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Income Tax - Case Laws
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2007 (1) TMI 125
... ... ... ... ..... fter, the judgment was delivered by the appellate authority and adducing of additional evidence was allowed to do substantial justice in the matter and not to thwart the evidence at the initial stage so as not to prejudice either party. Mr. U. Bhuyan, learned counsel for the Revenue was fair enough to submit that although the Revenue failed to file objection before the appellate authority before the order was passed, the objection could have been taken care of. We find that the Tribunal had considered the additional evidence and even the objections raised by the Revenue Department and the finding as regards adducing of additional evidence, in the facts and circumstances of the present case, we hold that it was in accordance with law and did not prejudice the Revenue as sufficient opportunity was given to the Revenue to rebut the same. In view of the above, we hold that no substantial question of law as raised emerges in the present appeal. Hence, the appeal stands dismissed.
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2007 (1) TMI 124
... ... ... ... ..... l are perverse, it was submitted that there is no material on record to take a view different to what has been taken by the Tribunal. Having heard learned counsel for the parties, we find from the material on record that the assessee had sought to claim the benefit under section 32A of the Act on the investment made on the value of plant and machinery installed for transport purposes and not for the purpose of manufacture or production of any article or thing. There is no material on record to even remotely suggest that the machinery was installed by the assessee for production of any article or thing or to enable the assessee to assemble any machinery. Once it is found that the assessee did not satisfy the conditions for grant of investment allowance as laid down under section 32A of the Act, we do not find any reason to hold that the assessee is entitled to the same. Accordingly, the questions referred to above are answered against the assessee and in favour of the Revenue.
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2007 (1) TMI 123
... ... ... ... ..... ase, the original assessment of the assessee adopting the share of loss was only made under section 143(1)(a) and only after the filing of the return of the firm belatedly and when the same had been lodged, the assessment was sought to be rectified under section 155 adopting the share of loss from the firm as nil . The facts in the present case are identical to the facts before the Calcutta High Court in the case cited supra and hence, we are in full agreement with the views of the Calcutta High Court in the said case cited supra. Following the same, we hold that rectification of the order of the original assessment invoking section 155 of the Act is impermissible, when the assessment had not been completed under section 143(3) and more particularly, when the return of the firm had only been lodged. In view of the above, we answer the question of law in the affirmative, against the Revenue and in favour of the assessee. Accordingly, the tax case appeal is dismissed. No costs.
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2007 (1) TMI 122
Validity Of service of notice u/s 143(2) - service beyond period of limitation or not - HELD THAT:- The fact that on January 11, 2001, Mr. Harish Bansal, chartered accountant, appeared before the Assessing Officer and filed his power of attorney and was asked to file details/information and thereafter on February 7, 2001, one Shri Mohammad Aslam, assistant along with M/s. S. Prasad and Co., chartered accountant, appeared before the Assessing Officer and filed a letter seeking adjournment, goes to show that notice u/s 143(2) of the Act has been duly served on the assessee through his representative on December 29, 2000, and that is why the representatives of the assessee have been appearing before the Assessing Officer in pursuance of the notice.
Accordingly, we hold that the Income-tax Appellate Tribunal erred in observing that the notice u/s 143(2) of the Act has not been served upon the assessee and the assessment stands vitiated.
The substantial question of law is answered in the affirmative, in favour of the Revenue and against the assessee.
The present appeal filed by the Revenue is accordingly allowed and the order passed by the CIT(A) cancelling the impugned assessment is set aside and the matter is remanded back to the CIT(A) to consider the matter afresh in accordance with the law.
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2007 (1) TMI 121
... ... ... ... ..... ling tank, mixing channel, aeration tank, secondary settling tank and drying bed. The plant installed is a permanent tangible asset of enduring advantage to the assessee, of a free pollution free atmosphere and environment. The benefit/advantage derived by the assessee is not only for the year under consideration but for all succeeding assessment years. Expenditure spent for its operating and maintenance costs may be revenue, but the expenditure spent for installation of plant which is of an enduring nature is always capital. We therefore allow this appeal and restore the order of the assessing authority and hold that the expenditure incurred by the assessee for installing water treatment plant is a capital expenditure and not revenue expenditure and we find ourselves unable to agree with the reasoning of the Division Bench in Steel Complex Ltd.'s case 1999 238 ITR 1054 (Ker), which in our view cannot be of universal application and is confined to the facts of that case.
