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2022 (4) TMI 1609 - ITAT BANGALORE
Validity of assessment u/s 153A - additions in respect of the agricultural lands - reference to incriminating material found in serach or not? - HELD THAT:- As decided in Shri Jitendra Virwani [2021 (8) TMI 70 - ITAT BANGALORE] as rightly contended by the DR, there is no requirement for an assessment made u/s 153A of the Act being based on any material seized in the course of search. Further under the second proviso to section 153A pending assessment or re-assessment proceedings in relation to any assessment year falling within the period of six assessment years referred to in section 153A(b) of the Act shall abate. Thus the Assessing Officer gets jurisdiction for six years assessment years referred to in section 153A(b) of the Act for making an assessment or re-assessment.
It is not the complaint of the assessee that any income, which is already subjected to assessment under section 143(3) or under section 148 of the Act completed prior to the search in respect of six assessment years referred to in section 153A(b) of the Act and in the second proviso to section 153A, has also been included in the assessment framed under section 153A of the Act. In such circumstances the plea of the assessee cannot be accepted.
In our considered opinion, as per clause (a) of sub section (1) of section 153A, at the stage of issue of notice u/s 153A, the only requirement is to ask the assessee to file return of income for relevant six years covered by section 153A and after filing of return of income, the assessment to be made by the AO will be assessment or reassessment has to be determined afterwards and not at the time of issue of notice u/s 153A. In this view of the matter, we find no merit in this technical objection raised by the assessee and the same is rejected.
Accordingly, the action of the AO in issuing notice u/s. 153A is justified. This ground of the assessee is therefore dismissed.
Nature of land sold - Addition in respect of transfer of land by Based on the documents found during the search in the Appellant’s group cases - What is sold by Appellant is agricultural and hence gains are outside the purview of capital gains tax? - HELD THAT:- As assessee was continuously carrying out agricultural activities in the impugned land and also offered agricultural income - This agricultural income offered by the assessee has been accepted and assessed in these assessment years. Contrary to this, the lower authorities are not ready to accept the sale of said land as agricultural land. The sale of land is to be treated as sale of agricultural land since there was continuous agricultural operations in the said land and though the land was converted, the land remained as agricultural land till sale of the same - we allow the ground taken by the assessee in both A.Ys.
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2022 (4) TMI 1608 - ITAT BANGALORE
Assessment u/s 153C - search and seizure action was conducted in the office premise in the Appellant’s group cases - AO opined that the Appellant is engaged in the purchase and sale of agricultural lands, hence proceeded to treat the activity of sale of agricultural lands to be ‘adventure in the nature of trade’ - HELD THAT:- Similar issue was considered by the coordinate Bench in the case of D. Dasappa [2009 (12) TMI 929 - ITAT BANGALORE] as held judgment of the Supreme Court in the case Sinhgad Technical Edn. Society [2017 (8) TMI 1298 - SUPREME COURT] is squarely applicable to the facts of the present case. Since the assessment framed u/s. 153C of the Act to be based on material found during the course of search which relate to or belong to the assessee and since we have held that there is no seized material for addition made by the AO, we do not wish to address the arguments made by the ld. AR for the assessee that the condition precedent for initiating the proceedings u/s. 153C of the Act having not been satisfied in the present case, therefore the assessment is liable to be annulled. Accordingly, we hold that the addition made by the AO is not based on seized material found in the course of search and therefore the addition cannot be sustained.
Nature of land sold - treatment of the gain arising out of sale of land as capital gain against the claim of assessee that it is exempt - HELD THAT:- This agricultural income offered by the assessee has been accepted and assessed in these assessment years. Contrary to this, the lower authorities are not ready to accept the sale of said land as agricultural land. In our opinion, the sale of land is to be treated as sale of agricultural land since there was continuous agricultural operations in the said land and though the land was converted, the land remained as agricultural land till sale of the same. In view of this, we allow the ground taken by the assessee. The other grounds are academic and dismissed accordingly.
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2022 (4) TMI 1607 - ITAT DELHI
Addition u/s 68 - enhancement of income u/s 56(2)(viib) - share capital and share premium received - identity and creditworthiness of the of the investors and genuineness of the transaction not proved - addition on protective basis by invoking the provisions of Section 56(2)(vii)(b) by CIT(A)
HELD THAT:- For protective addition u/s 56(2)(vii)(b) Identical issue had come-up before the Tribunal in assessee’s own case for the immediately preceding assessment year [2021 (3) TMI 459 - ITAT DELHI] to hold that the Ld. CIT(A) was not justified in making the addition of Rs.42 lakhs on protective basis by invoking the provisions of Section 56(2)(vii)(b) as held assessee has valued its shares as per the valuation certificate issued by the chartered accountant. Although the said valuation report was submitted before the AO to justify that the shares issued by the assessee was at fair market value, it was computed in accordance with Rule 11UA(a) of IT Rules, 1962, however, as we find, the AO rejected the same holding that the assessee is not having any worth of receiving any share premium. He has ignored the various assets shown by the assessee in the balance sheet such as cash and cash equivalent, - short-term loans and advances and other current assets - AO did not apply the formula provided in Rule 11UA and did not make any attempt to compute the value of shares of the assessee in accordance with Rule 11UA of IT Rules, 1962 which has been upheld by the ld.CIT(A).
