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2012 (1) TMI 105 - SUPREME COURT
Whether it would not be unreasonable to entertain the belief that the arbitrator appointed by the respondent would not be independent?
Whether the appointment of Mr. Satyanarayana cannot pass the test under Section 11(8) of the Arbitration and Conciliation Act, 1996?
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2012 (1) TMI 104 - ITAT CHENNAI
Non-compete fee agreement - Held that:- We are not in agreement with the arguments of the assessee that non-compete fee is an intangible asset to which provisions of section 32(1)(ii) of the Act are applicable. Therefore, in our considered opinion, the depreciation cannot be allowed on amount of non-compete fee. We accordingly dismiss this contention of the assessee.
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2012 (1) TMI 103 - ITAT CHENNAI
Capital expenditure vis-a-vis revenue expenditure - nature of expenditure - replacement cost - assessee has replaced the mechanical yarn clearers with the electronic yarn clearer - Held that:- The replacement has not increased the volume of production of the assessee-company. Strictly speaking, the yarn clearers do not directly take part in deciding the quantum of production. The yarn clearers make the yarn compatible for further treatment. Therefore, yarn clearer is a servicing system within the manufacturing operation carried out by the assessee-company. Therefore, it comes under the category of current repairs, as if a fused bulb is replaced by a new electric bulb. The existing situation is protected and no new benefit is created.
Entitlement to be deducted under section 80-IA - captive consumption of power generated - Held that:- Captive consumption of the power generated by the assessee from its own power plant would enable the respondent/ assessee to drive profit and gains by working out the cost of such consumption of power inasmuch as the assessee is able to save to that extent which would certainly be covered by section 80-IA(1). When such will be the outcome out of own consumption of the power generated and gained by the assessee by setting up its own power plant, we do not find any lack of merit in the claim of the respondent/assessee when it claimed by relying upon section 80-IA(1) of the Income-tax Act by way of deduction of the value of such units of power consumed by its own plant by way of profit and gains for the relevant assessment years.
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2012 (1) TMI 102 - ITAT CHANDIGARH
... ... ... ... ..... it is an established rule that ignorance of law is not an excuse, in the facts of the present case, where the assessee had bona fide acted on the advice of his counsel in respect of issue of claim of exemption under particular provisions of the Act and which are at variance even under the same chapter, where the assessee had so acted, the claim of the assessee can at best be called a bona fide mistake. There is no merit in levy of penalty under section 271(1)(c) of the Act in respect of such bona fide mistake made by the assessee, which was not mala fide. Accordingly, we hold that the assessee is not exigible to levy of penalty under section 271(1)(c) of the Act. Accordingly, we direct the Assessing Officer to delete the aforesaid penalty levied under section 271(1)(c) of the Act. The grounds of appeal raised by the assessee are thus allowed. In the result, the appeal filed by the assessee is allowed. The order pronounced in the open court on this 20th day of January, 2012.
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2012 (1) TMI 101 - ITAT CHENNAI
... ... ... ... ..... see not by its will and pleasure. The intervention of the Government made it impossible to import kerosene oil and consequently there was no occasion to utilise the facility. These are all the normal risks of a business carried on by any businessman. Because of the above risk, the assessee has lost the sum of Rs. 20,36,160. This is a loss incurred in the course of carrying on the business. Therefore, this is deductible under section 37 of the Income-tax Act, 1961. In the facts and circumstances of the case, we find that the lower authorities have erred in not deducting Rs. 20,36,160 while computing the taxable income of the assessee-company. The contention of the assessee is accepted and the assessing authority is directed to revise the computation of taxable income after deducting the sum of Rs. 20,36,160. In the result, this appeal filed by the assessee is allowed. The order pronounced in the open court at the time of hearing on Thursday, the 12th January, 2012 at Chennai.
