Violation of principles of natural justice - reassessment of goods imported by the appellant under a different tariff heading, without issuing a speaking order as mandated by section 17(5) of the Customs Act, 1962 - HELD THAT:- It is seen from the records that the goods cleared for classification by the importer against heading no. 9022 9090 of First Schedule to Customs Tariff Act, 1975, with attendant benefit of N/N. 12/2012-CE dated 17th March 2012, was instead subject to duties corresponding to heading no. 8471 5000 of First Schedule to the Customs Tariff Act, 1975. The importer, while paying the higher duties as assessed, signified their disagreement by requesting for the order contemplated in section 17(5) of Customs Act, 1962. It would appear that this request was ignored by the ‘proper officer’ entrusted with the assessment.
It would appear that the entire proceedings had been conducted behind the back of the appellant as they had not been afforded an opportunity to contest the grounds on which their classification had been rejected by the original, as well as first appellate, authority. In these circumstances of finding ourselves deprived of the wisdom of the assessing officer on the merits of the competing tariff headings, it would be appropriate to insist that this lack be made good.
The impugned order is set aside and the matter remanded back to the original authority for compliance with the legal requirement under section 17(5) of Customs Act, 1962.
Applicability of Order XXXVIII Rule 5 of the CPC in the context of the Arbitral Tribunal's powers under Section 17 of the Arbitration and Conciliation Act, 1996 - Applicability of Order XXXIX Rule 10, CPC - Scope of Section 37(2).
Applicability of Order XXXVIII Rule 5 of the CPC in the context of the Arbitral Tribunal's powers under Section 17 of the Arbitration and Conciliation Act, 1996 - HELD THAT:- It is, by now, settled that the power of the Arbitral Tribunal under Section 17 and the power of the Court under Section 9 of the 1996 Act are co-extensive and co-equal in character.
The concluding clause in Section 17(1)(ii) makes it clear that the power of the Arbitral Tribunal, for making an order under Section 17 would be the same as the power of a Court, in relation to proceedings before it. On the basis of this statutory clarification, it has been held, in various decisions, that the Arbitral Tribunal, exercising jurisdiction under Section 17, is required to bear in mind the provisions of Orders XXXVIII and XXXIX of the CPC.
The power to direct furnishing of security, in connection with the subject matter of the arbitral dispute, therefore, vested in the Arbitral Tribunal even under the pre-amended Section 17, by virtue of sub-section (2) thereof. The law relating to the power to direct furnishing of security, as a measure of interim protection, as enunciated in the pre-amended regime would, therefore, continue to apply, to that extent, even after Section 17 was amended w.e.f. 23rd October, 2015 - In a case arising under the pre-amended Section 9, the Supreme Court, in Arvind Constructions v. Kalinga Mining Corporation [2007 (5) TMI 642 - SUPREME COURT], while noting the view expressed by the High Court of Bombay that exercise of jurisdiction under Section 9 of the 1996 Act was not controlled by Order XXXVIII Rule 5 of the CPC, observed that the extent to which the said view was correct "requires to be considered in an appropriate case", but that it was not inclined to answer the question finally in the case before it. Even so, the Supreme Court observed that it was "prima facie inclined to the view that exercise of power under Section 9 of the Act must be based on the well- recognised principles governing the grant of interim injunctions and other orders of interim protection or the appointment of a receiver".
A bare reading of Order XXXVIII Rule 5 CPC reveals that the statutory sine qua non, for a direction by the Court, to furnish security under the said provision, is the satisfaction, of the Court, that the defendant, "with intent to obstruct or delay the execution of any decree that may be passed against him", (a) is about to dispose of the whole or any part of his property, or (b) is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court.
Applicability of Order XXXIX Rule 10, CPC - HELD THAT:- In Sanjeev Sarin v. Rita Wadhwa [2018 (1) TMI 1758 - DELHI HIGH COURT] this Court has held that the exercise of jurisdiction under Order XXXIX Rule 10 of the CPC has to be on principles analogous to those which apply to Order XII Rule 6 of the CPC.
A Court, or an Arbitral Tribunal, which directs deposit of an amount by defendant, which, in its view, is admitted to be payable by the defendant to the plaintiff, is not acting without jurisdiction or even in an illegal manner, if such admission is found to exist in a document executed by the defendant, even if it is not reflected in the pleadings before the court - An arbitral order which arrives at such a conclusion, would not, therefore, merit interference in exercise of the appellate jurisdiction vested by Section 37 of the 1996 Act.
Scope of Section 37(2) - HELD THAT:- The difference between orders passed under sub-sections (2) and (3) of Section 16, and an order passed under Section 17, is starkly apparent. Orders passed under sub-section (2) and (3) of Section 16 rule on the jurisdiction and authority of the Arbitral Tribunal to deal with the arbitral proceedings. Any orders accepting the objection to the jurisdiction of the Arbitral Tribunal would, therefore, in that sense, be final, as a decision thereon would conclude the issue of whether the Arbitral Tribunal possesses jurisdiction and authority to arbitrate. As against this, an order of interim protection under Section 17 - especially an order under Section 17(1)(ii)(b) such as the order under challenge - is fundamentally discretionary in nature, and does not put an end to the lis. Such orders would abide by the final award, to be passed later in the arbitral proceedings.
It is only in rare and extreme cases, therefore, that, in exercise of its appellate jurisdiction under Section 37, a Court would interfere with a discretionary order passed under Section 17. An order for deposit, under Section 17(1)(ii)(b), is, fundamentally and at all times, an order passed in exercise of its jurisdiction. Discretionary orders, by their very nature, are amenable to judicial interference to a far lesser degree than others.
