AI Overview...
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Guarantee by Guarantor - Not automatic in income context; the guarantee does not automatically ensure income realization or guarantee income accrual. Even if a person acts as a guarantor, it does not mean the income is assured or that the guarantee amount is automatically payable. Income that dissipates or is not realized cannot be characterized as income accruing to the assessee Commissioner of Income Tax VS United Breweries Limited - Karnataka.
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Guarantee and Liability - Giving guarantees is often based on interest or relationship with the society or entity; guarantees are sometimes given without any direct gain or consideration, and the guarantee's existence does not imply automatic income or liability settlement Rafique Abdul Malik and others VS State of Maharashtra - Bombay.
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Guarantor’s Liability and Court View - Courts emphasize that a guarantor’s liability is not automatic or unconditional; the liability remains unless explicitly extinguished or settled through legal processes such as OTS (One Time Settlement). The mere existence of a guarantee does not guarantee income or debt recovery without proper enforcement Ajay Kumar Bishnoi VS Tap Engineering - Madras, Puneet Resutra vs Jammu & Kashmir Bank Ltd. - National Company Law Appellate Tribunal.
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Impact of Insolvency and Settlement - Settlement through OTS with guarantors does not necessarily extinguish liability; the liability persists unless explicitly released. The recognition of debts and guarantor obligations is subject to specific legal procedures, and automatic release upon settlement is not guaranteed Puneet Resutra vs Jammu & Kashmir Bank Ltd. - National Company Law Appellate Tribunal.
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Guarantor’s Contract and Enforcement - The enforceability of guarantees depends on the terms and legal provisions; a guarantee under Section 129 is a continuing guarantee, but revocation or termination requires specific actions by the guarantor. Guarantee contracts are not automatically invoked unless the principal debtor defaults and legal procedures are followed Arun Khosla VS Central Bank of India - Dishonour Of Cheque.
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Role of Guarantors in Bankruptcy and Resolution Processes - During insolvency proceedings, guarantees are not automatically extended or benefit from resolution plans unless explicitly included. The resolution or settlement does not inherently guarantee the release of guarantors from liability unless specified GSA Retail Limited vs Vishnu Kumar Tulsyan - National Company Law Tribunal.
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Sale and Market Value of Assets - Sale of mortgaged assets or properties involving guarantors must reflect true market value; sale prices cannot be artificially depressed or manipulated to benefit guarantors or secured creditors. Proper valuation and notice are essential to uphold fairness and legality Everest Fincap Pvt. Ltd. VS Krishna Realtors - Dishonour Of Cheque.
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Income Tax and Guarantee - Guarantee does not automatically translate into taxable income unless income is actually realized or accrued; mere guarantee obligations or liabilities do not constitute income unless the conditions for income accrual are met Commissioner of Income Tax VS United Breweries Limited - Karnataka.
Analysis and Conclusion:
Guarantees provided by guarantors are not automatically binding or guaranteeing income realization in law. Their enforceability depends on explicit legal procedures, the terms of the guarantee, and actual realization of liabilities. Simply acting as a guarantor does not ensure automatic income or debt recovery; legal processes, proper valuation, and compliance are essential. Guarantees are contractual commitments that require enforcement and do not inherently guarantee income accrual or automatic liability extinguishment Commissioner of Income Tax VS United Breweries Limited - Karnataka, Ajay Kumar Bishnoi VS Tap Engineering - Madras, Puneet Resutra vs Jammu & Kashmir Bank Ltd. - National Company Law Appellate Tribunal, Arun Khosla VS Central Bank of India - Dishonour Of Cheque, GSA Retail Limited vs Vishnu Kumar Tulsyan - National Company Law Tribunal.
Search Results for "Guarantee by Guarantor is Not Automatic in Income"
2010 0 Supreme(Kar) 23 • India - Karnataka
D.V.SHYLENDRA KUMAR, N.ANANDA
real income, is not tenable in law. ... It is only such income which dissipates midway and will never reach the assessee that can be characterised as not income accruing ... INCOME TAX ACT, 1961 - Sections 36, 37 & 260-A: [D.V.Shylendra Kumar & N.Ananda,JJ] What amounts to ’Bad Debts’ - Liability to tax ... Even if the assessee had the business of standing guarantor, in this case there is no case that the assessee stood as guarantor for any considera....