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2012 (1) TMI 100 - DELHI HIGH COURT
Validity of reassessment proceedings failure to issue notice u/s 143(2) within the period stipulated in the proviso to clause (ii) - effect of Section 292BB - petitioner had filed returns of income vide letter dated 19th November, 2009 in response of notice issued u/s 147/148, adopting their earlier returns u/s 139(1) objections to the reopening were filed by petitioner on 13th July, 2010 and 19th July, 2010 and supplementary objections on 8th August, 2010 - A.O. issued notice u/s 143(2) on 23rd November, 2010 which is beyond the period of six months prescribed in the proviso to Section 143(2)(ii) - petitioner being foreign company, filed an application with the RBI for closure of their liaison office NOC required from the Income Tax Department Held that:- In the present case, the final assessment order has not been passed and only a draft assessment order u/s 144C has been passed. The proviso to section 292BB is applicable. The principle of estoppel u/s 292BB will, therefore, not apply. In respect of returns filed pursuant to notice u/s 148 after 1st October, 2005, it is mandatory to serve notice u/s 143(2), within the stipulated time limit. Thus, in present case, notice u/s 143(2) is deemed not to be served within the stipulated time. See ACIT vs. Hotel Blue Moon (2010 - TMI - 35251 - Supreme Court Of India. In view of the aforesaid position, reassessment proceedings should not continue as no notice u/s 143(2) was served on the assessee within the stipulated time. Accordingly, the writ petition is allowed and a Writ of Certiorari is issued quashing the assessment proceedings pursuant to the notices u/s 148. A Writ of Mandamus is issued to the Department to issue NOC to the petitioner as per the needs and requirements of the RBI within the stipulated time Decided in favor of petitioner.
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2012 (1) TMI 98 - BOMBAY HIGH COURT
Levy of service tax on Builders - amendment to clauses (zzq), (zzzh) and (zzzzu) - constitutional validity - held that:- The fact that the activity in question is an activity which is rendered on land does not make the tax a tax on land. The charge is on rendering a taxable service and the fact that the service is rendered in relation to land does not alter the nature or character of the levy. The legislature has expanded the notion of taxable service by incorporating within the ambit of clause (zzq) and clause (zzzh) services rendered by a builder to the buyer in the course of an intended sale whether before, during or after construction. There is a legislative assessment underlying the imposition of the tax which is that during the course of a construction related activity, a service is rendered by the builder to the buyer. Whether that assessment can be challenged in assailing constitutional validity is a separate issue which would be considered a little later. At this stage, what merits emphasis is that the charge which has been imposed by the legislature is on the activity involving the provision of a service by a builder to the buyer in the course of the execution of a contract involving the intended sale of immovable property. - The submission that the explanation brings in two fictions and is ultra vires the provisions of Sections 67 and 68 of the Finance Act is completely lacking in substance. The levy under Section 66 is on the value of taxable services. Section 65(105) defines taxable services. The explanation cannot possibly be held to be ultra vires Sections 67 and 68. - Constitutional validity of levy of service tax upheld. Service tax on Preferential location charges or development of complex clause (zzzzu) - held that:- These according to the Revenue involve value additions and services when the prospective purchaser purchases a flat or a unit before the completion certificate is obtained. We find merit in the contention which has been urged on behalf of the Revenue that if no charge is levied for a preferential location or development, no service tax would be attracted in the first place. Builders, however, follow the practice of levying charges under diverse heads including preferred development of the property intended to be sold or in terms of a preferred location which is made available to the buyer. Clause (zzzzu) only intends to obviate a leakage of revenue and plugs a loophole which would have otherwise resulted. To reiterate, if no separate charge is levied, the liability to pay service tax does not arise and it is only where a particular service is separately charged for that the liability to pay service tax arises. The fact that the service is rendered in the context of a location, does not make it a tax on land within the meaning of Entry 49 of List II. The tax continues to be a tax on the rendering of a service by the builder to the buyer. There is no vagueness and uncertainty. The legislative prescription is clear. Hence, there is no excessive delegation. - Levy of service tax upheld on preferential location charges or development of complex.
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2012 (1) TMI 97 - GUJARAT HIGH COURT
Validity of reopening of assessment previously framed after scrutiny beyond 4 years from the end of relevant A.Y. - assessment reopened on ground that income derived from the works contract would not qualify for deduction u/s 80IA - Explanation to Section 80IA added in year 2009 with retrospective effect from 1.4.2000 A.Y. 05-06 Held that:- By virtue of such retrospective amendment assessment previously framed after scrutiny could not have been reopened beyond the period of 4 years without any thing on record to suggest that the income chargeable to tax had escaped assessment for the failure on the part of the assessee to fully and truly disclose all material facts. The suggestion that the assessee failed to disclose the nature of works executed and that the same was executed only as works contractor and not as a developer, cannot be accepted for two reasons. Firstly, the reasons recorded do not refer to such a ground. Secondly, when the assessee filed the return of income, the Explanation in question was not in picture. It would not be possible to expect the assessee to comply with the requirements of such Explanation by making disclosures in this regard which Explanation did not form part of the statute book when he filed his return Decided in favor of assessee.