The agreement does appear to be somewhat ambiguous regarding the status of the residual gold, which was neither redeemed, nor purchased by Augmont, nor transferred to any alternate GAP account, during the period of four months. How such gold would have to be treated is, however, a conundrum which this Court, in exercise of its Section 37 jurisdiction, is mercifully not called upon to unravel. This aspect is, however, of significance in the present case, given the fact that the learned Arbitral Tribunal has directed Augmont to secure the full value of the residual gold. Such a direction, viewed any which way, could sustain only if there was, at least prima facie, material on the basis of which it could be held that Augmont would be liable, ultimately, to disgorge the full value of the residual gold to One97.
The impugned order is upheld to the extent it directs securing, by Augmont, of ₹ 2, 61, 22, 319/-, with the modification that the said amount would not be paid to One97, but would be deposited with the learned Registrar General of this Court, and would abide by the outcome of the arbitral proceedings. The direction, to Augmont, to furnish a bank guarantee of ₹ 3, 30, 57, 992/-, representing the value of the residual gold, is set aside.
Conclusion - i) The power under Order 38 Rule 5 CPC is a drastic and extraordinary power. Such power should not be exercised mechanically or merely for the asking. ii) The Arbitral Tribunal's discretion under Section 17 is guided by principles underlying Orders XXXVIII and XXXIX of the CPC, but not constrained by their express terms. iii) Admissions of liability can justify interim measures without strict adherence to Order XXXVIII Rule 5.
Seeking modification of the order as well as praying for extension of time - HELD THAT:- This Court is of the considered opinion that the review application is pending before this Court for the past about 8 years. All along the learned counsel for the review petitioner on record was continuing as a counsel on record. When the matter is listed for final hearing, it is represented that the learned counsel for the respondent/writ petitioner made a submission that he has given the change of vakalat. Undoubtedly, it is a privileged communication and transaction between the lawyer and the litigant. Courts cannot have any say in respect of such communications or transactions between the lawyers and the litigants, unless it is brought to the notice of this Court that some misconduct or otherwise is committed. When handing over of the bundle is or a communication between the lawyer and the litigant is a privileged communication, it is the duty of the litigant as well as the lawyer to make alternate arrangements either by appearing in person or by engaging any other Advocate of the choice of the litigant.
At the outset any litigant approaching the Court of law is expected to pursue the matter diligently either in person or through a lawyer. The lawyer is also expected to perform his duties not only towards his client, but also towards the Court - no lawyer can come to the Court and simply say that they have handed over the bundle to the client and that they won't argue the case. Courts cannot take the responsibility of conducting the case in respect of such litigant or on behalf of such lawyers. Even in cases where memo is filed, it is the duty of the lawyer, who received the legal fees and the litigant, to ensure that an alternate arrangement is made to represent the case, so as to assist the Court for the effective disposal of the cases.
This Court is of the considered opinion that once a show cause notice is issued, the noticee is expected to submit his objections, explanations, documents to the competent authority and the authority is bound to consider the same independently on merits and take a decision and pass orders by following the procedures as contemplated under law.
Conclusion - i) The order is modified to ensure independent adjudication based on the case's unique facts. ii) The delay in filing the review application is implicitly condoned, allowing the Court to address the substantive issues.
Constitutional validity of Regulation 101 framed under The Intermediate Education Act, 1921 - implications on the recruitment process of Class "IV" employees in aided institutions in Uttar Pradesh.
Right to aid - HELD THAT:- The right to get an aid is not a fundamental right, the challenge to a decision made in implementing it, shall only be on restricted grounds. Therefore, even in a case where a policy decision is made to withdraw the aid, an institution cannot question it as a matter of right. Maybe, such a challenge would still be available to an institution, when a grant is given to one institution as against the other institution which is similarly placed. Therefore, with the grant of an aid, the conditions come. If an institution does not want to accept and comply with the conditions accompanying such aid, it is well open to it to decline the grant and move in its own way. On the contrary, an institution can never be allowed to say that the grant of aid should be on its own terms.
Minority and non-minority - HELD THAT:- When it comes to aided institutions, there cannot be any difference between a minority and non-minority one. Article 30 of the Constitution of India is subject to its own restrictions being reasonable. A protection cannot be expanded into a better right than one which a non-minority institution enjoys. Law has become quite settled on this issue and therefore does not require any elaboration.
Policy decision - HELD THAT:- The challenge is to the amendment to the Regulation 101. This Regulation is in the form of a subordinate legislation. A subordinate legislation can also be in the form of a policy decision. It is already noted that a policy decision has come into force in the year 2010 itself.
A challenge to a Regulation stands on a different footing than the one that can be made to an enactment. However, when the Regulation is nothing but a reiteration of a policy reinforcing the decision of the Government made earlier, then the parameters required for testing the validity of an Act are expected to be followed by the Court - An executive power is residue of a legislative one, therefore the exercise of said power i.e., the amendment of the impugned Regulation, cannot be challenged on the basis of mere presumption. Once a Rule is introduced by way of a policy decision, a demonstration on the existence of manifest, excessive and extreme arbitrariness is needed.
Conclusion - i) The constitutionality of Regulation 101 upheld. ii) The right to receive aid is not a fundamental right, and institutions must comply with conditions attached to aid. iii) Article 14 allows for valid discrimination, and the policy to outsource Class "IV" vacancies was neither arbitrary nor unconstitutional. iv) The State Government has broad authority under Section 9(4) to amend regulations, and the amendment of Regulation 101 was within its powers. v) The regulation did not infringe on the rights of minority institutions under Article 30(1), as it applied uniformly to all aided institutions.
The impleadment/intervention applications are allowed.
