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2020 (8) TMI 959
Principles of natural justice - absence of pre-impleadment notice - Should the Lokayukta have notified and heard the additional respondents before it added them to the proceedings? - HELD THAT:- Indisputably, Rule 10 of Order 1 of CPC empowers the court to implead a party suo motu if it reckons that the party’s presence is necessary or proper. It may be against the wish of the plaintiff, the so called dominus litus, or the defendants already on record, who may, technically speaking, feel embarrassed with the proposed party’s presence. If put on notice, even the proposed party may object. But none of these three eventualities deters the court from exercising its suo motu power. More particularly, the court, usually at the trial stage, exercises its suo motu power after going through the record and after concluding that the proposed party’s presence is essential. While exercising its suo motu powers, the court does not, in the first place, rule based on any self-serving statement by any person already on record about a party’s presence. So notice to the parties on record hardly matters.
An individual’s every right is subject to the statutory limitations unless those limitations fall foul of the Constitution. Here, what is a proposed party’s right under the statute? Scrutinised, neither Rule 9 of the Lokayuta Rules nor Rule 10 of Order I CPC requires the Tribunal or the Court to notify the proposed party before his addition to the proceedings. Granted, the rules of natural justice need not be explicit; they can be read into a statute or a procedure. That is, though they do not supplant the law, they do supplement it.
In Ravi S. Naik v. Union of India [1994 (2) TMI 309 - SUPREME COURT], a case that has originated from this State, the Supreme Court has ruled that while applying the principles of natural justice, the court must remember that they are not immutable but flexible; they are not cast in rigid mould; they cannot be put in a legal straight-jacket. According to Ravi S. Naik, “whether the requirements of natural justice have been complied with or not has to be considered in the context of the facts and the circumstances of a particular case”.
In the civil matters, a suitor comes to court with a cause and grievance against a person or persons. The court takes the matter on file, numbers it, and serves summonses or notices on the opposite parties, say the defendants. Those defendants may file their written statements or may raise a preliminary objection even before their filing the written statements. That preliminary objection may take many forms.
The argument against pre-impleadment notice gains more traction and assumes more force because the Lokayuta, as a Tribunal, is not bound by codified procedural shackles. It can regulate its own procedure. And when we confine our discussion to Rule 9, its subjection to Rule 10 of Order I CPC is “as far as may be” necessary. The Code of Civil Procedure has no vice-like grip over the Lokayuta’s procedure. It is established that even Rule 10 of Order I requires no pre-impleadment notice. Of course, this is only a collateral—not precedential—observation under the CPC.
Conclusion - The Lokayukta's procedural discretion allows it to add parties to proceedings without pre-impleadment notice, provided that such addition is necessary for the effective resolution of the complaint.
There are no merit in the petitioners’ contentions. The Lokayukta’s order suffers from no legal infirmity, including that of violating the principles of natural justice - petition dismissed.
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2020 (8) TMI 958
Assessment u/s 153A - Addition u/s 68 - unexplained credit - as argued addition could be made u/s 153A on the basis of statement recorded u/s 132(4) and the power of the AO to assess or reassess total income u/s 153A is restricted to the material found during search - HELD THAT:- We do not find any error or illegality in the impugned order of the LD. CIT (A) qua this issue of no addition can be made in the absence of incriminating material so far as the assessment u/s 153A in respect of the assessment years already completed before the date of search and not abaited by virtue of search.
Assessment order based on the statement of the assessee recorded u/s 132(4) as well as the statements recorded by the Investigation Wing Kolkata of third party - The statements recorded by the Investigation Wing during the search and seizure action taking the confession and surrender from the assessee are clearly in violation of the Instructions of the CBDT vide F. No. 286/2/2003IT(Inv.) dated 10th March, 2003 wherein the Board has expressed its serious concern about the fact that the assessees have claimed that they have been forced to confess the undisclosed income during the course of search and seizure and survey operation. Such confessions, if not based upon the credible evidence, are later retracted by the concerned assessees while filing returns of income.
It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording the statement during the course of search and seizure and survey operations, no attempt should be made to obtain confession as to the undisclosed income. The Board has again issued a Circular dated 18th December, 2014 and advised the Taxing Authorities to avoid obtaining admission of undisclosed income under coercion/undue influences.
Thus in the absence of any incriminating material found during the course of search and seizure action, the confession as recorded during the course of search and seizure action has no evidentiary value. It is also pertinent to note that if a confession revealing certain information or disclosing certain transactions which are not disclosed by the assessee in the books of account, the same has a good evidentiary value and a simplicitor retraction of such statement cannot be accepted until and unless the assessee at the time of retraction explains the mistakes and circumstances under which such mistakes were committed while making the confession. In the case in hand, the confession of the assessee is not revealing any transaction which is not already disclosed or recorded in the books of account. Therefore, any confession of undisclosed income which is already part of books of account as well as already disclosed in the return of income filed under section 139(1), in the absence of any supporting documentary evidence cannot be regarded as a good evidence for addition. Hence, we do not find any error or illegality in the impugned order of the ld. CIT (A) qua this issue. This covers the Ground Nos. 1 to 8 of the Revenue’s appeal.
Protective addition made by the AO on account of unaccounted income from business of Antique Jewellers was deleted by the ld. CIT (A) - This addition made by the AO is protective in nature as the assessee in his statement recorded u/s 132(4) has stated that the undisclosed income on account of bogus capital gain is derived from the Antique jewellery business of the assessee. The AO has neither referred any material/incriminating material found during the course of search and seizure nor brought on record by the AO even during the course of assessment proceedings. Thus this addition was made based on the statement of the assessee recorded under section 132(4) of the IT Act without any material or evidence. Since this is only a consequential and alternative addition made by the AO pursuant to the addition made on account of bogus accommodation entries in respect of the Long Term Capital Gain declared by the assessee, therefore, in view of our finding on the issue of treating the Long Term Capital Gain by the AO as bogus accommodation entries, this protective addition made by the AO would not survive.