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2007 (1) TMI 120
... ... ... ... ..... ed at by the Assessing Officer. The learned Tribunal has noted in the impugned order that on a reading of the relevant section of the Act, the claim of the assessee ought to have been allowed outright. Considering the view taken by the learned Tribunal, and the language of the section (which is quite clear), no substantial question of law arises. Accordingly, the appeal is dismissed. In so far as the other two appeals are concerned that is W. T. A. Nos. 32 of 2005 and 33 of 2005, learned counsel for the Revenue says that similar issues have arisen in W. T. A. No. 25 of 2005 and W. T. A. No. 27 of 2005 (CWT v. Atma Ram Properties) which has already been admitted. Learned counsel for the assessee says that he needs time to look into the connected matter. Accordingly, W. T. A. No. 32 of 2005 and W. T. A. No. 33 of 2005 are adjourned to April 4, 2007, on which date the file of CWT v. Atma Ram Properties be sent. In so far as W. T. A. No. 31 of 2005 is concerned that is dismissed.
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2007 (1) TMI 119
... ... ... ... ..... ection 131 of the Act which were issued subsequent to the search. Instead of approaching this court the petitioners should fully participate in the proceedings under section 153A and vindicate its stand that it has no appreciable connection with the other business family concerns. We find no reasons to exercise the extraordinary powers vested in this court under article 226 of the Constitution of India. The writ proceedings were filed on August 22, 2006 (C.W.P. No. 13236 of 2006) and on October 5, 2006 (C.W.P. No. 15824 of 2006). During the pendency of these proceedings the Assessing Officer, in our opinion, would not have been able to conduct and complete the original proceedings. Hence the period of limitation set down in the statute stands extended by four months. Writ petitions are dismissed. This is a fit case for the imposition of exemplary costs against the petitioners, but we order the petitioners to pay nominal costs of Rs. 15,000 to the respondents within six weeks.
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2007 (1) TMI 118
... ... ... ... ..... there was no acquisition of any new asset, much less capital of any enduring advantage. A perusal of the orders of the authorities below shows that no claim for depreciation was ever made before any authorities either by the assessee or by the Revenue to consider the question of block of assets nor was there any necessity to do so. Moreover, the Department did not raise any objection before the Tribunal regarding the claim of allowance on the premise of the block of assets concept. Therefore, applying the law laid down by the decision cited supra, such question does not arise out of the order of the Appellate Tribunal for considering the same by this court under section 260A of the Act. The above view was also taken by this court in CIT v. Loyal Textile Mills Ltd. 2006 284 ITR 658. In view of the ratio laid down by this court in the decisions cited supra, no substantial question of law arises for our consideration in this appeal and therefore, the same is dismissed. No costs.
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2007 (1) TMI 117
... ... ... ... ..... asons for such transfer must be recorded. However, sub-section (3) postulates in the case of intra-city transfer no such requirement regarding grant of opportunity is necessary. In the instant case, prior to the transfer of the case from Kolkata to Mumbai, which is an inter-city transfer, no opportunity of hearing was given to the petitioners which is in contravention of sub-section (1) of section 127 of the Act. Thus, the principles of law laid down in Nitin Developers 2006 284 ITR 605 (Delhi) are applicable to the facts of the case. Therefore, the order of transfer of the case of the petitioner from Kolkata to Mumbai cannot be sustained and is, thus, set aside and quashed. Hence, the writ petition is allowed. The Revenue is at liberty to take action in accordance with law after issuing notice and after giving an opportunity of hearing to the petitioners. There will be no order as to costs. All parties are to act on a xerox signed copy of this order on the usual undertaking.
