State of Kerala Vs. Raneef (Decided on 03.01.2011)

Grant of bail- Respondent framed for treating medically one of the accused

Held, The case against the Respondent is very different from that against the alleged assailants. There is no allegation that the Respondent was one of the assailants. There is no prima facie proof that the Respondent was involved in the crime. In deciding bail applications an important factor, which should certainly be taken into consideration by the Court, is the delay in concluding the trial. Article 21 of the Constitution, which is the most basic of all the fundamental rights in our Constitution, is violated in such a case.

Daya Nand vs. State of Haryana (Decided on 07.01.2011) MANU/SC/0021/2011

Determination of juvenility- whether a juvenile who had not completed eighteen years on the date of commission of the offence was also entitled to the benefits of the Juvenile Justice Act, 2000

Held, The law as now crystallised on a conjoint reading of Sections 2(k), 2(1), 7A, 20 and 49 8, places beyond all doubt that all persons who were below the age of 18 years on the date of commission of the offence even prior to 1-4-2001, would be treated as juveniles, even if the claim of juvenility was raised after they had attained the age of 18 years on or before the date of commencement of the Act and were undergoing sentence upon being convicted. A juvenile who had not completed eighteen years on the date of commission of the offence was also entitled to the benefits of the Juvenile Justice Act, 2000, as if the provisions of Section 2(k) had always been in existence even during the operation of the 1986 Act. The said position was re-emphasised by virtue of the amendments introduced in Section 20 of the 2000 Act, whereby the Proviso and Explanation were added to Section 20, which made it even more explicit that in all pending cases, including trial, revision, appeal and any other criminal proceedings in respect of a juvenile in conflict with law, the determination of juvenility of such a juvenile would be in terms of Clause (l) of Section 2 of the 2000 Act, and the provisions of the Act would apply as if the said provisions had been in force when the alleged offence was committed. In the instant case, there is no controversy that the Appellant was about sixteen years of age on the date of commission of the alleged offence and had not completed eighteen years of age. In view of Sections 2(k), 2(l) and 7A read with Section 20 of the said Act, the provisions thereof would apply to the Appellant's case and on the date of the alleged incident it has to be held that he was a juvenile.

Raju @ Sheikha Mohamed Sharif vs. State of Maharashtra and Anr., (Decided on 05.01.2011) MANU/SC/0015/2011

Question of Sentence - Appellant sentenced Section 138 of the Negotiable Instruments Act for imprisonment for six months and payment of compensation of Rs. 4,00,000/- with the direction that in default of payment he would undergo imprisonment for a further period of one month

Held, before the Complainant gave the loan to the Appellant (for the repayment of which the dishonoured cheque was issued by the Appellant) there were business transactions between the Appellant and the Complainant's sister that had gone sour. As a matter of fact it was the defence of the Appellant that having regard to the past events there was no question that the Complainant would give him any loan and the whole case that the cheque was given in repayment of the loan was completely false. We are referring to the circumstance not to reconsider the Appellant's conviction, which we confirm, but for the limited purpose of the due sentence. The Appellant has faced the rigours of a criminal prosecution for the past six years and is said to have served out the substantive sentence of imprisonment for 39 days. In the overall facts and circumstances of the case, we are satisfied that the ends of justice would be satisfied by reducing the substantive sentence of the Appellant to the period already undergone by him. This would, however, be subject to the condition of payment of Rs. 1,00,000/- as additional amount of compensation to the Complainant, failing which, he would be taken in custody to serve out the remaining period of sentence given to him by the High Court.


State of U.P. and Ors Vs. Combined Chemicals Company Private Limited (Decided on 04.01.2011) MANU/SC/0010/2011

Whether the Respondent could invoke the arbitration clause contained in the tender document when no contract had been executed between the parties and whether the Arbitrator appointed by Civil Judge acted in violation of the rules of natural justice by declining the Appellants' prayer for adjournment.

