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Showing 201 to 220 of 1051 Records
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2013 (1) TMI 863
Issues Involved:
1. Depreciation on Transformer
2. Disallowance of Interest u/s 40A(2)(b)
3. Depreciation on Lathe Machine
4. Depreciation on Airier Vent Wind Driven Ventilators
5. Depreciation on Tools and Dyes
6. Disallowance u/s 14A r.w.r. 8D
Summary:
1. Depreciation on Transformer:
The Revenue challenged the allowance of 100% depreciation on a transformer claimed by the assessee. The Assessing Officer (AO) restricted the depreciation rate, treating the transformer as an electric equipment rather than an energy-saving device, allowing only 15% depreciation. The CIT (Appeals) allowed the assessee's claim, considering the transformer as an energy-saving device, relying on the Industrial Development Corporation of Orissa Ltd. Vs. CIT (268 ITR 130 (Ori)). The Tribunal upheld the CIT (Appeals)'s decision, confirming the transformer as an energy-saving device eligible for 100% depreciation.
2. Disallowance of Interest u/s 40A(2)(b):
The Revenue contested the CIT (Appeals)'s restriction of disallowance of interest paid to specified persons u/s 40A(2)(b) to 15% instead of 18%. The assessee also objected to the 3% disallowance. The AO had restricted the interest rate to 12%, while the CIT (Appeals) allowed 15%. The Tribunal found no merit in the assessee's plea for 18%, noting that each assessment year is independent and should reflect current market conditions. Both the Revenue's and the assessee's appeals were dismissed, upholding the 15% interest rate.
3. Depreciation on Lathe Machine:
The Revenue disputed the allowance of depreciation on a lathe machine not put to use during the year. The AO disallowed depreciation as the machine was ready for use but not used. The CIT (Appeals) allowed the claim, stating that the machine was ready for use, and depreciation is allowable on assets ready for use. The Tribunal upheld this view, referencing CIT Vs. Shahbad Co-operative Sugar Mills Ltd. (2011) 56 DTR 414 (P&H), which supports depreciation on assets kept ready for use.
4. Depreciation on Airier Vent Wind Driven Ventilators:
The assessee challenged the restriction of depreciation on Airier Vent Wind Driven Ventilators to 35% instead of 100%. The AO treated the device as an exhaust system, allowing only 17.5% depreciation. The CIT (Appeals) upheld this view. The Tribunal, however, found merit in the assessee's claim, recognizing the device as an energy-saving system and directed the AO to allow 100% depreciation (50% for the year under consideration).
5. Depreciation on Tools and Dyes:
The assessee contested the disallowance of depreciation on tools and dyes reimbursed by buyers. The AO disallowed additional depreciation on reimbursed amounts, treating the accounting treatment as incorrect. The CIT (Appeals) partly accepted the assessee's plea, allowing recovery of Rs. 1,86,120/- but upheld the disallowance of Rs. 6,33,090/-. The Tribunal found no merit in the assessee's appeal and upheld the CIT (Appeals)'s decision.
6. Disallowance u/s 14A r.w.r. 8D:
The assessee challenged the disallowance of Rs. 59,419/- u/s 14A r.w.r. 8D, arguing that the disallowance should be computed from the date of investment, not for the full year. The Tribunal upheld the disallowance but directed the AO to verify and compute the interest disallowance from the date of investment till the year's end.
Conclusion:
The Tribunal partly allowed the Revenue's appeal and the assessee's Cross Objection, providing specific directions for each issue.
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2013 (1) TMI 862
Issues Involved:
1. Validity of the proceedings under Section 7A of the Employees' Provident Funds & Miscellaneous Provisions Act, 1952.
2. Clubbing of two establishments under Section 2A of the Act.
3. Breach of principles of natural justice.
4. Evidence of supervisory, financial, or managerial control.
Summary:
1. Validity of the proceedings under Section 7A of the Act:
The petitioner challenged the order dated 13.01.2000 by the Regional Provident Fund Commissioner (RPFC) u/s 7A of the Employees' Provident Funds & Miscellaneous Provisions Act, 1952, and the appellate order dated 18.08.2005 by the Employees Provident Fund Appellate Tribunal (EPFAT). The petitioner argued that the proceedings were null and void due to non-compliance with the principles of natural justice, as the report by Shri K.L. Khurana, which formed the basis of the proceedings, was neither provided to the petitioner nor duly proved in the proceedings.