Thus when the statute provides for a particular procedure, the authority has to follow the same and cannot be permitted to act in contravention of the same. It has been held by Hon’ble Supreme Court in the case of A.K. Roy vs. State of Punjab [1986 (9) TMI 412 - SUPREME COURT] that where a statute requires to do a certain thing in a certain way, the thing must be done in that way or not at all. Other methods or mode of performance are impliedly and necessarily forbidden.
Assessee has issued the shares at fair market value computed in accordance with Rule 11UA(a) of the IT Rules 1962 and no fault has been found in the method applied by the assessee and the lower authorities have made the addition u/s 56(2)(viib) purely on presumptions and surmises.
For addition u/s 68 - As assessee has filed the requisite details to substantiate the identity and creditworthiness of the share applicants and genuineness of the transaction. Nothing has been brought on record to negate the various evidences filed by the assessee. A perusal of the audited balance-sheet of these Investor Companies shows that these companies are having sufficient capital and reserves to make the investment in the assessee company and the entire transactions have been made through banking channel. Merely because the Investor Companies have shown meager income during the impugned assessment year, the same in our opinion, cannot be a ground to doubt the creditworthiness of the said company especially when the said company is having sufficient funds in its account in shape of share capital and free reserves.
Since the assessee in the instant case has proved the identity of the investors and filed sufficient details to substantiate the creditworthiness and genuineness of the transaction, therefore, respectfully following the decisions M/s. Priyatam Plaschem Pvt. [2018 (8) TMI 980 - ITAT DELHI], Real Time Marketing (P) Ltd. [2008 (4) TMI 8 - HIGH COURT OF DELHI] hold that the Ld. CIT(A) was not justified in confirming the addition made by the A.O. under section 68.
Appeal of the Assessee is allowed.
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2022 (4) TMI 1606 - MADHYA PRADESH HIGH COURT
Cancellation of warrant of arrest filed by u/s 70 of sub-section (2) of Cr.P.C. - Application for cancellation rejected on the ground that applicant-accused did not appear as and when the prosecution filed their charge-sheet in respect of Crime alleging offences punishable u/S 120-B r/w Sections 407, 420, 467, 468, 471 and 201 of IPC and Sections 13(1)(d) r/w 13(2) of Prevention of Corruption Act, 1988 - HELD THAT:- This Court is of the considered view that since it is not disputed that the present applicant had cooperated in the investigation and their investigation stands concluded by filing of charge-sheet. The question of arresting the applicant would be an exercise in futility.
Accordingly, impugned order dated 19.01.2022 passed by trial Court rejecting the application u/s 70 of sub-section (2) of Cr.P.C. is quashed the impugned order to the extent it relates to rejection of application u/s 70 of subsection (2) of Cr.P.C. is set aside. The subject to the fact that applicant appears and furnishes bail bond to the satisfaction of Learned Trial Judge on or before 30.04.2022.
The application disposed off.
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2022 (4) TMI 1605 - MADHYA PRADESH HIGH COURT
Cancellation of warrant of arrest filed by u/s 70 of sub-section (2) of Cr.P.C. - Application for cancellation rejected on the ground that applicant-accused did not appear as and when the prosecution filed their charge-sheet in respect of Crime alleging offences punishable u/S 120-B r/w Sections 407, 420, 467, 468, 471 and 201 of IPC and Sections 13(1)(d) r/w 13(2) of Prevention of Corruption Act, 1988 - HELD THAT:- This Court is of the considered view that since it is not disputed that the present applicant had cooperated in the investigation and their investigation stands concluded by filing of charge-sheet. The question of arresting the applicant would be an exercise in futility.
Accordingly, impugned order dated 19.01.2022 passed by trial Court rejecting the application u/S 70 of sub-section (2) of Cr.P.C. is quashed the impugned order to the extent it relates to rejection of application u/S 70 of subsection (2) of Cr.P.C. is set aside. The subject to the fact that applicant appears and furnishes bail bond to the satisfaction of Learned Trial Judge on or before 12.04.2022.
The application disposed off.
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2022 (4) TMI 1604 - MADRAS HIGH COURT
Priority/out of turn hearing of the appeals - Writ of Mandamus to call for the records of the writ petitioner company and to direct the respondent to dispose the same within a stipulated time - Indulgence of this Court to issue a direction to the respondent appellate authority to decide the appeal at an early date in view of the large pendency of appeals pending before the appellate authority - HELD THAT:- Insofar as the prayer sought for herein is concerned, it is only for a mandamus to direct the appellate authority to decide the appeal filed by the petitioner on merits within a time frame. In this context, even though attempt has already been made by the assessee to file a petition for stay, the same is also still pending, where no decision seems to have been taken. When that being so, the petitioner assessee may not be remedy-less during the pendency of the appeal. Therefore this Court, taking into account the facts and circumstances and having regard to the submissions made by both sides, is inclined to dispose of this writ petition with the following order.
That there shall be a direction to the respondents / appellate authority to decide and dispose of the appeal filed by the petitioner dated 22.10.2021 against the assessment order dated 23.09.2021 for the Assessment Year 2018-2019 on merits and in accordance with law, after giving a fair hearing to the petitioner within a period of four months from the date of receipt of a copy of this order.