Held, reading of letter dated 16.11.1985 shows that the same was issued for and on behalf of the Governor of Uttar Pradesh. In the opening paragraph of the letter, Appellant No. 2 indicated that the bid given by the Respondent was being accepted on behalf of the Governor of Uttar Pradesh. At the end of that letter, it was clearly mentioned that the contract was being made for and on behalf of the Governor of Uttar Pradesh. The Appellant Nos. 1 and 2 had awarded a contract to the Respondent for supply of 200 metric tones Zinc Sulphate of Agriculture Grade for a total price of Rs. 10,95,200/- and the terms and conditions mentioned in the acceptance letter, tender form and the agreement forms were treated as part of the contract. The schedule of supply was also indicated in the acceptance letter. Clause 10 of the terms and conditions embodied in the acceptance letter did speak of formal agreement, but the same was to be executed only if required. Undisputedly, the Respondent completed all the formalities inasmuch as it deposited the security money and dispatched a duly signed agreement to the Directorate of Agriculture, which was to take the supply of Zinc Sulphate, and also sent letters for placing the supply order. Thus, a contract had come into existence between the parties and the fact that the Director of Agriculture did not sign the formal agreement sent by the Respondent cannot lead to an inference that the contract had not been executed. This view is consistent with the plain language of Section 5 of the Sale of Goods Act, 1930, Sub-section (1) whereof lays down that a contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such offer. That Sub-section further lays down that the contract may provide for the immediate delivery of the goods or immediate payment of the price or both, or for the delivery or payment by installments, or that the delivery or payment or both shall be postponed. The bid given by the Respondent, was unequivocally accepted by the competent authority and the letter of acceptance was issued for and on behalf of the Governor by treating it to be a contract. The execution of formal agreement was optional and was not sine qua non for supply of the goods by the Respondent. In our view, if the acceptance letter is read along with other documents in the light of the conduct of the parties, it becomes clear that an agreement was executed between the competent authority and the Respondent.

Tender of the Respondent was accepted by the competent authority , subject to the terms and conditions specified in the tender notice and the acceptance letter. In the schedule appended to the acceptance letter, it was clearly mentioned that the price shall remain firm till the completion of supply and the contract will be exclusively governed by the terms and conditions mentioned in the acceptance letter, tender form and the agreement forms. This shows that the terms and conditions mentioned in the tender form were treated as part of the contract Clause 16 of the tender form provided for reference of any dispute arising out of or concerning the agreement to the arbitration of an Arbitrator nominated by Appellant No. 2 and an Arbitrator nominated by the Respondent. Therefore, the Respondent was entitled to invoke the arbitration clause, we are of the view that the arbitration agreement did exist and therefore the matter should be referred to an arbitrator for decision.

It is borne out from the record that at one stage, the Arbitrator accepted the request made by the representative of Appellant No. 3 and adjourned the proceedings on the premise that the appeal filed against order was pending before the High Court. However, as the Appellants could not persuade the High Court to stay the operation of order, the Arbitrator had every reason to proceed with the matter and pass the award. Since the Appellants did not bother to participate in the arbitration proceedings despite the fact that the High Court did not grant stay, they are to blame themselves for the ex parte award. In any case, the Appellants cannot complain that they were denied reasonable opportunity of hearing However, A reading of the award shows that after adverting to the claim made by the Respondent and the proceedings held by him on various dates, the Arbitrator passed the award without assigning any reason whatsoever and without even recording a finding that the Respondent had suffered loss/damages on account of the failure of Appellant No. 3 to place supply order in furtherance of the acceptance letter ,the Arbitrator was duty bound to examine the tenability of the claim made by the Respondent under different heads and decide the same by assigning some reasons, howsoever briefly. His failure to do so constituted a valid ground for setting aside the award and the trial Court committed a serious error by making the award rule of the Court. The award is liable to be set aside because when it is a non-speaking one.


Secretary/General Manager Chennai Central Cooperative Bank Ltd. and Anr. Vs. S. Kamalaveni Sundaram (Decided on 04.01.2011) MANU/SC/0005/2011

Rate of Interest- whether the High Court was justified in granting interest for the period, when the plaint had been returned for removal of certain defects.

