Legal News & Views

Hasmukh N. Gala vs. ITO (ITAT Mumbai) S. 54: Giving advance to builder constitutes "purchase" of new house even if construction is not completed and title to the property has not passed to the assessee within the prescribed period The assessee declared sale of a residential property vide sale agreement dated 8/12/2009 for a total consideration of Rs.1,02,55,000/-. After considering the indexed cost of acquisition of Rs.14,17,904/-, the long term capital gain was computed at Rs.88,37,096/-. The relevant capital gain was claimed as exempt under section 54 of the Act on the strength of having acquired a new residential house. The investment in acquisition of the new residential house was claimed by the assessee based on an advance of Rs.1.00 crore given to the builder as booking advance through a cheque dated 6/2/2010. The AO denied the claim for exemption on the ground that the provisions of section 54 of the Act require the assessee to purchase a new residential house eit...

If two companies have to be declared 'related persons' for excise purposes, there should be mutuality of interest in the business of each other. If there is only 'one-way traffic', the two companies are not related. The revenue authorities must prove mutuality of interest or "two-way traffic", Supreme Court stated while dismissing the appeal of the commissioner of central excise against the order of the appellate tribunal in a case involving Goodyear South Asia Tyres Ltd. The company in this case was a joint venture of RPG SATL and Goodyear. It manufactured and supplied tyres exclusively to Ceat and Goodyear sold in their brand names. Goodyear and RPG Ceat had 50:50 shares in the assessee company. The excise authorities issued demand notice to the company on the basis of related persons under section 4 of the Excise Act. The company contended that its sale of tyres to the two companies was on principal to principal basis and at arm's length. The commission...

The debt recovery appellate tribunal under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act has the power to condone delay in filing petitions, the Supreme Court ruled last week in the judgment, Baleshwar Dayal vs Bank of India. The debt recovery law provided for 45 days as limitation, while SARFAESI provided for only 30 days. But the laws are complementary and the debt recovery mechanism is part of the SARFAES scheme, the judgment said. The contrary view held by the Madhya Pradesh High Court was incorrect and that court was directed to reconsider its judgment. Several other appeals involving the same question were also remanded to respective courts and tribunals for reconsideration. Article referred: http://www.business-standard.com/article/opinion/sc-explains-related-companies-in-taxation-115080900763_1.html

A contractual dispute should not be decided by a high court by appointing a commission and going into facts, the Supreme Court stated while setting aside the order of the high court in the judgment, State of Kerala vs M K Jose. In this case, a contract for building a road was not completed on time despite extensions. The contract was terminated and the earnest money was forfeited, leading to the writ petition in the high court. It appointed a commission to go into the disputed facts and allowed the petition of the contractor. The government appealed to the Supreme Court. Allowing the appeal, the Supreme Court observed that "this kind of orders in a contractual matter is ill-conceived. They not only convert the controversy to a disturbing labyrinth, but encourage frivolous litigation." The high court was criticised for allowing a roving enquiry while the contractor was abusing the process of law. Article referred:http://www.business-standard.com/article/opinion/higher-price-...

The Supreme Court has dismissed the appeal of Indian Rare Earths Ltd challenging the arbitration award in its dispute with Unique Builders. It stated that the award was given without providing reasons. Therefore "it is not permissible for the court to probe into the mental process of the learned arbitrator." The arbitrator is not bound to give reasons unless it is specified in the contract or there is a statute binding on him or the court orders so. In this case, the dispute over the tax content in payment was decided by arbitration and the builder's demand was drastically reduced by the arbitrator. Therefore, the government company could not challenge the award, the Supreme Court said while upholding the Orissa High Court view. Article referred: http://www.business-standard.com/article/opinion/higher-price-in-re-auction-not-legal-115082300797_1.html

After accepting the highest offer in an auction by an official liquidator, the company court cannot refuse to confirm the sale because subsequently another person offered a higher amount. The price of the property might have risen in the meantime, but that is no reason to accept a higher bid, the Supreme Court stated in its judgment, Vedica Procon Ltd vs Balleshwar Greens Ltd. The company judge of the Gujarat High Court ordered winding up of Omex Investors Ltd in 1990 and appointed the liquidator. The land was auctioned in open court in which 11 persons participated in the 12 rounds. Vedica offered the highest at Rs 148 crore. It deposited the earnest money and later sought extension of time to deposit the rest. The time was allowed. Meanwhile Balleshwar Greens, the second highest bidder moved the high court offering Rs 160 crore and seeking the recall of the earlier decision. The high court allowed it, leading to the appeal of Vedica in the Supreme Court. Allowing the appeal, the judg...