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2022 (4) TMI 1603 - ITAT DELHI
Disallowance of entire expenditure by the CPC u/s 143(1) - assessee submitted that the adjustment made by the CPC Bangalore does not fall under any of the limbs prescribed u/s 143(1) as debatable issue cannot be subject matter of adjustment u/s 143(1) - rectification application rejected - Also assessee contention that in case of charitable society, even if benefit u/s 11 and 12 of the Act is denied and its income was brought to tax as “Income from Other Sources”, all relevant expenditures are also to be allowed u/s 57(iii) of the Act.
HELD THAT:- CPC, Bangalore, processed the return u/s 143(1) of the Act and disallowed the expenses as claimed in the return of income. Assessee filed rectification application before the AO, which was rejected by the AO and the ld. CIT(A) also dismissed the appeal filed by the assessee holding that since the status of the assessee is AOP (Trust) on which there is no threshold limit, therefore, the calculation of the tax rate at maximum marginal rate is correct. However, the AO did not elaborate regarding the disallowance of entire expenditure claimed by the assessee i.e. 143(1) by the CPC, Bangalore.
A perusal of the same shows that the adjustment made by the CPC, Bangalore, does not fall under any of the limb prescribed u/s 143(1) of the Act. Further, the submission the ld. Counsel that no such adjustment was made in earlier Assessment Years and there is no change in the facts during the year under consideration, also could not be controverted by the ld. DR.
Even otherwise also, as find in the case of DDIT (E) vs Petroleum Sports Promotion Board [2014 (3) TMI 298 - DELHI HIGH COURT] has held that in case of a charitable society even if benefit u/s 11 & 12 of the Income Tax Act, 1961 is denied and its income was brought to tax as income from other sources, all relevant expenditures were also to be allowed.
Thus adjustment made by the CPC, Bangalore, and confirmed by the ld. CIT(A) is not warranted being contrary to provisions of section 143(1) - Decided in favour of assessee.
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2022 (4) TMI 1602 - MADRAS HIGH COURT
Vicarious liability of Director of the Company - failure to reply to statutory notice - Petitioner submitted that the Petitioner is the Director of the Company, but she was not in-charge of the day to day affairs of the Company - HELD THAT:- On consideration of the rival submissions and on perusal of the records, the submission of the learned Counsel for the Petitioner cannot at all be considered at this stage. As rightly pointed out by the learned Counsel for the Respondent, this subject matter is to be considered during trial before the learned Metropolitan Magistrate. In the light of the guidelines issued by the Hon'ble Supreme Court in STATE OF HARYANA AND OTHERS VERSUS CH. BHAJAN LAL AND ANOTHER [1992 (12) TMI 234 - SUPREME COURT], to the Hon'ble High Court regarding the quashing of criminal complaint. What are all argued by the learned Counsel for the Petitioner can be agitated as valuable defence of the Accused before the learned Metropolitan Magistrate.
These Criminal Original Petitions are dismissed with direction to the XVIII Metropolitan Magistrate, Saidapet, Chennai to proceed with the trial and dispose of the case within a period of three months from the date of receipt of a copy of this order or from the date of uploading this order on the website of this Court.
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2022 (4) TMI 1601 - CALCUTTA HIGH COURT
Refund of GST - cancellation of licence by mutual agreement, to permit an honorable exit from the contract agreement - HELD THAT:- This Court notes that the refusal is completely devoid of reasons. In that view of the matter, the Group General Manager, IRCTC, Eastern Zone, Kolkata shall consider the petitioner’s representation and furnish appropriate reasons on the question of refund the aforesaid GST component. While dealing with the petitioner’s representation, the respondent shall not be bound by the refusal already on record. The refusal may also be reconsidered in course of disposal of the aforesaid representation.
It is expected that the aforesaid representation would be disposed of within a period of one month from date, mandatorily and positively.
Thus, WPO is disposed of.
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2022 (4) TMI 1600 - SUPREME COURT
Validity of Arbitral Award - appeal dismissed solely on the ground of delay - sufficient cause for delay or not - HELD THAT:- The explanation as given in the affidavit in support of the application for condonation of delay filed by the Petitioners in the High Court does not make out sufficient cause for condonation of the inordinate delay of 337 days in filing the appeal Under Section 37 of the Arbitration and Conciliation Act. The law of limitation binds everybody including the Government. The usual explanation of red tapism, pushing of files and the rigmarole of procedures cannot be accepted as sufficient cause. The Government Departments are under an obligation to exercise due diligence to ensure that their right to initiate legal proceedings is not extinguished by operation of the law of limitation. A different yardstick for condonation of delay cannot be laid down because the government is involved.
The right of appeal is a statutory right, subject to the laws of limitation. The law of limitation is valid substantive law, which extinguishes the right to sue, and/or the right to appeal. Once an appeal is found to be barred by limitation, there can be no question of any obligation of the Court to consider the merits of the case of the Appellant - When consideration of an appeal on merits is pitted against the rejection of a meritorious claim on the technical ground of the bar of limitation, the Courts lean towards consideration on merits by adopting a liberal approach towards 'sufficient cause' to condone the delay. The Court considering an application Under Section 5 of the Limitation Act may also look into the prima facie merits of an appeal.