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2007 (1) TMI 116
... ... ... ... ..... esult the appeal succeeds. The judgment and order under appeal is set aside. The requisition made by the IDS official dated September 9, 1996, as challenged in the writ petition is quashed and set aside. We, however, make it clear that this judgment and order would not preclude the authorities to take any other appropriate steps if available to them under the statute and/or the notification issued thereunder at the relevant time. In case such proceeding is initiated and steps are taken accordingly, the concerned assessee would not be entitled to raise the plea of limitation and for the purpose of limitation the relevant date would be the date of delivery of this judgment. The Revenue would be entitled to rely upon the principles of section 14 of the Limitation Act in this regard. The appeal is disposed of without any order as to costs. Urgent xerox certified copy of this judgment, if applied for, be made available to the parties upon compliance with all requisite formalities.
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2007 (1) TMI 115
... ... ... ... ..... ns of the Act, which means, necessarily for the purpose of deduction, the income of that nature computed for deduction must have a working in accordance with the provisions of the Act. If that be so, income from profits and gains of business must necessarily conform to the provisions in Part D, including set off and carry forward. In the light of the decision of the apex court, the argument placed on the strength of the decision of the Bombay High Court is not sustainable in law. Consequently we do not find any merit in upholding the contention in the assessee. In the circumstances, the claim of the assessee has to be rejected. Consequently, the questions raised before this court are answered in the affirmative and against the assessee. On the last question raised, the Tribunal has held that the said question does not arise after the order of the Commissioner. In the circumstances, the references are answered against the assessee. There will, however, be no order as to costs.
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2007 (1) TMI 114
... ... ... ... ..... rity. In support of this view, he has also relied upon a decision of the hon ble Supreme Court in Orient Paper Mills Ltd. v. Union of India reported in AIR 1969 SC 48. The ratio available from this judgment is that the quasi-judicial power of an authority cannot be controlled by the direction issued by any authority however high it may be. There cannot be any controversy with regard to this proposition of law. However, the factual matrix made available before this court is not adequate enough to come to the conclusion that the approval accorded by the Range Deputy Commissioner of Income-tax was preceded by any sort of direction or control ingrained with deep seated influence in the decision making process. For this reason, it would not be possible to answer this question with authority. Moreover, the question also loses its significance in view of the decision in respect of question No. 1. We, therefore, decline to answer this question. In the result, the appeal is dismissed.
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2007 (1) TMI 113
Powers Of the Revenue u/s 245 - Refund claim - Adjustment of amount against outstanding demand - disallowance on the cross-charges/administrative expenses - Whether the petitioner is entitled to refund for the assessment year 2001-02 of the amount already computed by the Revenue by its orders dated December 28, 2005 and May 1, 2006 - HELD THAT:- We find that no notice u/s 245 was issued to the assessee proposing to set off the demand against the outstanding tax amount due from it. There is no explanation why such notice was not issued except saying that after the order of the Tribunal dated August 17, 2005, the Revenue was processing the refund application made by the writ petitioner. It could dispose of this application only on December 27, 2005. Even at this stage, there was no proposal to invoke section 245 although on this date there was an outstanding demand for the assessment year 2000-01. The petitioner was, therefore, compelled to come to this court assailing the delay in processing this application for refund. The application moved by the Revenue in this court appears to be a device to pass the responsibility of taking a decision u/s 245 on to the court only because the petitioner had come to this court. To us, this does not appear to be a sufficient justification for by-passing the procedural requirement u/s 245.
We do not wish to comment on the merits of the orders passed by the Tribunal, for the assessment years 2000-01 and 2001-02 since that is to be examined in the separate appeals filed by the Revenue in this court. As and when those appeals are decided, the necessary consequential orders will be passed. However, the fact that neither of the orders of the Tribunal in those cases has been stayed by this court while admitting the appeal is a relevant factor to be taken note of by the Revenue while deciding to invoke the power u/s 245.
