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Income Tax - Case Laws
Showing 101 to 120 of 185 Records
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2006 (3) TMI 201 - ITAT BOMBAY-G
Profits Derived From Exports ... ... ... ... ..... ore the Tribunal. 32. We have heard the rival submissions. We find that the issue stands covered in favour of the assessee by the decision of the Special Bench of the Tribunal in the case of Lalsons Enterprises vs. Dy. CIT (2004) 82 ITJ (Del)(SB) 1048 (2004) 89 ITD 25 (Del)(SB). In this case the Tribunal has held as under (iii) For the purpose of applying Expln. (baa) below sub-s. (4B) of s. 80HHC and while reducing 90 per cent of the receipt by way of interest from the profits of the business, it is only the 90 per cent of the net interest remaining after allowing a set off of interest paid, which has a nexus with the interest received, that can be reduced and not 90 per cent of the gross interest. 33. In the light of the above observation of the Tribunal, we remand the matter back to the file of AO to decide the issue afresh, after providing adequate opportunity to the assessee of being heard. 34. In the result, appeal of the Revenue stands allowed for statistical purposes.
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2006 (3) TMI 200 - ITAT BOMBAY-F
Share Application Money ... ... ... ... ..... tio laid down as sought to be propounded by the Delhi High Court in Stellar Investment Ltd. s case. A decision becomes binding as a precedent only when the Court decides a particular question of law or lays down the ratio through conscious adjudication. Agreement with the finding of fact without adverting to the ratio laid down does not create a precedent. In order to support this view, we may refer to the decisions in Municipal Corporation of Delhi vs. Gurnam Kaur AIR 1989 SC 38 (para 11) Gangadharan vs. Janardhana Mallan AIR 1996 SC 2127 and Director of Settlements vs. M.R. Apparao (2002) 4 SCC 638, 650. We are, therefore, unable to agree with the contention of Mr. Pal that the decision in Sophia Finance Ltd. s case is no longer good law. In view of the decision of Hon ble Calcutta High Court, we are of the view that assessee cannot draw any benefit from the decision of Hon ble Delhi High Court. . In the result, the appeal of the assessee is allowed for statistical purpose.
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2006 (3) TMI 199 - ITAT BOMBAY-E
Double Taxation Relief - DTAA between India and Netherlands - received arbitration award - payment taxable under Article 7 - No Permanent Establishment - Levy of interest u/s 234D - HELD THAT:- We find that the language of Article 7(1) of DTAA between India and Netherlands is unambiguous and clearly lays down that if an enterprise carries on business in the other State through a Permanent Establishment situated therein, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that Permanent Establishment. Here in this Article there is no mention of any condition of there being a PE in that other State to be in existence in the year of receipt of income by the enterprise. In these facts since the assessee was having a PE in India and also the income of Rs. 30.78 crores received from NMPT being attributable to the PE in India and there being no condition that PE should be in existence in India in the year of receipt of the amount by the enterprise, we hold that the arbitration award of Rs. 30.78 crores received by the assessee-company from NMPT project has rightly been taxed by the Assessing Officer as income of the assessee-company for the assessment year 2001- 02.
In view of our finding that the assessee was having PE in India and the income of Rs. 30.78 crores was attributable to PE in India and accordingly taxable in the hands of the assessee for the relevant assessment year 2001-02, we consider that the issue of applicability of provision of section 176(3A) of the Act is not relevant. Accordingly, the issue is decided in favour of the revenue and the Grounds of appeal Nos. 1 and 2 of the assessee are dismissed.
Taxing the arbitration award - The language of section 176(3A) lays down that the amount received will be taxed as income in the like manner as if such sum were received before such discontinuation of business. Accordingly, it cannot be said that as per the wording of section 176(3A) of the Act such income can be taxed in the hands of the assessee on a gross basis. We direct the Assessing Officer to tax the receipt of arbitration award of Rs. 30.78 crores, not on gross basis and to allow the allowable deductions thereon, if had not been allowed already in the earlier assessment years. We order accordingly.