2. Clubbing of two establishments under Section 2A of the Act:
The RPFC held that the petitioner and respondent No. 2 should be clubbed u/s 2A of the Act, which was contested by the petitioner. The petitioner argued that there was no identity or dependency between the two establishments. The court found that mere common ownership or shared resources like address and telephone numbers were insufficient to establish the required supervisory, financial, or managerial control for clubbing under Section 2A.
3. Breach of principles of natural justice:
The court noted that the reports relied upon by the respondent authorities were not provided to the petitioner, nor were they duly proved in the proceedings. This deprived the petitioner of the opportunity to rebut the findings, thus violating the principles of natural justice. The court emphasized that even if the strict provisions of the Evidence Act do not apply, basic principles of natural justice must be followed.
4. Evidence of supervisory, financial, or managerial control:
The court found no evidence of supervisory, financial, or managerial control between the two establishments. The largest stakeholder in respondent No. 2 had no interest in the petitioner company. The businesses of the two establishments were distinct and unrelated, with no interdependence or commonality in their operations. The court cited the Supreme Court's judgment in Dharamsi Morarji Chemical Co. Ltd., emphasizing that common ownership alone is insufficient for clubbing under Section 2A.
Conclusion:
The court quashed the orders dated 13.01.2000 and 18.08.2005, holding that the proceedings were illegal and violated the principles of natural justice. The court also found no basis for clubbing the two establishments under Section 2A of the Act. The petition was disposed of, and the parties were left to bear their respective costs.
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2013 (1) TMI 861
Rate of depreciation on UPS, ATM machines and software licence - Held that:- UPS is an integral part of the computer system and regulate the flow of the power to avoid any kind of damage to the computer network due to fluctuation in power supply - hence depreciation at 60% is allowed
ATM cannot function without the help of computer and would be a part of the computer used in the banking industry - hence depreciation at 60% is allowed - Tribunal records a fact that the evidence of the use of the software on 31/3/2008 was produced before the Tribunal - Thus, the Tribunal held that depreciation @ 30% on software was rightly claimed - decided in favor of assessee
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2013 (1) TMI 860
Issues Involved:
1. Treatment of Rs. 197.13 lakhs as income from interest on advances given by the assessee to its subsidiaries.
2. Accrual of interest income on loans given to sick subsidiaries.
Summary:
Issue 1: Treatment of Rs. 197.13 lakhs as income from interest on advances given by the assessee to its subsidiaries
The appellant, a Government of India enterprise engaged in pharmaceuticals, contested the addition of Rs. 197.13 lakhs as interest income from loans to its subsidiaries, MAPL and MSDPL. The Assessing Officer (AO) and CIT(A) treated this amount as income, despite the assessee not receiving or accruing it, arguing that the subsidiaries were sick industrial units referred to the BIFR u/s 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985. The assessee followed Accounting Standard (AS 9) on 'Revenue Recognition' and did not account for the interest due to uncertainty of recovery. The AO, however, added Rs. 140.94 lakhs from MAPL and Rs. 58.19 lakhs from MSDPL to the returned income, asserting that interest accrued on a mercantile basis.
Issue 2: Accrual of interest income on loans given to sick subsidiaries
The CIT(A) upheld the AO's decision, stating that the loan agreements continued to exist, and thus interest income accrued unless modified. The assessee argued that no real income accrued due to the subsidiaries' financial distress and cessation of operations. The Tribunal referred to the Supreme Court's judgment in Godhra Electricity Co. Ltd., emphasizing that income tax is on real income, not hypothetical accruals. It concluded that the realization of the interest income was highly suspect, and thus, no real accrual occurred. Consequently, the Tribunal set aside the CIT(A)'s order and directed the AO to delete the addition of Rs. 197.13 lakhs.
