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Showing 461 to 480 of 934 Records

• 2013 (2) TMI 481
  

  Deduction u/s 80IA - Initial Assessment Year - Assessee runs a spinning mill and has installed three wind mills first in A/Y 2003-04, second in A/Y 2005- 06 and the third in A/Y 2006-07 – A/Y 2007-08 was opted as initial Assessment Year for the purpose of claiming deduction u/s 80IA - Initially the loss from windmills was set off against profit of spinning mill division - Deduction u/s 80IA was not claimed during those years when it resulted in loss – As per AO the initial year should be taken as the year of commencement of business.

  Held that:- Respectfully, following the decision of the Hon'ble Jurisdictional High Court in the case of M/s Sri Velayudhasamy Spinning Mills [P] Ltd[2010 (3) TMI 860 - MADRAS HIGH COURT] the AO is directed to compute the profits u/s 80IA(5) of the Act as if such eligible business is the only sources of income of the assessee and only the losses of the years beginning from the initial Assessment Year are to be brought forward and not losses of earlier years which have been already set off against the income of the assessee. - Appeal of the Revenue is dismissed – Against the revenue.

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• 2013 (2) TMI 480
  

  Disallowance u/s 40(a)(ia) – TDS was not deducted on payment for packing material - Held that:- It is for purchase of packing material, which does not attract the provisions of TDS - AO has also mentioned it as payment for packing material. As TDS was not deductible on the packing material - provisions of Section 40(a) (ia) are not attracted. Hence, the addition made of Rs.2,73,360/- u/s 40(a) (ia) on account of packing material is deleted – Against the revenue.

  Interest on loan given to subsidiary – Held that:- The facts as available on record indicate that the sum of money was given by the assessee-company out of business expediency. Punjab Biotehnology park, a subsidiary of the assessee-company and therefore, the assessee is deeply interested in the working of the said company. Besides, the subsidiary company has been set in pursuance of joint collaboration agreement to which the assessee is a party for the development of Biotechnology Park. The subsidiary company is required to act as a facilitator for development of the biotechnology park in which the assessee is also interested – Therefore loan standing in the name of Punjab Biotehnology park is guided by business expediency - The AO is directed not to disallow any interest attributable to the loans given by the assessee- company to the said subsidiary company – Against the revenue.

  Interest free advance without commercial expediency - A sum of Rs. 49,38,930/- has been treated by the assessee-company itself as loan and advance given to Shri A.S. Bhatia, maternal uncle of Managing Director – Held that:- loans and advances have been treated as unsecured loans given by the assessee without any stipulation regarding their re-payment and interest - Auditors have considered the aforesaid loans as prejudicial to the interest of the assessee-company as no interest is being charged on them – Therefore amount standing in the name of Shri A.S. Bhatia is in the nature of loan advanced by the assessee to him without any commercial expediency - The interest attributable to a sum of Rs. 49,38,930/- being the amount of diverted by the assessee-company for the personal benefit of Shri A.S. Bhatia is therefore liable to be disallowed. The AO is directed to re-compute the disallowance accordingly – Against the assessee.

  Payments made towards freight charges :- As decided in CIT V Bhagwati Steels, 326 ITR 108 (P&H), where f reight expenses incurred added to cost of goods in invoice raised and No inference that assessee paid any amount of freight separately, assessee is not liable to deduct TDS - Assessee not a defaulter under Section 194C- Income- tax Act,1961 s.s. 40(a) (ia), 194C(3) (i)- In favour of assessee.

  provisions of Section 40(a) (ia) in respect of sales commission - TDS is to be deducted if the amount exceeds Rs.2500/- as per the provisions of Section 194H - AO was right in disallowing the sales commission of Rs.21,191/- u/s 40(a) (ia) - Appeal of the assessee is partly allowed.