Held, the plaint was returned by the City Civil Court, Chennai to the landlady on January 20, 2000 for re-presenting the same after rectification of the defects. However, for the reasons best known to the landlady, the plaint was not re-presented immediately nor within reasonable time. As a matter of fact, the matter remained dormant in the hands of the landlady and the plaint was re-presented after five years and six months on July 20, 2005.Obviously, the landlady cannot derive advantage of her inaction or lack of diligence in re-presenting the plaint. Had the landlady re-presented the plaint within reasonable time, the matter would have been decided long back. The plaint was re-presented on July 20, 2005 and the suit was decreed by the trial court on March 24, 2008. In the circumstances, therefore, the award of interest for the period January 20, 2000 to July 20, 2005 does not seem to be justified. We are not persuaded by the submission that by not filing the plaint immediately after it was returned or for delay in re-presenting the plaint, the landlady did not gain anything and although she was entitled to interest @ 18% per annum on the arrears of rent, the High Court only awarded interest @ 12% and thereby struck a balance on equity. Whether the landlady gained anything or not by delay in re-presenting the plaint is not material but what is material is that interest is awardable pendente lite taking into consideration the facts and circumstances of the case and not as a matter of course. Section 34 of the Code of Civil Procedure, 1908 empowers the court to award interest for the period from the date of the suit to the date of the decree and from the date of the decree to the date of payment where the decree is for payment of money. It does not empower the court to award pre-suit interest. The pre-suit interest would ordinarily depend on the contract (express or implied) between the parties or some statutory provisions or the mercantile usage.




Calcutta High Court

State of West Bengal Vs. Afcon Infrastructure Ltd., decided on 06.11.2011

Application under Section 34 of the Arbitration and Conciliation Act, 1996 for setting aside of Award - Scope of interference -

Held, the scope for interference in an application filed under Section 34 of the 1996 Act is limited and restricted to the grounds namely (a) fundamental policy of Indian Law; or (b) the interest of India; or (c) justice or morality; or (d) in addition, if it is patently illegal. The Arbitrators being skilled persons with experience were appointed by the parties and therefore, the Arbitrators were expected to know or likely to know the percentage to be levied. Since scope to interfere with an Award by Court is limited, Courts not to ordinarily substitute its views over that of the Arbitrator. The Award in question as corrected suffers from no illegality and therefore, cannot be interfered with.

The parties in the instant case agreed not to adduce oral evidence, therefore, the records were looked into. Irrespective of whether Notice was issued, the Arbitrators appointed were entitled to assess the claim on the basis of verified contemporary records. The records were placed before them and the same was also considered. In spite of receipt of the application the Petitioner did not seek to raise any objection before the arbitrators. In fact why the corrected calculation is incorrect has also not been canvassed in the instant application. All that the arbitrators did was to correct the mathematical calculation which ex-facie was erroneous. As the basis of such calculation existed and no change was being effected therewith the correction cannot be faulted. It is on a consideration of the records that sums have been awarded and levy of 15% in respect of claim no.1 was neither unreasonable nor such to shock the conscience of the Courts. How a quantum is to be determined is well within the domain of the Arbitrator. The counter-claim made by the Petitioner was more out of desperation to counter the Respondent's claim and was not a genuine claim. No order passed on the application and the same accordingly dismissed.

Delhi High Court

Delhi State Civil Supply Corporation Ltd. Vs. Bhagwati Transport Co. (Decided on 06.01.2011) MANU/DE/0011/2011

Condonation of delay - Whether Appellant entitled to seek condonation of delay under Section 14 of the Limitation Act read with Section 42 of the Arbitration of Conciliation Act, 1996 on the grounds that they were pursuing remedy before the High court and the delay should have been condoned, as the remedy was pursued in good faith and with due diligence

Held, it is the case of the Appellant that after they received the copy of the aforesaid order on 24.05.2005 they filed objections in the Court of District Judge on 25.05.2005. It was pleaded by them that initiation of proceedings should be considered as good grounds for condoning the delay in filing the objections as the proceedings taken by them before this Court was in good faith and with due diligence and therefore invoked Section 14 of the Limitation Act.

The Appellant themselves being fully aware of the jurisdiction of the District Judge where they should have filed the objections within limitation having not done so and having filed the objections in the present Court knowing full well that filing of such objections was not in accordance with law, it cannot be said that the delay in filing the objections should be condoned on account of proceedings undertaken by the Appellant before the present Court was in good faith and with due diligence. Appeal dismissed.