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2012 (1) TMI 96 - DELHI HIGH COURT
Fringe Benefit Tax car dealer - levy of FBT on car accessories provided free of cost to the customers Revenue contending it to be sales promotion expenses - Held that:- Expenditure incurred on accessories which were supplied to customers who have purchased cars cannot be treated as sale promotion including publicity expenses under clause (D) of Section 115WB(2). Until and unless a customer purchases a car, no accessories are provided or furnished. The customer was not given a largesse but was offered and has managed to get a better deal for the consideration paid. Revenue did not invoke clause (O) to sub-section (2) to Section 115WB. It was not the contention of the Revenue that the accessories given free of cost as gifts. This is rightly so as gifts are given or presented without consideration. Consideration, in the present case is inbuilt as per person/customer is paying consideration for purchase of the car. For gift under clause (O), the same should be paid without consideration. There is no finding to this effect by the Assessing Officer or by the tribunal. - Decided in favor of assessee.
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2012 (1) TMI 95 - DELHI HIGH COURT
Indian Contract Act 1872 - Breach of contract agreement to sale failure of appellant in not having obtained the permission from the Income Tax Authorities u/s 230A nad 269UC - forfeiture of earnest money Held that:- In view of decision of Supreme Court in case of Fateh Chand vs Balkishan Dass, there is no merit in the appeal inasmuch as not only because the appellant was guilty of breach of contract but also because the appellant did not plead and prove the forfeiture of earnest money or any loss having been caused to him. The appellant was, therefore, liable to refund the amount which he received under the Agreement to Sell Decided against the appellant.
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2012 (1) TMI 92 - DELHI HIGH COURT
Unexplained Investment Search conducted assessee declared undisclosed investment of Rs.42,65,924/- - A.O. made addition of Rs 61,64,407/ on ground of undisclosed stock - CIT(A) deleted addition of Rs 23,08,033/- as assessee established that belonged to third parties balance addition was deleted by Tribunal Held that:- Assessee in their explanation had pointed out that the valuation reports had taken the value of 24 carat gold at Rs.790 per gram but did not correspondingly reduce the value of 18 carat and 22 carat gold. Further, even the stock, recorded in the books of account, was valued as per the market rates, which is not correct, and under the mercantile system of accounting an assessee is entitled to value the stock in hand (declared stock) at cost price or market price, whichever is lower. The assessee had valued the stock at cost price. The cost price as recorded in the books was not rejected or adversely commented upon in the assessment order. Thus an obvious mistake has been corrected by the Tribunal Decided in favor of assessee.
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2012 (1) TMI 91 - DELHI HIGH COURT
Deduction u/s 43B in respect of interest paid on additional sales-tax - Tribunal rejected the claim on the ground that interest did not fall within the expression any sum payable used in Section 43B Held that:- It is clear in Section 17-A (2) of the Himachal Pradesh General Sales Tax Act, 1968 that once there is a notice of demand for the tax and the same is not paid then interest becomes automatically payable. In this regard, Tribunal, not having considered the said provisions of Himachal Pradesh General Sales Tax Act has committed an error in law Decided in favor of assessee.
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2012 (1) TMI 89 - DELHI HIGH COURT
Plea for waiver of pre-deposit of Rs 70 lakhs - clandestine removal and production has been established against the assessee and clubbing of turnover of assessee firm with turnover of sister concern was made Held that:- Appellant has made out the prima facie case by insisiting that due to its financial position, constraints & adverse market conditions, it is not in a position to pay the pre-deposit and thus would be deprived of his right to be heard and press their appeal. Further appellant have accepted to furnish surety or create a charge on its immovable property so that recovery can be made in case the demand is accepted. Thus, directions of the tribunal are modified. Appellant is required to pay Rs 40 lacs as per schedule specified and is required to deposit papers/title documents of its property. The appellant will also file an undertaking that they shall not dispose of, sell, or encumber or rent out property Decided in favor of assessee to the extent indicated above.
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2012 (1) TMI 88 - DELHI HIGH COURT
Whether period of limitation would be applicable on demand for payment of interest duty imposed vide order dated 12.09.2001 paid by assessee - no direction for payment of interest in order-in-original or in the appellate order - letter dated 10.11.2004 demanding differential duty issued - another letter dated 19.10.2005 demanding interest on differntial duty issued - Held that:- Period of limitation, unless otherwise stipulated by the statute, which applies to a claim for the principal amount should also apply to the claim for interest thereon. Period of limitation prescribed for demand of duty u/s 11A is normally one year and, in exceptional circumstance of a case falling under the proviso to Section 11A(1), the period of limitation is five years. But that would be applicable only in case of misstatement, fraud, concealment etc., which is not the case here. As such, in the present case, the period of limitation for the demand for duty would be one year. Thus, the period of limitation for demand of interest thereon would be one year - Decided in favor of assessee.