Validity of order passed u/s 153A read with section 143(3) - CIT (A) while passing the impugned order has held that the assessment for the assessment year 2013-14 was pending in the case of the assessee Atul Kumar Sogani on the date of search which is factually incorrect as the time limit for issuing the notice under section 143(2) of the IT Act was upto 30th September, 2014 whereas the search was carried on 22nd July, 2015. The ld. D/R has not disputed this factual error occurred in the impugned order of the ld. CIT (A). To that extent we set aside the order of the ld. CIT (A) and hold that the assessment for the assessment year 2013-14 was not pending as on the date of search i.e. 22nd July, 2015.
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2020 (8) TMI 957
Bid submitted by Adani Power Rajasthan Limited (APRL) was based on domestic coal or imported coal - non-availability of domestic coal constitutes a change in law under Article 10 of the Power Purchase Agreement (PPA) - applicability of the National Coal Distribution Policy (NCDP) of 2007 - Interest/late payment surcharge.
Whether the bid submitted was premised on domestic coal? - HELD THAT:- There is no doubt about it that the Government of Rajasthan entered into an MoU with APRL in 2008 to ensure supply of domestic coal and it had undertaken to facilitate the implementation of the Kawai Project for getting the coal block from the Central Government or coal from any other source for the project. Once the Government of Rajasthan entered into MoU dated 20.3.2008, containing Article 2.2 quoted above, it was incumbent upon the State of Rajasthan to provide coal from any other source for the project, in case the Central Government could not allot coal linkage/coal block. The Central Government had even written to the Government of Rajasthan to provide coal to APRL from the coal mine, but due to paucity, it could not be supplied to APRL. Thus, there was a failure on the part of the Government of Rajasthan to provide coal from any other source. The NCDP of 2007 prevailed as law 7 days prior to the bid with respect to the supply of coal, the cut-off date of the bid was 30.7.2009.
It is apparent that 100 percent of the quantity as per the consumers' normative requirement was to be made by CIL, obviously on the approval of the application by the Standing Linkage Committee. It was kept pending due to a shortage of coal supplies and was ultimately processed under the SHAKTI Policy, and linkage for 100 percent was given from January 2018. Thus, earlier as the quantity of coal was not available, sufficient supply could not be made. It is not a case where APRL was adjudged ineligible, but prior commitments and the non-availability of coal came in the way of failure to obtain domestic coal linkage under the NCDP of 2007, which itself was changed with effect from 26.7.2013.
Change in law - HELD THAT:- A decision was taken by the Standing Linkage Committee on 14.2.2012 read with the decision dated 31.5.2013 indicating a shortage in domestic coal and dependence on imported coal. For the shortage of coal, APRL could not have been made to suffer, on that it had no control. It was decided not to issue fresh LoAs, and all pending applications were kept in abeyance. The Cabinet Committee on Economic Affairs decided on 21.6.2013 to reduce coal supply to 65 percent and 75 percent of ACQ for the remaining four years of the 12th Five Year Plan. It allowed passing through of higher cost of imported coal. The Ministry of Coal was directed to suitably amend the NCDP. The Ministry of Coal on 26.7.2013 amended the NCDP of 2007, and the Ministry of Power issued a letter on 31.7.2013, which provided for pass-through of additional cost incurred to meet the coal requirements. The Cabinet Committee on Economic Affairs in its decision dated 21.6.2013, recognised coal supply, subject to availability, to 4660 MW having no fuel linkage.
The change in policy and in the terms and conditions prescribed for obtaining any consents, clearances and permits or the inclusion of any new terms or conditions for obtaining such consents, clearances, and permits are also included - The relief was not claimed on the basis of change in foreign law. Apart from that, admission has been relied upon change in law. The PPA was based on the domestic law and there was a change in domestic law. Thus, consequences must follow. The Government of Rajasthan entered into a MoU with APRL with respect to coal linkage in 2008 to provide coal linkage or coal from other sources.
The change in law does not provide that letter of approval should be issued by CIL, as provided in Article 10.1 relating to change in law. Even if the procedure is changed, that is to be given effect to.
Interest/late payment surcharge - HELD THAT:- A case was also filed by APRL in the year 2013 itself raising its claim on such basis. However, the Appellants-Rajasthan DISCOMS did not allow the claim regarding change in law, because of which APRL was deprived of raising the bills with effect from the date of change in law in the year 2013 - considering the totality of the facts of this case and in order to do complete justice and to reduce the liability of the Appellants-Rajasthan DISCOMS, payment of 2 per cent in excess of the applicable SBAR per annum with monthly rest would be on higher side. In our opinion, it would be appropriate to direct the Appellants-Rajasthan DISCOMS to pay interest/late payment surcharge as per applicable SBAR for the relevant years, which should not exceed 9 per cent per annum. It is also provided that instead of monthly rest, the interest would be compounded per annum.
Conclusion - i) APRL's bid was based on domestic coal, and the non-availability of domestic coal due to changes in the NCDP constituted a change in law. ii) APRL's entitlement to compensation for the shortfall in domestic coal supply confirmed and it is directed that Rajasthan DISCOMS to calculate and pay the compensation.
Appeal disposed off.
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2020 (8) TMI 956
Violation of principles of natural justice - Non providing all non-relied upon documents in relation to Show Cause Notice - HELD THAT:- The petitioner by its reply dated 21.11.2019, requested the respondent no.1 for supplying the un-relied documents as also other documents so as to frame a proper reply to the Show Cause Notice. The same were, however, not supplied and the Impugned Order, in fact, makes reference to and relies upon the documents which were never supplied to the petitioner.
In view of the submissions made, there shall be a stay on the operation of the Impugned Order till the next date of hearing.
List on 5th November, 2020.