This Court is, however, not inclined to entertain this Special Leave Petition since the Petitioners have failed to show sufficient cause for the condonation of the inordinate delay of 337 days in filing the Appeal in the High Court. Moreover, there are no grounds for interference with the arbitral award impugned.
The impugned judgment and order of the High Court need not be interfered - SLP dismissed.
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2022 (4) TMI 1599 - SUPREME COURT
Maintainability of execution petition - Seeking possession of the property of which sale deed was executed - HELD THAT:- The High Court has completely misdirected itself in accepting the petition Under Article 227 of the Constitution of India and directing the decree-holders to file a suit for possession by misreading the judgments referred to.
There was no provision in the Specific Relief Act, 1877 corresponding to Section 22 of the Act. Section 22 came to be part of the Act, in pursuance of the recommendation of Law Commission in its 9th Report submitted on 19th July, 1958.
To examine whether a provision is directory or mandatory, one of the tests is that the court is required to ascertain the real intention of the legislature by carefully attending to the whole scheme of the statute. Keeping in view the scheme of the statute, we find that Section 22(2) of the Act is only directory and thus, the decree-holder cannot be nonsuited for the reason that such relief was not granted in the decree for specific relief - The Defendant in terms of the agreement is bound to handover possession of the land agreed to be sold. The expression "at any stage of proceeding" is wide enough to allow the Plaintiffs to seek relief of possession even at the appellate stage or in execution even if such prayer was required to be claimed.
The judgment debtor in the written statement has admitted that the property is a vacant land and that she has sold other portion in favor of one Lakshmipathy. The stand of the judgment debtor now that the Respondent is in possession of 750 sq. feet would not defeat the right of possession of 2400 sq. feet of an area which she has agreed to sell to the Plaintiffs in respect of which decree was passed. All sales affected, and the construction, if any, raised are subject to lis pendens and no legal or equitable rights arise in favour of the purchasers during the pendency of the proceedings. Therefore, the decree-holders are entitled to actual physical possession of 2400 sq. feet of land which was agreed to be sold to the Appellants.
The order passed by the High Court is hereby set aside. The Executable Court shall ensure that such decree is executed and if any construction is raised on any part of the land agreed to be sold, the possession shall be delivered with or without construction in accordance with law - Appeal allowed.
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2022 (4) TMI 1598 - KARNATAKA HIGH COURT
Maintainability of petition - remedy of seeking enhancement of compensation before the reference court being available to the petitioners - entitlement to compensation under the Land Acquisition Act, 1894 or under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 - lands acquired pursuant to preliminary notification issued after 01.01.2014 under Section 28(1) of the Karnataka Industrial Areas Development Act, 1966 - compensation payable in favour of the petitioners is exempt from payment of tax deduction at source(TDS) and also from payment of income tax in view of Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 and Section 194-LA of the Income Tax Act amended vide Finance Act 67 of 2017 w.e.f 01.04.2017 as well as the CBDT Circular dated 25.10.2016 or not.
Whether the writ petitions are maintainable in view of the remedy of seeking enhancement of compensation before the reference court being available to the petitioners, who have already sought for such reference? - HELD THAT:- Merely because the remedy to seek enhancement before the reference court is available to the petitioners and they have sought for reference, there is no bar/prohibition for the petitioners to contend that they are entitled to compensation under the said Act of 2013 and not under the said Act of 1894; in other words, the right to seek compensation under the said Act of 2013 on the ground that the same was applicable and not the said Act of 1894 is completely different, distinct and mutually exclusive and independent from the right to seek reference on the ground that the compensation awarded under either of the enactments is meager and inadequate and deserves to be enhanced - notwithstanding the availability of the remedy in favour of the petitioners to seek enhancement before the reference court which they had already sought for, the present petitions seeking awarding of compensation under the said Act of 2013 and not under the said of 1894 under which the impugned awards have been passed are maintainable - question answered in favour of the petitioners by holding that the present petitions are maintainable.
Whether the petitioners are entitled to compensation under the Land Acquisition Act, 1894 OR under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, in respect of their lands acquired pursuant to preliminary notification issued after 01.01.2014 under Section 28(1) of the Karnataka Industrial Areas Development Act, 1966? - HELD THAT:- Not only the respondents have unequivocally and unambiguously decided, resolved, accepted and acquiesced to the fact that the land losers were entitled to payment of compensation under the said Act of 2013 in respect of KIADB acquisitions initiated pursuant to notification issued under Section 28(1) of the KIAD Act after 01.01.2014, but the respondents have also passed awards and paid compensation to such land losers under the said Act of 2013. Further, as stated supra, the entitlement of the land losers to receive compensation under the said Act of 2013 and the liability of the respondents to pass awards and pay the same has same has been recognised, accepted, confirmed and affirmed by this Court in the aforesaid litigations which have has attained finality and become conclusive and binding upon the State and KIADB - the subject lands of the petitioners have been acquired pursuant to notification issued under Section 28(1) of the KIAD Act after 01.01.2014 when the said Act of 2013 came into force, petitioners would be entitled to compensation under the said Act of 2013 and not under the said Act of 1894 which was clearly not applicable for the purpose of payment of compensation in favour of the petitioners.
