AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2012 (12) TMI 857
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.... Company had let out Flat No.101, Nisarg Building 1340-41, Pali Hill, Bandra (West), Mumbai belonging to it to the respondent and had written a letter dated 10.10.2005 to the respondent containing the terms and conditions on which the flat was so offered to the respondent. It was inter alia mentioned in the said letter that the flat was to be for use as a Guest House of the respondent on a rent of Rs. 1,50,000/- per month for a period of three years with effect from 01.12.2005 and the respondent would pay security deposit of Rs. 2,00,00,000/- and Extra Deposit equal to rent of 36 months i.e. Rs. 54,00,000/- refundable by the appellant to the respondent at the rate of Rs. 1,50,000/- per month. It was also mentioned in the said letter that 'the arrangement' could be terminated by giving advance notice of 12 months from either side. 3. It is not in dispute that in terms of the aforesaid letter dated 10.10.2005, the flat was let out by the appellant to the respondent with effect from 01.12.2005 and on the terms and conditions contained therein and that the appellant received security deposit of Rs. 2,00,00,000/- and extra deposit of Rs. 54,00,000/- from the respondent. 4. The respond....
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....erms of letting, the sum of Rs. 2,54,00,000/- aforesaid was paid, out of which Rs. 54,00,000/- was refundable by the appellant to the respondent at the rate of Rs. 1,50,000/- per month, the respondent, against the amount of Rs. 1,50,000/- so refunded by the appellant to the respondent per month, issued cheques of Rs. 1,16,340/- per month after deduction of Tax at Source (TDS) in favour of the appellant; that the said arrangement continued till July, 2007 when Mr. Swami resigned from the respondent Company. The appellant denied receipt of letters dated 12.07.2007 and 12.12.2008 supra. The appellant further pleaded that the amount of Rs. 2,00,00,000/- and the balance out of the Extra Deposit of Rs. 54,00,000/- was not refundable to the respondent since the same was received on account of Rs. 2,50,00,000/- sanctioned by Mr. Birla to Mr. Swami. 7. Needless to state, the respondent controverted the aforesaid pleas of the appellant. 8. The contention of the appellant before the learned Company Judge was that its defence aforesaid raised disputed questions of fact which could not be adjudicated in winding up jurisdiction and there could not be said to be any debt due from the appellant ....
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....ssessee and was admittedly filing the Income Tax Returns (ITR) during the relevant period. We have enquired from the counsel for the appellant as to how the appellant Company had shown the receipt aforesaid of Rs. 2,00,00,000/- and Rs. 54,00,000/- in its Books of Accounts and in its ITRs i.e. whether as Security Deposit/Advance Rent/Extra Deposit or as Incentive Receipt on behalf of its Director Mr. Swami. Though the counsel for the appellant first stated that the said payments in the Books of Accounts and in the ITRs were shown as having been received towards Security Deposit/Extra Deposit/Advance Rent but subsequently retracted by saying that there is no plea on record in this regard. 14. We have next enquired from the counsel for the appellant that if the case of the appellant was that the sum of Rs. 2,00,00,000/- and Rs. 54,00,000/- aforesaid, instead of being the Security Deposit/Extra Deposit/Advance Rent, was towards Incentive Payment due to Mr. Swami, Director of the appellant in terms of his employment with the respondent, whether Mr. Swami in his ITRs (he of course must be an income tax assessee since as per the appellant, he was earning a monthly salary in excess of Rs.....
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.... made of S.P. Chengalvaraya Naidu v. Jagannath [1994] 1 SCC 1 holding that the Courts of law are meant for imparting justice between the parties; that a person whose case is based on falsehood has no right to approach the court and can be summarily thrown out at any stage of litigation. It was also noted that the process of the court is being abused - property grabbers, tax evaders, bank loan dodgers and other unscrupulous persons from all walks of life find the court process a convenient lever to retain the illegal gains indefinitely. 17. We are also tempted to refer to Ram Sewak v. Ram Charan AIR 1982 All. 177. It was a case of concealment of profits; the parties had been keeping double set of accounts for evading payment of income tax and sales tax. The Lower court reported the matter to the Taxation Authority. The High Court held that the Courts should have refused to entertain the suit on the ground of public policy, as it involved directing the recovery of an amount found to be due to either party as a share of the profits which had been deliberately concealed by the parties from the books of account in order to evade the payment of taxes. It was held that no Court can count....
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.... how the modus aforesaid of payment of Rs. 2,50,00,000/- if due to Mr. Swami as an employee of the respondent could be beneficial to the respondent. The counsel for the appellant states that it was to save the tax payable by the respondent. We are however of the view that had the respondent paid the sum of Rs. 2,50,00,000/- to Mr. Swami as an employee, the said amount would have been a deductable expenditure out of the income of the respondent and it was Mr. Swami who would have paid tax thereon. However by payment as Security Deposit under the Lease Deed, the same could not constitute expenditure of the respondent and on the contrary became non taxable in the hands of Mr. Swami through the appellant. It was thus Mr. Swami/appellant who stood to evade tax by adopting the modus aforesaid and the respondent does not appear to have gained anything therefrom. The counsel for the appellant is unable to argue to the contrary. There is thus no merit in the plea that it was the respondent who would be interested in paying Rs. 2,50,00,000/- if due to Mr. Swami in terms of his employment, in the form of Security Deposit under a Lease Deed. 21. We may also notice that save for the bald plea ....
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....tra deposit of Rs. 54,00,000/-, in terms of letter dated 10.10.2005 supra. 24. Yet another contention of the counsel for the appellant is that letting was for three years terminable prior thereto by a 12 months notice and which had not been given; that the respondent is thus not entitled to refund of Security Deposit. Though as aforesaid, the letter dated 12.07.2007 records that 12 months notice as agreed had been waived but we may further state that if such be the plea of the appellant then it would amount to the tenancy of the respondent of the flat in question continuing; if the respondent is still a tenant and Mr. Swami upon resignation from employment of the respondent having lost the right to occupy the said flat, we have enquired from the appellant whether the appellant is willing to vacate the flat to let the respondent enjoy the same as a tenant. No answer is forthcoming. The appellant has to sail or sink on his pleas and cannot on the one hand contend that the tenancy has not been determined by the respondent and on the other hand also deny enjoyment of the flat as tenant to the respondent. Even otherwise, a Lease for three years could be created by a registered document....