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2020 (8) TMI 955
Invocation of jurisdiction of this court under Section 37 of the Arbitration and Conciliation Act, 1996 - Section 34 of the Arbitration and Conciliation Act, 1996 - prayer for setting aside the final arbitral award passed by the arbitral tribunal - absence of any clause for price escalation in the agreement entered into between the parties - compensation for delay - Legality of the interest rate awarded - award of interest on the interest component.
Whether the impugned arbitral award is liable to be set aside on the basis of the preliminary objection that in the absence of any arbitration clause in the agreement, the arbitral tribunal acted without jurisdiction? - HELD THAT:- The principle of law settled by the Hon’ble Supreme Court of India in the case of S.B.P. & Co v. Patel Engg. Ltd. [2005 (10) TMI 495 - SUPREME COURT] decided by a seven judge bench of the Hon’ble court holds the field. It has inter alia been decided therein that the Chief Justice or the designated Judge will have the right to decide the preliminary aspects as to his own jurisdiction to entertain the request, the existence of a valid arbitration agreement, the existence or otherwise of a live claim, the existence of the condition for the exercise of his power. In this case undisputedly the objections of the appellant against the prayer for appointment of arbitrator in the matter of the application under section 11(6) of the Arbitration and Conciliation Act, 1996 were not accepted by the designated judge of this court - there is no merit in the preliminary objection of the appellant and the impugned arbitral award cannot be set aside on the ground of non-existence of the arbitration clause in the agreement between the parties. This point for determination is answered accordingly in the negative against the appellant.
Whether in the absence of any clause for price escalation in the agreement entered into between the parties and also in the absence of any clause for compensation for delay, idling charges and hire charges, the awarding of different amount of compensation under such heads were beyond the terms and conditions of the agreement entered into between the parties? - HELD THAT:- It is a settled principle of law as has been held in the case of K.N. Sathyapalan (Dead) By LRs v. State of Kerala and Another [2006 (11) TMI 724 - SUPREME COURT] that though ordinarily, the parties would be bound by the terms agreed upon in the contract, but in the event one of the parties to the contract is unable to fulfill its obligations under the contract which has a direct bearing on the work to be executed by the other party, the arbitral tribunal is vested with the authority to compensate the second party for the extra costs incurred by him as a result of the failure of the first party to live up to its obligations, even in the absence of any clause for escalation in the agreement entered into by the parties and thus the arbitral tribunal is well within his jurisdiction in allowing some of the claims on account of escalation of costs which are referable to the execution of the work during the extended period if the claimant is prevented by unforeseen circumstances from completing the work within the stipulated period if such delay could have been prevented by the State by its diligent action and the hardships to the claimant in completing the work in time could have been taken care of by eradicating the hurdles which forced the delay in completion of work by the claimant.
As has been held in the case of Food Corporation of India Vs. A.M. Ahmed & Co. & Another [2006 (10) TMI 456 - SUPREME COURT] that even in the absence of an escalation clause in the contract, once it is found that the arbitral tribunal has jurisdiction to find that there was delay in execution of the contract due to the conduct of the organization who has awarded the work to the claimant, such organization is liable for the consequences of the delay, hence escalation, being normal and routine incident arising out of gap of time in this inflationary age in performing any contract of any type, the arbitral tribunal has jurisdiction to go into the question of escalation.
Coming to the facts of this case it is crystal clear from the pleading of the parties and the evidence produced that the appellant herein was very much aware that it was the case of the claimant that the delay resulted from the negligence of the government authorities. So the appellants herein were aware that they had to meet that case. Under such circumstances of this case, non-framing of separate issue that the government authorities before it were negligent does not lead to a mis- trial sufficient to vitiate the decision in exercise of the jurisdiction under section 37 of the Arbitration and Conciliation Act, 1996.
This court is of the considered view that as arbitral tribunal on appreciation of the evidence in the record has reasonably held that the work suffered apparently on account of lack of promptness on the part of the concerned officers of the respondent to resolve the dispute, hence the arbitral tribunal was well within his jurisdiction to award compensation for delay, idling charges and hire charges even though there was no specific term in this respect in the agreement entered into by the parties. Thus the second point for determination is answered in the negative and against the appellant.
Whether award of interest @ 12% per annum from 20.05.2010 to 14.10.2011 is on the higher side and is liable to be reduced? - HELD THAT:- The arbitral tribunal has not assigned any reason for awarding the said interest. The pendentelite interest awarded by the arbitral tribunal is at the rate of 6% per annum. By the amendment vide section 16 of Act 3 of 2016 w.r.e.f 23.10.2015 the future interest in case the award does not otherwise direct which was earlier at eighteen per centum per annum as provided for in section 31(7)(b) of the Arbitration and Conciliation Act, 1996 have been substituted with two per cent higher than the current rate of interest prevalent from the date of the award which is no doubt much less than 12% per annum - In the case of National Aluminium Co. Ltd. v. Varun Shipping Co. Ltd. [2001 (4) TMI 959 - SUPREME COURT], of course in the facts of that case the Hon’ble Supreme Court of India reduced the interest from 15% to 9% per annum. Under such facts of this case this court is of the considered view that award of interest @ 12% per annum from 20.05.2010 to 14.10.2011 is on the higher side accordingly the same is reduced to 9% per annum.
Whether the interest that has been awarded upon the interest component of Rs. 10,40,105/- which was the interest calculated for the period 20.05.2010 to 14.10.2011 is illegal? - HELD THAT:- It is crystal clear that the expression “the sum for which the award is made” occurring in clause (a) of sub-section (7) of Section 31 of the Act refers to the total amount or sum for the payment for which the award is made, that is if no interest is awarded the ‘sum’ is only the principal. If both principal and interest is allowed then ‘sum’ is the principal plus interest and if in any case only interest is allowed, ‘sum’ is the interest. Section 31(7)(b)of the Arbitration and Conciliation Act, 1996 empowers the arbitral tribunal to award interest on the ‘sum’ as mentioned in Section 31(7)(a)of the said Act. So it is the mandate of the Parliament that the arbitral tribunal shall award interest on the ‘sum’ amount which may include interest also and may even in any particular case be only interest - this court has no hesitation in holding that there is no merit in the submission of the appellant in respect of the interest that has been awarded upon the interest component of Rs. 10,40,105/- which was the interest calculated for the period 20.05.2010 to 14.10.2011 is illegal, as the Parliament itself mandates the same.
