Legal News & Views

The Delhi High Court has said that banks can’t evict a tenant using the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), a law that allows lending firms to auction properties when borrowers fail to repay loans. The ruling is crucial at a time when cases are piling up in courts in Delhi where tenants allege that house owners are misusing the 2002 Act to circumvent the Delhi Rent Control Act, 1958 to evict old tenants who are occupying prime properties but pay paltry rent in areas such as Connaught Place, Gol Market, Daryaganj and Chandni Chowk. The Rent Control Act provides protection to tenants who are paying less than R3,500 from eviction. “Right of a tenant protected by the Rent Act cannot be defeated and SARFAESI Act cannot be used for eviction,” a bench of justices Sanjay Kishan Kaul and Sanjeev Sachdeva said, giving relief to one Pradeep Chugh, a tenant evicted by State Bank of India. Chugh was paying R900 as rent for ...

ADIT vs. M/s Clifford Chance (ITAT Mumbai Special Bench) Taxation of foreign professional firms & concept of “force of attraction” under India-UK DTAA explained. Linklaters LLP 40 SOT 51 (Mum) held to be not good law The assessee, a U.K. partnership firm of Solicitors, provided legal consultancy services in connection with different projects in India and claimed that the taxability of the income arising there from had to be processed under Article 15 (“independent professional services“) of the India-UK DTAA. The AO rejected the claim regarding applicability of Article 15 and held that as the assessee had a PE in India as per Article 5 and as the services had been rendered in India, the entire income was chargeable to tax in India under Article 7. In AY 1996-97, the Tribunal (82 ITD 106 (Mum)) accepted the claim of the assessee that if the aggregate period of stay of the employees/ partners did not exceed 90 days, the income was not taxable under Article 15 of the DTAA and if i...

The assessee exported tea to Iraq under the ‘Oil for Food Program’, as sanctioned by the United Nations. It paid commission of Rs 1.28 crores to one Alia Transportation, a Jordanian company. The Volcker Committee, which was set up to expose the ‘Oil for Food scam’ found that this company was a front company for the Iraqi regime, meant to receive illegal kickbacks, and did not render any services. The AO, acting on the report, held that the commission paid by the assessee was “illegal” and not allowable under the Explanation to s. 37(1). This was reversed by the CIT (A). On appeal by the department, the Tribunal (72 DTR 425) upheld the stand of the assessee on the ground that even if the amounts paid to Alia were actually kickbacks to Iraqi regime, that fact per se would not attract Explanation to s. 37(1). It was pointed out that while the transactions between Alia and the Iraqi regime may be contrary to the UN sanctions, the transactions between the assessee and Alia were not hit by t...

CIT vs. Madan Theatres (Calcutta High Court) The assessee sold property for a consideration of Rs. 2.50 crore. However, for the purpose of stamp duty, the property was valued at Rs. 5.19 crore and stamp duty was paid on that value. The assessee offered capital gains on the basis that the sale consideration was Rs. 2.50 crore. The AO invoked s. 50C and held that the sale consideration had to be taken at Rs. 5.19 crore and capital gains computed on that basis. The AO imposed penalty u/s 271(1)(c) which was deleted by the CIT(A) and the Tribunal by relying on Renu Hingorani. On appeal by the department to the High Court, HELD dismissing the appeal: Though the assessee could have disputed the valuation on the basis of the deemed value and chose not to do so, the fact remains that the actual amount received was offered for taxation. It is only on the basis of the deemed consideration that the proceedings u/s 271(1)(c) started. The revenue has failed to produce any iota of evidence ...

Holding a construction firm guilty of "deficiency in service", Maharashtra Consumer Disputes Redressal Forum has asked it to hand over possession of two flats to a purchaser or refund the money already paid with interest.  The forum, comprising presiding member S R Khanzode and member S B Sawarkar, passed the order on an appeal filed by Mathew Varghese against S S Construction last week.  It also asked the firm to pay Varghese Rs 50,000 as cost incurred for legal proceedings.  Varghese had agreed to buy two flats in the firm's project in Nashik. Of the total Rs 9.69 lakh, he paid Rs 9.43 lakh, and the balance was to be paid while taking the possession.  But the company did not execute the written agreement and failed to deliver possession, his complaint said.  The company argued that it had demanded Rs 2 lakh as a part-payment in 2002, and since it was not paid by due date, it terminated the agreement by a letter dated February 10, 2004, asking Varghese to t...

While determining road accident claims, the amount to be deducted on account of personal and living expenses of the victim may vary as per the number of the dependents, the Supreme Court has held.  The apex court also held that in such accident cases where deceased is aged below 40 and had a permanent job, an addition of 50 per cent of the actual salary should be made towards future prospects to the current income.  A three-judge bench headed by Justice R M Lodha observed that a proportion of a man's earning, which he saves or spends exclusively for maintenance of others, does not form a part of his "living expenses".  "One must bear in mind that the proportion of a man's net earnings that he saves or spends exclusively for maintenance of others does not form part of his living expenses but what he spends exclusively on himself does. "The percentage of deduction on account of personal and living expenses may vary with reference to the number of dependant...

A builder cannot seek additional money from a house allottee who has paid all dues and taken possession on the ground that the cost calculated at the time of handing over the property was tentative, the top consumer court has ruled. National Consumer Disputes Redressal Commission Presiding Member V.B. Gupta and Member K.S. Chaudhari said if the builder failed to justify the need for demanding extra money, a house owner could not be forced to shell out the additional amount even if he had given an affidavit to the builder agreeing to accept a cost escalation in the future. The commission gave the consumer-friendly interpretation of the law while dismissing the Ghaziabad Development Authority's (GDA's) appeal in a case related to Satya Narayan, a house owner in Indirapuram. "The price could have been escalated only on the ground of increase of payment of compensation for the land acquired but learned counsel for the GDA admitted that compensation has not b...

The other factor which governs the happening of transfer is the handing over of possession. This section says “and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession continues in possession in part performance of the contract and has done some act in furtherance of the contract”. Retention of possession is open of the facet of part performance of contract. The agreement in question can be said to be a distinct transaction that has given rise to the event of allowing the contractor to enter into the property. What is contemplated by s. 2(47)(v) is a transaction which has direct and immediate bearing on allowing the possession to be taken in part performance. It is at that point of time that the deemed transfer takes place. According to us the possession as contemplated in cl. (v) need not necessarily be sole and exclusive possession, so long as the transferee is enabled to exercis...

The petitioners allegations that their group has been converted from a majority to a minority in shareholding and respondents representation in management has substantially been increased are found to be correct. In view of the continuous effects of such oppressive acts, to undo the effects and to regulate the affairs of the R-1-company in future, the present petition deserves to be allowed. A clear case of oppression has been made out, the conduct of the respondents have been harsh, burdensome, against probity and good conduct) Once conduct is found to be oppressive under sections 397 and 398, the discretionary power given to the CLB under section 402 to set right, remedy or put an end to such oppression is very wide. The respondents have been involved in continuous acts of oppression against the petitioners and the present petition deserved to be allowed in favour of the petitioners. COMPANY LAW BOARD, principal bench, NEW DELHI          Rajendra Pras...