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• 2013 (2) TMI 479
  

  Applicability of section 14A - Expenditure earning exempted income - Assessee company had invested Rs.1 crore from borrowed funds in equity of one M/s.Pankaj Extrusion Ltd. which was for the purpose of earning dividend income - Neither investment was made in the assessment year under consideration nor dividend received in the earlier year on such investment – Held that:- assessee had not received any dividend income in the previous year as also the fact that there was no investment made by the assessee during the year under consideration - Investment had been made prior to the impugned assessment year as well as the fact that interest bearing fund invested in the shares yielded no dividend income - As decided in Shree Shyamkamal Finance & Leasing Co. (P) Ltd v. ITO[2007 (10) TMI 446 - ITAT MUMBAI ], when interest bearing funds are invested in shares which yielded no dividend income, interest paid on such loan cannot be disallowed by invoking section 14A.

  Disallowance towards interest expenses applying the provisions of section 36(1)(iii) - Assessee had established a new unit where it invested a sum of Rs.11.09 lacs – Disallowed by CIT on the ground that the same should have been capitalized as per the amendment by the Finance Act 2003 holding that the said amendment was retrospective – Held that:- Interest on the borrowed fund was allowable deduction if the same was for the purpose of business. It is immaterial whether the assessee had utilized the money for capital or revenue purpose - Issue is covered by the decision in the case of Core Healthcare Ltd [2008 (2) TMI 8 - SUPREME COURT OF INDIA], wherein it was held that there is no difference between money borrowed to acquire capital asset or revenue asset - Amended provisions were applicable from the assessment year 2003-04 and they were not retrospective in operation.

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• 2013 (2) TMI 478
  

  Estimation of GP - search & seizure u/s 132 of the Act were conducted - several incriminating documents were seized - notice u/s 158BD of the Act were issued on 24.11.1999 to file return for the block period commencing from 1.4.1988 to 8.1.1999 - Assessee filed a return on 11.12.2000 declaring undisclosed income of Rs.7.50 lacs – AO found unaccounted sales of bricks – Section 145 were invoked - On examination of the seized documents in respect of financial year falling under this block period, undisclosed income of Rs.70,13,557/- was determined by the AO. - AO adopted GP rate at 23% for the purpose of computing undisclosed income – Held that:- there is a specific provision u/s 158BC , which confers jurisdiction on the AO to invoke the provisions of Section 145 as also Section 144 of the Act. Thus, AO is competent to make estimate based on the incriminating documents.

  AO has extensively placed reliance on the seized documents and determined the sales of bricks outside the required books of account, which were admitted by the assessee for the financial year 1993-94, 1994-95, 1995-96 and 1998-99. AO worked out sale of bricks for the financial year 1996-97 at Rs.61,68,819/- whereas the assessee worked sales of bricks at Rs.59.63 lacs. Similarly, for the financial year 1997-98, the AO worked out the sales at Rs.64,26,735/- whereas the assessee worked out the sale of bricks at Rs.61,68,819/- Therefore, in these two financial years, viz 1996-97 and 1997-98, there is insignificant difference between the estimation made by the AO and the assessee.

  Having regard to the fact situation of the present case and the analysis of incriminating seized documents and case laws relied upon by the assessee,it is fair and reasonable to apply net profit rate at 7.85% - The AO is directed to apply NP at 7.85% for the purpose of computation of undisclosed income of block period – Appeal of the assessee is allowed for statistical purposes only.

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• 2013 (2) TMI 477
  

  Search and seizure – Search u/s 132(1) conducted on 4.9.2002 - sale-deeds, Cash, Fixed Deposit, RBI Relief Bonds, purchase of jewellery in the name of family members were found – ROI were filed, for the block period beginning from 1.4.1996 to 4.9.2002, in response to notice u/s 158BC declaring income as nil – Additions were made by the AO on account of unexplained investment in construction, undisclosed income by way of sale consideration, undisclosed investment - Held that:- Construction was made in the year of 1993 and In regular returns, the profit had been offered to tax and the same had been accepted by the Department - Also confirmed by the Ahmedabad Municipal Corporation, and therefore, cost was incurred before the block period and assessee offered 8% of such income of sale proceeds of shops in regular income tax returns.