Deduction of arbitration proceedings related expenses incurred against the arbitration award - We find no justification for not allowing the genuine expenses incurred by the assessee in relation to the arbitration award amount received by it. While deciding the Grounds of appeal Nos. 1 and 2 in this appeal, we have held that the assessee was having a PE and the amount of Rs. 30.78 crores received by the assessee is attributable to the PE in India and accordingly the allowable expenses in relation to this amount of Rs. 30.78 crores have to be allowed as allowable deduction to the assessee. Accordingly the Assessing Officer is directed to examine and allow the genuine and allowable expenses incurred by the assessee in relation to the arbitration award amount received by the assessee. We direct accordingly.
Levy of interest u/s 234D - The provision of section 234D was not in the statute book during the relevant period and was inserted by the Finance Act, 2003 with effect from 1-6-2003. In this case the processing u/s 143(1)(a) was made on 25-2-2003 wherein the order was passed granting refund to the assessee and on which date the provision of section 234D had not come on the statute. In these facts of the case we are of the view that the decision of the Delhi Tribunal in Glaxo Smithkline Asia (P.) Ltd.'s case [2005 (8) TMI 301 - ITAT DELHI-C] is applicable and accordingly the interest u/s 234D of the Act is not chargeable to the assessee and the ground of appeal No.6 of the assessee is allowed.
In the result, the appeal is partly allowed.
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2006 (3) TMI 198 - ITAT BOMBAY-E
Deemed Dividend u/s 2(22)(e) - accumulated profits - unexplained cash credits - HELD THAT:- Undisputedly, the shareholders of the lender-company Mr. Kirti Kapadia and Mrs. Tanuben Kapadia were holding more than 10 per cent of the equity shares in the lender-company i.e., SVMIPL and these shareholders also held more than 20 per cent of the equity shares in the assessee-company. Being a common shareholdings in both the companies, the assessee's case falls within the category No. 2 as discussed. The lower authorities are given a categorical finding in this regard and nothing is placed on behalf of the assessee to rebut this finding. We, therefore, have no hesitation in holding that provisions of section 2(22)(e) were rightly invoked by the revenue authorities on the advance given to the assessee. In this section, it has not been distinguished whether these advances are the trade advances or for different purposes. Only few exceptions are given in which these advances do not fall within the category of deemed dividend.
In the instant case, assessee has taken a plea that the advances and loans were given in the ordinary course of its business, but, nothing is placed on record to establish that the substantial part of the business of the lender-company i.e., SVMIPL was lending of money. Whereas, CIT(A) has given a categorical finding in the light of profits earned by the lender-company i.e., SVMIPL and has held that the gross receipt of the lender-company were to the tune of Rs. 7,80,69,819 out of which only Rs. 4,38,835 was accounted for interest receipt. During the course of hearing, nothing had been placed before us on behalf of the assessee to establish that the substantial part of the business of the lender-company is of lending money. In these circumstances, we agree with the finding of the CIT(A) that the assessee does not fall within any exemption clause.
Once the Legislature has defined the words 'accumulated profit', no other meaning of accumulated profits can be inferred or interpreted. In the instant case, though the Revenue is required to compute the accumulated profits up to the date of distribution or payment, but, they have computed up to the end of the last quarter of this previous year which is less than the accumulated profits computed on the date of the distribution or the payment. But, these facts are not clear from the record. We, therefore, restore the matter to the file of the Assessing Officer with a direction to re-compute the accumulated profits up to the date of distribution or payment and if it is found to be lesser than the accumulated profits adopted by the Assessing Officer, then, it should be taken into account for the purpose of deemed dividend income as per section 2(22)(e) of the Act. Otherwise, the Order of the Assessing Officer would be upheld.