Narcotics Control Bureau Vs. Ashok Mittal and Anr., (Decided on 04.01.2011) MANU/DE/0007/2011

Plea of Bail - Charge sheet not filed within 180 days of the incident - Whether the Applicant has an undefeatable right to be released on bail under such circumstances

Held, the jurisdiction of the Magistrate to detain the accused in judicial custody arises only when the accused is produced before him. One time detention, which the Magistrate can authorize is of 15 days and the total detention varies according to the nature of offence. The Magistrate has power of detention of 180 days in respect of an offence under the Narcotic Drugs and Psychotropic Substances Act, 1985.

Beyond the prescribed period of 180 days in case of an offence under NDPS Act the Magistrate has no power to extend detention unless challan is filed. The power to authorize detention by the Magistrate extinguishes on 180th day and the law provides that he shall pass an order of his release on bail and on accused furnishing bail bond as per order, he shall be released on bail.

The power of Magistrate to authorize detention again starts when challan is filed and cognizance of the offence is taken by the Magistrate. Thus, after expiry of 180 days, the Magistrate has not to wait for bail application but has to pass an order for bail and ask the accused to furnish bail bonds so that he can be set at liberty. However, if before the accused furnishes the bail bonds, the investigating agency files challan, the Magistrate per se has to take cognizance of the offence and take cognizance of the facts and circumstances under which the offence was allegedly committed by the accused and the investigating agency can very well press that since the bail bond of the accused has not been furnished, he be not released on bail under Section 167(2) Cr.P.C. and the accused be kept in custody and his bail application be decided on merits.

While the accused has a right to be released on bail after 60,90 or 180 days, as the case may be, the State also has a right to detain the accused on filing of challan and accused is entitled to bail only on merits. This right of being released on bail without merits is available only after statutory period as given under Section 167(2) Cr.P.C for extending remand has expired till the charge sheet is filed by prosecution. It is not the right of accused which is defined in Section 167(2), it is the authority of the Magistrate to extend remand which is defined in Section 167(2). The authority of Magistrate to extend remand of such an accused is up to 180 days in NDPS cases, in absence of filing of charge sheet, but once the charge sheet is filed this authority again gets vested in the Magistrate and after filing of charge sheet, the Magistrate can decide the bail application only on the basis of merits i.e. facts and circumstances of the case. Criminal justice system cannot be made subservient to the wishes of an investigating officer who, for some or the other reasons, may choose to delay filing charge-sheet for 2/3 days to ensure that the accused gets bail even in a most heinous crime. In the present case, the charge sheet was filed on 9th September 2008 itself i.e. on the date when bail application was made. Once charge sheet had been filed, the Magistrate was not supposed to consider the bail application under Section 167(2) Cr.P.C. Moreover, in this case, Magistrate has counted 180 days from 10th March 2008 i.e. from the date of incident. Section 167(2) envisages powers of Magistrate from the date of production of accused before the Magistrate and not from the date of incident. The order of learned trial court is bad in law and is liable to be set aside. The order of the trial court is hereby set aside. The accused be taken in custody. The accused shall be at liberty to make an application before the trial court for grant of regular bail on merits.

Uttarakhand High Court

Salim @ Lalle Vs. State of Uttarakhand (Decided on 04.01.2011)

Bail - Applicant in jail in connection with FIR relating to offences punishable under Section 420, 467, 468, 471 of the Indian Penal Code, 1860

Held, the case is triable by Magistrate, and applicant is in jail for last five months. Without expressing any opinion in regard to merits of the case, Applicant held to be entitled for bail and accordingly the application was allowed.


Punjab and Haryana High Court

Balwinder Singh Vs. State of Punjab and others (Decided on 05.01.2011)

Petitioner appointed as Sarpanch without giving Respondent seven days' clear notice. High court reversed the order and reinstated the Respondent -Petitioner filed writ petition to restrain Respondents from removing him from the post

Held, section 19 of the Punjab Panchayati Raj Act, 1994 prescribing the removal of Sarpanch by passing resolution of No Confidence Motion, has already been omitted by the State Govt. As no notification was issued to de-notify the election of Respondent No.5, therefore, he will be deemed to continue as Sarpanch of the village in view of order Petitioner has no legitimate claim on the office of Sarpanch of the village. Writ petition hereby dismissed


Delhi High Court

Ratan Mani Vs. State and Ors. (Decided on 04.01.2011) MANU/DE/0008/2011

Validity of the Will - Challenged by wife of the Deceased Testator on the grounds that it was forged by her mother-in-law so as to deprive her of her right in the estate of the deceased