Acquisition of the electrical and automation business - implementation of two of the modifications or remedies that were proposed by the CCI in its Approval Order, being the remedy of `White Labelling’, and the consequential `Non-exclusive technology transfer’ licences which were to be given - primary contention raised on behalf of the Petitioner- Eaton is that CCI does not have the statutory power of Review and hence the impugned order, which seeks to Review the earlier order dated 7th January, 2020, is bad in law.
HELD THAT:- The question as to whether the CCI has the power of Review or not, is no longer res integra and the same has been considered in various decisions of this Court.
It is important to note that Section 37 of the Act of 2002, was, however, repealed by Competition (Amendment) Act of 2007, and the said provision no longer exists on the statute book. It is under the now repealed Section 37 that any aggrieved person, who did not avail of the remedy of an appeal, could have sought a Review of the CCI’s order before the CCI. The CCI had to, then, compulsorily provide a hearing and make such order as it makes fit. However, the said provision has been expressly repealed now and has no application to this case - Insofar as Section 38 of the Act of 2002 is considered, the same provides for rectification of a mistake apparent from the record, in respect of which the CCI could pass an order rectifying the said mistake. Such a mistake can be rectified either suo moto, or upon an application of the party. There need not even be a written application as the words used are “mistake…brought to its notice”. The explanation to Section 38 makes it further abundantly clear that while rectifying a mistake, the substantive part of the order cannot be amended.
In Google [2015 (4) TMI 1234 - DELHI HIGH COURT], the Division Bench, framed a question as to whether at the stage of Section 26(1) of the Act of 2002, the CCI has the power to Recall/Review an order directing/causing investigation. The Division Bench, after considering in detail the submissions made on behalf of the parties, held that even though while making an order under Section 26(1), as held in Competition Commission of India v. Steel Authority of India Ltd. [2010 (9) TMI 215 - SUPREME COURT], the CCI is not required to hear the person, there can be no inference that even if a party approaches the CCI for Recall or Review, such party is not to be heard.
In Cadila Healthcare Ltd. v. Competition Commission of India [2018 (9) TMI 844 - DELHI HIGH COURT], a ld. Division Bench of this court again considered the power of Review/Recall of the CCI of an order passed under Section 26(1) of the Act of 2002. The conclusion of the Division Bench in Cadila was that in proceedings under Section 26 of the Act of 2002, which was held to be administrative in nature, i.e., during the course of investigation, Review/Recall application can be filed, however, only if an egregious fraud or a mistake which is covered by Section 38 exists. Apart from these circumstances power to Review/Recall does not exist with the CCI.
From the facts stated in the affidavit, it is clear that the negotiations are at an advanced stage with some parties. The exchange of correspondence, mentioned in the Affidavit dated 26th July 2021, shows that there are continuous talks going on between Schneider, MA and the four parties, however the White Labelling Agreements have not yet been finalized yet. Schneider claims that the applicants in the said Arrangements have repeatedly requested rescheduling and extensions. To the extent that it is relevant to the present writ petition, it is important to note is that while CCI sought to exclude Eaton vide the impugned order, on the ground of the delay in the conclusion of White Labelling Arrangements as in August, 2020, till date, i.e., after more than a year having passed since the date of closing, the said arrangements have not been concluded.
Further, considering the fact that Eaton was itself responsible for having not submitted the documents in terms of the advertisement, and its offer to the EOI being non-responsive, as also the direction clearly provided in the portal, it ought not to be allowed to completely upset the negotiations which are currently underway and are at an advanced stage - There is, in effect, no clarity as to why Eaton failed to submit the documents in time, when the EOI, as also the instructions on the portal were categorical and brooked no ambiguity. However, Eaton cannot also be indefinitely excluded as the intention of the Approval order is to expand and enlarge the number of players in the market, so as to increase competition.
Conclusion - The CCI does not have the power to review its orders post the repeal of Section 37. Orders affecting substantive rights must adhere to principles of natural justice.
Since CCI does not enjoy the power of Review, the impugned order is not sustainable in law - petition disposed off.
Termination of the arbitral tribunal's mandate due to expiry of the prescribed time limit - Authority of the Exchange to constitute a new tribunal after the termination of the previous tribunal's mandate - whether the mandate of the first tribunal appointed on 17th June 2020 survives or it stood terminated? - HELD THAT:- There is no dispute between the parties that the mandate of the first tribunal stood terminated upon expiry of timelines on 31st December 2020. Thereupon, given the facts of the case, the Bye-Laws would once again come into play and these Bye-Laws and Business Rules, it is not disputed, are binding on both parties. By virtue of these Bye-Laws, the Exchange was entitled to appoint a tribunal again. Section 14 or 15 therefore would not prevent in any manner, the Exchange from appointing a new tribunal, which it has done in the usual course. It must be noted that the Exchange was conscious of the fact that substantial time had been lost and had therefore offered “Combined Arbitration Proceedings”, to which the petitioner was not agreeable. The Exchange therefore constituted a tribunal once again.
The Arbitration and Conciliation Act will continue to govern the procedural parts of the reference and, in my view, the petition before this court seeking reliefs of declaring the tribunal constituted by the Exchange to be de jure and de facto unable to continue with the arbitral proceedings, is completely misconceived. The tribunal is ready and willing to proceed with the arbitration and has so indicated in the minutes of the hearing held on 1st March 2021. The decisions in Jayesh H. Pandya [2019 (8) TMI 1308 - SUPREME COURT] and Bharat Oman Refineries Ltd. [2012 (5) TMI 782 - BOMBAY HIGH COURT] do not come to the assistance of the petitioner in the facts of the present case. The tribunal is constituted legitimately under the provisions of the Bye-Laws of the Exchange and it is willing to act.
