Gujarat High Court Weekly Round-Up: November 20 To November 26, 2023

AM Mining India Private Limited Versus Union Of India 2023 LiveLaw (Guj) 183

Ketkiben Vasudev Vyas Versus State Of Gujarat 2023 LiveLaw (Guj) 184

Bharatkumar Ramabhai Patel Versus State Of Gujarat 2023 LiveLaw (Guj) 185

Mayur Kanaiyalal Shah Versus State Of Gujarat & 2 Other(S) 2023 LiveLaw (Guj) 186

Bhailal Babubhai Patel Versus The Principal Commissioner Of Income Tax 1 2023 LiveLaw (Guj) 187

The Principal Commissioner Of Income Tax 1, Ahmadabad Versus Jigar Jashwantlal Shah) 2023 LiveLaw (Guj) 188

Artiben Amishkumar Patel Versus The Income Tax Officer, Ward 3(2)(1) 2023 LiveLaw (Guj) 189

The Principal Commissioner Of Income Tax 1, Ahmadabad Versus Jigar Jashwantlal Shah) 2023 LiveLaw (Guj) 190

Naman Gyanchand Pipara Versus State Of Gujarat & Ors. 2023 LiveLaw (Guj) 191

Bhagwati Polyfill Pvt. Ltd. Versus The Assistant Commissioner Of Income Tax 2023 LiveLaw (Guj) 192

Adf Foods Ltd. Versus Union Of India 2023 LiveLaw (Guj) 193

Judgments/Orders

Gujarat High Court: Protection Granted U/S 32A(2) & 33(5) Of IBC Overrides The Power Of Enforcement Directorate To Attach The Properties Under PMLA

Case Title: AM Mining India Private Limited Versus Union Of India

LL Citation: 2023 LiveLaw (Guj) 183

The Gujarat High Court has held that the protection granted under Section32A(2) and Section 33(5) of the Insolvency and Bankruptcy Code, 2016 (“IBC”) would override the power of Enforcement Directorate to attach the properties under Section 5 of the Prevention of Money Laundering Act, 2002 (“PMLA”).

A single bench of Justice Vaibhavi D. Nanavati said that the Enforcement Directorate has proceeded to confirm the order of provisional attachment passed under Section 5(1) of PMLA without any application of mind.

District Collector Honeytrap Case: Gujarat High Court Grants Bail To Accused RAC, Says S.354C IPC Not Attracted Against Women

Case Title: Ketkiben Vasudev Vyas Versus State Of Gujarat

LL Citation: 2023 LiveLaw (Guj) 184

The Gujarat High Court has granted bail to a female Resident Additional Collector who was implicated in a case involving the installation of spy cameras in the office chamber of the District Collector, Anand. The court ruled that Section 354C of the Indian Penal Code (IPC), which pertains to voyeurism, is not applicable to women.

According to the established facts of the case, the current petitioner, who was employed as the Resident Additional Collector at the Collector's office in District Anand, orchestrated the installation of spy cameras in the office chamber of the former District Collector. Subsequently, a woman was directed to frequent the District Collector's office with the purpose of cultivating a close relationship with the then District Collector, with the promise of financial compensation.

Gujarat High Court Denies Bail To Accused Involved In Fake Passport Scam, Says He May Use International Contacts To Flee

Case Title: Bharatkumar Ramabhai Patel Versus State Of Gujarat

LL Citation: 2023 LiveLaw (Guj) 185

In a recent ruling, the Gujarat High Court denied bail to an accused individual facing charges related to the creation of forged passports and fraudulent visa stickers for various foreign countries, emphasizing the possibility that if released on bail, the accused might leverage these connections to evade legal consequences.

Justice Nirzar S Desai observed, “Considering the fact that the allegations against the present applicant are about creating forged passports and fabricated forged visa stickers of various foreign countries as well as it is coming out from the statement of various witnesses, prima facie, it seems that the present applicant is having contacts all over the world and therefore, looking to the nature of the allegations leveled against him about illegally sending the people to foreign countries and successfully allowing them to cross the border, there are all the chances that if the present applicant is enlarged on bail, he may utilize his international contacts all over the world for himself and may fly away.”

No Prosecution Under Copyright Act For Sale Of Duplicate Spare Parts Of Computer Hardware: Gujarat High Court

Case Title: Mayur Kanaiyalal Shah Versus State Of Gujarat & 2 Other(S)

LL Citation: 2023 LiveLaw (Guj) 186

The Gujarat High Court has ruled that duplicate spare parts of computer hardware are not literary, musical or artistic works and therefore an FIR cannot be lodged for violation of the Copyright Act, 1957 for their sale.

Justice Sandeep Bhatt while quashing the FIR observed, “Apart from that, even if, the FIR is taken at its face value, it refers to items, which do not fall within the artistic work as defined under Section 2(c) of the Copyright Act, 1957. It cannot be said that the spare-part is literal work or musical work. It is not disclosed that the spare part is an artistic work or any other such work that the provisions of Copyright Act, 1957 would apply.”

Income Tax Act | Valid Show-Cause Notice Crucial For Recovery Under Section 179: Gujarat High Court

Case Title: Bhailal Babubhai Patel Versus The Principal Commissioner Of Income Tax 1

LL Citation: 2023 LiveLaw (Guj) 187

In a recent ruling, the Gujarat High Court has set aside an Income Tax Liability Order, highlighting the crucial requirement of a valid show-cause notice for recovery under Section 179 of the Income Tax Act, 1961. The above ruling came in a petition challenging the order dated 27.03.2019 under Section 179 of the Income Tax Act, 1961 against the petitioner holding him in his capacity as a Director responsible for the outstanding demand against the company – Banyan & Berry Alloys Limited.