Conclusion:
The Tribunal allowed the appeal for A.Y. 2001-02 and applied the same decision to the appeals for A.Ys. 2002-03 to 2005-06, directing the AO to delete the impugned additions for all years under consideration. The decision was pronounced in the open court on 31st January 2013.
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2013 (1) TMI 859
Issues involved: Appeal against order of CIT(A) directing treatment of income from share transactions as LTCG instead of business income, deletion of addition of expenses related to exempt income u/s 14A of the Act, and challenge to CIT(A)'s decision upholding the assessment order of the Assessing Officer.
Issue 1 - Treatment of income from share transactions:
The revenue appealed against the CIT(A)'s order directing the Assessing Officer to treat the income from share transactions as Long Term Capital Gain (LTCG) instead of business income. The revenue contended that the CIT(A) erred in law and on facts. The Tribunal noted that the issue had been previously decided in favor of the assessee in a prior year's Tribunal Order. After considering the submissions and the previous decision, the Tribunal declined to interfere in the CIT(A)'s order, as no differences in facts were pointed out for the current year compared to the previous assessment year. Therefore, ground No.1 was rejected.
Issue 2 - Deletion of expenses related to exempt income:
The revenue challenged the deletion of an addition of expenses amounting to Rs. 7,22,711 related to exempt income under section 14A of the Act. The Assessing Officer had disallowed expenses based on Rule 8D of the Income Tax Rules, 1962. The Tribunal observed that no disallowance could exceed the expenses debited in the profit & loss account. As the assessee had already disallowed certain expenses in the computation of income, and the remaining expenses were confirmed by the CIT(A), the Tribunal found no grounds to interfere with the CIT(A)'s decision. Therefore, ground No.2 was also rejected.
In conclusion, the appeal of the revenue was dismissed, and the Tribunal upheld the orders of the CIT(A) for the assessment year 2009-2010.
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2013 (1) TMI 858
Hindu Adoptions and Maintenance Act, 1956 - Adoption of a male child from outside the family - Right to inherent the property / legacy rights of the adopted child - HELD THAT:-The apex court restored the trial court decision that holding the adoption of Raghunath by Smt. Laxmibai was valid and the adoption deed was a legal document which could in fact, be relied upon;also the ceremony of giving and taking of the child and that performance of all other religious ceremonies was conducted ; and the photographs taken at the time of adoption could be relied upon. The said adopted child Raghunath, inherited all the property of Smt. Laxmibai when she died before the trial of the suit even commenced. The inheritance was held to be valid, as it was held that there was no custom of adopting of a male child only from within the said family and, consequently, the adoption of Raghunath by Smt. Laxmibai from outside, was upheld.
Therefore,The judgments and decrees of the appellate courts are set aside.
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2013 (1) TMI 857
Issues involved: Validity of show cause notice u/s 28 of Customs Act, 1962 issued by Assistant Commissioner of Customs (SIIB) who was not the proper officer as per section 2(34) of the Act. Applicability of Explanation 2 after sub-section 11 of section 28 only from the date the Finance Bill, 2011 received assent of the President.
The main issue raised in the writ petition is the validity of the show cause notice dated 31.10.2003 u/s 28 of the Customs Act, 1962, issued by the Assistant Commissioner of Customs (SIIB), Special Intelligence and Investigation Branch, who was allegedly not the proper officer as per section 2(34) of the Act. It is contended that Explanation 2 after sub-section 11 of section 28 clarifies that the provisions apply only from the date the Finance Bill, 2011 received presidential assent, and for notices issued before that date, the previous provisions of section 28 would apply. Since the notice in this case was issued in 2003, before sub-section (11) was in effect, its validity is questioned.
There is uncertainty regarding the introduction of Explanation 2 in the statute book and whether it has been passed by Parliament. The respondent's counsel has expressed the intention to seek instructions on this matter. The case is to be renotified on 04.02.2013 for further clarification and proceedings.
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2013 (1) TMI 856
The Bombay High Court dismissed the revenue's appeal for assessment year 2000-01 regarding interest claim under section 36(1)(iii) of the Income Tax Act, 1961. The Tribunal's decision was upheld based on earlier rulings in favor of the assessee company. The appeal was dismissed with no costs.