Unexplained cash credits - From careful perusal of the orders of the lower authorities, we find that the assessee was not given sufficient time to prove these cash credits as the enquiry with regard to the cash creditors was initiated in January or February when the assessment is going to be time-barred on 31st March. Since most of the creditors belong to Bhavnagar, assessee should have been given sufficient time to produce the confirmations or any other evidence in order to prove the genuineness of the credits and creditworthiness of the creditors. Since the issue was not properly investigated by the Assessing Officer in the light of explanations of the assessee, we are of the view that this issue requires a fresh adjudication. We, therefore, set aside the order of the Commissioner (Appeals) in this regard and restore the matter to the file of the Assessing Officer to re-adjudicate the issue afresh after affording a proper-opportunity of being heard to the assessee.
In the result, Appeal No. 1088/Mum./2002 is partly allowed for statistical purposes - In the result, Appeal No. 1089/Mum./2002 is allowed for statistical purposes.
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2006 (3) TMI 197 - ITAT BOMBAY-E
Cost Of Acquisition ... ... ... ... ..... hich by itself is a capital asset) would be nil with the result that entire consideration of Rs. 70 received by him for transfer of said capital asset would represent capital gains vide sub-clause (iii) and as far as B is concerned, cost of acquisition in relation to 10 shares acquired by him in the above process would be Rs. 19 per share, i.e., aggregate of Rs. 7 and Rs. 12 vide sub-clause (iv) . 9. Keeping in view the aforesaid legal position after the amendment, we have examined the facts of the instant case and we find that the assessee has acquired the TOCD of Reliance Petroleum Ltd. by virtue of original holding of shares. As such, in view of the amended provisions, the original cost of shares cannot be spread over for working the capital gain of sales. We, therefore, find no infirmity in the computation of short-term capital gain done by the Assessing Officer. Accordingly, the order of the CIT(A) is confirmed. 10. In the result, the appeal of the assessee is dismissed.
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2006 (3) TMI 196 - ITAT BANGALORE-B
Liability to pay for warranty claims - Contingent liability Or accrued liability - Year In Which Deductible - Software purchase - capital or revenue expenditure - Payment received, in respect of transfer of skilled personnel and sharing of customer database - chargeable to tax - claiming credit of taxes paid in USA - MAT - Charging of interest u/s 234B while computing the income under the provision of section 115JA.
HELD THAT:- The appellant has provided for liability on the basis of sales made during the year. Though the exact amount cannot be quantified, however, the sum is based on the scientific approach and based on past experience. Various High Courts relied by learned counsel for assessee has held that the liability in respect of such warranty claims is not a contingent liability but an accrued liability. The ITAT, in the case of Wipro-GE Medical Systems Ltd.[2002 (7) TMI 220 - ITAT BANGALORE] held that the liability towards warranty is inbuilt in the sale price itself and so the liability is not contingent but an ascertained one and to be allowed in the year of sales. We accordingly delete the disallowance.
Software purchase - capital or revenue expenditure - The assessee in the course of its business acquired certain application software. It is made clear that the amount is paid for application software and not system software. The application software enables the assessee to carry out its business operation efficiently and smoothly. However, such software itself does not work on stand alone basis. The same has to be fitted to a computer system to work. Such software enhances the efficiency of the operation. It is an aid in manufacturing process rather than the tool itself. Thus, for payment of such application software, though there is an enduring benefit, it does not result into acquisition of any capital asset. The same merely enhances the productivity or efficiency and hence to be treated as revenue expenditure. We accordingly hold that the amount paid is revenue expenditure and not capital expenditure.
Payment received from IBM Global Services India Ltd. (IGSI) in respect of transfer of skilled personnel and sharing of customer database - All receipts by assessee would not necessarily be deemed to be the income for the purpose of Income- tax Act and the question whether any particular receipt is income or not will depend on the nature of the receipt and the true scope and effect of the relevant taxing provision. It is for the revenue to prove that the receipt is chargeable to tax under the provision of Income-tax Act. Once it is shown that the receipt is income under the Income-tax Act, it is for the assessee to prove that the same is either exempt or the assessee is eligible for deduction of the same.
