - HELD THAT:- The first addition made in the hands of the assessee is on account of estimation of gross profit rate and we uphold the said addition. In view thereof, ground of appeal in Cross Objection filed by the assessee are dismissed. Similarly, as we have upheld the order of Commissioner of Income Tax (Appeals) in giving the benefit of surrendered amount after arriving at the total addition, we find no merit in the ground of appeal No. 2 raised by the revenue.
Bogus purchases - Investigation made by the AO that the concern M/s Glass Plastic Co. of India was a bogus party created by the assessee through whom no purchases or sales were made and was utilized for making bogus payments. The assessee was depositing cash in his bank account from which cheques were issued which in-turn were deposited in the bank of M/s Glass Plastic Co. of India, from which cash was withdrawn of exact amount of the cheque deposited. In view of the facts and circumstances of the case where the exercise was being carried out from day-to-day, there is no merit in treating the total deposits as unexplained and the theory of peak credit is to be applied to work out the addition in the hands of the assessee.
CIT(A) direction that the addition on account of peak credits be made in the hands of the assessee and the benefit of surrendered amount should be given after making total additions in the hands of the assessee upheld - no merit in ground of appeal No. 1 raised by the revenue.
Imposition of 'damages' as envisaged Under Section 14B of the EPF Act - request for a waiver of damages rejected on the predication that the said establishment was neither a sick unit nor the subject of any scheme for rehabilitation sanctioned by the Board for Industrial and Financial Reconstruction - ELD THAT:- There is no gainsaying that criminal liability remains steadfastly fastened to the actual perpetrator and cannot be transferred by any compact between persons or even by statute. But this incontrovertible legal principle does not support or validate the contention of Mr. Jayant Bhushan, learned Senior Advocate for the Appellants, that damages levied in terms of Section 14B of the EPF Act cannot be foisted onto his clients. Sections 14, 14A, 14AA, 14AB and 14AC of the EPF Act are the provisions postulating prosecution; in contradistinction Section 14B contemplates the power to "recover from the employer by way of penalty such damages, not exceeding the amount of arrears, as may be specified in the Scheme".
Section 14B is complete in itself so far as the computation of damages is concerned. It is conceivable that the money due from an employer would have to be calculated Under Section 7A, and in the event the default or neglect of the employer is contumacious and contains the requisite mens rea and actus reus yet another exercise of computation has to be undertaken Under Section 14B. Where the Authority is of the opinion that damages Under Section 14B need to be imposed, the computations would come within the purview of Section 14B and it would be recoverable jointly and severally from the erstwhile as well as the current managements. A perusal of the Appeals Section, namely, 7I is illustrative of the fact that these exercises are distinct from each other as per the enumerations found in the first Sub-section of Section 7I. It also appears logical to us, in the wake of the numerous and different dates of amendments, that Section 7A(2) would also be available to proceedings Under Section 14B of the Act.
The impugned judgment deserves to be upheld - Appeal is devoid of merit - appeal dismissed.
Over valuation of the closing stock - computation of opening and closing balances - HELD THAT:- We do agree on the last bit of submission of ld. AR that whatever the value of the stock has been accepted by the AO as closing stock during the impugned assessment year, the same should have been taken as the opening stock in the succeeding assessment year i.e. in A.Y 2002-03. We noted that in the succeeding assessment year, the AO has taken the opening stock to be at Rs. 2,92,49,971/- instead of Rs.2,07,38,120/-.
To that extent the AO was bound to give effect in the succeeding assessment year. Whatever will be the closing stock of the impugned assessment year, the same will become the opening stock of the succeeding year. In view of this fact and in the absence of evidence being brought on record by the ld. AR, we confirm the action of the AO of reducing the closing stock by Rs.85,11,851/- during the impugned assessment year but direct the AO to reduce the opening stock in the succeeding assessment year 2002-03 and give the credit to the Assessee in accordance with law in the succeeding assessment year. We, accordingly, dismiss ground no. 2 taken by the Assessee.