The contention of the petitioner that the tribunal is unable to act being de jure is de facto unable to continue the proceedings, cannot be accepted - The provisions of Bye-Law 15.32 does not in any manner suggest that there is only one attempt at arbitration and that if that attempt fails, no tribunal could be constituted. The petitioner is not entitled to declarations sought of and in these circumstances, the petition fails.
The interim order restraining the progress of arbitral proceedings stands vacated - Arbitration Petition is dismissed.
Waiver of pre deposit of the amount in the appeal fled against the order passed by the Maharashtra Real Estate Regulatory Authority - delay on the part of developer in completing the project due to deliberate non compliance of the obligations on his part - Section 31 of the the Real Estate (Regulations and Developments) Act, 2016 read with Rule 6 of the Maharashtra Real Estate (Regulation and Development) (Recovery of Interest, Penalty, Compensation, Fine Payable, forms of complaints and appeal etc.) Rules, 2016 - Doctrine of ‘forum conveniens/non-conveniens’.
Whether the objection of the fat purchaser that the present Petition should not be entertained at the Principal Seat on merits and instead returned to the developer for presenting the same before the Nagpur Bench to be disposed of deserves to be upheld?
HELD THAT:- In the present case, though the entire cause of action has arisen in Nagpur, by virtue of the provisions of the Act, it is only at Mumbai where the authority is situated that the fat purchaser can file the complaint. Even the Tribunal is established only in Mumbai and therefore, for the present, the appeal necessarily has to be fled in Mumbai.
In view of sub-rule (1) of Rule 1 of Chapter XXXI of the Appellate Side Rules, all Petitions under Articles 226 and 227 arising in the District of Nagpur which lie to the High Court of Bombay shall be presented to the Additional Registrar of that High Court at Nagpur and shall be disposed of by the Judges sitting at Nagpur. The cause of action is in respect of a failure on the part of the developer in fulfilling his obligation of handing over the fat in terms of the Flat Purchasers Agreement to the fat purchaser within the time stipulated. Prior to the coming into force of the said Act and the Rules framed thereunder, for breach of obligation on the part of the developer, the fat purchaser would have had to invoke remedies before the Civil Court situated within the territorial jurisdiction of the place where the project is situated i.e. at Nagpur. Section 16 of the Code of Civil Procedure then would have squarely applied. It is in view of the provisions of the said Act which came into force with effect from 26/3/2016 and the Rules framed thereunder that the fat purchaser could avail of the speedy mechanism provided under the said Act for redressal.
In view of the law laid down by the Hon’ble Supreme Court in Kusum Ingots & Alloys Ltd. [2004 (4) TMI 342 - SUPREME COURT] and the Delhi High Court in M/s. Sterling Agro Industries Ltd. [2012 (6) TMI 76 - DELHI HIGH COURT - LB], undoubtedly, in view of the order having been passed by the Tribunal at Mumbai, the Writ Petition is maintainable before the Principal Seat. Yet this cannot be single factor to compel this Court to decide the matter on merits. Whether the place where the appellate or revisional authority is located constitutes the place of forum conveniens will vary from case to case and depends upon the lis in question. It is by virtue of the establishment of the authority and the Appellate Tribunal under the said Act, that the complaint and consequently the appeal came to be fled at Mumbai.
The fat purchaser booked a fat in a project undertaken by the Developer comprising five towers having approximately 400 residential tenements situated at Nagpur by agreement for sale dated May 15, 2015 valued at Rs. 77,49,675/-. The fat purchaser paid consideration amount of Rs. 64,97,956/-. The agreement for sale records that the site office of the developer is at Nagpur. The fat purchaser is a resident of Nagpur. The entire payments are made and accepted at Nagpur. Clause 63 of the sale agreement states that any disputes in relation to the agreement, shall be subject to the exclusive jurisdiction of Courts at Nagpur, India. The cause for fling of a complaint under Section 31 of the said Act was a result of breach of the obligation on the part of the developer in handing over possession of the fat within the stipulated time to the fat purchaser.
The principle contained in Section 16 of Code of Civil Procedure that the suit shall be instituted in the Court within the local limits of whose jurisdiction the property is situated will have to be borne in mind, though Section 16 may not apply in the present facts. This Petition under Articles 226 and 227 of the Constitution of India undoubtedly is maintainable before either of the Benches viz. Principal Seat at Bombay or the Bench of this Court at Nagpur also in view of the Appellate Side Rules. This Court cannot, however, be oblivious to the hardship and inconvenience that the fat purchaser will have to face in contesting the Petition at Mumbai. The fat purchaser succeeded before the Authority, whereby, the developer has been directed to refund the consideration amount paid along with interest. In an appeal fled by the developer before the Tribunal, the fat purchaser contested the Miscellaneous Application made for waiver of the pre-deposit for entertaining the appeal. Even the application for waiver has been rejected by the Tribunal. Against this order, the present Petition is fled before the Principal Seat of this Court.
The doctrine of ‘forum non-conveniens’ applies in full vigor in the present facts and in favour of the fat purchaser. This Court cannot be oblivious to the plight of the fat purchaser and the resultant hardships that would be caused to him, for even this Petition is fled challenging an interim order of predeposit as a condition for hearing of appeal by the Tribunal. As a result of non compliance, the order of dismissal of appeal is now challenged. On the contrary, no inconvenience would be caused to the developer if the Petition is presented for being heard by the Bench of this Court at Nagpur, for apart from the factors indicated herein before, even Clause 63 of the agreement for sale stipulates that in case of dispute, the Courts at Nagpur will have jurisdiction. If by upholding the objection of the fat purchaser results in providing some succour to him, present is a case where there are no hesitation in refusing to entertain the Petition on merits applying the Doctrine of ‘forum conveniens/non-conveniens’. The balance of convenience is clearly in favour of the fat purchaser.