The appellant received a sum being consideration for the value which inheres in the human resources by reason of training, skill, practical experience and work culture for transfer of the personnel. To facilitate such transfer, the amount was paid. Undisputedly, the training, skills and experience as well as work culture was imparted by the assessee. Because of the employment of such personnel with the appellant company, the personnel acquire such skills, experience and work culture. Acquisition of such training, skill, experience and work culture was at the cost of appellant company. Thus, the same can be connected with the office or occupation, which the assessee carries on. The sum is referable to the source, which is office or occupation of the appellant. The amount is therefore the income of appellant and not a capital receipt de hors such office or occupation. The amount received is not de hors the operation of appellant company or as a windfall but can be linked to the activities carried on by appellant company and hence chargeable to tax.
As regards the sum, the appellant agreed to share the database of its clients and customers. Though it is said to be for transfer of database, there is no prohibition that such database becomes the absolute property of the transferee and assessee cannot utilize the database for its own purpose. The assessee has merely shared the database without transferring of such rights in the database. The sum therefore can be attributed to the activities carried on by the assessee and hence is to be considered as revenue receipt and not capital receipt. By sharing such database, there is no impairment in the trading structure or there is no loss of source of income and hence, the amount received is to be classified as revenue receipt chargeable to tax. The ground raised in ground Nos. 4 and 5 therefore fails.
Claiming credit of taxes paid in USA - The Assessing Officer may allow the credit for the taxes paid in USA as per the provision of section 90 of the Act read with article 25(2)(a) of the DTAA between India and USA, whether or not such claim is made in the return or during the assessment proceedings. There cannot be any embargo on entertaining the claim even if such claim is not made in the return or during assessment proceedings.
MAT - The debts due to assessee are appearing as asset in the balance sheet. For certain debts which are doubtful, the assessee can provide for such debts by writing off such sum in respect of doubtful debts. By such provision, what is provided is reduction in the value of assets but not meeting any liability. The liability is on the debtors to pay and so far as assessee is concerned, the same is an asset. If the amount is doubtful of recovery, to that extent, the value of asset is reduced but it cannot result into creating any liability on the assessee to pay. In making the provision, the assessee merely restated the value of asset but there is no setting aside any amount to meet any liability. As rightly contended by Shri Pardiwala, in the case of Dy. CIT v. Beardsell Ltd.[2000 (3) TMI 37 - MADRAS HIGH COURT], proceeded on assumption that provision for doubtful debt was provision for liability and that was the only contention before the High Court. The High Court never answered the question whether the diminution in value of asset is provision for liability or not.
As per the view taken above and the decision relied by learned counsel for assessee, we hold that the amount being provision made for bad and doubtful debts, cannot be considered as provision for meeting any liability, which is not an ascertained liability and hence the book profit is not to be increased by such amount provided for.
Charging of interest u/s 234B while computing the income under the provision of section 115JA - The operation of section 115J was discontinued with effect from 1-4-1991 and section 115JA was brought on the statute book from 1-4-1997. Though as per sub-section (4) of other provision of the Act shall apply, there is no specific mention to the provision of section 208 or 234B of the Act. Since the assessee is not in a position to compute its book profit prior to closing of the financial year, the assessee cannot foresee its liability to pay advance tax u/s 208. Consequently for failure to pay such advance tax, interest u/s 234B cannot be levied. In view of the decision by the jurisdictional High Court in the case of Kwality Biscuits [1999 (11) TMI 48 - KARNATAKA HIGH COURT], which is the binding decision upon this Tribunal, interest u/s 234B cannot be levied, when income is computed even under the provision of section 115JA of the Act.
In the result, the appeal is partly allowed.
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2006 (3) TMI 195 - ITAT AMRITSAR
Contravention Of S. 269T ... ... ... ... ..... count with the firm where a sum of Rs. 1,500 was deposited and withdrawals for meeting some urgent requirements were made on different dates. We have already held that penalty under s. 271E was not leviable in respect of repayment of amounts to the partners and Smt. Usha Seth on merits. Here also the assessee accepted loans of small amounts under a bona fide belief that provisions of s. 269SS were not attracted. Such explanation of the assessee appears to be bona fide and there is nothing on record to suggest any mala fide on the part of assessee to evade tax. Therefore, the reasoning given for deleting the penalty under s. 271E would equally hold good for the purpose of levy of penalty under s. 271D because the amounts have been accepted from the same two parties. Accordingly, we set aside the order of the CIT(A) and delete the impugned penalty. Accordingly, the ground of appeal of the assessee is allowed. 3. In the result, both the appeals filed by the assessee are allowed.
