Legal News & Views

The popular press and TV are blazing with the "Saradha Story' and everyone is looking for someone to blame ignoring a one of the or perhaps the most important culprit and also the victim - Us - The people of Bengal. This can be easily seen from the ill informed and sarcastic attitude - like calling this company a 'Chit Fund'. There has always been a tendency among those in the populace not interested in financial companies to refer to them sarcastically as "Chit Fund"-  not because that's what they may be but because of phonetic association of the word with "Cheat", not knowing or caring to know that 'Chit Funds' are companies governed by the Chit Fund Act and are among still respectable organisations in Andhra, Tamil Nadu etc. These funds have been fulfilling a very specific need among the investors there for many decades while those in West Bengal seem to  be hot air balloons. This is because and here I am speaking from personal ex...

Refusing to grant relief to, the Maharashtra State Consumer Disputes Redressal Commission rapped three “ignorant” flat purchasers for not getting the necessary information before making the payment. The three paid a total of Rs. 53 lakh to a developer, Terrain Infrastructure Private Limited, for booking three flats at Vakola in Santacruz (East). They moved the consumer commission after the builder failed to give them possession.  “These complainants are well-educated and not illiterate persons and certainly they are well aware about provisions of law,” the bench of presiding member Dhanraj Khamatkar and member Narendra Kawde said.  “None of these complainants have produced the receipts issued to them by the opponents [developer] against the payments made,” the bench said. “Before parting with such huge amounts, the complainants should have insisted on receipts.” Two of the complaints, Ghatkopar resident Karishma Lalwani and Byculla resident Dr Bhawarlal Jain had paid ...

The Maharashtra State Consumer Disputes Redressal Commission on Wednesday dismissed a complaint filed by a man who alleged that his credit card had been fraudulently used to book air tickets worth Rs 32,000. "Since the transaction is effected by using the credit card and a secret password of the complainant, we do not find any deficiency in service on the part of the opponent (bank). In such cases, the complainant should have approached the cyber crime branch," the panel said. On October 14, 2009, an amount of Rs 34,529 was debited from Balkatta Hegade's account. On inquiring with ICICI Bank Ltd, he was told his card was used to purchase air tickets from a travel and tour company. He contended he had not purchased the tickets and that his password was used. He stated that during the transaction, his signature was not taken on the voucher. Hegade said the name, number and address on which the tickets were drawn were fraudulent. He issued a notice in April 2010 to the ...

CIT vs. Somany Evergreen Knits Ltd (Bombay High Court) The assessee filed a return of income in which it committed two mistakes (i) Depreciation was claimed at Rs.1.70 crores instead of at Rs. 1.05 crores due to a mistake in calculation, (ii) the assessee sold its garment manufacturing machine and suffered a loss of Rs.21.68 lakhs thereon. Though the loss was on capital account, it was claimed as a revenue deduction. In the course of the assessment proceedings, the assessee realised its mistake and withdrew the claim for excess depreciation and the claim for the loss. The AO levied penalty u/s 271(1)(c) on both issues which was confirmed by the CIT(A). However, the Tribunal held that both mistakes had occurred due to a mistake/ wrong advice given by the Chartered Accountant and that there was a “ bona fide mistake ”. It was also held that “ the bonafide of the assessee is established from the fact that the assessee accepted the mistake and did not prefer any appeal against the o...

DCIT vs. Vikas Oberoi (ITAT Mumbai) The assessee was a beneficial shareholder of two companies named Kingston Properties P Ltd. (KPPL), New Dimensions Consultants P Ltd (NDCPL) & R. S. Estate Developers P Ltd (RSEDPL). NDCPL & RESEDPL advanced various sums of money to KPPL towards “share application money”. However, some of the advances were returned by KPPL while some were adjusted towards allotment of shares. The AO held that the transaction was a “ colourable device ” and a “ loan and advance ” which fell within the ambit of s. 2(22)(e). The said “ loan and advance ” was assessed as “ deemed dividend ” in the hands of the assessee – beneficial shareholder – following  Universal Medicare  324 ITR 264 (Bom). The CIT(A) reversed the AO. On appeal by the department to the Tribunal HELD dismissing the appeal: Share application money or share application advance is distinct from ‘loan or advance’. Although share application money is one kind of advance given wit...

Joginder Pal Gulati vs. OSD – CPIO (Delhi High Court) The Petitioner, an advocate, filed an application with the CBDT under s. 6 of the Right to Information Act, 2005 seeking information pertaining to cases excluded from scrutiny, where the disclosure was made during survey. He also sought information qua the scrutiny guidelines for the financial year 2009-10. The Department opposed the disclosure of the scrutiny guidelines on the ground that it would prejudice the “ economic interest ” of the Country and enable assessees to “ configure ” their return to avoid scrutiny. The refusal to supply the information was upheld by the CIC. The Petitioner filed a Writ Petition to challenge the order of the CIC. HELD by the High Court reversing the CIC: The Income-tax department has issued instructions with regard to procedure for selection of cases for scrutiny from time to time both qua corporate assessees as well as non-corporate assessees. These instructions give detailed procedure o...

