Winding-up proceedings – Commendable role being played by company court – a case study

As everybody knows, Company Law is very complicated and at the same time very interesting too. Both Company Law Board and the Company Court discharge its responsibilities commendably when they entertain company disputes or company petitions. Interpretation of provisions of Companies Act, 1956 and applying the legal provisions to the facts before the adjudicatory forum will be a challenging job.

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A shareholder has no “say” in management of a company unless and until he becomes part of management

A shareholder has a right only to the dividend and of participation in the annual general meetings and to vote there.

CASE LAW DETAILS

Decided by: HIGH COURT OF DELHI,  In The case of: Ravi Raj Gupta v. Hans Raj Gupta & Co. Pvt. Ltd., Appeal No.: C. S. (OS) No. 1944 of 2003,  Decided on: February 17, 2009.

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When CIT cannot exercise jurisdiction u/s 263 of Income Tax Act, 1961

SUMMARY OF CASE LAW

In a situation where only one view was possible on the point of issue, under no circumstances, order u/s 263 could be passed by the CIT to revise the order passed by the AO.

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Date of reckoning for limitation period provided u/s 154(7) of Income Tax Act, 1961

SUMMARY OF CASE LAW

Once an appeal against the order passed by an authority is preferred and is decided by the appellate authority, the order of the said authority merges into the order of the appellate authority; with this merger, order of the original authority ceases to exist and the order of the appellate authority prevails; the limitation for the purpose of section 154(7) is to be counted from the date of this order of CIT (A) and not the date of original order of assessment.

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Amount disbursed by chit Fund Company to its members from their contribution cannot be treated as interest

SUMMARY OF CASE LAW

The amount disbursed by a chit fund company to the members from their contribution cannot be treated as `interest’; as the payments made/disbursed to the subscribers/ members are not `interest’, therefore, the question of deducting any tax at source therefrom would not arise; in the case of a chit fund, there is no borrowing of moneys nor any debt is incurred and as such the provisions of section 2(28A) are not attracted.

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Applicability of MAT on amount withdrawn from revaluation reserve and credited to P&L account

SUMMARY OF CASE LAW

Prior to insertion of the proviso to clause (i) of the Explanation of section 115JB the assessee was entitled to reduce the sum from revaluation reserve while computing book profit under section 115JB; however, after the insertion of the proviso to clause (i) of Explanation to section 115JB, the assessee has been deprived from this benefit by clearly mandating that in case the amount of such reserve has not been added back by the assessee in relevant assessment year i.e. when the assessee created the revaluation reserve while computing the book profit for that year, then the amount is statutorily to be included while computing the book profit under section 115JB.

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ICAI to issue fresh notice to PriceWaterhouse, Delhi after Delhi High Court objection

Accounting regulator ICAI on Wednesday said it will issue fresh notices to PriceWaterhouse, Delhi, in relation to the Satyam scam after the Delhi High Court objected to its action against the firm without any evidence that it was related to PW, Bangalore, the statutory auditors of scam-hit company.

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False claim in return of Income would be treated as case of concealment of Income or of furnishing inaccurate particulars of Income

SUMMARY OF CASE LAW

Even if there is no concealment of income or furnishing of inaccurate particulars, but on the basis thereof the claim, which is made, is ex facie bogus, it may still attract penalty provision.

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