Question answered in favour of the petitioners by holding that they are entitled to compensation under the said Act of 2013 and not under the said Act of 1894 and consequently, the impugned awards, endorsements, orders, communications, official memorandums etc., issued/passed by the respondents deserve to be quashed and the respondents are to be directed to pass fresh awards and do all such necessary acts, deeds and things etc., for the purpose of paying compensation to the petitioners towards acquisition of the subject lands under the said Act of 2013.
Whether the compensation payable in favour of the petitioners is exempt from payment of tax deduction at source(TDS) and also from payment of income tax in view of Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 and Section 194-LA of the Income Tax Act amended vide Finance Act 67 of 2017 w.e.f 01.04.2017 as well as the CBDT Circular dated 25.10.2016? - HELD THAT:- A conjoint reading and the cumulative effect of Section 96 of the said Act of 2013, the CBDT Circular dated 25.10.2016, Section 194-LA and Section 10(37) of the I.T.Act make it abundantly clear that compensation payable in respect of the awards passed subsequent to 01.01.2014 when the said Act of 2013 came into force would be exempt from payment of income tax as well from deduction of tax deduction at source(TDS). In the instant case, the subject lands were acquired pursuant to preliminary notifications issued under Section 28(1) of the KIAD Act subsequent to 01.01.2014 which were followed by the impugned awards as well as the impugned endorsements, official memorandums, communications, orders, actions, etc., also undisputedly issued after 01.01.2014.
Compensation payable in favour of the petitioners, whose lands were notified for acquisition subsequent to 01.01.2014 would be exempt from payment of income tax as well as exempt from deduction of tax deduction at source(TDS) and the impugned endorsements, communications, orders, actions, etc., issued/passed by the revenue are illegal, arbitrary and without jurisdiction or authority of law and liable to be quashed.
Though the question as to whether the said amendment to Section 30 is prospective or retrospective has not been gone into in the present order and the same is left open to be decided in an appropriate case, in the light of the undisputed fact that the respondents would necessarily have to pass fresh/modified awards and do all such necessary acts, deeds and things etc., in favour of the petitioners under the said Act of 2013, Section 96 of the said Act of 2013, CBDT Circular dated 25.10.2016, Section 194-LA and Section 10(37) of the I.T.Act would become applicable to the petitioners who would be entitled to the benefit of exemption from payment of income tax and from tax deduction at source(TDS) in respect of the awards and compensation in their favour.
This question is also answered in favour of the petitioners by holding that the impugned awards, endorsements, orders, communications, actions etc., of the respondents directing payment of income tax and tax deduction at source(TDS) on the subject compensation amounts are illegal, arbitrary and without jurisdiction or authority of law and that the same deserve to be quashed and the respondents are to be directed to pass fresh/modified awards and do all such necessary acts, deeds and things etc., in favour of the petitioners under the said Act of 2013 by exempting the petitioners from payment of income tax and tax deduction at source(TDS) on the compensation amounts paid/payable in their favour.
Petition allowed.
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2022 (4) TMI 1597 - GUJARAT HIGH COURT
Seeking grant of Regular bail - conscious possession of contraband substance or not - grounds of parity - HELD THAT:- The applicant in this case had purchased intoxicating cough syrup from the accused in this case Shaileshbhai Kushwah. Shaileshbhai does not have any license to possess or sell such medicine.
In connection with the submission of parity, the Court observes that in the order of Allauddin Dagdubhai Mansuri, the Court has specifically observed that said accused had accompanied the applicant as a friend and had no other connection, whereas in case of the applicant, the applicant was in telephonic connection consistently with the main supplier namely Shailesh Kushwah, who is later on now arrested and in custody as well as other accused persons, who were part of the organized crime, whereas the investigation has not found any telephonic connection or call details record of said Allauddin Dagdubhai Mansuri with any other accused except for the present applicant.
It would be appropriate to give due regards to the submissions made by the learned APP bringing of notice of the Court the grim situation that is prevailing, especially in the State of Gujarat where offences under the provision of NDPS Act dealing with the drugs like 'Ganja', Charas', 'Mephadrone' and 'Amphetamine' are on huge increase and the action is taken by the Government Agency to deter the use from indulging into the activities related to drugs which include the drug dealing, drug peddling and drug consuming.
Thus, no case is made out for the exercise of discretion in favour of the applicant for the grant of regular bail in connection with aforesaid C.R. Hence, the application is dismissed.
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2022 (4) TMI 1596 - ITAT AHMEDABAD
Revision u/s 263 - Disallowance u/ 10AA - as per CIT assessee has incorrectly filed claim of exemption u/s 10AA of the Act in an incorrect format, which has been accepted by the Ld. AO - CIT observed that the assessee had incorrectly submitted form 56G (instead of form 56F) which is required for claiming exemption u/s. 10B - HELD THAT:- It is a well accepted principle of law that beneficial provisions should be given a liberal construction and once the assessee has satisfied the conditions laid down for claiming deduction/exemption under the relevant beneficial provision, the same should not be denied. We are of the view that exemption benefits u/s 10AA cannot be denied to the assessee on account of a procedural lapse committed by the Chartered Accountant of the assessee. We must always keep the object of the Act in view while interpreting the section. The legislative intention must be the foundation of the court’s interpretation. Once an assessee falls within the ambit of a beneficial provision, then the said provision should be liberally interpreted.