Income Tax Act | Section 56(2)(Viic) Not Applicable To Fresh Issuances Or Allotments Of Shares By A Company: Gujarat High Court

Case Title: The Principal Commissioner Of Income Tax 1, Ahmadabad Versus Jigar Jashwantlal Shah)

LL Citation: 2023 LiveLaw (Guj) 188

The Gujarat High Court recently delivered a crucial ruling on the interpretation of Section 56(2)(viic) of the Income Tax Act, 1961, stating that the provision does not apply to fresh issuances or allotments of shares by a company.

According to section 56(2)(viib), if a company receives, in any previous year, any consideration for the issue of shares that exceeds the face value of such shares from any person who is a resident, the aggregate consideration received for shares that exceed the fair market value of the shares shall be deemed to be the income of the concerned company chargeable to tax under the head Income from other Sources for the relevant financial year.

Reassessment On Suspicion To Enquire Further Is Unsustainable: Gujarat High Court

Case Title: Artiben Amishkumar Patel Versus The Income Tax Officer, Ward 3(2)(1)

LL Citation: 2023 LiveLaw (Guj) 189

The Gujarat High Court has delivered a significant ruling, asserting that reassessment on suspicion for making further inquiry is unsustainable under section 148 of the Income Tax Act.

The division bench of Justices Biren Vaishnav and Bhargav D Karia observed, “The reassessment was also therefore based on suspicion. As pointed out by learned Senior Counsel Mr.Hemani, that factors that indicate that income has escaped assessment consists of facts which if established will have a cause and effect relationship, whereas factors which indicate a suspicion about income escaping assessment which would warrant a further inquiry. This is not what is contemplated under section 148 of the Act. The jurisdiction cannot be used to carry out a roving inquiry.”

Income Tax Act | 35(2ab) Deduction Can't Be Denied For Failure Of Authority To Send Intimation: Gujarat High Court Upholds ITAT Decision In Schaeffler India Ltd's Tax Appeal

Case Title: The Principal Commissioner Of Income Tax 1, Ahmadabad Versus Jigar Jashwantlal Shah)

LL Citation: 2023 LiveLaw (Guj) 190

In a recent ruling by the Gujarat High Court, it has been held that the deduction under Section 35(2AB) of the Income Tax Act cannot be denied merely due to the failure of the authority to send intimation. The decision came in response to an appeal filed by the Revenue against the order of the Income Tax Appellate Tribunal 'C' Bench, Ahmedabad, pertaining to the assessment year 2016-17.

As per Section 35(2AB) of the Income-tax Act, where a company is engaged in the business of bio-technology or in any business of manufacture or production of any article or thing', incurs any expenditure on scientific research (not being expenditure in the nature of cost of any land or building) on in-house research and development (R&D) facility as approved by the Department of Scientific and Industrial Research (DSIR), then, a sum equal to two times of the expenditure so incurred shall be allowed as weighted deduction.

Gujarat High Court Quashes FIR Against Chartered Accountant Firm In GSLDC Scam

Case Title: Naman Gyanchand Pipara Versus State Of Gujarat & Ors.

LL Citation: 2023 LiveLaw (Guj) 191

The Gujarat High Court has quashed the First Information Report (FIR) against a Chartered Accountant firm in connection with the Gujarat State Land Development Corporation Limited (GSLDC) Scam. The court emphasized that the firm's role was confined to auditing vouchers and records, and it was not directly implicated in the misconduct associated with the Khet Talavadi project, the focal point of the accusations.

No Reason To Believe Income Chargeable To Tax Escaped Assessment: Gujarat High Court Quashes Income Tax Notice

Case Title: Bhagwati Polyfill Pvt. Ltd. Versus The Assistant Commissioner Of Income Tax

LL Citation: 2023 LiveLaw (Guj) 192

The Gujarat High Court in a recent ruling underscored the importance of tangible evidence and a valid reason to believe that income has escaped assessment in a significant decision regarding the validity of reopening assessments based on reasons lacking a direct connection between the taxpayer and the disputed transaction.

Justice Biren Vaishnav and Bhargav D Karia observed, “Perusal of the reasons would indicate that except making a statement that the petitioner had an access with Shri Kamal Zaveri and that the tainted concerns, namely, Jay Traders and Shubham Enterprise were conduits for securing unsecured loans. No material came forth in terms of any statement or details to pin-point a live link or a nexus of the petitioner with the transaction in question.”

IGST Refund On Exported Goods Being Zero Rated Supplies Admissible As Excess Drawback Repaid: Gujarat High Court

Case Title: Adf Foods Ltd. Versus Union Of India

LL Citation: 2023 LiveLaw (Guj) 193

The Gujarat High Court has ruled that the surplus drawback resulting from the utilization of the Cenvat Credit facility was repaid along with interest, and thus, the refund of Integrated Goods and Services Tax (IGST) paid on goods and services for exported goods, classified as zero-rated supplies, is deemed eligible.

The petitioner, ADF Foods Ltd., challenged the inaction on the part of the respondents not to sanction the refund claims of integrated goods and service tax paid on exported goods i.e. “Zero Rated Supplies” through Mundra Customs Port.

Other Developments

Gujarat High Court Inaugurates Dedicated Medical Facility For Stakeholders

In a collaborative effort between the Chief Justice and Judges of the Gujarat High Court and the Health Ministry of the Government of Gujarat, a state-of-the-art medical facility was inaugurated at Entry Gate No. 5 of the High Court premises. The inauguration ceremony, held on November 9, 2023, saw the presence of the Health Minister of Gujarat, Mr. Rushikesh Patel, Chief Justice Mrs. Justice Sunita Agarwal, and all companion Judges of the High Court.