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2013 (1) TMI 855
Issues involved: Appeal against the Order by the Commissioner of Income Tax (Appeals) regarding the restriction of depreciation on a Turbine Generator (TG) set acquired by the assessee during the assessment year 2007-08 u/s.143(3) of the Income Tax Act, 1961.
Summary:
1. The only issue in the appeal was the restriction of depreciation on the TG set to 50% due to it being put to use after 30.09.2006 for less than 180 days.
2. The TG set was commissioned over two weeks starting from 06.09.2006, reaching a load of 1100 KW, and was handed over for commercial use after satisfactory operation.
3. The Tribunal found that the TG set was put to use before 30.09.2006, operating at sub-optimum levels due to insufficient steam generation, not technical issues.
4. The Tribunal disagreed with the Revenue's contention, stating that the TG set was fit for use and actually worked at a sub-optimum level before the specified date.
5. The Tribunal clarified that the TG set's operation before securing all necessary approvals was a factual matter beyond the scope of the appeal.
6. The Tribunal upheld the assessee's appeal, rejecting the Revenue's case and accepting Ground No. 1 regarding the depreciation issue.
7. Ground No. 2 regarding the penalty u/s. 271(1)(c) was not pressed and was dismissed as premature by the CIT(A), a separate proceeding from the quantum appeal.
Conclusion: The Tribunal allowed the assessee's appeal, emphasizing that the TG set was put to use before the specified date, rejecting the Revenue's restriction on depreciation and dismissing the penalty issue as separate from the quantum appeal.
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2013 (1) TMI 854
Issues Involved:
1. Successive Bail Application u/s 439 of CrPC.
2. Examination of Merits for Default Bail u/s 167(2) of CrPC.
3. Non-Inclusion of Psychotropic Substances in Schedule I of NDPS Rules.
4. Applicability of Section 8 and Section 22 of NDPS Act.
5. Interpretation of Rules 53, 53A, and 66 of NDPS Rules.
6. Evaluation of Public Interest and Risk of Recurrence.
Summary:
1. Successive Bail Application u/s 439 of CrPC:
The applicant filed a successive bail application u/s 439 of CrPC in connection with offenses under various sections of the NDPS Act, 1985, and IPC. The Court noted that the applicant had not previously sought bail u/s 439 before the Sessions Court, and this alone cannot be a ground for dismissal.
2. Examination of Merits for Default Bail u/s 167(2) of CrPC:
The applicant's previous application for default bail u/s 167(2) of CrPC was rejected. This is the first time the case is being examined on its merits. The Court clarified that this does not constitute a successive bail application in the strict sense.
3. Non-Inclusion of Psychotropic Substances in Schedule I of NDPS Rules:
The applicant contended that the psychotropic substances seized (Methamphetamine, Alprazolam, Ketamine Hydrochloride) are not listed in Schedule I of the NDPS Rules, 1985, and thus, the act should not be considered an offense under Section 8 of the NDPS Act. The Court examined various precedents, including decisions from the Bombay High Court and the Supreme Court, which discussed the implications of substances not listed in Schedule I.
4. Applicability of Section 8 and Section 22 of NDPS Act:
The Court emphasized that Section 8 of the NDPS Act prohibits the production, manufacture, possession, sale, purchase, transport, and use of narcotic drugs and psychotropic substances except for medical or scientific purposes. Section 22 prescribes punishments for contraventions involving psychotropic substances. The Court noted that the applicant did not possess any valid license or authorization for the substances seized.
5. Interpretation of Rules 53, 53A, and 66 of NDPS Rules:
The Court discussed Rule 53, which prohibits the import and export of substances listed in Schedule I of the NDPS Rules, and Rule 53A, which restricts the export of substances listed in Schedule II to specified countries. The Court found that the applicant's actions violated these rules, as the substances were not authorized for export. Rule 66 prohibits possession of psychotropic substances without proper authorization, which the applicant lacked.
6. Evaluation of Public Interest and Risk of Recurrence:
The Court considered the public interest, the large quantity of psychotropic substances seized, and the applicant's past involvement in similar offenses. The Court concluded that granting bail would likely lead to recurrence and send a wrong signal to society. The application for bail was dismissed, emphasizing the need to uphold the objectives of the NDPS Act.