Section 10AA of the Act is a beneficial provision aimed at encouraging exports of goods and services by setting up of industrial units in special economic zones. In our view, benefit of section 10AA should not be denied on account of a procedural/ technical default by the assessee or his chartered accountant by invoking revisionary jurisdiction u/s 263 of the Act, if otherwise the assessee is eligible to claim deduction under the said exemption provision.
Whether there is sufficient compliance once assessee has filed the revised Form 56F in section 263 proceedings before Pr. CIT.? - CIT has initiated 263 proceeding only on account of an inadvertent error on the part of the chartered accountant of the assessee by filing form 56G instead of form 56F in support of claim of deduction u/s. 10AA of the Act. This error has also been rectified by the A.R. of the assessee during the course of 263 proceeding wherein revised form 56F for claiming deduction u/s. 10AA of the Act was produced before Pr. CIT during 263 proceeding. We are therefore of the view that there is sufficient compliance if the correct form 56F has been filed during the course of revisionary proceeding, there is no material objective to be achieved by directing revision of the original assessment order once the procedural lapse for which revisionary proceedings has been initiated has been rectified during 263 proceedings.
Whether once the Ld. AO has examined the claim u/s 10AA of the Act and has accepted the same, on appreciation of documents placed on record, can it be said that the twin conditions of section 263 of the Act viz. order passed is erroneous and prejudicial to the interests of revenue are satisfied? - As in the instant case though there may be a procedural breach, but on the aspect of claim of deduction u/s 10AA, the issue has been analyzed by the Ld. AO in detail during the assessment proceedings and relied granted accordingly. Even in the 263 proceedings, the Ld. Pr. CIT has not challenged the assessee’s eligibility to claim deduction u/s 10AA of the Act nor has he pointed out any error in the findings of the Ld. AO with regards to the assessee’s claim u/s 10AA of the Act. The only contention of Ld. Pr. CIT is that the Ld. AO failed notice that claim of exemption u/s 10AA of the Act has been filed in an incorrect Form, which the assessee revised during the course of revisionary proceedings. In our considered view, in the instant facts, the twin conditions of section 263 of the Act viz. order passed is erroneous and prejudicial to the interests of revenue are not satisfied in the instant facts. In our view, Ld. Pr. CIT erred in law and in facts in invoking section 263 of the Act to revise the order of Ld. AO - Decided in favour of assessee.
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2022 (4) TMI 1595 - PATNA HIGH COURT
Invocation of territorial jurisdiction of this Court - Disqualification for future employment - petitioner who was working on the post of assistant Sub-Inspector, CISF was dismissed from service - Seeking reinstatement of petitioner with continuity of service and consequential benefit including back wages - partial cause of action - HELD THAT:- MeIn view of merely the fact that petitioner is a resident of State of Bihar and certain correspondences have been made by him and that does not accrues any partial cause of action to the petitioner in the State of Bihar so as to entertain writ petition. If this analogy is accepted every aggrieved person sitting at his/her home town invoke territorial jurisdiction of the respective State High Court, even though contesting respondent's office or residence is in a different place-territorial jurisdiction. For example employee of the respondents if he is resident of Tamil Nadu and make correspondence from Tamil Nadu and he cannot invoke jurisdiction of Madras High Court as employer and employee relation would be only at Assam/West Bengal.
If the employer is Union of India one can understand. If the other than Union of India, in that event, invoking Article 226(2) of Constitution is not feasible and appropriate. It is to be noted that 1st respondent is not necessary and proper party, he has been unnecessarily impleaded, since no order of 1st respondent is under challenge -- Accordingly, writ petition stands rejected on the score that this Court has no territorial jurisdiction in respect of quashing the action of the respondents-Assam/State of West Bengal.
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2022 (4) TMI 1594 - SC ORDER
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - the petition was admitted by NCLT - HELD THAT:- Issue notice.
Until further orders, there shall be stay of the impugned order passed by the National Company Law Appellate Tribunal, Principal Bench, New Delhi so far as the remand of I.A. No. 300 of 2018 to the Adjudicating Authority i.e. National Company Law Tribunal, is concerned.
List in the month of July, 2022.
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2022 (4) TMI 1593 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Dismissal of Application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 - amount given as Share Application Money - Financial Debt or not - HELD THAT:- Admittedly, the amount was given, as per the case of the Appellant, as a Share Application Money on which no share was allotted. Under some settlement, the principal amount was refunded and thereafter, the Application under Section 7 was filed by the Appellant - the Adjudicating Authority rightly took the view that the amount which was given by the Appellant as Share Application Money cannot be treated to be a financial debt so as to enable the Appellant to trigger the Insolvency Process under Section 7 of the Code.
Learned Counsel for the Appellant submitted that a cheque was also issued which was dishonored. It is for the Appellant to take appropriate proceeding, if any, in accordance with the law.
The Adjudicating Authority did not commit any error in rejecting the Application under Section 7 - There is no merit in the Appeal - The Appeal is dismissed.