Deduction u/s 80HHC(1A) as a supporting manufacturer - HELD THAT:- As the section allows the supporting manufacturers to claim deduction of the profit derived by it from the sale of the goods or merchandise to the export houses or trading houses in respect of which the certificate has been issued by the export or trading house. There is no compulsion whatsoever that the export house has to necessarily export the goods only in that year in which it has purchased the goods from the supporting manufacturers.
The fact that the certificate has been issued by the export houses prove that the goods purchased from the Assessee (supporting manufacturer) were ultimately exported and that should enable the supporting manufacturer to claim appropriate deduction under the section in the year of its supply to the export house. There cannot be any other interpretation of this provision. We, accordingly, set aside the order of CIT(A) and allow ground no. 3 taken by the Assessee and direct the AO to allow the claim of the Assessee u/s 80HHC(1A) during the impugned assessment year.
Cessation of liability u/s 41(1) - AO noted that the sundry creditors and loans and advances taken by the Assessee are being carried forward for many year - HELD THAT:- For the addition made u/s 41(1) the onus, in our opinion, lies on the Revenue to prove that the liability has ceased during the impugned assessment year. Merely liability has become barred by limitation will not prove that the liability of the Assessee has ceased.
The liability ceases when it has become barred by limitation and Assessee has unequivocally expressed its intention not to honour the liability even when demanded. Our aforesaid view is duly supported by the decision of Chase Bright Steel Ltd [1988 (12) TMI 80 - BOMBAY HIGH COURT] We, therefore, set aside the order of CIT(A) and delete the addition made by the AO as ultimately the addition which remains sustained by CIT(A) relates to the sundry creditors and the liability outstanding against the Assessee.
Unrecovered balance in respect of the advances the same has already been allowed by the AO while making the net addition even though these unrecovered debtors have to be allowed, as observed by us earlier, in the year in which they have been written off. We, therefore, set aside the order of CIT(A) and delete the addition respectfully - Ground taken by the Assessee stands allowed.
Nomination of Mr. Bharat Prashar, an officer of Delhi Higher Judicial Service for being posted as Special Judge to deal and exclusively try the offences pertaining to coal block allocation matters - HELD THAT:- The competent authorities are directed to issue requisite notifications appointing Mr. Bharat Prashar, an officer of Delhi Higher Judicial Service as Special Judge for the above purpose. The notifications shall be issued within two weeks from the date of communication of copy of this order.
Mr. R.S. Cheema, senior advocate shall be appointed as Special Public Prosecutor by the Government of India to conduct the prosecution of the offences pertaining to coal block allocation matters on behalf of CBI and Enforcement Directorate. On such appointment, Mr. R.S. Cheema may choose two other advocates, who, in his opinion, will be of assistance in the matter - List this group of matters on 1.9.2014 at 2 P.M.
Grant of sanction Under Section 197 of Code of Criminal Procedure - public servant within the meaning of Section 21 of the Indian Penal Code - Case of appellant is that the sanction for prosecution of the Appellant Under Section 197 of the Code of Criminal Procedurewas not obtained or granted prior to the date of taking of cognizance - whether the acts giving rise to the alleged offences had been committed by the accused in the actual or purported discharge of his official duties? - HELD THAT:- In a series of pronouncements commencing with Satwant Singh v. State of Punjab [1959 (10) TMI 32 - SUPREME COURT], Harihar Prasad v. State of Bihar [1971 (9) TMI 186 - SUPREME COURT] and Prakash Singh Badal and Anr. v. State of Punjab and Ors. [2006 (12) TMI 548 - SUPREME COURT] it has been consistently held that it can be no part of the duty of a public servant or acting in the discharge of his official duties to commit any of the offences covered by Section 406, 409, 420 etc. and the official status of the public servant can, at best, only provide an opportunity for commission of the offences. Therefore, no sanction for prosecution of the public servant for such offences would be required Under Section 197 of the Code. Notwithstanding the above, the High Court had granted liberty to the Appellant to raise the issue of sanction, if so required, depending on the evidence that may come on record in the course of the trial.
There are no occasion to cause any interference with the orders passed by the High Court in the proceedings instituted before it by the Appellant which have been impugned in the appeals under consideration - appeal dismissed.