Held, the testimony of the two witnesses who attested the Will stated that the testator was in a sound and disposing mind at the time when the Will was executed. It was observed that there was nothing unnatural for a person to get his Will attested by his close friends and if the Will is attested by his close friends, it cannot be considered as a suspicious circumstance, moreover, when the testimony of these two witnesses is clear on the point that the testator was in a sound and disposing mind at the time he executed the Will, there being nothing in rebuttal thereto. The objector despite her marriage with the Appellant was not residing with the Appellant but had been keeping herself busy in her studies which furnishes a good ground to dis-inherit her as this shows that she had no interest in the family of the deceased testator. This clearly goes to show that the objector had made life of the deceased testator miserable and had virtually deserted him for the last over 2 years before he executed the Will rather she even refused to come to live with him despite sincere efforts. The deceased testator in the Will has also mentioned all these things. She has not substantiated the plea of forgery taken by the objector/Appellant inasmuch as she had not been able to lead any evidence to show that the signatures appearing on the Will were forged and fabricated. No other evidence to prove any conspiracy in this regard was also led by her.


Allahabad High Court

Rajesh Kuamr Verma Vs. State Of U.P. Thru Principal Secretary Home (Decided on 05.01.2011)

Removal from Service - Challenged on the ground that Inquiry Officer, illegally travelling beyond the charge, considered the past conduct of the Petitioner, himself imposed the punishment of removal from service, though making it subject to the approval by the competent authority

Held, the Inquiry Officer, in the instant case, after observing that the Petitioner is habitual of abstaining from duty without permission or leave and there was no improvement in his conduct though he was given opportunity to improve and a person of such conduct is not fit for the disciplined force like police also imposed the major punishment of removal from service without disentitling him for future employment although subjecting it to the approval of the concerned Deputy Inspector General of Police.

The imposition of the punishment by the Inquiry Officer, though subject to the approval of the competent authority, shows the element of bias in the mind of Inquiry Officer that he intended to ensure that the Petitioner instead of being dealt with dispassionately and impartially in awarding the sentence, be punished severely in the manner stated by him. Thus, the inquiry report and the impugned order of removal passed on the basis of that inquiry report as well as the judgment of the appellate authority and the learned Tribunal does not sustain the Petitioner is directed to be reinstated in service.

Gujarat High Court

Punia Ramchandra Vs. Western Railway, (Decided on 30.12.2010)

Writ of Mandamus - Petitioner aged 60 years working as licensed porter at the Railway Station - Transfer of buckle/ badge sought into the name of his real son on the ground of his inability to work as porter - Application turned down for supplying incorrect details

Held, as per the policy the conditions laid down therein are required to be satisfied, namely, porter's license is transferable to his son or if he has no son or his son is not alive, to his near relative provided the porter is infirm or very sick or because of his old age, he is unable to carry out his work, and in support thereof, medical certificate of a railway doctor is required and further the medical certificate about the fitness of the proposed transferee about the physical condition is produced.

In the instant case, along with the application of transfer, the Petitioner had annexed the medical certificates issued by a railway doctor. Initially his request was turned down though no reason was assigned. In his application and the affidavit, he had stated that his wife had expired before about 2 - 3 years and the proposed transferee is his only son. Whereas the annexed copy of his ration-card along with the application suggested that his wife was alive and has two sons and three daughters.

However, based on papers annexed submissions advanced, no malafide intention found on the part of the Petitioner. It became clear that he is illiterate and as explained by him, fully relied upon the typist, who typed his application and his affidavit. If at all there were any malafide intention in the mind of the Petitioner, then he would not have annexed copy of his ration-card. Further as clear, he was not going to gain any benefit by making false averments in his application and in the affidavit. The Railway administration was directed to transfer the buckle/badge of the Petitioner to the name of his son as per the application on usual terms and conditions.