The arbitral award shall stand modified to the extent that interest @ 12% per annum from 20.05.2010 to 14.10.2011 upon the amount of Rs. 61,79,055/-, which is the sum of the claims under various heads approved by the arbitral tribunal is reduced to 9% per annum. Accordingly the interest from 20.05.2010 to 14.10.2011 upon the claims under various heads approved by the arbitral tribunal which has been worked out to be Rs. 10,40,105/- be substituted by Rs. 7,80,084/-.
The appeal is disposed of accordingly - Let the lower court record with a copy of this judgment be sent to the learned court below forthwith.
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2020 (8) TMI 954
Revision u/s 263 - claim of depreciation on the spectrum fees and allowability of depreciation u/s 32(1)(ii) - whether the deduction is to be allowed thereon as depreciation u/s. 32 of the Act over a period of time, or whether the same has to spread over the years as per section 35ABB ? - HELD THAT:- We observe that AO had examined/ verified the cost of acquisition of the 3G spectrum and then allowed the claim of depreciation u/s 32(1)(ii) as claimed by the assessee, by treating this right as an intangible asset after due examination and application of mind.
We also observe that the AO had conducted enquiries during the course of proceedings, however, CIT merely change of opinion by reappraising evidence is not within the parameters of revisional jurisdiction u/s 263 as laid down in the case of Gabriel India Limited [1993 (4) TMI 55 - BOMBAY HIGH COURT]. It is also well settled that where two views are possible and the AO has taken one of the possible views which might result in prejudice to the revenue, then also proceedings u/s 263 cannot be initiated. Reliance in this regard is placed on the decisions of Malabar Industrial Co. Ltd [2000 (2) TMI 10 - SUPREME COURT]
Spectrum fees so paid by the assessee, we observed that Spectrum fees is part of the license fees and they are not distinct or independent. There is a clear distinction between payment for ‘use of spectrum’ and the ‘license to provide telecom services’. This is clear from the fact that any new telecom operator who wished to provide 3G services was separately required to obtain a Unified Access Services (‘UAS’)/ Cellular Mobile Telephone Service (‘CMTS’) license to provide the telecom services. Grant of 3G spectrum does not in itself entitle a company to provide telecom services unless a license has been granted to such company to provide telecom services. In fact, 3G spectrum cannot be granted to a bidder unless it has already obtained a UAS/CMTS license. The eligibility criteria to participate in the Auction is referred in the 3G Bidding document placed.
Provisions of Section 35 ABA was inserted by the Finance Act, 2016 w.e.f. 01-04-2016, hence the provision of this Section is not applicable to the year under consideration. We also observed that this amendment clearly suggests that right to use spectrum is not covered by the provisions of Section 35ABB of the Act. Accordingly, the assessee had correctly claimed depreciation u/s 32 of the Act prior to insertion of Section 35ABA under the statute.
With regard to invocation of powers under section 263 of the Act for declining the claim of bad debts and allowability of deduction under section 36(1)(vii) we observe that the assessee had created a Provision of Bad and Doubtful Debts of INR 32,23,50,209 [reflected in Schedule 17 of the Profit & Loss Account and simultaneously reduced such amount from ‘Sundry Debtors’ in Schedule 7 of the Balance Sheet.
From such provision of bad and doubtful debts, the assessee had written off an amountof INR 37,57,77,446 as bad debts after expiry of period of 180 days since the debt had become irrecoverable. In response to the specific query of the AO regarding deductibility of the bad debts, the assessee filed submissions dated March 30, 2015 wherein details regarding the policy adopted by the assessee for treating any amount as bad debts and the process generally followed by the assessee for collection of the outstanding dues was outlined.
We also found that such debt was earlier accounted as income, and this fact is duly evidenced from clause 13 of the Tax Audit Report for the subject AY and also the accounting policies followed by VIL as reported in schedule 19 to the audited financial statement relevant for the subject AY.
From the order of the AO, we also found that during the course of the assessment proceedings, due enquiries regarding the allowability of bad debts was made by the AO in response to which a detailed submission was filed by the assessee vide its submission dated March 30, 2015.
After considering the submissions of the assessee, the AO allowed the claim of bad debts in accordance with the provisions of the Act. Thus, as the claim has been allowed after proper examination and due application of mind, exercise of power under section 263 of the Act was bad in law.
We also observe that the issue with regard to deduction u/s 36(1)(vii) of the Act is no more res-integra and has been settled in the case of TRF Limited [2010 (2) TMI 211 - SUPREME COURT] and Vijay Bank [2010 (4) TMI 46 - SUPREME COURT] wherein it has been held that if an assessee has written off debts in its books of accounts, then deduction under section 36(1)(vii) of the Act is necessarily to be given to the assessee. Reliance is also placed on the Circular No 12 of 2016 dated May 30, 2016 issued by the Central Board of Direct Taxes (‘CBDT’), wherein it has been categorically mentioned that where an assessee writes off a debt as irrecoverable in books of account, such claim will be admissible u/s 36(1)(vii) of the Act.
Thus we quash the revisionary order passed by the PCIT, as being bad in law. Decided in favour of assessee.