1996 0 Supreme(Bom) 605 • India - Bombay
S.S.PARKAR
The petitioners contended that they had given guarantees because they had an interest in the societies from whom they were purchasing ... The petitioners contended that they had given guarantees because they had an interest in the societies from whom they were purchasing ... finished products and that they had not gained anything by receiving cash withdrawals from the societies' accounts. ... It is common knowledge that many times the ladies are shown Directors or Office bearers only for the name sake or for the purpose of distribution of....
2020 0 Supreme(Mad) 967 • India - Madras
G.R.SWAMINATHAN
The protective shield will not fit the erstwhile director at all - It was never designed for him - court of course, conscious that ... The facts appearing on record and the contentions put forth by learned counsel for the petitioner do not persuade me to come to the ... guarantor as well. ... Bhikhabhai Prabhudas Parekh and Co. and its progeny, making it clear that income tax dues, being in the nature of Crown debts, do not take precedence even over secured creditors, who are private persons." ... Juman....
2025 Supreme(Online)(NCLAT) 398 • India - National Company Law Appellate Tribunal
Indevar Pandey, T
... ... Ratio Decidendi: The court upheld that the liability was not extinguished by OTS with guarantors and that acknowledgment ... erstwhile Director against NCLT's admission of application - Financial debt claimed settled through one-time settlement (OTS) with guarantors ... the admission of insolvency proceedings due to the claim that debts had been settled through an OTS arrangement with the personal guarantors ... However, the co-extensive nature does not imply automatic release....
2006 0 Supreme(Ori) 586 • India - Orissa
ASOK KUMAR GANGULY, I.MAHANTY
seen that Section 32 of SICA is only subject to Foreign Ex¬change Regulation Act, Urban Land Ceiling Act and Section 72(a) of the Income ... petition - Guarantor’s contract can be invoked by the bank of its claim against the principal debtor fails - In such a situation the guarantors ... The reasons for which are not far to seek. ... The writ peti¬tioners are guarantors and the equitable mortgage, which was created by the company, has been supported by the guarantee of the petitioners. ... The existence....
2023 Supreme(Online)(NCLT) 2880 • India - National Company Law Tribunal
Shri Rohit Kapoor, Shri Balraj Joshi, JJ
approved with 81.45% voting share by the Committee of Creditors (CoC) - Compliance with IBC and CIRP Regulations confirmed - Claims not ... Allow filing return of income and/or revised return of income, for the Assessment Years prior to the Effective Date.83. ... , nor shall the Resolution Applicant have the benefit of any recourse to the Personal Guarantees of the Guarantors. ... The order of the NCLT approving the Resolution Plan shall operate as automatic extinguishment of all other....
• India - Dishonour Of Cheque
RANJIT SINGH
3 —Condonation of delay — Delay of almost 2000 days in filing substitution application not considered and substitution ... allowed — HELD — It will be appropriate to have the view of Tribunal — Whether case for condoning delay is made out or not and also ... A guarantee as per Section 129 is a continuing guarantee which extends to a series of transactions. Section 130 of the Contract Act empowers a surety to revoke a continuing guarantee. ... The arbitrator passed a joint award granting a higher compens....
2010 0 Supreme(Pat) 2497 • India - Patna
RAMESH KUMAR DATTA
clothe the petitioner with any right vis-a-vis the contract between the Bank and the borrower–it is not privy to the said contract ... certificate holder–Bank and certificate debtor borrower and recovery proceeding stood withdrawn–participation in the auction sale does not ... so as to bring to a close the lis pending between them–Having participated in the auction with such condition, the petitioner is not ... The very object of the guarantee is defeated if the creditor is asked to postpone his remedies against the sure....
• India - Dishonour Of Cheque
B.R.GAVAI, RIYAZ I.CHAGLA
artificial and/or depressed market value arrived at by consensual method by and between secured creditors, guarantors and purchaser—It ... notice to Liquidator and hear him before ordering a sale as representative of creditors in general—Notice to Official Liquidator is not ... mortgaged asset—Court is bound to see that sale price for assets must be corresponding to market value of property of company but not ... In other words, the earlier re-assessment of compensation made by giving ten times of net income would revive....
2004 0 Supreme(AP) 21 • India - Andhra Pradesh
V.V.S.RAO
require a borrower to produce registration certificate, balance sheet and income tax returns–Held, In the case of a borrower who ... Co-operative tribunal by filing appeal and writ petition is not a proper remedy and it is not open to invoke jurisdiction in view ... India which is issued by way of clarification drastically deviates from OTS package – As previous sanction of RBI in writing was not ... No. 4) is not automatic and the same does not confer any right. The ....
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