The objection of the Petitioner that the present Petition should not be entertained at the Principal Seat as it will be more appropriate for the Nagpur Bench of this Court to hear the Petition is upheld - The proceedings in this Petition be placed before the Hon’ble Chief Justice on the administrative side for His Lordship’s consideration for transferring the Petition to the Bench of this Court at Nagpur.
Validity of assessment order passed - breach of principles of natural justice - Petitioner states that an assessment order has been passed even before the time granted for fling a reply expired and without considering the reply which was already fled - HELD THAT:- As noted the reply has already been fled on 12th April, 2021 which has not been considered in the assessment order. The affiant has stated that the final assessment order was passed at 3:1. PM, whereas the assessment order indicates that it was digitally signed at 2:53 PM. Therefore, we are constrained to observe that the affidavit does not reflect the true facts and has been prepared in a very lackadaisical manner without confirming veracity of the statement being made on oath.
After lot of deliberation, we have decided and we hereby call upon the affiant Syama Saji to show cause as to why perjury proceedings should not be initiated against the said Syama Saji for making incorrect statements on oath particularly without verifying the documents of the Department annexed to the Petition.
The impugned assessment order has to be quashed and set aside, which we hereby do. The consequential notice of demand and notice of penalty also require to be set aside and the same are hereby set aside.
The assessment order has been passed even before time to file reply had expired and without considering the records that reply has in fact been fled. This has resulted in petitioner having to rush praying to this Court to interfere in this wrongful action on the part of respondent.
If the AO had checked his/her records, he/she would not have passed assessment order hastily without waiting for time granted to file reply expired and without checking whether any reply has been fled. In our view, it is a fit case to impose cost in the sum of ₹ 10,000/- and this amount shall be paid by the concerned respondent no.2 officer to PM Cares Fund and the compliance affidavit with the proof of payment shall be filed within two weeks from today.
Assessment u/s 153A - Bogus LTCG - statement recorded in search action against a third person - whether a statement u/s 132(4) constitutes incriminating material for carrying out assessment u/s 153(A) ? - ITAT deleted the addition - HC decided issue in favour of assessee
HELD THAT:- Issue notice. AOR accepts notice on behalf of the respondent.
Gain on Sale of land - nature of land - agricultural land u/s 2(14)(iii) or Capital asset - As decided by HC [2018 (12) TMI 216 - MADRAS HIGH COURT] no materials have been produced by the assessee for the period between 1998 and 2006 to show that he was carrying on agricultural activities in the land at any point of time except producing Chitta and Adangal for the year 2005. Since relevant columns in the Adangal with regard to crop and extent are left blank, it would not be proper to record a finding on those documents and they have to be discarded
HELD THAT:- There is justification in the submission which has been urged on behalf of the Union of India that by its very nature, it would not be appropriate for this Court to look into the documents which have been produced in the application for permission to file additional documents, particularly in the absence of the High Court having carried out the exercise. It would be unsafe for this court to rely on material which has been produced for the first time in the present proceedings, without the genuineness and authenticity of the documents being tested earlier. This aspect of the submissions of the ASG has weighed with this court.
At the same time, the manner in which the case appears to have proceeded before the High Court creates a sense of disquiet.
Was the appeal by the Revenue initially dismissed ? If so why was the appeal listed again before the Division Bench ? Was the original order recalled by the High Court after apprising parties and their counsel ? Were any reasons for recall recorded ? While we have flagged these issues, we are not venturing into the exercise of finding answers, on the state of the record as it stands the better course being to remand the proceedings for hearing before another Bench of the High Court. In the above conspectus of facts, and particularly having regard to the checkered history of the appeal which we have referred to above, we are of the view that the appropriate course of action would be to set aside the judgment of the High Court and to remand the proceedings for disposal afresh. We are inclined to pass an order of remand since it appears that the High Court while exercising its jurisdiction in an appeal under Section 260A reversed the view of the Tribunal on the basis of an evidently cursory view which appears in paragraph 15 of the impugned order extracted above.
Thus, without this Court expressing any opinion on the merits of the appeal filed by the revenue against the order of the Income Tax Appellate Tribunal, we allow the appeal and, in consequence, restore Tax Case (Appeal) to the file of the High Court of Judicature at Madras for disposal afresh. All the rights and contentions of the parties are specifically kept open to be addressed before and decided by the High Court.
Statement given to take physical possession could not be implemented - Jurisdiction of Civil Court in negating rights of secured creditor under the Securitisation Act, 2002 in a civil suit or proceedings instituted by the borrower/guarantor/any third party qua the secured asset - binding nature of Civil Court in a lis inter-se between parties pertaining to the secured asset, not having impleaded the Bank/Secured Creditor - Scope of powers of the District Magistrate in exercise of its jurisdiction under Section 14 of the Securitisation Act, 2002.
Whether Civil Court would have jurisdiction to negate any right of the secured creditor under the Securitisation Act, 2002, qua the secured asset in a civil suit or proceedings instituted by the borrower/guarantor/any third party qua the secured asset? - HELD THAT:- Section 13(1) clearly brings out the legislative intent of permitting the secured creditors to enforce the securities without the intervention of the courts. Enforcement of securities are provided under Section 13(4) of the Act, 2002 which entitles the secured creditor to take over the possession or management of the secured asset for the purpose of its enforcement by transfer by way of sale, lease or assignment etc., after the borrower fails to make the payment within 60 days of the issuance of the demand notice under Section 13(2) and objections if any, having been filed by the borrower are rejected by the secured creditor under Section 13(3-A) of Act, 2002. If the secured creditor decides to take physical possession the bank can avail of assistance of the District Magistrate on making an application supported by an affidavit in terms of proviso to Section 14 of the Act, 2002.