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2013 (1) TMI 853
Criminal proceedings launched by respondent no. 1 under Section 3(1)(viii) of the Scheduled Castes & Scheduled Tribes (Prevention of Atrocities) Act, 1989 - Held that:- The facts on record make it evident that the land on which both parties claim title/interest had initially been allotted to one Anant Ram, a member of the Schedule Caste community, under the 20 Point Programme of the Government of India (Poverty Elevation Programme) and he sold it to one Ram Lal Aggarwal in the year 1989, who further transferred it to his son Anil Kumar Aggarwal in the year 1990. Anil Kumar Aggarwal sold the same to appellant Ravinder Singh in the year 2005.
Respondent No. 1, who at the relevant time was holding a very high position in the Central Government, claimed that initial transfer by Anant Ram, the original allottee, in favour of Ram Lal Aggarwal was illegal and he could not transfer the land allotted to him by the Government under Poverty Elevation Programme and further that as the said land had been encroached upon by his father, he had a right to get his name entered in the revenue record. Thus, it is clear that the respondent no. 1, became the law unto himself and assumed the jurisdiction to decide the legal dispute himself to which he himself had been a party being the son of a rank trespasser. Transfer by the original allottee at initial stage, even if illegal, would not confer any right in favour of the respondent no.1. Thus, he adopted intimidatory tactics by resorting to revenue as well as criminal proceedings against the appellant without realising that even if the initial transfer by the original allottee Anant Ram was illegal, the land may revert back to the Government, and not to him merely because his father had encroached upon the same.
The High Court has dealt with the issue involved herein and the matter stood closed at the instance of respondent no.1 himself. Therefore, there can be no justification whatsoever to launch criminal prosecution on that basis afresh. The inherent power of the court in dealing with an extraordinary situation is in the larger interest of administration of justice and for preventing manifest injustice being done. It is a judicial obligation on the court to undo a wrong in course of administration of justice and to prevent continuation of unnecessary judicial process. It may be so necessary to curb the menace of criminal prosecution as an instrument of operation of needless harassment. A person cannot be permitted to unleash vendetta to harass any person needlessly. Ex debito justitiae is inbuilt in the inherent power of the court and the whole idea is to do real, complete and substantial justice for which the courts exist. Thus, it becomes the paramount duty of the court to protect an apparently innocent person, not to be subjected to prosecution on the basis of wholly untenable complaint.
In view of the above, the judgment of the High Court impugned herein dated 14.12.2011 as well as of the Revisional Court is set aside. Order of the Metropolitan Magistrate dated 13.8.2009 is restored. The complaint filed by respondent no.1 under the provisions of Section 3(1)(viii) of the Act 1989 is hereby quashed. The appeal is thus allowed.
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2013 (1) TMI 852
Disallowance of interest paid on borrowed money for the purpose of acquiring shares - Held that:- The main purpose of making investment was to purchase shares to earn dividend - Acquisition of shares may carry the acquisition of controlling interest, which is purely a commercial - since dividend income is taxable during the year Therefore the interest paid is allowable as deduction u/s57(iii) - Decided in favor of assessee
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2013 (1) TMI 851
Issues involved: Appeal against imposition of penalty u/s 271(1)(c) of the Income-tax Act, 1961 for the assessment year 1996-97.
Assessment of Business Income:
- The assessee filed a return of income at &8377; 2,44,550, but assessment was framed at an income of &8377; 13,20,000.
- Tribunal reduced the income from business by &8377; 1.30 lakhs but confirmed the addition on account of cash credit.
- Hon'ble High Court accepted substantial question of law u/s 260A of the Income-tax Act, 1961.
Penalty Proceedings:
- Assessing Officer levied penalty u/s 271(1)(c) of the Act, which was confirmed by CIT(A).
- Assessee contended that penalty should not be levied as it can substantiate no concealment of income.
- Assessee produced cash creditors who confirmed advancing of loan by account payee cheque.
- Legal arguments presented citing relevant case laws to support the contention against penalty imposition.
- Ld. Sr. DR supported penalty imposition based on Tribunal's confirmation of addition made by Assessing Officer.