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2022 (4) TMI 1592 - ITAT INDORE
Admission of additional evidences by CIT(A) - as alleged by revenue that there is violation of the provisions of Rule 46A of the Income Tax Rules, 1962 - HELD THAT:- Whenever any additional evidences are admitted, the CIT(A) is duty bound to provide a copy of such additional evidences to the AO so that the AO after making further inquiry can make his comments on such evidences by way of a Remand Report. We find that in the instant case, the ld. CIT(A) has not only forwarded the additional evidences to the AO, but, on such additional evidences, the AO has also furnished his Remand report and we further find that in the impugned Order, the ld. CIT(A) has mentioned at many places that such Remand Report was duly taken into consideration while passing the impugned Order. We also find that before us, the ld. CIT(DR) could not point out any specific instance where the ld. CIT(A) had not taken the comments of the AO into his consideration. Thus, in our view, there was absolutely no violation of the provisions of Rule 46A of the Income Tax Rules, 1962 in the present case - Decided against revenue.
Assessment u/s 153A - Addition u/s 40A - cash expenditure in violation to the provisions of sections 40A(3)/40A(3A) ascertained by the Special Auditors - HELD THAT:- We find that the AO, while making the impugned additions on account of disallowance u/s. 40A(3)/ 40A(3A) of the Act in the assessment years under consideration, has not made any single reference to any incriminating material found during the course of the search. Before us, CIT (DR) has also not brought on record any single incriminating material on the basis whereof the additions have been made by the AO in the assessment order for the years under consideration. We find that the years under appeals are non-abated assessment years. It is a settled proposition of law that addition in non-abated assessment years can be made only on the basis of incriminating material found during the course of search.
We find support from the decision of the Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] wherein held that completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.
Thus no addition could have been made by the AO in the assessee’s income in a completed year of assessment without having recourse to any incriminating material. We find full substance in the legal plea taken by the assessee that all the assessment years under appeal are those in respect of which no assessment proceedings could be said to be pending on the date of initiation of the search in the case of the assessee on 07/01/2016 and therefore, merely on the basis of entries found recorded in the regular audited books of account of the assessee, no addition could have been made for making disallowance u/s. 40A(3)/40A(3A) - Decided in favour of assessee.
Unexplained expenditure - CIT(A) deleted the addition - AO, from the subject loose papers, noted that the seized document contains details of summary of capital and interest working found in search and seizure action u/s. 132 - HELD THAT:- We find that on the basis of such seized document, the AO reached to the conclusion that the assessee had actually incurred such expenses and such expenses were also claimed by it in its books of account. For reaching such conclusion, the AO took a stand that no books of accounts were produced and therefore, whether or not such expenses have been claimed by the assessee in its books of accounts could not be verified at her end. According to the AO, the assessee has claimed such interest expenditure which are not allowable in the nature. However, we find merit in the contention of the assessee that first of all, the entire books of account in the soft copy were seized by the search party. Secondly, such books of account were duly produced before the Special Auditors and such production of books of account before the Special Auditors is evident from the various findings as regard to the cash payments etc. given by the Special Auditors which have been referred to by the AO in the body of the assessment order itself. Further, we find that without making a reference to the regular books of account, the same could not have been referred to the Special Auditors u/s. 142(2A) of the Act. Thus, the findings given by the AO that the assessee had not produced books of account, in our view, are not factually correct.
From financial statements, we did not find claiming of any expenditure by way of interest on share capital as presumed by the AO on the basis of the seized document. We find merit in the contention of the assessee that merely for the purpose of computing the opportunity cost of investment in the assessee company, computation of interest was made on notional basis and from such computation itself, it cannot be conclusively held that such interest expenditure were actually incurred or paid by the assessee company to various shareholders. In view of such finding, we find absolutely no justification in the action of the ld. AO in making the addition in the assessee’s income on account of interest on capital and accordingly no interference is called for in the finding of Ld.CIT(A). - Decided against revenue.
Suppression of profit for A.Y. 2012-13 - CIT(A) deleted the addition partly - CIT(A) has applied net profit rate of 1.5% of suppressed sales and has confirmed the addition partly - assessee had maintained two set of books of account as held by both the authorities below - HELD THAT:- We are in agreement with the contention of the assessee that the unaccounted set of books of account maintained by the assessee in the name of M/s. ABC Ltd. are not correct and complete and there were many expenditure which although, apparently incurred by the assessee were not found recorded. In such circumstances, respectfully following the decisions of Balchand Ajit Kumar [2003 (4) TMI 76 - MADHYA PRADESH HIGH COURT] and again in the case of Manmohan Sadhani [2007 (10) TMI 246 - MADHYA PRADESH HIGH COURT] we uphold the findings of the ld. CIT(A) in applying the net profit rate of 1.5% on the amount of suppressed sales which has resulted into confirmation of addition partly. Revenue ground Dismissed.
Undisclosed income - difference in figures of capital and loans as per Tally data of ABC Ltd. and the audited accounts of the assessee - CIT(A) deleted the addition - HELD THAT:- The present case is a case of suppression of liabilities in audited books of account vis-à-vis the parallel set of books of account. In our considered view, under the scheme of the law, any undisclosed investment or undisclosed expenditure can be subject matter of addition either u/s. 69 or s. 69A or s. 69B or s. 69C of the Act but in the present case the issue is with regard to unexplained liability. We find that the addition was made by the AO on the only basis of the difference in the audited financial statements and the parallel data. But since, the difference cannot lead to assumption of any income, whether real or deemed, in the hands of the assessee, in our considered view, there was absolutely no justification for the AO to make the impugned addition. Accordingly, we find no infirmity in the action of the ld. CIT(A) in deleting the entire addition. Decided against revenue.