The jurisdiction of the Civil Court shall be completely barred in so far as those matters, which would fall for adjudication within the jurisdiction of the Tribunal. It is only for those limited cases like for example, where the action of the secured creditor is alleged to be fraudulent or their claim may be so absurd and untenable which may not require any probe, that the jurisdiction of the Civil Court could be invoked - the Civil Court would not have jurisdiction to negate any right of the secured creditor under the Securitisation Act, 2002, qua the secured asset in a civil suit instituted by the borrower/guarantor/any third party qua the secured asset.
Whether the petitioner bank/secured creditor would be bound by an order passed by a Civil Court in a lis inter-se between parties pertaining to the secured asset, not having impleaded the Bank/Secured Creditor? - HELD THAT:- Since the scope of adjudication before the Civil Court would not involve determination of any right of a secured creditor on account of lack of jurisdiction in view of Section 17 read with Section 34 of the Act, 2002, no order passed by the Civil Court could be construed to be a restraint order on the secured creditor to enforce its security under the provisions of the Securitisation Act, 2002 This is subject to an exception that unless the secured creditor is specifically impleaded as a party defendant and an interim order is passed specifically restraining the secured creditor to enforce the security interest - none of the orders passed could have been treated to have restrained the petitioner bank or Respondent No. 1 or 3 to enforce the secured assets under the provisions of the Securitisation Act. 2002.
Scope of powers of the District Magistrate in exercise of its jurisdiction under Section 14 of the Securitisation Act, 2002? - HELD THAT:- The District Magistrate does not assume any adjudicatory function while examining the application of the secured creditor under Section 14 of the Act, 2002. For the same reason, we find that it would amount to no illegality if an order is passed without effective service upon the borrowers being in the nature of execution process pursuant to statutory notices served under Section 13(2) and (4) as envisaged under the scheme of the Act, 2002. Though, it would be desirable that before proceeding to take actual physical possession by the officer so deputed by the District Magistrate, a reasonable notice of say 15 days be served on the occupant so that they are not taken by surprise - in case if the secured creditor is aggrieved of any action of the District Magistrate or the manner and mode of its enforcement, not involving adjudication of rights of any other secured creditor, the remedy under writ jurisdiction would be available to such a secured creditor. This is because, Section 17 of the Act 2002 can be invoked only in case, if the applicant is aggrieved of the action of the secured creditor, while in the instant case, the grievance of the secured; creditor is against the non-implementation of it is rights under Section 14 of the Act, 2002.
After the order is passed by the District Magistrate the officer so deputed to execute the said order under Section 14(1A) of the Act, 2002 would also complete the process of execution within 60 days from the date of receipt of such order. Further in case if for any reason, the order is unable to be executed, the officer shall report the matter back to the District Magistrate, who would then pass such suitable orders as the situation may warrant. Even though the said period is directory but it is to be noticed that such actions of the officer concerned would be open to judicial scrutiny to ensure that the object of the said provision is not frustrated.
Respondent Nos. 1 and 3 are directed to ensure handing over of actual physical possession of the secured asset to the petitioner bank within four weeks with an advance notice of 15 days to the occupants/borrowers - The application of the respondent-State is dismissed.
Levy of royalty and charges for controlled release of water on Captive Power Producers (CPPs) - Alleged discrimination between Captive Power Producers (CPPs) and Independent Power Producers (IPPs) - whether the projects of CUMI and INDSIL are located at places where the advantage of controlled supply of water is assured and can be derived?.
HELD THAT:- The facts on record thus show that both the projects have certainly derived advantage of controlled supply of water as contemplated in Clause 14 of the Policy. How much benefit of controlled supply of water each of the projects has received or will receive in future would be a matter of computation and calculation - The Agreements entered into by CUMI and INDSIL show that the terms and conditions of the Policy including Clause 14 thereof were consciously incorporated in the Agreements. Both CUMI and INDSIL were alive to the fact that because of peculiar location, their units would certainly have the advantage of controlled supply of water - the absence of a specific clause, akin to Clause 14 of CUMI Agreement, in INDSIL Agreement, would be of no consequence. The relationship between the parties would be governed by Clause 14 of the Policy, as incorporated in the respective Agreements.
Whether Clause 14 of CUMI Agreement and Clause 14 of the Policy which stood incorporated into the respective Agreements could be termed to be unconscionable and/or manifestly arbitrary? - HELD THAT:- I cases where a term of contract or agreement entered into between the parties is completely one sided, unfair and unreasonable, where the other party having less bargaining power had to accept such term by force of circumstances, the relief in terms of the decision of this Court in Central Inland Water Transport Corporation [1986 (4) TMI 271 - SUPREME COURT] can be extended. It may be stated that the Agreements were entered into after long deliberations where both CUMI and INDSIL had the advantage of legal counsel - It cannot be said that CUMI and INDSIL were in a position with lesser bargaining power or were so vulnerable that by force of circumstances they were forced to accept such term. Therefore, the concerned Clause in CUMI Agreement as well as the terms of the Policy that stood incorporated in the respective Agreements, cannot be termed unconscionable.
There is nothing arbitrary or unreasonable in having such term in the Policy. Since the private entity or agency would stand to gain from and out of the capital outlay and infrastructure put in place by the State, some reasonable charges for such benefit would naturally be imposed. It was only under such Policy that both CUMI and INDSIL were given permissions to set up their electricity generating units and such term was consciously accepted by them.
The distinction or classification brought out was based on a clear rationale with the object of reducing the additional burden on the consumers. Since the electricity generated by CPPs would be self consumed, there would be no such question of putting any ultimate or resultant burden on the common consumers. The basis for such distinction or classification was quite correct and as such this question was rightly answered by the Division Bench of the High Court against CUMI and INDSIL. Rather than being unnatural or irrational, the classification had a clear nexus or relationship with the object of reducing resultant burden on the common consumers.