Tribunal's Decision:
- Tribunal confirmed reduction of business income but upheld addition on cash credit.
- Hon'ble High Court admitted substantial question of law regarding the cash credit addition.
- Decision of Coordinate Bench and other High Courts cited to support the assessee's position.
- Tribunal did not find justification for penalty imposition where substantial question of law was accepted.
- Penalty confirmed for the addition in business income as no substantial question of law was accepted.
Conclusion:
- Penalty upheld for the addition in business income but not for the cash credit addition.
- Appeal of the assessee partly allowed based on the Tribunal's decision.
- The order was pronounced on 29th January, 2013.
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2013 (1) TMI 850
Issues involved: Appeal against penalty imposed u/s 271(1)(c) of the Income-tax Act, 1961 for assessment year 1996-97.
Summary:
1. The appeal was filed against the penalty imposed u/s 271(1)(c) for cash credit and sale of scrap. The Assessing Officer's penalty was based on additions made, which were later confirmed by the Tribunal.
2. The High Court accepted a substantial question of law regarding the genuineness of parties and transactions, shifting the burden of proof to the Department. The Tribunal observed that when a substantial question of law is accepted, the issue becomes debatable, and no penalty can be imposed.
3. Citing precedents, the Tribunal emphasized that when a substantial question of law is accepted by the High Court, the addition is debatable, and penalty cannot be levied. The Tribunal directed the cancellation of the penalty for the cash credit addition but confirmed the penalty for the sale of scrap.
4. The decision was in line with previous judgments by the High Court and Supreme Court, highlighting that a substantial question of law must be debatable. The Tribunal allowed the appeal in part, canceling the penalty for cash credit but confirming it for the sale of scrap.
5. The Tribunal's order was pronounced on 31st January 2013, directing the Assessing Officer to cancel the penalty for the cash credit addition while confirming the penalty for the sale of scrap.
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2013 (1) TMI 849
Issues involved: Appeal against deletion of penalty u/s.271(1)(c) of IT Act by ld.CIT(A)-XV Ahmedabad.
Issue 1: Deletion of penalty u/s.271(1)(c) based on disallowance of TDS deduction
The Revenue appealed against the deletion of penalty of &8377; 13,85,546/- u/s.271(1)(c) of IT Act by ld.CIT(A)-XV Ahmedabad. The AO had disallowed &8377; 40,87,727/- for non-deduction of TDS from freight payments to truck owners, leading to initiation of penalty proceedings. Ld.CIT(A) held that penalty imposition was not justified, citing that penalty and assessment proceedings are distinct, and not all disallowances attract penalty. The appellant's explanation was not properly considered by the AO, who failed to distinguish between 'furnishing of inaccurate particulars' and 'concealment of income'. The appellant's bonafide was supported by conflicting views on disallowance u/s.40(a)(ia) and relevant case laws. The ITAT Ahmedabad concurred with ld.CIT(A)'s decision, noting that the issue of disallowance u/s.40(a)(ia) was contentious and relying on legal precedent to dismiss the Revenue's appeal.
Issue 2: Barred by limitation and erroneous quantification of penalty
The appellant contended that the impugned penalty order was barred by limitation and the penalty amount was excessive, but failed to substantiate these grounds. The special bench order in the case of Marilyn Shipping & Transport, which supported the appellant's position, was not available to the AO at the time of passing the orders. These grounds were rejected, while other grounds of appeal were allowed. The ITAT Ahmedabad upheld ld.CIT(A)'s decision to delete the penalty, finding no fallacy in the view taken and dismissing the Revenue's appeal based on the legal proposition that mere disallowance of expenditure should not attract penalty.
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2013 (1) TMI 848
Issues involved:
The computation of long term capital gains arising from the sale of ancestral joint property.
Details of the Judgment:
Issue 1: Computation of Long Term Capital Gains
The appellant, an individual employed with a company, sold ancestral joint property and claimed deductions u/s. 54EB, 54EC & 54F of the Act, resulting in nil capital gains in the return of income. The Assessing Officer disallowed the deductions as they were not claimed in the original or revised return. The CIT(A) allowed the deduction u/s. 54EC, stating that once capital gain is assessed, relevant deductions must be given if the investment was made in specified assets. The Tribunal upheld the CIT(A)'s decision, dismissing the revenue's appeal.