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2012 (1) TMI 86 - DELHI HIGH COURT
Contract Construction activity - Commissioner exercised revisionary powers u/s 263 on the ground that A.O. had not examined whether the assessee was following completion method or percentage completion method and whether the said expenditure could be claimed as an expense in the A.Y. in question - non-inquiry by the Assessing Officer with regard to squared up loans Tribunal quashed the order of Commissioner on ground that expenditure would be allowed as assessee has commenced business activities Held that:- There was error on the part of the A.O. in not making verification and inquiries, regarding both the aspects discussed aforesaid, which were required and the assessment order was prejudicial to the interest of the Revenue. The tribunal has completely ignored the said aspect and has proceeded on an entirely different basis which was not edifice and foundation of the order passed by the CIT u/s 263 of the Act. Order of Tribunal quashing CIT order is set aside Decided in favor of Revenue.
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2012 (1) TMI 82 - ALLAHABAD HIGH COURT
Business expenditure - dis-allowance of travelling expenses, lease hold expenses, investment allowance, part of foreign travelling expenses Held that:- Since assessee has not pressed before Tribunal the matter of dis-allowance of travelling expenses, lease hold expenses and investment allowance hence, this question does not arise for adjudication in the present appeal. Further, Tribunal has not found any good ground to interfere in such part dis-allowance of foreign travelling expenses and appellant could not persuade us to take a contrary view. Therefore, appeal is dismissed.
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2012 (1) TMI 81 - ALLAHABAD HIGH COURT
Best judgement assessment Lower G.P. Rate in comparison to last A.Y. - assessee contesting estimation of G.P. Rate based on previous records and G.P. of last year Held that:- In the instant case, the addition is made on the estimate basis, which is a question of fact as laid down in the case of Utkal Road Lines vs. Registrar, Income Tax Appellate Tribunal (2009 - TMI - 206552 - Orissa High Court). The Tribunal is a final fact finding authority and has already given the partial relief. No substantial question of law is emerging from the impugned order Decided against the assessee.
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2012 (1) TMI 80 - ALLAHABAD HIGH COURT
Penalty u/s 271D Proceedings u/s 269 SS initiated on finding during search that assessee had received money exceeding Rs. 20,000/- in cash from 46 persons assessee contending it to be share application money Held that:- It is on record that the CIT (Appeals) had held the entire amount in dispute related to the share application money and was treated as having been fully explained. This Court has already held that share application money can not be called deposit within the meaning of section 269 SS or 269 T of the Act and, therefore, in our considered opinion, the Tribunal had rightly upheld the order of the CIT (Appeals) deleting the penalty Decided in favor of assessee.
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2012 (1) TMI 79 - PUNJAB AND HARYANA HIGH COURT
Benefit of Central Government Health Scheme(CGHS) - pensioner neither got his name registered with any of the dispensary in CGHS covered dispensaries nor paid the requisite contribution writ petition decided in favor of pensioner for directing the appellant-employer to reimburse the medical expenses incurred by him - Held that:-Various judicial prouncements have held that -even if employee contributes after availing medical facilities, and becoming member after treatment, there is entitlement to reimbursement - even if membership under scheme not processed the retiree is entitled to benefits of Scheme - Full amounts incurred have to be paid by the employer - pensioner is entitled to full reimbursement so long the hospital remains in approved list - If medical treatment is availed, whether the employee is a cardholder or not is irrelevant and full reimbursement to be given. Thus, appeal is dismissed.
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2012 (1) TMI 78 - ALLAHABAD HIGH COURT
Writ petition filed to seek an order in the nature of mandamus commanding the respondents to release the containers to the petitioner - shipping company - 40 containers having 20,000 bags of MOP of Fertilizer Grade of customer seized by the Customs Authorities - petitioner is pressing for release of containers after unloading the goods contained therein - Additional Commissioner (Customs) vide order dated 11.10.2010 had asked the Container Corporation of India Ltd, Noida to keep seized goods in the warehous in safe custody and release the containers to the concerned shipping line Held that:- Additional Commissioner (Customs) should take appropriate steps for keeping the seized goods in the safe custody and for releasing the 40 containers to the petitioner for which the Court thinks that period of one month would be reasonable as more than a year have passed since letter dated 11.10.2010. Further, release of containers should not be taken to mean that the petitioner has been absolved of its liability if any under the provisions of the Customs Act, 1962 or any other enactment, in case the authorities decide to take any action.
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