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Archive for the ‘Supreme Court’ Category

Inturi Rama Rao vs. UOI (Supreme Court)


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DATE: September 23, 2014 (Date of pronouncement)
DATE: October 8, 2014 (Date of publication)
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As the UOI has continued the process of appointment of Tribunal Members without amending the Rules, the Petitioner, who was wait-listed in 2007, deserves to be considered for appointment within 30 days

The Selection Committee finalized a list of 18 persons, 13 for the post of Accountant Member and 5 for the post of Judicial Member. The Petitioner, Inturi Rama Rao, was placed in a ‘Waiting List’ appointment as Accountant Member. The Select List was approved by the Appointment Committee of the Cabinet (ACC) and 11 vacancies […]


Supreme Court | 9 Comments »

The Stock Exchange, Bombay vs. V.S. Kandalgaonkar (Supreme Court)


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DATE: September 25, 2014 (Date of pronouncement)
DATE: October 4, 2014 (Date of publication)
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Income Tax Act does not provide for any paramountcy of dues by way of income tax. Government dues only have priority over unsecured debts

The first thing to be noticed is that the Income Tax Act does not provide for any paramountcy of dues by way of income tax. This is why the Court in Dena Bank’s case (supra) held that Government dues only have priority over unsecured debts and in so holding the Court referred to a judgment […]


Supreme Court | No Comments »

Madras Bar Association vs. UOI (Supreme Court – Constitution Bench)


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DATE: September 25, 2014 (Date of pronouncement)
DATE: September 25, 2014 (Date of publication)
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The NTT Act “crosses the boundary” & is unconstitutional. CAs/CSs are specialists on accounts & facts and are not capable of arguing/ deciding ‘Substantial Questions Of Law’


The NTT Act “crosses the boundary” & is unconstitutional. CAs/CSs are specialists on accounts & facts and are not capable of arguing/ deciding ‘Substantial Questions Of Law

A perusal of the reported judgements shows that while deciding tax related disputes, provisions of different laws on diverse subjects had to be taken into consideration. The Members of the NTT would most definitely be confronted with the legal issues emerging out of Family Law, Hindu Law, Mohammedan Law, Company Law, Law of Partnership, Law related to Territoriality, Law related to Trusts and Societies, Contract Law, Law relating to Transfer of Property, Law relating to Intellectual Property, Interpretation of Statutes, and other Miscellaneous Provisions of Law, from time to time. The NTT besides the aforesaid statutes, will not only have to interpret the provisions of the three statutes, out of which appeals will be heard by it, but will also have to examine a challenge to the vires of statutory amendments made in the said provisions, from time to time. They will also have to determine in some cases, whether the provisions relied upon had a prospective or retrospective applicability. Keeping in mind the fact, that in terms of s. 15 of the NTT Act, the NTT would hear appeals from the Income Tax Appellate Tribunal and the CESTAT only on “substantial questions of law”, it is difficult for us to appreciate the propriety of representation, on behalf of a party to an appeal, through either Chartered Accountants or Company Secretaries, before the NTT. The determination at the hands of the NTT is shorn of factual disputes. It has to decide only “substantial questions of law”. In our understanding, Chartered Accountants and Company Secretaries would at best be specialists in understanding and explaining issues pertaining to accounts. These issues would, fall purely within the realm of facts. We find it difficult to accept the prayer made by the Company Secretaries to allow them, to represent a party to an appeal before the NTT. Even insofar as the Chartered Accountants are concerned, we are constrained to hold that allowing them to appear on behalf of a party before the NTT, would be unacceptable in law. We accordingly reject the claim of Company Secretaries, to represent a party before the NTT. We simultaneously hold s. 13(1), insofar as it allows Chartered Accountants to represent a party to an appeal before the NTT, as unconstitutional and unsustainable in law.