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2006 (3) TMI 194 - ITAT AMRITSAR
Erroneous And Prejudicial Order ... ... ... ... ..... atiala, or with some other CIT. Therefore, we are unable to comment on this aspect of the case. 10.6 In the light of detailed discussions in the preceding paras and the legal position discussed, we are of the opinion that the learned CIT, Patiala, was justified in revising the assessment under s. 263 of the Act. We confirm his order and reject the ground of appeal of the assessee. 10.7 However, before parting with the case, we wish to mention that assessment in this case has been completed on protective basis. Even in the impugned order, the CIT has not held that the addition in this case was required to be made on substantive basis. In fact, the order was not revised on this ground. Therefore, the nature of addition as per revised order continues to be only protective and not substantive because such capital gain is liable to be taxed in the hands of firm as per provisions of s. 45(4) of the Act on substantive basis. 1. In the result, the appeal of the assessee is dismissed.
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2006 (3) TMI 193 - ITAT AMRITSAR
Addition u/s 68 - Cash Credits - balance sheet under the head 'Sundry creditors' - whether provisions of section 68 are attracted to such credits or not? - HELD THAT:- A bare reading of section 68 of the Act shows that the expression used in the section is 'any sum' and it does not say that credit should be only in the nature of cash receipt. The expression 'any sum' is very wide and general in nature. It covers all credits including loan, receipts and any other amount of similar nature. The credits shall also include both loans and trade credits and also other receipts, be that of cash or kind. These maybe in the name of the assessee i.e., capital account or in the name a of third party.
In the case of Smt. Shanta Devi v. CIT [1987 (10) TMI 26 - PUNJAB AND HARYANA HIGH COURT] held that section 68 of the Act, refers to credits in the books of the assessee. It was held that where a partner did not maintain any books of account and a cash credit entry appeared in the books of the firm in the name of the partner, section 68 would apply and the amount of the cash credit would be liable to be assessed in the hands of the firm because the entry appeared in the books of account of the firm which was a separate entity from its partner. In the present case also, these credits appeared in the books of account of the assessee. Therefore, these are liable to be considered in the hands of the assessee as per provisions of section 68 of the Act.
Thus, it is clear from the facts of the case that even though amount credited to the capital account included gold ornaments i.e., in kinds and partly in cash, the addition of the entire amount was upheld. Thus, from the discussion, it is very clear that the provisions of section 68 are wide enough to cover all credits including credits of the nature found in the books of account of the assessee. The submission of the assessee that provisions of section 68 apply only to cash receipt/loans only is without any merit. Therefore, this submission is rejected.
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2006 (3) TMI 192 - ITAT AMRITSAR
Income Escaping Assessment ... ... ... ... ..... n in accordance with law, the assessment would be illegal and without jurisdiction. 14. Considering the above discussion, it is clear that the Revenue has failed to prove that notice under section 147/148 dated 9-3-1998 was served upon Shri Lakhwinder Singh. Therefore, the Assessing Officer did not validly assume jurisdiction under section 148 of the Income-tax Act. As a result, the entire reassessment proceedings are invalid and bad in law. I accordingly set aside and quash the reassessment proceedings under section 147/148 of the Income-tax Act in all the assessment years. Resultant reassessment proceedings are also quashed. 15. As far as question of additions on merits is concerned in the departmental appeal as well as in the assessee s appeals, the point has now become academic in nature because of the fact that reassessment proceedings have been set aside and quashed. 16. As a result, all the appeals of the assessee are allowed and the appeal of the Revenue is dismissed.