Imposition of royalty or charges on controlled supply of water on the ground of absence or lack of jurisdiction - HELD THAT:- The expression 'Royalty' has consistently been construed to be compensation paid for rights and privileges enjoyed by the grantee and normally has its genesis in the agreement entered into between the grantor and the grantee. As against tax which is imposed under a statutory power without reference to any special benefit to be conferred on the payer of the tax, the royalty would be in terms of the agreement between the parties and normally has direct relationship with the benefit or privilege conferred upon the grantee - The controlled release of water made available to INDSIL and CUMI, has always gone a long way in helping them in generation of electricity. For such benefit or privilege conferred upon them, the Agreements arrived at between the parties contemplated payment of charges for such conferral of advantage. Such charges were perfectly justified.
Revision u/s 263 - assessment of excess stock u/s 69 - HELD THAT:- It is asserted on behalf of the assessee that in the course of survey, no other activity/other source of income was found in the hands of the assessee except the ongoing jewellery business. The excess stock declared as business income in the statement u/s133A of the Act was reflected in the return of income. AO issued a specific show cause notice dated 18.12.2019 wherein the identical question was raised and the assessee was required by the A.O. to show cause as to why the amount be not treated as unexplained investment u/s 69 of the Act and tax rate under section prescribed under section 115BBE need not apply.
A reply thereof was furnished (dated 19.12.2019) to the A.O. On consideration of the facts and circumstances narrated in the reply and original submissions, the AO found merit in the plea of the assessee and dropped the issue and did not disturb the position taken by the assessee. Certain case laws are relied upon to support the stance taken by the assessee.
As contended that statement taken u/s 133A should either be relied in full or not relied upon - A part of statement cannot be read differently. On appraisal of the facts narrated on behalf of the assessee, it is manifest that the assessee has taken a consistent position on submission of excess stock from business activities and thus a business income in ordinary course right from survey proceedings till filing return of income and subsequent completion of assessment. Significantly, the AO has made specific query in this regard and found the reply of the assessee in sync with the factual matrix. Thus the action of the AO was after due application of mind. We further notice that similar issues have cropped up in other cases as well and judicial view is available on subject matter of dispute in similar circumstances.
In Bajaj Sons Limited [2021 (5) TMI 956 - ITAT CHANDIGARH] also answered the issue in favour of the assessee therein and held that surrender of undisclosed business income would not attract provisions of section 115BBE of the Act.
Similar view has been taken in the case of PCIT vs. Subarna Rice Mills [2018 (8) TMI 1475 - CALCUTTA HIGH COURT]. Thus, taxability of such income under the head “business income” has been endorsed by the judicial view and hence could not have been disregarded outrightly by the AO in departure with the statement u/s 133A while performing quasi judicial function. The issue thus cannot be said to be, at least, free of debate. Clearly, the AO having applied the mind to the facts of the case and has taken a view which cannot be said to be wholly unsustainable in law. Therefore, the action of the AO cannot be branded as erroneous per se on this issue. The invocation of section 263 is thus unjustified on this point.
Mismatch between figures appearing in the Trial Balance viz-a-viz audited Balance Sheet towards purchases - AO has examined the books. The PCIT himself could have called for records again and looked into the explanation offered by the assessee himself. On a perusal of the purchase figures under various heads, we find justification in the explanation of the assessee towards regrouping of certain purchase entries. For instance, under the head “Inside State” & “Ornaments (URD)” purchases appearing in the Trial Balance seem to have been clubbed under the head “New Ornament” & Old Ornament” making it comparable. Once the transfer entries are passed, the figures as per Trial Balance and audited account stands at the near vicinity and purchase shown in the Trial Balance appears to be in conformity with the Balance Sheet subject to time difference.
PCIT, under such circumstances, ought to have been circumspect while putting the assessee with the burden of further enquiry without having any cogent case for doing so. Secondly, we also find merit in the other line of argument that once the books of accounts are rejected, the individual entries of expenses etc. lose its relevance. Hence, we see no perceptible error in the action of the A.O. The directions of the PCIT in this regard deserve to be set aside and quashed. Appeal of the assessee is allowed.
Action u/s 276-CC - assessee had filed his return belatedly by 19 months - HELD THAT:- Use of words ‘in due time’ is a significant term used in Section 276-CC and relates to non-furnishing of return within the time in terms of sub-Section (1) or indicated in the notice given under sub-Section (2) of Section 139. There is no provision for condonation of the said infraction, even if, a return is filed in terms of sub-Sections (4) of Section 139 because due time as prescribed under sub-Section (1) or (2) of Section 139 will not get diluted by filing return under Section 139(4) much later as it is against the legislative intent.
Contention of applicant’s counsel that return was filed prior to issuance of any notice by the department is to be examined in terms of the use of word ‘or’ under sub-Sections (1) or (2) of Section 139. Word ‘or’ is normally disjunctive and ‘and’ is normally conjunctive as has been held in case of Hyderabad Asbestos Cement Products and others [1999 (12) TMI 63 - SUPREME COURT] wherein, it is held that ‘or’ in its natural sense denotes an ‘alternative’ and is not read as ‘substitutive’.
In case of Union of India (UOI) and Ors. vs. Ind- Swift Laboratories Ltd. [2011 (2) TMI 6 - SUPREME COURT] it is held that where provision is clear and unambigous the word ‘or’ cannot be read as ‘and’ by applying the principle of reading down.
Thus, when examined in light of said legal position, then the argument that applicant had already furnished his return in terms of Section 139 (4) will not take away the liability of filing the return ‘in due time’ as mentioned in Section 276-CC, merely because no notice was issued prior to filing of the return.