All Judgements, Supreme Court | 32 Comments »

CIT vs. Vatika Township (Supreme Court – Full Bench)


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DATE: September 16, 2014 (Date of publication)
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S. 113 Proviso inserted by FA 2002 w.e.f. 01.06.2002 to impose surcharge in search assessments is not clarificatory or retrospective. Suresh Gupta 297 ITR 322 (SC) overruled

There cannot be imposition of any tax without the authority of law. Such a law has to be unambiguous and should prescribe the liability to pay taxes in clear terms. If the concerned provision of the taxing statute is ambiguous and vague and is susceptible to two interpretations, the interpretation which favours the subjects, as against there the revenue, has to be preferred. This very principle is based on the “fairness” doctrine as it lays down that if it is not very clear from the provisions of the Act as to whether the particular tax is to be levied to a particular class of persons or not, the subject should not be fastened with any liability to pay tax


All Judgements, Supreme Court | 1 Comment »

CIT vs. Vector Shipping Services (P) Ltd (Supreme Court)


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DATE: July 6, 2014 (Date of publication)
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Dept’s SLP against High Court’s verdict that s. 40(a)(ia) disallowance applies only to amounts “payable” as of 31st March and not to amounts already “paid” during the year dismissed

In CIT vs. Vector Shipping Services (P) Ltd 357 ITR 642, the Allahabad High Court held that disallowance u/s 40(a)(ia) applies only to amounts “payable” as of 31st March and not to amounts already “paid” during the year. The majority judgement in Merilyn Shipping 136 ITD 23 (SB) was approved. The department filed a Special Leave Petition (SLP) in the Supreme Court. The said SLP has been dismissed by the Supreme Court in limine


All Judgements, Supreme Court | No Comments »

Sanjeev Lal vs. CIT (Supreme Court)


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DATE: July 6, 2014 (Date of publication)
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S. 2(47)/ 54: If an agreement to sell is entered into within the prescribed period, there is a transfer of some rights in favour of the vendee. Fact that sale deed could not be executed within the time limit owing to supervening problem is not a bar for s. 54 exemption

Consequences of execution of the agreement to sell are very clear and they are to the effect that the appellants could not have sold the property to someone else. In practical life, there are events when a person, even after executing an agreement to sell an immoveable property in favour of one person, tries to sell the property to another. In our opinion, such an act would not be in accordance with law because once an agreement to sell is executed in favour of one person, the said person gets a right to get the property transferred in his favour by filing a suit for specific performance and therefore, without hesitation we can say that some right, in respect of the said property, belonging to the appellants had been extinguished and some right had been created in favour of the vendee/transferee, when the agreement to sell had been executed. A right in respect of the capital asset, viz. the property in question had been transferred by the appellants in favour of the vendee/transferee on 27.12.2002. The sale deed could not be executed for the reason that the appellants had been prevented from dealing with the residential house by an order of a competent court, which they could not have violated. As held in Oxford University Press vs. CIT [(2001) 3 SCC 359] a purposive interpretation of the provisions of the Act should be given while considering a claim for exemption from tax and one can very well interpret the provisions of Section 54 read with Section 2(47) of the Act, i.e. definition of “transfer”, which would enable the appellants to get the benefit under Section 54 of the Act


All Judgements, Supreme Court | 3 Comments »

CWT vs. Estate of Late HMM Vikramsinghji of Gondal (Supreme Court)


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DATE: May 16, 2014 (Date of publication)
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Important principles of law on taxation of discretionary & specific trust explained

A discretionary trust is one which gives a beneficiary no right to any part of the income of the trust property, but vests in the trustees a discretionary power to pay him, or apply for his benefit, such part of the income as they think fit. The trustees must exercise their discretion as and when the income becomes available, but if they fail to distribute in due time, the power is not extinguished so that they can distribute later. They have no power to bind themselves for the future. The beneficiary thus has no more than a hope that the discretion will be exercised in his favour. Having regard to the above legal position about the discretionary trust which is also applied by by this Court in the earlier judgment and the fact that the income has been retained and not disbursed to the beneficiaries, the view taken by the High Court cannot be said to be legally flawed. Merely because the Settlor and after his death, his son did not exercise their power to appoint the discretion exercisers, the character of the subject trusts does not get altered. The two U.K. trusts continued to be ‘discretionary trust’ for the subject assessment years. The High Court has taken a correct view that the value of the assets cannot be assessed on the estate of the deceased Settlor (Snell’s Principles of Equity, 28th Edition, Page 138 followed)


