Legal Reference Library

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.

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.

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...

Citations 1)    Khatri Hotels Private Limited & Anr. v. Union of India & Anr., (2011) 9 SCC 126 2)    Bolo v. Koklan [(1929-30) 57 IA 325 : AIR 1930 PC 270] and it was held: (IA p. 331) 3)    Annamalai Chettiar v.Muthukaruppan Chettiar [ILR (1930) 8 Rang 645] 4)    Gobinda Narayan Singh v. Sham Lal Singh [(1930-31) 58 IA 125] 5)    Rukhmabai v. Lala Laxminarayan [AIR 1960 SC 335 : (1960) 2 SCR 253] 6)    Kisandas Rupchand v. Rachappa Vithoba, ILR 33 Bom 644 (1900) 7)    Pirgonda Hongonda Patil v. Kalgonda Shidgonda Patil, 1957 SCR 595, at pages 603 to 604 8)    Charan Das v. Amir Khan, 47 IA 255 (1920) 9)    L.J. Leach & Co. Ltd. v. Jardine Skinner & Co., 1957 SCR 438, at pages 450 to 451 10)  Pirgonda Hongonda Patil, reported in 1957 SCR 595 11)  K. Raheja Constructions Ltd. & Anr. v. Alliance Ministries & Ors., 1995 Supp. (3) SCC 17 12)  Vishwam...