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2006 (3) TMI 191 - ITAT AHMEDABAD-B
Deduction of 1/5th of income from house property u/s 24(1)(i) - Charitable Trust - Disallowance of depreciation - Medical Expenses - HELD THAT:- It was found that despite the fact that no claim was made before AO, there was also no material on record to support such claim. But the position in the case of assessee is different. As pointed out earlier that depreciation claim has been claimed in the income and expenditure account. Therefore, the claim of assessee could not be denied on the ground that the said claim was not made before AO. Learned Departmental Representative had raised an issue that where the entire cost has been allowed as expenditure, no depreciation is eligible. However, it is not the case of AO or the CIT(A) that entire cost of the said building was allowed as an expenditure in the case of assessee. On the other hand, in the balance sheet the value of the building stands. Therefore, there being no supportive material with regard to this contention of learned Departmental Representative, we find no merit in such contention.
No dispute to the fact that the object of assessee-trust includes merely establishment of hospital. Establishment of hospital in itself embedded the provisions for medical help to be extended to the public. Establishment of hospital is one of the modes to provide such medical help. Taking a liberal view we hold that providing medical help is also covered in the objects of the trust, particularly when genuineness of such payments incurred by assessee in respect of medical help have not been doubted. Therefore, we direct AO to delete the disallowance.
To sum up, our findings are as under:
(a) The assessee is not entitled to deduction u/s 24(1)(i).
(b) The assessee is entitled to get depreciation as claimed by it in the income and expenditure account [we find that the claim of depreciation before CIT(A) in the grounds of appeal was Rs. 4,41,530 whereas in the grounds filed before us is Rs. 6,49,856]. According to decision in the case of CIT vs. Sheth Manilal Ranchhoddas Vishram Bhavan Trust [1992 (2) TMI 51 - GUJARAT HIGH COURT] the amount of depreciation debited to the accounts of the charitable institution has to be deducted to arrive at the income available for application to charitable and religious purposes. Therefore, we hold that the assessee is entitled for depreciation only to the extent of Rs. 4,41,530 in place of Rs. 6,49,856 mentioned in the grounds of appeal before us.
(c) The disallowance of Medical Expenses is deleted.
In the result, appeal filed by the assessee is partly allowed.
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2006 (3) TMI 190 - ITAT AHMEDABAD-B
Charitable And Religious Trust ... ... ... ... ..... are not in accordance with the subsequent decision of Jurisdictional High Court in the case of Sana Family Trust in which decision Their Lordships have considered the decision in the case of K.T. Doctor. However, the revenue has not filed appeal against such finding of CIT(A) and assessee is the appellant, we are not supposed to enter into in this controversy. 11. To conclude our findings for present appeal are that assessee trust could not be denied benefit of exemption under section 11 merely on the ground that it is not registered under section 12AA of the Act for the reasons elaborately discussed in the above part of this order. However, to examine that whether assessee has fulfilled the conditions for grant of registration under section 11 for the year under consideration, we restore this matter back to the file of Assessing Officer to consider the same as per provisions of law. With these observations, the appeal filed by the assessee is considered to be partly allowed.
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2006 (3) TMI 189 - ITAT AHMEDABAD-B
Interest On Borrowed Capital ... ... ... ... ..... . 1,75,000 shares 39375 26-3-1997 of Pinnacle Finance Ltd. Rs. 45 Total valuation Rs. 78,75,000 0.5 -------------------------------------------------- Total shares transfer Stamp Expenses 530029-------------------------------------------------- 22. After hearing both the parties, we consider it proper to restore this issue to the file of Assessing Officer as it is not clear from the record that whether or not necessary details were furnished before Assessing Officer. It is also seen that Assessing Officer was also not present in the appellate proceedings before CIT(A). In the circumstances, we restore this issue to the file of Assessing Officer for factual verification of the contention of assessee. After factual verification, the Assessing Officer will decide the question of disallowance as per provisions of law. With these directions we restore this issue to the file of Assessing Officer. 23. In the result, appeal filed by revenue is partly allowed for statistical purposes.
