Page 22 - Banking Finance June 2019

LEGAL UPDATE

Bombay HC sets aside Buying property in name of sons not 'benami'
A real estate agent who bought properties for his sons was not violating the
CBDT's reward policy for
Benami Transactions Prohibition Act, the Supreme
income tax officials Court ruled in the case, Leelavathi vs V
The Bombay High Court (HC) has di- Shankarnarayana Rao. The court made this observa-
rected the tion in a dispute dating back to 1980 between a woman
C e n t r a l and her brothers over the partition.
Board of She alleged that their father was property dealer as well as money lender who
D i r e c t bought assets in the name of his sons. The sons denied it and asserted that they
T a x e s acquired properties on their own. The court put an end to the nearly four-de-
(CBDT) to put a halt on its policy of cade-old case pursued by the legal heirs of the original parties, rejecting the
rewarding Commissioner Income Tax
allegation of benami transactions. It recalled in detail the tests which should be
(Appeals) to enhance assessments
applied in cases of benami transactions.
and levy penalty.
The petitioners, Chamber of Tax Con- Row over right to name arbitrator
sultants, had approached the court
The Bombay High Court has ruled that once an arbitrator is appointed at the
challenging the CBDT's direction in
request of a disputing party and he recuses from
Central Action Plan of offering incen-
the post, the opposite party cannot recommend a
tives to CIT(A). It provided for ap-
name as a substitute. That right has been forfeited
peals to be disposed of by the Appel-
when the opposite party originally refused to name
late Commissioner in an expeditious
its candidate for arbitration.
manner and had targets and norms
It cannot claim a "rebirth of a right which stood for-
to be achieved within certain time.
It gave additional credits of two units feited," the court stated in its judgment, Sap India Ltd vs Cox & Kings. When
for each quality order passed. Trade disputes arose between the parties over an agreement, Sap nominated a re-
associations too had written to the tired judge as arbitrator. Cox declined to name its choice alleging the agree-
Finance Ministry seeking relief. ment was tainted by fraud.
Justice Sarang V Kotwal and Justice So Sap moved the court, which appointed a retired judge. Bu the recused. Now
Akil Kureshi said, "Prima facie, we Cox wanted to name a substitute but Sap opposed it arguing the right of Cox
feel that it may be impermissible for had extinguished when it had declined to name an arbitrator. The HC agreed
the CBDT to prioritise the disposal of and appointed a new judge as a substitute.
the appeals and to set the goals for
disposal of the certain number of Tax demand against dissolved firms
such appeals by the Appellate Com-
A claim of income tax will not become infructuous even if a company's name
missioner. From the action plan, it is
has been struck off by the Registrar of Compa-
not clear as to the utility of the
nies, according to the Supreme Court. The Com-
norms set which the CIT(A) has to
panies Act and the Income Tax Act deal with
achieve. If the purpose of the setting
such situations and those provisions should be
of norms is to evaluate the perfor-
followed.
mance of the CIT(A) there would be
all the more reason why the above- The Rajasthan High court had dismissed the ap-
quoted portion of the action plan be peal of the Commissioner of Income Tax against
reconsidered by the CBDT." the order of the appellate tribunal in the case of Gopal Shri Scrips Ltd. The high
court had ruled that nothing survived in the case as the company was dissolved.
Amit Maheshwari, Partner, Ashok
Maheshwary & Associates LLP said, Reversing that judgment, the Supreme Court stressed that the method pre-
"The judgment has come as a relief scribed in the two Acts should be adhered to in this case. The Supreme Court
and is on expected lines." asked the high court to reconsider the appeal.

22 | 2019 | JUNE | BANKING FINANCE