Issue 2: Claim for Indexed Cost of Acquisition
The CIT(A) disallowed the claim for deduction on account of indexed cost of acquisition as it lacked supporting evidence. The Tribunal allowed the assessee's cross objection, admitting additional evidence of the valuation report obtained post the CIT(A)'s order. The issue was restored to the Assessing Officer for a decision on the claim for deduction u/s. 48(ii) based on the additional evidence.
The Tribunal upheld the CIT(A)'s decision to allow deduction u/s. 54EC for the appellant's long term capital gains, emphasizing the statutory provisions. The Tribunal also admitted additional evidence for the claim of indexed cost of acquisition, directing the Assessing Officer to decide the claim based on the new evidence. The revenue's appeal was dismissed, and the assessee's cross objection was allowed for statistical purposes.
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2013 (1) TMI 847
Whether share transactions were bogus and fictitious - Held that:- The assessee filed copy of the balance sheet of earlier year, copy of bank account, allotment letter, quotation of shares and copies of shares sold along with the sale bills and contract notes issued by the share broker - Hence the sales are not sham transactions - Assessee has received entire sale consideration of shares through known sources - Decided against the revenue
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2013 (1) TMI 846
Issues Involved:
1. Disallowance of depreciation by the Assessing Officer.
2. Alleged double deduction of depreciation on assets used for charitable purposes.
3. Applicability of Section 32 for depreciation to charitable trusts.
4. Upholding the Assessing Officer's order by the CIT (A).
5. Accumulation of income under Section 11(2) if depreciation is disallowed.
Issue-Wise Detailed Analysis:
1. Disallowance of Depreciation by the Assessing Officer:
The revenue argued that the CIT (A) erred in deleting the disallowance of depreciation amounting to Rs. 11,55,974 made by the Assessing Officer. The Assessing Officer had disallowed the depreciation on the basis that the cost of the assets had already been allowed as a deduction on account of application of income, which would amount to a double deduction.
2. Alleged Double Deduction of Depreciation:
The revenue relied on the judgment of the Hon'ble Supreme Court in the case of Escorts Ltd. vs. Union of India (199 ITR 43), arguing that allowing depreciation on assets whose cost had already been deducted would result in a double deduction. The revenue also cited the judgment of the Kerala High Court in Lissie Medical Institutions vs. CIT (348 ITR 244), which supported the stance that depreciation should not be allowed if the cost of the asset was treated as application of income for charitable purposes.
3. Applicability of Section 32 for Depreciation to Charitable Trusts:
The revenue contended that since the income of the charitable trust was not assessable under the head "Profit and Gains from business and profession," depreciation under Section 32 should not be available. However, the CIT (A) and various High Courts, including the Gujarat High Court in CIT vs. Seth Maniklal Ranchoddas Vishram Bhavan Trust (198 ITR 594), held that the income of a charitable trust should be computed on the basis of commercial principles, which includes allowing depreciation.
4. Upholding the Assessing Officer's Order by the CIT (A):
The revenue prayed that the CIT (A) should have upheld the order of the Assessing Officer. However, the CIT (A) had observed that the judgment in Escorts Ltd. was distinguished by the Punjab & Haryana High Court in CIT vs. Tiny Tots Education Society (330 ITR 21), and since there was no specific provision in Section 11 restricting depreciation, the claim did not amount to double deduction. The ITAT also found that the income of the trust should be computed on commercial principles, as upheld by the Gujarat High Court.
5. Accumulation of Income under Section 11(2) if Depreciation is Disallowed:
The assessee argued that if depreciation is not allowed as an application of income, the amount should be allowed to be accumulated under Section 11(2). However, since the ITAT upheld the CIT (A)'s order allowing depreciation, this issue became infructuous.
Conclusion:
The ITAT dismissed the revenue's appeal, holding that allowing depreciation does not result in double deduction, as exemption under Section 11 is not akin to a deduction but an exemption from tax liability. The ITAT followed the judgment of the Gujarat High Court, which mandates computing the income of a charitable trust on commercial principles, including allowing depreciation. Consequently, the cross-objection filed by the assessee in support of the CIT (A)'s order was also dismissed as it became infructuous.