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2006 (3) TMI 188 - ITAT AHMEDABAD-B
Convertible debentures for subscription - Expenditure incurred on the issuance of convertible debentures is "capital or revenue" expenditure? - HELD THAT - Maganlal Mohanlal Panchal (HUF)'s [1993 (9) TMI 20 - GUJARAT HIGH COURT], states that a solitary decision is to be followed but only when it is applicable to the facts and circumstances of the case. It has a persuasive value and not a binding decision like that of Supreme Court. This is with regard to decision of Calcutta High Court in the case of East India Hotels Ltd. [2001 (8) TMI 102 - CALCUTTA HIGH COURT], In this case, the debenture was held to be loan and 20 per cent repaid by allotment of shares was found to be an incentive for debentures subscription. There is nothing in the present case of that nature. Intention was to issue shares, partly on allotment of debenture itself and partly after 15 months. Here, the intention is thus was otherwise. The conversion is not an incentive for debenture but a prelude to issue of shares.
We, therefore, hold that the raising of funds by issue of convertible debentures was to raise capital by ultimately converting debentures into equity share without giving an option to debenture holder to get repayment or a say in conversion. Substance of the transaction is issue of equity capital partly on the date of allotment of debentures. The contention of the assessee that expenditure relating to conversion partly after 15 months can at least be held as revenue has no force as the nature of such retention is akin to share application money pending allotment of shares.
In the result, the appeal of the assessee is dismissed.
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2006 (3) TMI 187 - ITAT AHMEDABAD
Carry forward of losses in Speculation Business - HELD THAT:- A careful perusal of Explanation to section 73 indicates that this Explanation lays down that the expression "speculation business", under the specified circumstances, will cover assessee's business 'to the extent to which the business consists of the purchase and sale of such shares'. Unlike the definition under section 43(5) which defines 'speculative transactions', the provisions of Explanation to section 73 lay down the circumstances in which, and the extent to which, a business is to be deemed as, 'speculation business'. The thrust of the provisions under Explanation to section 73 is on the nature of 'business', rather than nature of 'transaction'. Even the circular itself provides that the Explanation would apply to the business of purchase and sale of shares of certain companies.
The case of the assessee is covered by the plain, clear and unambiguous statutory language of the provisions of Explanation to section 73 of the Act which requires no external aid, like object etc. to construe them differently and therefore, the loss suffered on account of acquisition by allotment and sale thereof being in denature of loss arising on purchase and sale of shares of a company and also being in the nature of business of the assessee being purchase and sale of shares of other companies is to be taken as a speculative loss.
The appeal of the assessee is dismissed.
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2006 (3) TMI 140 - SUPREME COURT
Search And Seizure - whether the High Court could have directed payment of interest on certain jewellery and ornaments belonging to the respondents which had been seized by the appellants on January 12, 2001 - Held that:- Without going into the question as to the payability of interest on the value of goods found by the court to have been illegally seized, we hold that the appellants are liable to compensate the respondents at least by way of costs. The loss obviously suffered by the respondents during the pendency of the proceedings before the High Court was further aggravated by the delay in complying with the High Court's decision. In the circumstances, we direct the appellants to pay a sum of Rs. 75,000 to the respondents on account of costs which the respondents will accept in full and final settlement of the claim towards the quantum of interest under the impugned order. Such payment is to be made within a period of four weeks - Decided conditionally in favour of Revenue.
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2006 (3) TMI 136 - MADHYA PRADESH HIGH COURT
Validity of the assessment order - Appeal To Appellate Tribunal - Admission of additional grounds - Jurisdiction - proceedings so initiated u/s 142(2A) - barred by limitation - HELD THAT:- It cannot be disputed that the CIT(A) had jurisdiction to examine those four grounds had it been raised before him in appeal even in the first round. We thus cannot subscribe to the approach and the manner in which the Tribunal allowed the assessee to raise additional grounds in appeal for the first time and then deciding the appeal on those grounds by not only setting aside of the order of the CIT(A) but even proceeding to annul the order of the Assessing Officer also. Such approach is neither legal, nor proper. It only exhibits the anxiety of the Tribunal to decide the appeal on the merits even on those points which did not arise for decision out of the order of the CIT(A) . In other words, instead of concentrating on the issues already decided by the CIT(A), the Tribunal only concentrated on those grounds which had not been taken before the CIT(A) and then answered them in favour of the assessee by completely annulling the whole assessment. There would have been no prejudice caused to either party if the case had been remanded to the CIT(A) once the prayer to raise additional grounds was allowed by the Tribunal in favour of the assessee. When a litigant has a right to seek adjudication on a particular point from one more authority (as in this case CIT(A) and again acquire a right to reiterate the challenge before the higher appellate authority (such as Tribunal) in case if the challenge is decided against by the first appellate authority, then in such event, there is no justifiable reason as to why a litigant is deprived of such an opportunity. We, therefore, do not agree to such approach resorted to by the Tribunal and hence, we set aside the impugned order.