In a recent judgement L.C. Hanumanthappa vs H.B.Shivakumar decided on 26 August, 2015. Suit for declaration or amendment of pleadings to incorporate relief of declaration: While enacting Art. 58 of the 1963 Act, the legislature has designedly made a departure from the language of Art. 120 of the Limitation Act, 1908. The word “first” has been used between the words “sue” and “accrued”. This would mean that if a suit is based on multiple causes of action, the period of limitation will begin to run from the date when the right to sue first accrues. To put it differently, successive violation of the right will not give rise to fresh cause and the suit will be liable to be dismissed if it is beyond the period of limitation counted from the day when the right to sue first accrued. the issue before the Hon'ble Supreme Court is  When did the right to sue arose under Article 58 of the Limitation Act (b) Under what circumstances can such a time barred application be allowed. The Hon...

Calcutta high court ruled on 21/8/15 if a marriage consent is obtained by fraud it can lead to the annulment of the marriage. "In our view, fraud denotes that if the consent to the marriage contract was obtained by fraud, then there is ground for an annulment of marriage and that fraud would be construed simply for not telling the truth in order to induce the other party to enter into the marriage contract," a bench of Justice Rajiv Sharma and Justice Shivakant Prasad observed. The high court upheld the trial court judgment, which had earlier declared the marriage as null and void.

1)CIVIL APPEAL NOS.10643-10644 OF 2010, Indian Performing Rights Society Ltd. Vs. Sanjay Dalia & Anr. 2)Just Lifestyle Pvt. Ltd. vs Advance Magazine Publishers Inc (CA Nos 10643-10644/2010 with CA No 4912/2015 @ SLP (C) No 8253/2013) The Supreme Court, on 1 July 2015 has dismissed the appeals filed by the Indian Performing Rights Society Limited (IPRS) and Advance Magazine Publishers Inc (Advance Magazine) against orders of the High Court of Delhi, and held that if a plaintiff is residing or carrying on business at a place where the cause of action has also arisen, either wholly or in part, it has to file suit at that place. Both cases concerned the place of institution of the suit - the IPRS case is related to Section 62 of the Copyright Act 1957 (Copyright Act), while the Advance Magazine case is related to Section 134 of the Trade Marks Act 1999 (TM Act),

Though a woman may be unwilling to live with her husband and desert him, that does not disqualify her from getting maintenance from her husband, Madras High Court ruled today. "If the wife does not remarry and the person has obtained divorce on the ground of desertion and unwillingness to live with him, then the wife is entitled to alimony," Justice S Nagamuthu said.     The court stated this on an appeal by an astrologer who challenged a lower court order directing him to pay Rs. 2,000 per month as alimony to his divorced wife, though he did so on the ground of desertion.     The judge said that as per CrPc, the wife would not be entitled to receive allowance from her husband if she was living in adultery or without any sufficient reason she refused to live with her husband or if they were living seperately by mutual consent.     Besides, a divorcee and one who had obtained divorce from her husband but had not remarried any other person was a "wife...

There is no legal provision that allows an accused who has obtained anticipatory bail to surrender and thereby avoid arrest, the Kerala high court said. The accused should be arrested even if anticipatory bail is obtained and needs to be let out on bail only following the arrest, the court clarified. The high court was considering an order issued by Kalpetta additional sessions court-II on anticipatory bail petitions filed by Anthru Ibrayi Haji and Kamarunneesa Salim of Wayanad. They were asked to surrender within 10 days. "I do not find any provision in the Code (CrPC) empowering the court to direct the petitioner in an application under Section 438 (anticipatory bail) of the Code to surrender before the investigating officer. The object of the section is not to help the accused avoid arrest. The direction to surrender militates against the concept of 'anticipatory bail'," Justice K Abraham Mathew said in the judgment. Article referred: http://timesofindia....

The Madras High Court has directed the Tamil Nadu Electricity Board (TNEB) to ensure that electricity bill dues of premises were reflected in encumbrance certificate issued by the Registration Department as and when a purchaser approached the property. Wherever an electricity bill was due for a premises in question, TNEB should immeidately communicate the same to the Inspector General of Registration who, in turn, shall communicate the encumrance of the property in question to the Sub-Registrar concerned without delay and ensure it was reflected in the encumbrance certificate, Justice R Mahadevan said. He gave the direction while allowing petitions filed by a school and two dargahs seeking to direct to give fresh electricity connection to their property in the city, which was disconnected for non-payment of dues accumulated over a period of 11 years. Assistant Engineer of TNEB had rejected the plea for fresh connection saying that unless the dues of Rs. 3,12,656, which their erst...

Recently a very interesting matter M/s.Addhar Mercantile Private Limited Vs Shree Jagdamba Agrico Exports Pvt.Ltd came up before the Hon'ble Bombay High Court where it was asked of the court whether in a situation where both parties are from India but had mutually decided to have the seat of arbitration in Singapore or India under English Law, can an Indian court adjudicate on the dispute ? After hearing both parties, the Hon'ble Judge opined that as both parties are Indian having been registered in India, the said arbitration cannot be treated as an International Commercial Arbitration as per Section 28(1) of the Arbitration act and therefore Indian law has to be applied.