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2020 (8) TMI 953
Grant of bail - Dowry death - whether the High Court was justified in directing release of the Respondent No. 2 on bail, during the pendency of his appeal before the High Court? - HELD THAT:- It is nobody’s case that the death of the victim was accidental or natural. There is evidence of demand of dowry, which the Trial Court has considered. The death took place within 7 or 8 months and there is oral evidence of the parents of cruelty and torture immediately preceding the death. There is also evidence of payment of Rs. 2,50,000/- to the Respondent-Accused by the victim’s brother. The Respondent No. 2 has not been able to demonstrate any apparent and/or obvious illegality or error in the judgment of the Sessions Court, to call for suspension of execution of the sentence.
In considering an application for suspension of sentence, the Appellate Court is only to examine if there is such patent infirmity in the order of conviction that renders the order of conviction prima facie erroneous. Where there is evidence that has been considered by the Trial Court, it is not open to a Court considering application under Section 389 to re-assess and/or re-analyze the same evidence and take a different view, to suspend the execution of the sentence and release the convict on bail.
From the evidence of the Prosecution witnesses, it transpires that the Appellant had spent money beyond his financial capacity, at the wedding of the victim and had even gifted an I-10 car. The hapless parents were hoping against hope that there would be an amicable settlement. Even as late as on 17.6.2010 the brother of the victim paid Rs. 2,50,000/- to the Respondent No. 2. The failure to lodge an FIR complaining of dowry and harassment before the death of the victim, is inconsequential. The parents and other family members of the victim obviously would not want to precipitate a complete break down of the marriage by lodging an FIR against the Respondent No. 2 and his parents, while the victim was alive.
The impugned order of the High Court is set aside and the Respondent No. 2 is directed to surrender for being taken into custody. The bail bonds shall stand cancelled - Appeal allowed.
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2020 (8) TMI 952
Validity of reopening of assessment - funds received by the assessee from a foreign entity - information has been received from DIT (Intell. & Cr. Inv.) - valid “reasons to believe” - Assessment after merger of company - scope of section 170 - No separate notice issued for the amalgamated company - as decided by HC[2020 (2) TMI 1061 - DELHI HIGH COURT] AO had sufficient tangible materials and was justified in issuing the notice for assessment and the recorded reasons are not mere change of opinion - The bar to reopening of proceedings after expiry of four years from the date of final assessment order, under the proviso, does not apply and the initiation of proceedings is not barred by limitation with necessary sanction for issuance of notice under section 148, as required under section 151 had been obtained. For Assessment after merger of company what purpose would be served by two separate assessment orders. Pertinently, as of now, we are only concerned with the requirement of issue of two separate notices under Section 147/148 and we cannot find any such requirements emanating from Section 170 (2) of the Act.
HELD THAT:- We are not inclined to interfere with the judgment and order passed by the High Court.
The special leave petitions are dismissed.
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2020 (8) TMI 951
Seeking a direction to quash the communication/notice issued by respondent No. 1/Bank - Wilful Defaulter or not - petitioner has submitted that the entire proceedings initiated to declare the petitioner as a wilful defaulter are misplaced and illegal and contrary to the Circular of RBI pertaining to declaration of wilful defaulters dated 01.07.2015 - HELD THAT:- It would be appropriate for the petitioner to appear before the Wilful Defaulter Identification Committee of the Bank for a personal hearing which has been fixed for tomorrow. The petitioner may appear before the Wilful Defaulter Identification Committee and is free to raise all the submissions raised herein before the said Committee.
At this stage, learned senior counsel for the petitioner states that the time to prepare for the personal hearing is very short as the hearing is to be held tomorrow - Liberty is granted to the petitioner to appear before the Wilful Defaulter Identification Committee and make a request for a short adjournment to an appropriate date which is suitable to the said Committee. In case such a request is made, the Committee is requested to consider the same favourably.
Keeping into account the facts and circumstances of the case, especially, the fact that on the same facts multiple proceedings have been commenced against the petitioner, the petitioner is also given liberty to file written submissions within two weeks from today before the Wilful Defaulter Identification Committee - The Identification Committee may deal with the submissions of the petitioner as per law and pass an appropriate reasoned order.
Petition disposed off.
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2020 (8) TMI 950
Locus to question the judgement - whether the Appellants held the locus to question the judgment and decree passed by the Trial Court and whether the High Court was justified in rejecting their leave to appeal? - HELD THAT:- Section 96 and 100 of the Code of Civil Procedure provide for preferring an appeal from any original decree or from decree in appeal respectively. The aforesaid provisions do not enumerate the categories of persons who can file an appeal. However, it is a settled legal proposition that a stranger cannot be permitted to file an appeal in any proceedings unless he satisfies the Court that he falls with the category of aggrieved persons. It is only where a judgment and decree prejudicially affects a person who is not party to the proceedings, he can prefer an appeal with the leave of the Appellate Court.
Reference be made to the observation of this Court in SMT. JATAN KANWAR GOLCHA VERSUS GOLCHA PROPERTIES (P.) LTD. (IN LIQUIDATION) [1970 (12) TMI 60 - SUPREME COURT] where it was held that 'It is well settled that a person who is not a party to the suit may prefer an appeal with the leave of the Appellate Court and such leave should be granted if he would be prejudicially affected by the Judgment.'
The Appellants can neither be said to be aggrieved persons nor bound by the judgment and decree of the Trial Court in any manner. The relief claimed in the suit was cancellation of agreement to sell. On the other hand, the sale deeds which were the basis of the claim of the Appellants were executed on the basis of General Power of Attorney, and had nothing to do with the agreement to sell which was subject matter of suit. The judgment and decree of the Trial Court is in no sense a judgment in rem and it is binding only as between the Plaintiffs and Defendants of the suit, and not upon the Appellants.
The Appellants have thus failed to demonstrate that they are prejudicially or adversely affected by the decree in question or any of their legal rights stands jeopardized so as to bring them within the ambit of the expression 'person aggrieved' entitling them to maintain appeal against the decree.
There are no infirmity in the judgment of the High Court dismissing the application filed by the Appellants seeking leave to appeal against the decree. The appeals, accordingly, stand dismissed.