Madhya Pradesh High Court

Ram Lal Mehra Vs. State of MP and others (Decided on 06.01.2011)

Notice of retirement - Incorrect date of birth in service records - Earlier informed date of birth 28.7.1941 whereas later the same informed to be as 28.7.1942 - Claim denied on the ground that in the service book date of birth as submitted bears signature and now at the fag end of career when notice for retirement is issued, the date of birth cannot be changed

Held, as per the service book appointment was made in the year 1960, as a Middle Trained Teacher and the date of birth shown was 28.7.1941. The service book bears the thumb impression alongwith his signatures and is counter signed by the Assistant District Inspector of Schools, Bareilly, Bhopal. Even though in the first sheet of the service book, the date of birth - '28.7.1941' is mentioned after pasting a strip on it, but on a perusal of the service book, apart from the first page of the service book, date of birth of the Petitioner is recorded in more than two other places. The first is the family particulars of the Petitioner and the second his leave records maintained under the statutory leave rules. In both these entries, the date of birth of the petitioner is shown as '28.7.1941'. The original copy of the mark-sheet filed by the Petitioner was not available in the service book, a hand-written copy of the Higher Secondary School Certificate Examination, 1969 was available on record, in which the date of birth of the petitioner was shown as '28.7.1942'. However, this certificate was issued after the appointment and, therefore, cannot be relied upon for the purpose of correcting the date of birth.

Accordingly, not a fit case where interference was warranted and the Petition accordingly dismissed.

Yogesh Malviya Vs. State of MP and others (Decided on 04.01.2011)

Compassionate Appointment - Rejection of claim - Denial of claim on the ground that Petitioner was not the legitimate son of the deceased and hence claim not in accordance to schemes of establishment

Held, grant of compassionate appointment is based on Schemes and Rules formulated in an establishment. Compassionate appointment is an appointment contrary to the recruitment rules and is, therefore, granted strictly in accordance to the scheme formulated by a particular establishment. In the present case, Petitioner did not fulfill the criteria laid down in the scheme, and, therefore, in the absence of right being available to the Petitioner in accordance to the scheme, a mandamus cannot be issued for grant of compassionate appointment to the Petitioner contrary to the scheme applicable in the establishment. Petition dismissed.


Kerala High Court

V. Ramesh vs. State of Kerala (Decided on 03.01.2011)

Public Interest Litigation - Relief sought under the disguise of PIL - Maintainability thereof under challenge - Direction sought for removal of vehicles parked in the public road for causing inconvenience to the passengers and to dispose of or remove the vehicles kept inside the concerned Police Station and the surrounding public road remaining unclaimed without any valid title for the last six months

Held, the Petitioner never disclosed his personal interest in the matter. When confronted with this question, the Petitioner pointed to a sentence in the writ petition, which read "Petitioner also finds it difficult to come to his office in his car as there is no space left in the road." It was held that the above extracted statement was too vague and is susceptible to many an interpretation. The petitioner who is admittedly a practising lawyer cannot be heard to say that the above statement would amount to sufficient disclosure of his personal interest in the matter. In view of the fact that the Petitioner has a personal grievance, he cannot be permitted to seek any relief as sought under the guise of public interest. Petition dismissed at the admission stage.



Central Administrative Tribunal, Principal Bench, New Delhi

Kailash Chand Joshi Vs. Union of India, (Decided on 03.01.2011)

Irregular Appointment- Whether Applicant on the principle of quantum meriut and judicial precedents based thereon was right in contending that once he was asked to shoulder the responsibilities of a higher post, the Respondents were duty-bound to give him the pay scale attached to the post on which he actually worked

Held, once, an employee is made to shoulder responsibilities of a higher post, on the principle of quantum meriut he would be entitled to the pay scale attached to that post. The applicant, in the circumstances as mentioned above, would not be concerned whether the Commission was competent to make his appointment or the same had to be made by the Minister concerned. The facts of the said case reveal that the Appellant therein looked after duties of Secretary (Scouts) from the date of order and was yet not paid salary for the work done by him as such. It was admitted position that the Appellant was not regularly promoted to the post of Secretary (Scouts). He was regularly posted in the pay scale of Rs.1200-2040 and was asked to look after the duties of Secretary (Scouts). The Applicant had worked on the higher post though temporarily and in officiating capacity and that his salary was to be drawn during that time against the higher post. It was also not in dispute that the salary attached to the post of Secretary (Scouts) was in pay scale of `1640-2900. Consequently, on the principle of quantum meriut the authorities were directed to pay the Appellant as per the emoluments available in the higher pay scale during the time he actually worked on the said post, though in officiating capacity It is a settled position that if the Government, for want of candidate, directs an officer in the lower cadre to perform the duties of the post in the higher cadre, during that period, necessarily, the incumbent would be entitled to the payment of the salary attached to the post if the incumbent had performed the duties in that post. Similarly where the officer concerned is on promotion from lower cadre to the higher cadre, though on ad hoc or even temporary basis, the incumbent would be entitled to the payment of the salary attached to the post for the period of his discharging the duty in that post.