Demand of Compensation - Validity of Award - challenge has been raised to the validity of the acquisition proceedings contending that since the notification under Section 3-D of the Act was published within the prescribed time, it has ceased - it is alleged that the procedure adopted for awarding compensation is erroneous - HELD THAT:- There is a statutory obligation for publishing the notice in two newspapers for the purpose of award of compensation under Section 3-G of the Act. The petitioner has categorically stated in paragraph 20 of the writ petition that no such notice was ever published nor any opportunity was given to the petitioner to file any objections.
Sri Mehrotra submits that the notification dated 3.11.2011 should be considered to be a notification published in the newspaper under Section 3-G of the Act.
It is observed that that the said notification is a notification under Section 3-D and is not a notification under Section 3-G of the Act. The averment contained in paragraph 28 of the counter affidavit is, therefore, misleading. The respondents, therefore, have not complied with a statutory provision containing the principles of natural justice engrafted in the Act itself. It is settled law that if an act requires to be performed after publication of the notice in the newspaper then it is not a mere formality and the matter relating to award of compensation dealing with substantive right of a tenure holder cannot be defeated by delivering the award without complying with the aforesaid provision. Once it is held that the award is in violation of principles of natural justice then it is not necessary for this Court to relegate the petitioner to the remedy under the 1996 Act. The award itself being contrary to the provisions of Section 3-G and in contravention thereof, we have no hesitation to hold that the said act of the authority was in complete disregard of the statutory provisions resulting in violation of principle of natural justice. The question, therefore, availing of any alternative remedy by the petitioner on the facts of this case does not arise.
The award which has been rendered in relation to the agricultural land of the petitioner is clearly in violation of Section 3-G of the Act as the award itself also nowhere recites that any such notice was published in the newspaper as required in the said provision. Consequently, the impugned award dated 30.4.2013 to the said extent is quashed.
Vicarious Liability of Chairman, Managing Director and Directors of the Company, in the offence of the company - Liable to be prosecuted in a Criminal Case, being the Director of M/s. Davangere Sugars Co. Ltd., and Chairman of M/s. Shamanur Sugars Co. Ltd. (by virtue of his position) - petitioner is having knowledge and has a specific role and active participation in the conduct and business of the Companies at the time of commission of the alleged offence by the companies or not - HELD THAT:- The normal rule in the case involving criminal liability is against vicarious liability, i.e., no one is to be held guilty of criminal liability for an act of another. This normal rule is however subject to exception on account of specific provision being made in the statute, extending liability to others. One such provision is Section 10 of the EC Act. Therefore, if an offence is committed by a company, it extends the criminal liability to other officers of the company if the requirements contemplated under the said provision are satisfied before the liability is fastened on such Officers. Since the provision creates criminal liability, the conditions have to be very strictly and meticulously complied with. With this background, now let me go through the decisions in this regard.
In fact, this Court also had an occasion to deal with similar matters under the EC Act between Smt. Vidya Murkumbi and Others vs. India Sugars and Refineries Ltd., in Crl.P. No. 7563/2009 dated 4.11.2009, wherein, learned brother Judge Justice Jawad Rahim, evaluated the provisions under the EC Act as well as the NI Act - In the said decision, the learned Judge has observed the wordings used in sub-Section (2) of Sec. 10 of the EC Act - that "if proved" pre-supposes "sufficient material" that such person by his consent or connivance or attributable negligence indulged in the crime. If such prima facie proof is not available in the complaint, then such person cannot be fastened with liability. However, the learned Judge has observed that the liability of the Chairman and the Director stand on a different footing and come in the category of sub-Section (1) of Section 10 of the EC Act. Therefore, they could be termed as personnel being in charge of/or responsible to the Company and its business and an element of presumption is being available against them.
Thus, it is crystal clear that there is almost unanimous judicial opinion that necessary averments ought to be contained in the complaint, particularly against a person who are not deemed to be persons in charge of a Company or looking after the day to day affairs of the Company and therefore, it is necessary to specifically aver the duties, role of each and every person to show his responsibility, his duties and functions assigned under the Memorandum of Articles of the Company.