As in the light of the law laid down by Supreme Court in case of Prakash Nath Khanna and another [2004 (2) TMI 3 - SUPREME COURT] the ratio being that, though, plea of lack of culpable mental state may be evoked by an accused in defense, but that cannot be seen at the time of filing of the complaint or at the stage of taking of the cognizance in terms of the provisions contained in Section 278-E(1) of the Income Tax Act, 1961, which deals with presumption of existence of such mental state being a matter of trial and, therefore, the petition/Application deserves to be dismissed and is dismissed.
Revision u/s 263 - deduction u/s 80P(2) on interest and dividend receipts - HELD THAT:- We find that there is no material discussion in the assessment order regarding factual matrix as well as assessee’s eligibility to claim deduction u/s 80P. The assessee failed to appear during revisional proceedings and could not substantiate the same.
All these arguments as put forth by Ld. AR were not considered by Ld. Pr.CIT while setting aside the assessment order. Therefore, we are of the considered opinion that it would be in the fitness of thing to restore the matter of revision back to the file of Ld. Pr. CIT to consider factual matrix as well as to consider the arguments of the assessee on the issue. The assessee, in turn, is directed to substantiate his stand, in this regard. The appeal stands allowed for statistical purposes.
The High Court of Gauhati heard a writ appeal filed by the Union of India challenging an order to provide interest on a delayed refund to the respondents. The appeal was dismissed as withdrawn subject to the condition that the revenue would pay the amount within three months. The interest payable would be contingent upon the outcome of a related SLP pending before the Hon'ble Apex Court. The matter was resolved amicably between the parties involved.
Estimation of income - Bogus purchases - HELD THAT:- CIT(A) has confirmed the order of AO by rejecting the evidences filed by the assessee in the form of bills, vouchers, bank statements, corresponding sales and stock register showing the movement of stock.
CIT(A) instead harped on the finding of the AO that assessee has not responded to various notices issued by the AO and thus dismissed the appeal.
AR argued before us that the assessee could not appear before the AO because the notices were not served upon the assessee. We find merit in the arguments of AR that in view of the nature of trade of trading in ferrous and non ferrous metals and GP rate during the year of 3.76%, a reasonable view may be taken.
We are of the considered view that the it would reasonable if a profit rate of 4% is applied on the bogus purchases. Accordingly we set aside the order of CIT(A) and direct the AO to apply a rate of 4%. Appeal of the assessee is partly allowed.
Disallowance of depreciation u/s 32(1) r.w.s. 43(1) - assets on which depreciation has been claimed by the assessee company has been acquired out of Government grants (excise duty exemptions) obtained by the demerged company - Whether excise refund being revenue receipt can be reduced from the cost of plant & machinery? - HELD THAT:- As following the orders passed by the coordinate Bench of the Tribunal in Assessment Years 2010-11, [2018 (11) TMI 1774 - ITAT DELHI] 2011-12 [2018 (9) TMI 1791 - ITAT DELHI] and 2012-13 & 2013-14 [2020 (4) TMI 86 - ITAT DELHI] which are based upon the decision rendered in case of CIT vs. Meghalaya Steels Ltd. [2016 (3) TMI 375 - SUPREME COURT], we are of the considered view that the excise refund is in the nature of revenue receipt forming part of the profit and gains arising from the business and as such cannot be reduced from the cost of plant & machinery. In these circumstances, the contentions raised by the ld. DR for the Revenue are not sustainable.
CIT(A) passed the impugned order by following the earlier years order passed by his predecessor, subsequently confirmed by the Tribunal, by rightly reaching the conclusion that, “the assets acquired by demerged company, M/s. Dharampal Satyapal Ltd., out of the amount of excise duty refund, accounted as deferred Government grants in its books of account does not carry any force to make reduction in the cost of assets and thereby deleted the addition made on account of disallowance of depreciation”. Consequently, finding no illegality or infirmity in the impugned order passed by the ld. CIT (A), the appeal filed by the Revenue is hereby dismissed.
Characterization of receipt - receipt of excise refund capital receipt or revenue receipt - it is the case of the assessee that the entire cost has been paid by the assessee for plant and machinery and as such, it cannot be reduced from the cost of asset -HELD THAT:-We find that in the assessment years 2012-13 & 2013-14 [2020 (4) TMI 86 - ITAT DELHI] held as based upon the decision rendered by Hon’ble Apex Court in CIT vs. Meghalaya Steels Ltd. [2016 (3) TMI 375 - SUPREME COURT] we are of the considered view that the excise refund is in the nature of revenue receipt forming part of profits and gains arising from the business and as such cannot be reduced from the cost of plant and machinery. So, the findings returned by Ld. CIT(A) on this issue are confirmed.
AO as well as CIT(A) have erred in making addition by disallowing the claim of depreciation of the asset made u/s. 32 of the Act which would further entitle to the assessee the benefit of deduction u/s. 80IC on profits enhanced by such disallowances made u/s. 32 of the Act. Consequently, appeal filed by the assessee is partly allowed.
Thus on identical facts in preceding years, Revenue’s appeal is dismissed.
Direction to vacate its physical possession and to return back asset to the liquidation estate - delay in auctioning the secured asset - Appellant intends to put further efforts to realize its security and accordingly, need a further time period of 6 months - HELD THAT:- In the present case, the order of liquidation was passed on 05.09.2018, three years has been lapsed and the liquidation proceeding could not be completed and after granting ample opportunity the Appellant has failed to realize its security interest. Therefore, Ld. Adjudicating Authority has rightly directed the Appellant to handover the asset in possession back to the liquidator within 7 days.
There are no legal flaw in the impugned order. Thus, the Appeal is dismissed summarily.
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