  Details of bank deposits were made available and bank account of assessee's son was also disclosed - There were explained deposits in bank account which were part of regular transactions and which were not only disclosed but from the sale proceeds of the shops, profits was offered for tax by the assessee in the regular returns filed with the Income Tax Authority and therefore, it did not sustain such additions.

  With regard to the “unexplained investment – In the Statement of income of assessee that the income received on these investment were also disclosed in the regular return, of income prior to the date of search - Issue were decided in favour of assessee.

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• 2013 (2) TMI 476
  

  Jurisdiction under section 154 – An order was passed under section 264 by CIT, in revision against an order under section 143(3) - claim of the assessee to the extent of contribution towards the payment of gratuity was allowed to the extent of Rs. 6.80 lakhs while the balance amount of Rs. 31.25 lakhs was disallowed – The assessee applied under section 154 for rectification – The CIT declined to entertain the application – Held that:- In the present case, the revisional authority had passed an order in revision. The application for rectification was not made before the Assessing Officer who passed the assessment order which was the subject-matter of revision but the application was made before the revisional authority itself for rectification. Such an application was maintainable and was not barred by section 154(1A) – Order set aside and restored the proceedings arising out of the application for rectification under section 154 to the Commissioner of Income-tax – In favour of assessee.

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• 2013 (2) TMI 475
  

  Reassessment – Income assessed on reassessment cannot be less than the income originally assessed - Assessee is a plot owner society,received a sum as the TDR premium from its members - In the original return of income, the assessee had offered the TDR premium to tax after deducting the expenditure incurred by it - Notice issued under section 148 to show cause as to why the expenditure incurred for earning the TDR premium should not be disallowed – Held that:- As decided in Sun Engineering Works P. Ltd[1992 (9) TMI 1 - SUPREME COURT] the object and purpose of the proceedings under section 147 of the Act is for the benefit of the Revenue and not for the benefit of the assessee and, therefore, in the reassessment proceedings, the assesse be permitted to convert the reassessment proceedings as his appeal or revision in disguise - Since the decision of the Income-tax Appellate Tribunal is contrary to the aforesaid decision of the apex court, the impugned decision of the Income-tax Appellate Tribunal is quashed and set aside and the matter is restored to the file of the Income-tax Appellate Tribunal for fresh decision in accordance with law.

  TDR premium amount received by the assessee has been voluntarily offered to tax, the question of considering the taxability of that amount by applying the principle of mutuality in the reassessment proceedings does not arise at all - It is only the expenditure claimed to have been incurred by the assessee which is disallowed in the reassessment order that has to be considered by the Income-tax Appellate Tribunal – Appeal disposed of accordingly

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• 2013 (2) TMI 474
  

  Expenditure incurred on hired space on hoardings – Whether expenditure incurred on hired space on hoardings would come under section 37(3A) read with sub-section (3B), despite the fact that rentals are allowance under section 30 of the Act ?– Assessee claimed deduction of (i) expenditure incurred on hired space on hoardings, and (ii) expenditure incurred on statutory advertisement like printing of technical data sheets, printing of stationery, etc., under the general head of advertisement and publicity. – Held that:- If the assessee is a tenant in occupation of a premises for the business or profession, the rent paid for such premises and the cost of repairs incurred, if any, shall be allowed to be deducted. Crucial words in section 30 are "use of the premises for the purpose of business or profession". By no stretch of imagination, it can be inferred that the hire charges paid for advertisement hoardings would also come within the ambit of use of the premises for the purpose of business. Section 30 has nothing to do with advertisement, publicity or sales pro-motion. Giving very plain meaning of the language in section 30, it has to be construed as dealing with the deduction of rent, rates, taxes, repairs and insurance paid for the premises used for the business or profession either as a tenant or otherwise as a tenant. It does not take within its fold expenditure incurred for advertisement or publicity. If section 30 is interpreted as also allowing deduction of the hire charges for the space for the purpose of advertisement, it would amount to supplying casus omissus.