ITAT, Visakhapatnam

Sri Lakshmi Aditya Students Hostel Vs. ACIT (Decided on 03.01.2011) MANU/IV/0150/2010

Whether show cause notice issued is invalid and consequent revision proceedings are null and void as "the ground and belief entertained by Ld. CIT to initiate revision proceedings" are already seized out of purview of section 263 of the Income-tax Act, 1961 by the conscious decision taken by Ld. Assessing Officer on the very same ground in the facts and circumstances Appellant's case

Held, we find the issue of nature of rental receipt on letting of the property was examined by the Assessing Officer in the light of explanations furnished by the Assessee and being convinced with it the Assessing Officer has accepted the claim of the Assessee. Though the CIT was of the different view, but he did not make out a case that the view taken by the assessing officer is not possible and does the apex court settle an absurd view against the legal propositions. Since the issue has been examined by the A.O. and he has taken one of the possible views, that view cannot be revised by the CIT u/s 263 of the Act only for the reason that it was not acceptable to the CIT. If the assessing officer has not examined the issue then one can understand that the A.O. has not applied his mind and CIT has every right to revise the order of the A.O. Once the assessing officer has applied his mind and adjudicated the issue in a particular manner that order can only be revised by the CIT if he is able to make out a case that the view taken by the Assessing officer is perverse and against the principles of law settled by the apex court. Since the A.O. has taken a one of the possible view, the CIT has wrongly exercised his jurisdiction to revise the same. Therefore, order of the CIT directed to be set aside.


Nimbus Communications Limited Vs. Assistant Commissioner of Income Tax (Decided on 05.01.2011) MANU/IU/0004/2011

Whether the Commissioner (Appeals) was justified in sustaining an arm's length price adjustment in respect of interest not charged by the Assessee on debit balances, overdue beyond thirty days, of Assessee's associated enterprises

Held, it is only elementary, in terms of the provisions of Section 92 the Income-tax Act, 1961, any income arising from an international transaction has to be computed having regard to the arm's length price (ALP), and that this exercise includes the allowance for any expense or interest arising from an international transaction as well. That is the only provisions under which ALP adjustments can be made. Arm's length price adjustments can only be made in respect of an 'international transactions'. The expression 'international transaction', on the other hand, is defined under section 92B as a transaction between two or more associated enterprises, either or both of them are non-residents, "in the nature of purchase, sale or lease of tangible or intangible property, or provision of services, or lending or borrowing of money, or any other transaction having a bearing on the profits, incomes, losses or assets of such enterprises" as also transaction in the nature of cost or expense sharing arrangement. A continuing debit balance only reflects that the payment, even though due, has not been made by the debtor. It is not, however, necessary that a payment is to be made as soon as it becomes due. Many factors, including terms of payment and normal business practices, influence the fact of payment in respect of a commercial transaction. Unlike a loan or borrowing, it is not an independent transaction, which can be viewed on standalone basis. What can be examined on the touchstone of arm's length principles is the commercial transaction itself, as a result of which the debit balance has come into existence, and the terms and conditions, including terms of payment, on which the said commercial transaction has been entered into. The payment terms are an integral part of any commercial transaction, and the transaction value takes into account the terms of payment, such as permissible credit period, as well. The residuary clause in the definition of 'international transaction', i.e. any other transaction having a bearing on the profits, incomes, losses or assets of such enterprises, does not apply to a continuing debit balance, on the given facts of the case, for the elementary reason that there is nothing on record to show that as a result of not realizing the debts from associated enterprises, there has been any impact on profits, incomes, losses or assets of the Assessee. In view of these discussions, a continuing debit balance per se, in the account of the associated enterprises, does not amount to an international transaction under section 92 B in respect of which ALP adjustments can be made. The factum of payment has to be considered vis--vis terms of payment set out in the transaction arrangement, and not in isolation with the commercial terms on which transaction in respect of which payment is, delayed.