Unaccounted cash payment - Undisclosed transactions found recorded in the books of M/s. ABC Ltd.- subject addition was made by the AO on the basis of one computerized excel sheet seized and inventorized - CIT(A) deleted the addition - HELD THAT:- We find that it is not the case of the Revenue that the assessee company was holding any agriculture land at Mortaka and therefore, without having any other corroborative evidence, merely on the basis of such excel sheet, it could not have been conclusively held that such expenditure were incurred by the asseseee company itself. Accordingly, we find no infirmity in the action of the ld. CIT(A) in deleting the addition - Decided against revenue.
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2022 (4) TMI 1591 - NATIONAL COMPANY LAW TRIBUNAL CHENNAI
Sanction of Composite Scheme of Amalgamation - Section 230 to 232 and other applicable provisions of the Companies Act, 2013 - HELD THAT:- After analyzing the Scheme in detail, this Tribunal is of the considered view that the scheme as contemplated amongst the petitioner companies seems to be prima Mac/e in compliance with the provisions of the Companies Act, 2013. Further there seems to be no objection on the part of the shareholders that the Scheme is in any way detrimental to the interest of the shareholders of the Company. In view of absence of any other objections having been placed on record before this Tribunal and since all the requisite statutory compliances having been fulfilled, this Tribunal sanctions the Scheme of Amalgamation along with Company Petitions as well as the prayer made therein.
The Company Petitions are allowed and the Composite Scheme of Amalgamation annexed with the Company Petition s is hereby sanctioned and shall be binding on the members, Secured, unsecured creditors and shareholders of the Transferor/ Transferee Companies.
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2022 (4) TMI 1590 - ITAT MUMBAI
Nature of expenditure - software expenses - AO treated it as capital expenditure - HELD THAT:- Upon hearing the parties, we find that this is a recurring issue since assessment year 2004-05 to 2011-12. In all these years, the Tribunal took a view in favour of the assessee, as has been agreed by the DR. It is also brought to our notice that notice further appeal has been preferred by the Revenue against the decision of the Tribunal. This being the factual matrix, consistent with the earlier decisions of the Tribunal, we uphold the order of the Ld.CIT(A) and reject the ground raised by the Revenue. This ground of appeal of the Revenue fails.
Addition of notional interest income in respect of toll road from Madhya Pradesh State Industrial Development Corporation - HELD THAT:- As counsels representing the parties submitted that this issue has been restored to the file of the Assessing Officer for the assessment years 2004-05 to 2011-12. Therefore, consistent with the earlier decisions of the Tribunal for the above assessment years, the issue in ground 2 raised by the Revenue is restored to the file of the Assessing Officer for de novo consideration in line with the directions issued for the assessment years 2004-05 to 2011-12. This ground is treated as allowed for statistical purpose.
Disallowance of payments made to clubs - HELD THAT:- Upon hearing the parties, we find that this issue is covered in favour of the assessee by the earlier orders of the Tribunal for the assessment years 2005- 06 to 2011-12. Therefore, consistent with the earlier decisions of the Tribunal for the assessment years 2005-06 to 2011-12, we uphold the order of the CIT(A) on this issue.
Depreciation on residential properties - AO held that depreciation claimed in respect of house properties, income from which were chargeable as ‘Income from house property’, was not allowable - HELD THAT:- Upon hearing the parties, we note that this issue has been decided by the Tribunal in favour of the assessee for earlier years, i.e. A.Ys. 2004-05 to 2011-12. There is no change in the facts and circumstances of the issue. Therefore, being consistent with earlier orders of the co-ordinates benches, we allow this ground raised by the assessee. Ground 1 of the appeal is allowed.
Depreciation on toll road - HELD THAT:- The issue stands squarely covered by the decision of the Tribunal for the assessment years 2010-11 and 2011-12 [2019 (12) TMI 1499 - ITAT MUMBAI], wherein the “C” Bench of this Tribunal by following the decisions of the Tribunal for assessment years 2008-09 and 2009-10 [2019 (11) TMI 1368 - ITAT MUMBAI] has restored the issue to the file of the Assessing Officer with direction to the Assessing Officer to decide the issue keeping in view the directions of the Tribunal for the A.Ys. 2004-05 to 2007-08. This ground is allowed, for statistical purpose.
Disallowance u/s 14A read with rule 8D - HELD THAT:- We restore this issue to the file of the Assessing Officer to follow the directions of the Tribunal for the A. Y. 2004-05 to 2007-08 [2019 (4) TMI 1809 - ITAT MUMBAI] and recompute the disallowance in accordance with the directions therein. We also direct the Assessing Officer to recompute the disallowance keeping in view the decision of the special bench of Delhi in the case of ACIT vs Vireet Investments Private Limited [2017 (6) TMI 1124 - ITAT DELHI]. This ground is allowed for statistical purpose
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