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2020 (8) TMI 949
Abuse of dominant position by WhatsApp and Facebook u/s Competition Act, 2002 - Locus Standi of the Informant - informant is aggrieved party of not - HELD THAT:- The Informant need not necessarily be an aggrieved party to file a case before the Commission. Neither the Act specifies any such requirement explicitly, nor the same can be implicitly read into the provisions which clearly point towards the inquisitorial system envisaged by the Parliament. Further, it is because of the inquisitorial scheme of the Act, that the Commission in appropriate cases, defends its orders in higher forums, regardless of the fact as to who brought such case before it, which is not a normal feature in adversarial proceedings. Moreover, given that there are divergent decisions of the Hon'ble Appellate forum on the question of locus of the Informant, it may not be appropriate for the Opposite Parties to challenge the maintainability of the information filed by the Informant, based on the observation in the case of SAMIR AGRAWAL VERSUS COMPETITION COMMISSION OF INDIA & ORS. [2020 (5) TMI 746 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI [LB]] alone.
Next contention is that the Informant has indulged in forum shopping being closely associated with a petitioner who has approached the Hon'ble Supreme Court against WhatsApp and Facebook and this apparent nondisclosure reveals the mala fide intent and unclean hands with which the Informant has approached the Commission. The Commission notes that though on first blush this argument looks attractive, it may not be factually correct and is legally untenable, given the scheme of the Act.
The Informant has alleged that WhatsApp and Facebook are abusing their dominant position under Section 4 of the Act. Specifically, the Informant has alleged contravention of Sections 4(2)(a)(i), 4(2)(d) and 4(2)(e) of the Act, by these OPs, besides a brief mention of 4(2)(b)(ii) and 4(2)(c). Primarily, the Informant has alleged that WhatsApp has abused its dominance in the 'market for internet-based messaging application through smartphones', to manipulate another market i.e. 'market for UPI enabled digital payment applications' in its favour. This, as per the Informant, has distorted fair competition in the latter market for the existing players and has foreclosed the said market to potential entrants.
The Commission is of the view that the relevant product market in which WhatsApp operates is the 'market for Over-The-Top (OTT) messaging apps through smartphones'. The Commission observes that though in terms of nomenclature this relevant product market appears different from the one proposed by the Informant, it largely covers the same set of players and competition dynamics.
The Commission does not find alleged contravention of the provisions of Section 4 of the Act against WhatsApp or Facebook being made out. In view of the foregoing, the Commission is of the opinion that there exists no prima facie case of contravention and the information filed is directed to be closed under Section 26(2) of the Act.
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2020 (8) TMI 948
Disallowance of expenses related to completed projects - as the project was completed in a previous year, no further expenditure could be allowed - Assessee argued even if the project had been completed on completion contract method, it did not mean that the residual and incidental expenses related to the project cannot be accounted for in the succeeding year - assessee is following the completed contract method but the impugned expenditure was general in nature and did not impact the recognition of Revenue in Assessment Year 2010-11 - HELD THAT:- We find that the Hon’ble Delhi High Court in the case of Gopal Das Estates & Housing Pvt. Ltd. [2019 (3) TMI 1272 - DELHI HIGH COURT] has held that in the case of an assessee following completed contract method, the expenditure incurred subsequent to the completion of the project had to be allowed as Revenue expenditure.
In this case, the assessee was engaged in construction and sale of commercial space and followed completed contract method of accounting. When the project was still under construction, interest expenditure was capitalized and once the project was completed, the said expenditure was claimed as Revenue expenditure. This was disputed by the Department. The Hon’ble Delhi High Court held that for the assessee following the completed contract method, the expenditure incurred subsequent to the completion of the project had to be allowed only as Revenue expenditure.
As not disputed that this expenditure has been incurred by the assessee. Also it remains undisputed that the expenditure was incurred for the purposes of the business of the assessee. Therefore, it is our considered opinion that even though the assessee has been following the completed contract method of accounting, the assessee’s claim for allowance of expenditure pertaining to the project Uniworld Garden-1 deserves to be allowed during the year under consideration, notwithstanding the fact that the project had already been completed in the immediately preceding assessment year. We draw support from the judgment of Gopal Das [2019 (3) TMI 1272 - DELHI HIGH COURT] as mentioned in the preceding paragraph. Accordingly, the order of the Ld. CIT (A) on the issue is set aside and the Assessing Officer is directed to delete the disallowance. Decided in favour of assessee.
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2020 (8) TMI 947
Validity of reopening of the assessment - AO issued notice U/s. 148 of the Act after expiry of more than four years - assessee has received accommodation entries of bogus purchases and consequently the income assessable to tax has escaped assessment - HELD THAT:- There is no dispute that in the case in hand, the assessee disclosed all necessary and primary facts during the scrutiny assessment which were duly examined and verified by the A.O. while passing the assessment order. The requirement of assessee to disclose fully and truly all material facts necessary for assessment does not extend beyond furnishing of the primary facts before the assessing authority.
Hence, in absence of any failure on the part of the assessee to disclose fully and truly all relevant material facts for reopening of the assessment is not valid as the condition precedent for exercising the power of reopening of assessment as provided U/s. 147 of the Act was absent and consequently the A.O. acted beyond his power while issuing notice U/s. 148 of the Act. Accordingly, the reopening of the assessment for the A.Y. 2008-09 and 2010-11 are invalid and the same is quashed.
Estimation of income - bogus purchases - HELD THAT:- It is clear that the ld. CIT(A) has principally followed the decisions of this Tribunal for estimation of the income after rejection of books of account. However, the addition sustained by the ld. CIT(A) is not based on the average G.P. declared by the assessee in the preceding years.