Administrative expenses/cross charges - Assessee has succeeded up to this court for the earlier assessment years 1998-99 and 1999-00. For the assessment year 2001-02, the assessee has succeeded before the Tribunal. Therefore, to the extent of the demand on account of administrative expenses/cross charges, there is no justification for withholding the refund. In the event of the Revenue succeeding before this court, the amounts would become payable by the assessee and there are sufficient provisions of the Act to take care of such a contingency. The Revenue, by delaying the refund, is actually incurring an additional expenditure since it has to pay interest on the amount of refund as well as delayed refund as contemplated under sections 243 and 244A. This may not, in the larger context, be in the best of interests of the Revenue itself.
Unless there are sound reasons justifying the formation of an opinion that the tax that has become payable cannot be recovered from the assessee as and when the issues are ultimately decided, the power u/s 245 should not lightly be invoked. All of the factors weigh against the Revenue invoking the power u/s 245 in the present case.
From the submissions made on behalf of the assessee and the chart presented showing the status of demands as on August 8, 2006 (which has not been disputed by learned counsel for the Revenue) it appears that the petitioner has not only paid the entire demands raised on all other issues but has also paid Rs. 4.26 crores towards the demand on cross charges.
In our considered view, there is no warrant for the Revenue to seek to set off the refund due to the petitioner on account of cross charges against the outstanding demand of tax on such account for the subsequent years. The delay in the processing of the refund claim and issuing the initial order dated December 28,2005, and the subsequent order dated May 1, 2006, has not, in our view, been satisfactorily explained. The Revenue must, in our view, suffer the statutory consequence of payment of interest on the delayed refund.
We, accordingly, hold that the petitioner is entitled to refund for the assessment year 2001-02, as already computed by the Revenue while giving appeal effect vide orders dated December 28, 2005 and May 1, 2006, after adjusting the refund of Rs. 1.10 crores already made pursuant to the order dated August 17, 2006, passed by this court. Accordingly, a direction by way of a mandamus is issued to the respondents to refund to the petitioner the aforesaid amount due to it for the assessment year 2001-02 after making the adjustment as aforesaid. The petitioner would also be entitled to interest on such amount of refund as well as interest on delayed refund as per the provisions of the Act. The respondents are directed to make the refund to the petitioner of the sum as aforesaid together with interest thereon and interest on delayed refund as per the provisions of the Act within a period of four weeks and in any event not later than February 15, 2007. The respondents will also pay to the petitioner the costs of this petition which are quantified at Rs. 20,000.
The writ petition and all pending applications stand disposed of accordingly.
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2007 (1) TMI 112
Application for the condonation of delay - delay of 11 days - Whether section 5 of the Limitation Act, 1963, shall apply in case of an appeal filed u/s 260A of the Income-tax Act, 1961 - HELD THAT:- That the Legislature has used the words "shall be filed" in sub-section (2) means that the limitation for filing the appeal is as provided therein but that does not make section 29(2) of the Limitation Act, 1963, inapplicable. The High Court being the superior court, the power to condone the delay in filing the appeal must be read to be existent, more so by virtue of section 29(2) of the Limitation Act, unless there is clear indication of its exclusion by implication. The use of the word "shall" and the longer period of limitation (120 days) are not indicators of such exclusion. Nor from the position that section 260A is silent about the applicability of section 29(2), can any justifiable inference be drawn for inapplicability of that provision. What is obvious need not be stated and, therefore, the Legislature may have thought fit that it was not necessary to express specifically about the power of the High Court to condone the delay in view of existence of section 29(2). When the statute is silent, the presumption is not drawn automatically about the exclusion of section 29(2) or for that matter section 5 of the Limitation Act. In our thoughtful consideration of the whole matter there is nothing to indicate that the application of section 29(2) is excluded except providing a special limitation. Section 260A does not necessarily imply the exclusion of sections 4 to 24 of the Limitation Act.
Thus, there is an overwhelming line of cases holding section 5 of the Limitation Act applicable to the matters in appeal and reference applications to the High Court under the Indian Income-tax Act, the Customs Act and the Bombay Sales Tax Act. Our conclusion in this regard is in line with these cases.