All Judgements, Supreme Court | 2 Comments »

Kushalbhai Ratanbhai Rohit vs. State of Gujarat (Supreme Court)


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DATE: May 14, 2014 (Date of publication)
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Despite pronouncement of verdict in open court & signing of draft judgement, Judge entitled to alter verdict until judgement is signed & sealed

Up to the moment the judgment is delivered Judges have the right to change their mind. There is a sort of ‘locus paenitentiae’ and indeed last minute alterations often do occur. Therefore, however much a draft judgment may have been signed beforehand, it is nothing but a draft till formally delivered as the judgment of the Court. Only then does it crystallise into a full fledged judgment and become operative. It follows that the Judge who “delivers” the judgment, or causes it to be delivered by a brother Judge, must be in existence as a member of the Court at the moment of delivery so that he can, if necessary, stop delivery and say that he has changed his mind. There is no need for him to be physically present in court but he must be in existence as a member of the Court and be in a position to stop delivery and effect an alteration should there be any last minute change of mind on his part. If he hands in a draft and signs it and indicates that he intends that to be the final expository of his views it can be assumed that those are still his views at the moment of delivery if he is alive and in a position to change his mind but takes no steps to arrest delivery. But one cannot assume that he would not have changed his mind if he is no longer in a position to do so. A Judge’s responsibility is heavy and when a man’s life and liberty hang upon his decision nothing can be left to chance or doubt or conjecture; also, a question of public policy is involved. As we have indicated, it is frequently the practice to send a draft, sometimes a signed draft, to a brother Judge who also heard the case. This may be merely for his information, or for consideration and criticism. The mere signing of the draft does not necessarily indicate a closed mind. We feel it would be against public policy to leave the door open for an investigation whether a draft sent by a Judge was intended to embody his final and unalterable opinion or was only intended to be a tentative draft sent with an unwritten understanding that he is free to change his mind should fresh light drawn upon him before the delivery of judgment.


All Judgements, Supreme Court | 1 Comment »

Kone Elevator India Pvt. Ltd vs. State of T. N (Supreme Court – 5 Judge Bench)


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DATE: May 14, 2014 (Date of publication)
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Important principles on distinction between “contract for sale of goods” and “works contract” explained

(ii) Four concepts have clearly emerged from the numerous judgements of the Supreme Court on the point. They are (a) the works contract is an indivisible contract but, by legal fiction, is divided into two parts, one for sale of goods, and the other for supply of labour and services; (b) the concept of “dominant nature test” or, for that matter, the “degree of intention test” or “overwhelming component test” for treating a contract as a works contract is not applicable; (c) the term “works contract” as used in Clause (29A) of Article 366 of the Constitution takes in its sweep all genre of works contract and is not to be narrowly construed to cover one species of contract to provide for labour and service alone; and (d) once the characteristics of works contract are met with in a contract entered into between the parties, any additional obligation incorporated in the contract would not change the nature of the contract;


All Judgements, Supreme Court | 1 Comment »

CIT vs. Punjab Stainless Steel Industries (Supreme Court)


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DATE: May 10, 2014 (Date of publication)
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Meaning of the word “turnover” in s. 80HHC explained. Sale proceeds of scrap is not “turnover” for s. 80HHC. Revenue should encourage assessees to bring in foreign exchange

(i) The word “turnover” means only the amount of sale proceeds received in respect of the goods in which an assessee is dealing in. So far as the scrap is concerned, the sale proceeds from the scrap may either be shown separately in the Profit and Loss Account or may be deducted from the amount spent by the manufacturing unit on the raw material. When such scrap is sold the sale proceeds of the scrap cannot be included in the term ‘turnover’ for the reason that the unit is engaged primarily in the manufacturing and selling of steel utensils and not scrap of steel. Therefore, the proceeds of such scrap would not be included in ‘sales’ in the Profit and Loss Account of the assessee (The situation would be different in the case of a person who is primarily dealing in scrap)


All Judgements, Supreme Court | 2 Comments »


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