MUMBAI: The State Bank of India has been ordered to pay an Andheri-based doctor couple Rs 7 lakh in compensation after the couple lost out on acquiring some blue-chip shares because the bank failed to inform them that their cheque for about half that amount had been dishonoured due to mismatched signatures. The couple also proved to the Maharashtra State Consumer Disputes Redressal Commission, which delivered the order on Saturday, that the signatures, in fact, were not mismatched. "Because of the deficiency in service or negligence by the bank, the appellants could not get shares and thereby legal injury is caused to the complainants and they need to be compensated," the commission said. Dr Pushpakala Jimulia and Dr Ramjibhai Jimulia had an account with the bank since 2005. They contended that they had been allotted 1,180 blue-chip shares in a company and accordingly issued a cheque of Rs 3.54 lakh towards them on December 17, 2007. The last date for payment toward...

Mumbai: In a significant order, a consumer forum has ruled that a parking space that comes with a flat cannot be sold by the builder to a party that has not purchased the flat. The forum on Monday, directed Royal Palms (India) Pvt Ltd to pay a Juhu-based couple Rs 5 lakh as compensation for not handing over a parking space along with the flat the couple had purchased in a Goregaon complex in 2006. "Handing over possession of the parking space along with the flat is binding on the developer," said the Mumbai Suburban District Consumer Disputes Redressal Forum. In the judgment, the forum pointed out to Section 36 of the Development Control Regulations, which states that for a four-wheeler the minimum size of a parking space should be 2.5m-by-5.5m. The regulations also have a chart that specifies the parking spaces to be allotted to flats according to their size and number. "This proves that a parking space was a part of the flat and not a separate subject from the fl...

The Ministry of Corporate Affairs vide its General Circular No. 06/2013 dated 14.03.2013, has issued a clarification with respect to Section 372A (3) of the Companies Act, 1956 that prohibits lending of money to Bodies Corporate at a rate lower than the prevailing bank rate.  The Union Budget 2013-14 allows the Central Government to raise Rs. 50,000 Crores in the form of Tax Free Bonds which carry a lower rate of interest (presently 6.75% to 7.5%) which is tax free under Sections 10(15) (iv)(h) of the Income Tax, 1961. Such a provision was also made in Budget 2012-13 but it received poor acceptance owing to restrictions posed by Section 372A (3) of the Companies Act, 1956. The Ministry of Finance therefore drew the attention of MCA to the said section in order to remove bottlenecks in effective implementation of this provision.  Keeping the current scenario in mind, MCA has clarified that the said Section will not be considered contravened if the effecti...

The Delhi High Court today restrained unaided private schools from charging fees on quarterly basis, saying the city government's guidelines does not authorise them to do so. The court also said parents are entitled to deposit the fees by 10th of the month in which they are due. Allowing the plea of a group of parents against a school here, Justice Valmiki Mehta said, "Respondent 1 (school) is directed only to collect monthly fees from the wards of the petitioners and the respondent school will accordingly comply with the provisions of Rules 165 and 166 of Delhi School Education Rules." Referring to a circular issued by the Directorate of Education of Delhi government, the judge said, "In my opinion, though the circular on the first blush seems to refer to collection of fees on quarterly basis, however, a reading of the entire circular shows that the portion relied upon is only indication of the fact that there possibly is a practice or may be an earlier circu...

The state consumer commission has directed LIC to pay around Rs 44,000 in compensation plus the insured amount to a widow whose claim it rejected on the grounds that her husband had suppressed the fact that he was suffering from HIV while applying for the insurance. The commission said the medical check-up done when the man applied for insurance should have detected he had HIV as well as tuberculosis. LIC has to pay the woman a total of Rs 1.34 lakh. Reprimanding the insurance company, the Maharashtra State Consumer Disputes Redressal Commission said that it was extremely difficult to believe that the mandatory medical examination and the doctor's examination of the insured person failed to assess and detect a prolonged ailment and symptoms of tuberculosis and HIV. The commission said that the insured person also may not have been aware of the infections and changes taking place in his body. "He, therefore, cannot be attributed to have suppressed material ...

In a crucial decision that will go a long way in determining the taxability of online advertisements, a Calcutta Income-Tax Appellate Tribunal (ITAT) held that the payment to websites such as Google, Yahoo etc for online advertisement are not liable to tax in India. The websites' presence in a location cannot be construed as fixed place constituting a Permanent Establishment (PE), the ITAT order held. Under the rules governing cross-border taxation, having the presence of a PE in a location is an ideal condition for any tax regime to claim tax. The ITAT, in its order on Friday morning, observed that the web server located in the tax jurisdiction can be construed as PE but in this case the servers are outside India and therefore the tax claim based on having a PE in India could not be made. The ITAT order authored by George Mathan and Pramod Kumar was on an appeal filed by Right Florist who had paid about Rs 35 lakh for its advertisements on Yahoo and Google websites during 2...