COMMISSIONER OF WEALTH TAX (C)-1 vs. M/S SAHARA INDIA FINANCIAL CORPORATION LTD.

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WTA/7/2017HC DelhiDLHC01261850201704 August 2017Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MS. JUSTICE PRATHIBA M. SINGH3 pages
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What did the High Court hold?

The High Court, by consent of the parties, disposed of the contempt appeal and the related civil miscellaneous application. The court accepted the concessions made by the first respondent and the appellant's agreement to the stipulated conditions. These conditions included the handling of rent arrears and future rent deposits, which would abide by further orders of the learned Single Judge in the civil suit. Any modification to the lease deed would require the learned Single Judge's approval. Litigation expenses of Rs. 30,000/- were made easy. The court clarified that the execution of the lease deed and retention of 50% rent would not create any right or interest in favor of the appellant. The deduction of TDS and payment of GST by the tenant would continue. The issue of whether the appellant would have to disclose the rent deposited in court as income in their Income-Tax Returns was left open, with the appellant permitted to approach the learned Single Judge if required. Future rent deposits were to be made by cheque within ten days of encashment, with intimation to the first respondent's counsel, and converted into FDRs. The court explicitly stated that it had not expressed any opinion on the merits of the civil suit or the parties' stands, and that the observations in the impugned order would not prejudice any party's rights. The operative direction was to dispose of the appeal and CM as per the agreed terms.

What were the facts?

This is a contempt appeal before the Delhi High Court concerning an alleged contempt by the appellant, Ashok Nath, against the respondents, Krishna Gupta & Anr. The appeal was adjourned to allow counsel for the first respondent to explore resolution. The first respondent's counsel proposed disposing of the appeal based on concessions from the appellant, subject to specific conditions. These conditions included how arrears of rent and future rent deposits would be handled, requiring approval for lease modifications, waiving litigation expenses, and clarifying that rent retention wouldn't create rights. The appellant's counsel accepted these conditions. The court clarified that TDS and GST payments would continue. The issue of disclosing rent deposits as income in Income-Tax Returns was left open for the learned Single Judge to decide. Future rent deposits were to be made by cheque within ten days of encashment, with intimation to the first respondent's counsel. Deposits were to be converted into FDRs. The court modified the learned Single Judge's order by consent, without expressing an opinion on the merits of the civil suit.

What were the issues?

1. Whether the contempt appeal can be resolved based on concessions and agreed conditions between the appellant and the first respondent, thereby disposing of the appeal without deciding the merits of the contempt allegations? Assessee (Appellant) Contentions: - The appellant, through senior counsel, appreciated the concessions offered by the first respondent and accepted the conditions without prejudice. - The appellant stated they might not want to renew the lease deed or enter into a fresh lease with a third party if the tenant vacates. - The appellant noted that TDS at 10% is deducted by the tenant and GST at 18% is paid by the tenant. - The appellant acknowledged they may have to disclose rent deposited in court as income in their Income-Tax Returns and would be liable to pay income tax on that amount. Revenue (Respondent) Contentions: - The first respondent's counsel stated that, without prejudice to their rights and contentions, the contempt appeal could be disposed of based on concessions, subject to the appellant agreeing to specific conditions. - The first respondent's counsel requested that the issue of disclosing rent deposited in court as income in Income-Tax Returns be left open for the learned Single Judge to decide if required.

AI-generated summary — verify with the full judgment below

$~22 * IN THE HIGH COURT OF DELHI AT NEW DELHI + CONT.APP.(C) 7/2017 & CM No.39165/2017

ASHOK NATH

..... Appellant Through: Mr. Arvind Nigam, Senior Advocate with Ms. Manmeet Arora & Mr. Tarang Gupta, Advocates

versus

KRISHNA GUPTA & ANR

..... Respondents Through: Mr. S.N. Choudhuri, Mr. H.D. Talwani, Ms. Shruti Choudhuri & Mr. Sukreet Khandelwal, Advocates for respondent No.1

CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE CHANDER SHEKHAR

O R D E R %

15.03.2018

This contempt appeal was heard on 13.3.2018 and adjourned for today to enable the learned counsel for respondent No.1 to obtain instructions on whether the issue relating to tenancy and the alleged contempt by the appellant, Ashok Nath, can be resolved.

Learned counsel for the first respondent states that, without prejudice to the rights and contentions of the parties, i.e., the appellant and the respondents, the present contempt appeal may be disposed of, on the basis of the concessions given by the first respondent, subject to the appellant agreeing to the following:- (i) Arrears of rent @50% and rent deposited by the appellant in the Court in terms of the order dated 31.10.2017 would abide by

further direction and order by the learned Single Judge in the civil suit. (ii) Appellant will continue to deposit future rent received from the tenant in the Court as directed and in terms of order dated 31.0.2017. Deposits made would abide by directions and order of the learned Single judge. (iii) Any modification or amendment to the Lease Deed or its terms, would require approval and permission of the learned Single Judge. (iv) Litigation expenses of Rs.30,000/- imposed may be made easy. (v) Execution of the lease Deed and retention of 50% rent, in terms of the order dated 31.10.2017, would not create or reflect as creating any right and interest in favour of the appellant.

Learned Senior Counsel for the appellant appreciates the statement and without prejudice accepts the conditions stated by the learned counsel for the first respondent. He states that the appellant may not want to renew the lease deed or enter into a fresh lease with a third person in case the tenant vacates the property. Learned Senior Counsel for the appellant states that TDS @ 10% is deducted by the tenant from the rent. GST @ 18%, is paid by the tenant. We would clarify that payment of GST @ 18% and deduction of TDS would continue. Learned Senior Counsel for the appellant states that the appellant may have to disclose the rent deposited in Court as income in his Income-Tax Returns. Accordingly, the appellant would be

liable to pay income tax on the said amount. Learned counsel for respondent No.1 states that this issue may be left open and, if required, could be decided by the learned Single Judge. We leave the issue open and if required appellant could approach the Single Judge. Deposit of rent in future in the Court may be made by way of cheque. Deposit would be made within ten days of encashment of cheque given by the tenant. Intimation with regard to both receipt of cheque as well as deposit in the Court would be made by the appellant to the counsel for the first respondent. Rent deposited will be converted into a FDR to earn interest. Deposits made, as noted above, would abide by further orders of the Single Judge. By consent, we have modified the order passed by the learned Single Judge. We clarify having not expressed opinion on merits or on the respective stands and pleas taken by the parties in the civil suit. Observations and findings in the impugned order would not prejudice rights of any party. The appeal is disposed of in the above terms. CM No. 39165/2017 is also disposed of.

SANJIV KHANNA, J

CHANDER SHEKHAR, J MARCH 15, 2018 tp

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