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2013 (1) TMI 845
Issues involved: Appeal against order of ld. CIT(A)-XXI, Ahmedabad dated 20.09.2012 regarding disallowance of depreciation and availability of depreciation u/s 32 for a charitable trust.
The Revenue's appeal challenged the deletion of depreciation disallowance of Rs. 35,72,478/- by the A.O. The issue was whether depreciation on assets, already deducted on account of income application, would lead to double deduction, citing the decision in Escorts Ltd. 199 ITR 43. Additionally, the question arose whether a charitable trust, not assessable under "profit and gains from business and profession," could claim depreciation u/s 32.
The decision of Hon'ble Gujarat High Court in Tax Appeal No.439 of 2012 favored the assessee, following the stand taken in Director of Income Tax (Exemption) vs. Ahmedabad South Indian Charitable Trust. The High Court upheld the Tribunal's decision regarding the allowance of depreciation and deductions for the relevant assessment years. The Tribunal's stance against the Revenue's challenge was consistent with previous rulings, dismissing the appeal and confirming the allowance of depreciation and deductions.
In conclusion, the Revenue's appeal was dismissed based on the precedent set by the Hon'ble High Court and the Tribunal's consistent decisions in similar cases. The Tribunal's decision to allow depreciation and deductions for the charitable trust stood, as per the established legal interpretations and precedents.
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2013 (1) TMI 844
Issues Involved:1. Disallowance of expenses u/s 14A for assessment years 2006-2007 and 2007-2008. 2. Reduction of rebate claimed u/s 88E for assessment year 2007-2008. Summary:Issue 1: Disallowance of expenses u/s 14A for assessment years 2006-2007 and 2007-2008For the assessment year 2006-2007, the assessee, a company dealing in shares and securities, declared a total income of Rs. 10,75,67,534/- and claimed a dividend income of Rs. 77,84,289/- as exempt. The assessee made a disallowance of Rs. 3,89,214/- u/s 14A for expenses related to earning the exempt income. The Assessing Officer (AO) applied Rule 8D of the I.T. Rules, 1962, and increased the disallowance to Rs. 49,29,454/-, resulting in an additional disallowance of Rs. 45,32,240/-. The CIT(A) found the assessee's basis for allocating expenses reasonable and directed the AO to re-compute the disallowance u/s 14A. The CIT(A) also directed that if the re-computed disallowance was less than 5% of the exempt dividend income, the disallowance should be limited to the amount offered by the assessee. The Revenue appealed, arguing that the AO should verify the reasonableness of the assessee's basis for allocation. The Tribunal upheld the CIT(A)'s order, agreeing that the disallowance made by the assessee was reasonable and that the basis suggested by the assessee for allocating expenses was also reasonable. The Tribunal dismissed the Revenue's appeal for assessment year 2006-2007. For the assessment year 2007-2008, the Tribunal followed its decision for the previous year and upheld the CIT(A)'s order on the disallowance u/s 14A, dismissing the Revenue's appeal. Issue 2: Reduction of rebate claimed u/s 88E for assessment year 2007-2008The assessee claimed a rebate of Rs. 3,33,11,220/- u/s 88E in the return of income for assessment year 2007-2008. The AO found the basis for allocating expenses at Rs. 40,89,798/- unreasonable and recomputed the rebate, excluding expenses related to earning exempt income. The CIT(A) directed the AO to compute the rebate u/s 88E using the assessee's basis for allocation, finding the AO's rejection of the assessee's basis unjustified. The Tribunal upheld the CIT(A)'s order, noting that the issue was covered by a decision in favor of the assessee by a Coordinate Bench in the case of KBII Securities Pvt. Ltd. The Tribunal also observed that the AO had accepted the rebate claimed by the assessee on a similar basis for assessment year 2006-2007. The Tribunal dismissed the Revenue's appeal on this issue. In conclusion, both appeals of the Revenue were dismissed. Order pronounced in the open Court on 31st January, 2013.
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