We shall finally conclude thus: Section 5 of the Limitation Act shall apply in case of the appeals filed u/s 260A of the Income-tax Act, 1961.
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2007 (1) TMI 111
... ... ... ... ..... r the assessment years under consideration and took the plea that the Department s reference applications having been allowed by the Income-tax Appellate Tribunal in R. A. No. 441/(Alld.) of 1987 dated February 26, 1988, the matter is still sub judice before the Allahabad High Court. The Tribunal, however, dismissed the Department s appeals for the assessment years under consideration on the ground that the High Court s decision was not available. We have heard S. Chopra, learned standing counsel for the Revenue. We find that identical questions came up for consideration by this court in W. T. R. No. 150 of 1988, CWT v. Rakesh Mohan 2007 289 ITR 308 (All), decided on January 17,2005. This court has answered both the questions in favour of the assessee and against the Revenue. Respectfully following the aforesaid decision we answer both the questions referred to us in the affirmative, i.e., in favour of the assessee and against the Revenue. There shall be no order as to costs.
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2007 (1) TMI 110
Undisclosed income of the block period - Non-issuance of notice u/s 143(2) - Non-issuance of notice u/s 143(2), did not invalidate the assessment relating to the block period and was at best a mere procedural irregularity? - HELD THAT:- It is true that the return was filed by the assessee in response to a notice u/s 158BC(a). Clause (b) of section 158BC provides that the provisions of section 142 as well as sub-sections (2) and (3) of section 143 shall apply even in the case of a block assessment so far as may be. There is no dispute that in the case of assessment under Chapter XIV, a notice u/s 143(2) is mandatory where the Assessing Officer proceeds to make an inquiry as provided in section 142. Similarly, the provision of section 143(2) will be mandatorily applicable in the case of a block assessment also where the Assessing officer in repudiation of the return filed u/s 158BC(a) proceeds to make an inquiry in the proceeding under Chapter XIV-B. Once the power of inquiry u/s 142 is invoked, the Assessing Officer has no option but to follow the provisions of section 143(2).
Thus, we hold that the provisions of section 142 and sub-sections (2) and (3) of section 143 will have mandatory application in a case where the Assessing Officer in repudiation of the return filed in response to a notice issued u/s 158BC(a) proceeds to make an inquiry. The defects crept in cannot be cured at this stage in view of the limitation provided in section 143(2). The assessment order in the instant case thus suffers from both procedural and jurisdictional error. The option left with the Assessing Officer is to compute the income and levy taxes on the basis of the return filed by the assessee.
The question formulated is answered against the Revenue and in favour of the assessee. Consequent thereupon, the orders passed by the authorities below are set aside. The appeal, accordingly, stands allowed.
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2007 (1) TMI 109
Applicant, an investment company incorporated in Netherlands, invests in software products, development & carries on its operations through various subsidiaries across the globe - capital gain arising to the applicant in the course of corporate reorganization at the group level, from the proposed transfer of shares - held that no taxes need be deducted at source in this case, since the capital gains in question would not be liable to tax under the provisions of the Act read with DTAA
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2007 (1) TMI 108
Applicant is engaged in the business of providing access to internet based air cargo portal known as Ezycargo at Singapore – held that the payments made by the Indian subscriber to the applicant, for providing a password to access and use the portal hosted from Singapore, are taxable in India and subject to deduction of tax at source
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2007 (1) TMI 107
Held that amalgamation of the wholly owned subsidiary foreign company with its parent company does not result in a transfer for consideration and therefore, does not give rise to any capital gains. The liability to capital gains tax (if any) can only be on the transferor-company (subsidiary), which in the present case has lost its identity and ceased to exist.
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2007 (1) TMI 106
Dept. raised question that Trust is not validly created on ground that sole beneficiary of trust was not in existence at time of creation - Merely because Revenue had not accepted the decision of the Tribunal & the reference made was pending, it can’t be said that there was any mistake apparent on the record & therefore, action u/s 154 to charge tax on higher rate u/s 164, was not warranted – AO is not justified in taking recourse to sec. 164 - assessment order passed u/s 154 is not justified
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