Whether by virtue of his position as a Chairman, ipso-facto liable for all the offences committed by the Company? - HELD THAT:- The term Chairman is not defined under the Companies Act, 1965. The Chairman is a necessary person in company meetings and is usually appointed by the articles of the Company. Generally, Chairman is the highest post in the Company, who represents the name and fame of the Company. Chairman's role is to attend the meetings and to act according to the byelaws of the Company and also exercise any defined or reserved rights or duties. Regulation 76(1) of table A to Schedule-I to the Companies Act 1956, provides that the Board may elect a Chairman and determine the period for which he has to hold the office. Generally, the Directors elect one of them to be the Chairman of the Board who continues to be as such until he seizes to be a Director or some other Director who is appointed as a Chairman. Normally, the Chairman is a Director who is authorised to preside over the Board and General Meetings - the Chairman of a Company presides over the meetings of the board and as a member on all the board committees and he presides over all the committee meetings. Therefore, the Chairman has the powers under the common law, such as (1) the power to preside over the meetings, (2) bring the discussion on any question and (3) the power to adjourn the meeting if necessary under the circumstances.
Looking to the powers and duties of the Chairman, it goes without saying that the Chairman is as good as a Director, but as he is higher in position, he presides over the meetings of the Company. Therefore, unless a specific role is given to a Chairman by virtue of articles of the Company to represent the management and participate in the day to day business, conduct and affairs of the Company, he is not liable for all the offences committed by the Company.
The Chairman also stands on the same footing as that of a Director. If any liability has to be fastened on the Chairman, in law, a specific role has to be given to him and what is the overt act committed by him to share the criminal liability of the Company. Therefore, in the absence of such allegations and specific averments in the complaint, even Chairman also, ipso-facto by virtue of his position, cannot be made as an accused in a criminal case for the offence committed by the Company.
It is a well settled law that at the time of issuing of the process, the Magistrate is required to see the allegations in the complaint in order to ascertain whether the allegations made in the complaint constitute an offence against a person, then only the Magistrate can call upon the persons cited as accused to answer the charges. Otherwise, the complaint has to be dismissed by exercising powers u/s. 203 of the Code of Crl. Procedure - the cognizance taken by the Magistrate and the process issued against the petitioner who is a Director and Chairman of the respective companies is bad in law and the same is liable to be quashed.
Wealth tax assessment - leasehold rights in the land whether be brought to Wealth Tax under the deeming provisions of Section 4(8) of the Act - HELD THAT:- Respectfully following the earlier ITAT judgements in assessee's own case the issues relating to property at Raniwala Oil Mills, property at Mangal Marg, Alwar, property at Rishikesh and property at Kush Marg, Alwar as raised by the Revenue in 1 to 3 and 5 are dismissed.
Property at Station Road, Alwar also, we see no infirmity in the order of the ld. CWT(A) as on the valuation date the property had become the commercial complex and reflected as commercial asset in the accounts of the assessee which is further evident from the fact that some of the shops were also sold. Thus the building in question was a commercial complex which is not includible in the definition of Section 2(ea)(i) of the Act. Besides, the issue in question is also covered in favour of assessee by the decision of Hon'ble Kerala High Court in the cae of Apollo Tyres Ltd. [2009 (12) TMI 572 - KERALA HIGH COURT] - Thus the ground no. 4 of the Revenue is dismissed.
Property at Nangali Khor, it has not been disputed that in lieu of assessee's two plots, the impugned plot was allotted to the assessee for 99 years lease. As per plain meaning of legal fiction of section 4(8) of the Wealth Tax Act, it applies only to leasehold right in a building and not on the land. The scope of fiction cannot be enlarged by intendment. In view thereof, we see no infirmity in the order of the ld. CWT(A) which has been passed keeping in view the plain meaning of Section 4(8) of the Wealth Tax Act and the decisions of Hon'ble Supreme Court in the case of CWT vs. Biswanath Chatterjee [1976 (4) TMI 1 - SUPREME COURT] and case of Vysya Bank Ltd. [2007 (2) TMI 161 - KARNATAKA HIGH COURT]. Thus the order of ld. CWT(A) is upheld. The ground raised by the Revenue is dismissed.
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