For the A.Y. 2005-06 to 2007-08, the average G.P. declared by the assessee is (-2.38%) where for the A.Y. 2008-09 the G.P. declared by the assessee is (-0.69%) which is better than the average of past history of the G.P. declared by the assessee. Similarly, for the A.Y. 2010-11, the assessee has declared G.P. of (-4.64%) which is less than the average of past history and therefore, the income of the assessee is required to be estimated by taking average of G.P. declared by the assessee in the preceding year at (-2.38%). However, since we have quashed the reopening of the assessment for the A.Y. 2008-09 and 2010-11, therefore, no consequential addition is called for.
For the A.Y. 2011-12, the assessee has declared G.P. of (-1.38%) which is better than the average of past history of (-2.38%), accordingly, no addition is called for even after rejection of books of account U/s. 145(3) of the Act. It is settled proposition of law that the rejection of books of account would not ipso facto result to an addition if the G.P. declared by the assessee is better than the past history of the gross profit. Accordingly, in view of the above facts and circumstances of the case, the addition made by the A.O. for the A.Y. 2011-12 is deleted.
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2020 (8) TMI 946
Validity of assessment u/s 153A r.w.s. 153C - disallowance of freight charges u/s 37(1) - as pointed assessment year in question was not abated as per Section 153A and the regular assessment had already been completed u/s 143(3) - HELD THAT:- As the regular assessment has already been completed u/s 143(3), the assessment has not been abated, the addition has not been made based on any incriminating material unearthed during the course of search or requisition of document or undisclosed income pertaining to the assessee found out during the search & seizure operation and in view of judgments in the case of CIT Vs Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] and CIT Vs Kurele Paper Mills Pvt. Ltd. [2015 (9) TMI 115 - DELHI HIGH COURT] wherein it was held that the completed assessments cannot be interfered with by the AO while making the assessment u/s 153C in the absence of any incriminating material, the addition made by the AO is directed to be deleted. Assessee appeal allowed.
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2020 (8) TMI 945
Seeking to quash the order passed by the Special Judge, C.B.I. - Direction to the C.B.I. to defreeze the bank account - criminal conspiracy with the co-ccused - utilized/transferred/ misappropriated the amounts - Offences punishable under Sections 120B/406/409/420 of the Indian Penal Code as well as u/s 13 (2) read with Section 13 (1) (d) of Prevention of Corruption Act, 1988 - HELD THAT:- The concerned banks with whom the petitioner is having its accounts have not been impleaded as a parties to this writ application and no relief has been sought against such banks. It is evident that though the petitioner has submitted a proposal of compromise, it has been accepted by the bank and though upon the petitioner giving an undertaking to deposit the said compromise amount of Rs.16,35,00,000/- by way of installments the petitioner was given the privilege of anticipatory bail provisionally, yet undisputedly, the petitioner has neither surrendered nor deposited any amount with the State Bank of India, Hatia Branch. There is no dispute that further investigation of the case u/s 173(8) Cr.P.C. is going on.
Thus, in the absence of any material to suggest that any bank account has been freezed during the investigation of the instant case no order to defreeze any bank account can be passed. No merit in the writ application. Accordingly, this writ application being without any merit is dismissed.
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2020 (8) TMI 944
Repayment of loan - Letter of Comfort - can that Letter of Comfort be fairly read to be a guarantee by the 1st Defendant to repay a loan that the Plaintiff gave to another entity? - Does it accord with the requirements of a guarantee under Section 126 of the Contract Act, 1872? - Does it contain an unequivocal commitment or assumption by the 1st Defendant to repay the loan on the principal borrower's default? - HELD THAT:- In a given case, a letter of comfort may indeed amount to a guarantee. Not every letter of comfort is ipso facto a guarantee. The nomenclature is unimportant, as is the absence of the word 'guarantee' - The ordinary rules of construction and interpretation relating to contracts apply to LoCs - The document is to be construed as a whole, read in a reasonable commercial sense, and in context of events and associated documents - Yet, to be a guarantee, it must conform to the provisions of Section 126 of the Contract Act.
Whether the document in question is a guarantee or not depends upon the exact terms to which the guarantor binds himself. In law, no guarantor is liable for more than what the guarantor has undertaken - Where the terms of a written contract are unambiguous and clear, they cannot be altered by addition or subtraction. The terms of a written guarantee cannot be so altered to foist on a party a liability beyond that which the party has undertaken. The contract cannot be rewritten at the instance of one party - The conduct of the parties is a relevant factor in assessing the construction of any contract.
Broad allegations of commercial infidelity, immorality or amorality have no role at all to play in the construction of commercial contracts--especially where parties are well-equipped with legal and financial services (as opposed to an uneducated indigent or individual), and the resultant documentation is complex, and has carefully considered, well-defined provisions. A court will look to the nature of the bargain struck and the role that each of the parties was to play, and when, in what manner, and to what extent. The fact that one or more of the contracting parties are interlinked is not necessarily relevant.
The Interim Application is utterly without merit. It should be dismissed - Application dismissed.
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2020 (8) TMI 943
Conspiracy - illegal mining activities - cognizance of the offences under the MMDR Act and MCD Rules without the complaint being lodged by any competent authority as per the mandate in Section 22 of the MMDR Act and Schedule-I of the OMPTS Rules - HELD THAT:- It is true that none of the petitioners have challenged or are questioning the power of Government to issue the Notification dated 14.01.2010 authorising Vigilance Police in that respect. Undisputedly the validity of notification dated 14.1.2010 is not questioned. The averments and submissions made on behalf of the petitioners are completely silent about the said Notification made in favour of the Vigilance Police. On the other hand, as seen from the Notification dated 14.01.2020 issued by the Government in Home Department and the Notification dated 19.12.2009 issued by the Steel and Mines Department, Government of Odisha, they are neither overlapping to each other nor the Notification dated 14.01.2010 is found in conflict with the provisions of the MMDR Act or the OMPTS Rules.