Hence, we answer only additional question of law framed in favour of the Revenue and against the assessee (respondent). As a result, the appeal succeeds and is hereby allowed. The impugned orders of the Tribunal is set aside, so also that of the of CIT(A) which was the subject-matter of appeal before the Tribunal in an appeal filed by the assessee.
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2006 (3) TMI 135 - MADHYA PRADESH HIGH COURT
Investment Deposit Account ... ... ... ... ..... appellant, the case of the assessee would fall in section 50 of the Act for the purpose of calculating capital gains earned in the case of sale of depreciable assets. In other words, the profit earned by the assessee by sale of fixed assets should have been dealt with for determining the taxi liability by taking recourse to the provisions of section 50 ibid because the asset sold by the assessee was depreciable assets. In view of the foregoing discussion, we hold that the Assessing Officer was right in holding that the profit earned by the assessee amounting to Rs. 18,97,929 from sale of fixed asset during the assessment year in question could not be included in the main profit of the assessee earned from their business for calculating the deduction available under section 32AB and, therefore, had to be excluded from such calculations. Accordingly, while answering the questions framed in favour of the appellant, we allow the appeal and set aside the impugned order. No costs.
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2006 (3) TMI 134 - MADRAS HIGH COURT
Search And Seizure ... ... ... ... ..... ected to refund the cash seized and the amounts withdrawn from the current account of the petitioner held with the fourth respondent-bank. Accordingly, the respondents are directed to refund the cash seized and the amounts withdrawn from the current account of the petitioner with the fourth respondent-bank, viz., a sum of Rs. 17.78 lakhs immediately on receipt of a copy of this order. Further, the petitioner and the respondents are directed to abide by clauses 1, 2, 3, 4, 6 and 7 contained in the joint memo. The joint memo filed by the petitioner and the respondents will form part of the records. Further, it is made clear that this court has not expressed any opinion on the merits of the case. It is open to the respondents to proceed further in this matter strictly in accordance with law without being influenced in any way by anything said in this order. With the above directions, the writ petitions are disposed of. No costs. Consequently, the connected W.P.M.Ps. are closed.
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2006 (3) TMI 133 - MADHYA PRADESH HIGH COURT
Penalty levied u/s 271(1)(c) - Concealment of Income - HELD THAT:- In our considered opinion it is a clear case where the assessee failed to prove certain heavy transactions which they claimed to have entered into with some kabaddies for purchase of scrap "raw material" for manufacturing of steel items in their factory. If the assessee despite affording them an opportunity, to prove the transactions relied on by them for claiming benefits failed to substantiate, then a case for imposition of penalty is made out. In other words in such circumstances it becomes a case of concealment of true income chargeable to tax. When a bogus claim is made to evade tax and the same is proved to be bogus then in these circumstances, a case for imposition of penalty is made out. It is for the reason that it exhibits animus on the part of the assessee in concealing the true income and further exhibits an attempt on the part of the assessee to set up a bogus claim to avoid payment of legitimate tax which is otherwise due and payable on their true income for the year in question.
We are also unable to accept the submission of learned counsel for the assessee when he contended that in the absence of any finding on the latter part of Explanation (1) to section 271(1)(c), the case has to be either remanded or the impugned penalty be set aside.
As a result we do to find any merit in this appeal which fails and is hereby dismissed.
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