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TMI Blog2017 (4) TMI 1656X X X X Extracts X X X X X X X X Extracts X X X X ..... e option of the Board" in the case of the Companies having share capital below 1 crore, but there is no corresponding or analogous provision in the Companies Act for a similar situation in case of Companies having share capital above Rs. 1 crore. AR produced before us by way of Paper Book a copy of extract of Section 297 of the Companies Act, 1956 from A. Ramaya Guide to the Companies Act, 2006 Edition and Relevant extracts of Indian Contracts Act, 1972 which clearly stated that in the absence of approval of Central Government, where necessary, the contract shall be void. Nothing contrary to this is produced before us and this statement supplements the observations of the Ld. CIT (A) to the effect that want of consent in respect of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. that the agreement dated 01.05.2008 was declared void ab initio by the Board of Directors in their meeting held on 20.04.2009 as a result of which the transaction of income was reversed by the assessee as there was no legally enforceable right to such income under a void contract. However, the AO added back a sum of Rs. 2,05,39,063/- and Rs. 21,73,292/- to the income of the assessee. The assessee contended that the amount of Rs. 2,17,13,292/- includes Rs. 2,05,39,063/- also. By way of order passed u/s 154 of the Act the AO rectified the mistake and determined the amount of disallowance at Rs. 2,17,13,292/- only. The appeal preferred by the assessee against the assessment order challenging the addition of Rs.&n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, ostensibly upon obtaining the consent from the BOD, is also required to obtain prior approval from the Central Government. In circumstances of urgent necessity, these provisions also allow obtaining the consent of the Board within three months of signing of the agreement, where agreement has been entered into without the consent of the Board. In the absence of the consent of the Board, or if consent is not accorded to any contract under this section, anything done in pursuance of the contract shall be voidable at the option of the Board. The provisions relating the approval of Central Government in respect of companies with share capital over Rs. 1 crore were introduced later. However, these provisions are silent whether the approva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies with share capital below Rs. 1 crore is voidable at the option of the Board, whereas it would render the contract void ab initio in case of Companies share capital more than Rs. 1 crore. 6. Further, in this case, the assessee alleges that on the contract becoming void ab initio, the transaction of income from ICICI Home Financing Co. Ltd. was reversed by the assessee since there was no legally enforceable right to such income on the contract being declared as void ab initio. On this aspect there is no denial of fact by the Revenue. In the circumstances, we are of the considered opinion that no real income had accrued to the assessee under a void contract as such the addition made on the basis of the income under a void contr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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