A bare perusal of the notification dated 14.01.2010 clearly shows that it has given power to the Vigilance Police to investigate or lodge complaint for such offences under the MMDR Act and other relevant Acts/Rules. Therefore, in view of the specific authorization made in favour of the Vigilance Officials in that respect, the contentions of the petitioners cannot be accepted that the Dy. Superintendent of Police (Vigilance) is not authorized to file the complaint for the offences against the requirement of Section 22 of the MMDR Act. Therefore, the complaint at the instance of Vigilance Police and investigation conducted by them against the petitioners is maintainable.
A further contention is made on behalf of the petitioner Jitendranath Patnaik that in absence of all legal heirs of the lessee Late Bansidhar Patnaik, the prosecution against him alone is not maintainable. This contention has no leg to stand because as per the allegation he is the only legal heir of late Bansidhar Patnaik, who applied for renewal by producing the forged WILL and is also the beneficiary of the ill-got minerals. When other legal heirs have not played any role in such illegal mining, they need not be brought into the sphere of prosecution because only being the legal heirs under the law will not attract any offence itself, without actus reus and mens rea.
The CRLREVs are found devoid of any merit and accordingly all these Criminal Revisions stand dismissed.
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2020 (8) TMI 942
Authority of the Monitoring Committee to seal the residential premises on the private land - used for the commercial purpose or not - Whether the Monitoring Committee could have sealed these residential premises? - HELD THAT:- It is apparent from the various orders passed by this Court from time to time and from the various reports of the Monitoring Committee that it was never authorized by this Court to take action against the residential premises that were not being used for commercial purposes. It was appointed only to check the misuser of the residential properties for commercial purposes. After that, this Court directed that the Monitoring Committee should also look into the matter of “encroachment on the public land” and “unauthorized colonies” that have come up on the public land and were wholly unauthorized without sanction. At no point in time, this Court had empowered the Monitoring Committee to act visàvis to the purely residential premises.
The power of sealing of property carries civil consequences. A person can be deprived of the property by following a procedure in accordance with law. The Monitoring Committee is not authorized to take action concerning the residential premises situated on the private land. If there is unauthorized construction or in case of deviation, the requisite provisions are under the DMC Act, such as sections 343, 345, 347(A), 347(B). The mode of action and adjudication under the Act is provided including appellate provisions and that of the Tribunal. It would not be appropriate to the Monitoring Committee to usurp statutory powers and act beyond authority conferred upon it by the Court. The Monitoring Committee could not have sealed the residential premises, which were not misused for the commercial purpose as done vide Report No.149, nor it could have directed the demolition of those residential properties.
After going through the report of the Monitoring Committee and other reports which have been relied upon by the Amicus Curiae, there is no scintilla of doubt that the Monitoring Committee in the past at any point of time did not seal any residential premises being used for residential purposes, situated on the private land nor it could have ordered demolition.
Let the property sealed be desealed, and possession be restored to the owners forthwith. Let this order be complied with within three days - Issue notice.
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2020 (8) TMI 941
Wilful defaulter - petitioner has submitted that the writ petitioner is aggrieved by a portion of the order and accordingly, leave may be given to the writ petitioner to file a cross objection - HELD THAT:- It is directed that the appeal shall be heard treating the stay application as paper book. The service of notice of appeal is dispensed with.
Both the appeal and the cross-objection may appear before the appropriate Bench two weeks hence - application disposed off.
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2020 (8) TMI 940
Direction to handover the legal possession of the unit along with all the promised facilities and amenities to the complainant - Interpretation and implementation of the terms of the builder buyer's agreement - complainant has multiple bookings which prove that the complainant is not covered under the definition of ‘consumer’ as provided in the Consumer Protection Act 1986 - HELD THAT:- The complaints have been filed mainly for two reasons. The first is that the opposite party has demanded extra money for excess area and second is the delay in handing over the possession. In respect of excess area, the complainant has made a point that without any basis the opposite party sent the demand for excess area and the certificate of the architect was sent to the complainant, which is of a later date. The justification given by the opposite party that on the basis of the internal report of the architect the demand was made for excess area is not acceptable because no such report or any other document has been filed by the opposite party to prove the excess area. Once the original plan is approved by the competent authority, the areas of residential unit as well as of the common spaces and common buildings are specified and super area cannot change until there is change in either the area of the flat or in the area of any of the common buildings or the total area of the project (plot area) is changed. The real test for excess area would be that the opposite party should provide a comparison of the areas of the original approved common spaces and the flats with finally approved common spaces/ buildings and the flats. This has not been done. In fact, this is a common practice adopted by majority of builders/developers which is basically an unfair trade practice.
There is no harm in communicating and charging for the extra area at the final stage but for the sake of transparency the opposite party must share the actual reason for increase in the super area based on the comparison of the originally approved buildings and finally approved buildings. Basically the idea is that the allottee must know the change in the finally approved layout and areas of common spaces and the originally approved lay-out and areas.
Hon’ble Supreme Court in DLF HOMES PANCHKULA PVT. LTD. AND ORS. VERSUS D.S. DHANDA AND ORS. [2019 (5) TMI 2006 - SUPREME COURT] has clearly observed that when the contract/agreement has been signed by the builder and the allottee, both of them are bound by the terms of the agreement and from this aspect, the allottee is only entitled to get the compensation as mentioned in the agreement. The Hon’ble Supreme Court has given some compensation for mental agony and harassment to such allottee. In the present case, a compensation of Rs.7.50/- per sq.ft. per month is agreed between the parties for delay in possession and therefore, in the light of the decision of the Hon’ble Supreme Court in DLF Homes Panchkula Pvt. Ltd. & anr. Vs. D S Dhanda, ETC; it is difficult to compensate the complainant by ordering interest on the amount paid by the complainant.
The demand for excess area is cancelled and the opposite party is directed to send revised demand excluding for the demand of excess area without adding any new demand within a period of 30 days along with the offer of possession - Opposite party is directed to hand over the possession within a period of 30 days from the date of issue of such offer letter. The possession should be complete in all respects as per the agreement.
Complaint allowed in part.
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