  The expenditure under the head expenditure incurred on hired space does not come within the purview of publicity, advertisement or sales promotion. Section 37(3A) read with sub-section (3B) is very specific that it is only the expenditure incurred for advertisement, publicity and sales promotion which are to be given ordinary meaning. Mere hiring a on hoardings cannot be treated as expenditure for advertisement or publicity or sales promotion - In favour of the Revenue

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• 2013 (2) TMI 473
  

  Penalty for Concealment of Income – Whether Penalty u/s 271(1)(c) should be imposed or not – Search was carried out in the business premises of the assessee – Found that the assessee had invested Rs. 11 lakhs in two properties and this had not been disclosed – Held that:- Assessee had made a statement under sub-section (4) of section 132 of the Act stating that he had acquired the property out of the income which was not disclosed by him. Subsequently, the assessee filed a return of income before the expiry of time specified under section 139 of the Act and he also paid the tax thereon.

  Moreover, the assessee had not acted in a contumacious manner. In fact, the assessee had made a clean breast of the entire facts and had admitted the purchase of the property from the income which was not disclosed. The non-disclosure of the income was due to the facts that the assessee was an uneducated and illiterate petty contractor who received payments only after deduction of tax at source. It is under these circumstances that the assessee believed bona fide that no further tax was required to be paid.

  In T. Ashok Pai v. CIT [2007 (5) TMI 199 - SUPREME COURT] the Supreme Court observed that if the explanation given by an assessee is taken to be bonafide, the question of imposition of penalty under section 271(1)(c) of the Act would not arise. Since assessee had complied with the provisions of clause (2) of Explanation 5 to section 271(1)(c) of the Act, no penalty Shall be imposed – Against the revenue.

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• 2013 (2) TMI 472
  

  Refund claim - 100% E.O.U. - Assessee engage in manufacture and export of Precision Electro Mechanical Assemblies, parts of Medical Equipments, etc. - services were used for manufacture of the goods - Held that:- As concluding from the facts that the original authority has taken a verification report from the jurisdictional range officer and found that the impugned services have been “used by them in relation to the manufacture of the finished goods and also in the day-to-day activities like procurement of raw materials, production and quantity control, marketing and sale & export of the finished goods.” This finding of the original authority has not been rebutted in the grounds of appeal. In favour of assessee

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• 2013 (2) TMI 471
  

  Adherence of principles for decision making process – whether the decision has been taken adhering to correct principles that are pertinent and applicable to the decision making process – Issue is single judge could not have entered into a roving enquiry and contrary to the concept of judicial review under articles 226 and 227 of the Constitution of India, since a writ court is not to enter into the justifiability of the decision, as an appellate court – Held that:- He has accepted number of additional affidavits on record, recorded observations and issued certain directions, though the solitary grievance was that the SEBI has failed to act appositely on the complaints filed by the writ petitioner.

  In course of hearing of the appeals, two complaints were made to the SEBI - but no decision or outcome was communicated to the respondent - Thus, mandamus issued to the SEBI is to take a decision on the basis of the complaints filed and communicate the decision to the complainant-respondent - An appeal would lie from such a decision – Appeals accordingly disposed of without any order.

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• 2013 (2) TMI 470
  

  Stay petition - Waiver of pre-deposit of penalty - Rejection of rebate claim - Assessee are merchant exporters - Exported the goods which are purchased from M/s Metro Industries under duty paying documents - Assessee filed a rebate claim in respect of the exported goods - AO argued that assessee colluded with M/s. Metro Industries in falsifying and creating fictitious central excise invoices and ARE 1 - Held that:- The applicants have colluded with M/s. Metro Industries but find no such evidence in the adjudication order against the applicants. In these circumstances, the pre-deposit of penalty is waived. Stay granted

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• 2013 (2) TMI 469
  

  Reversal of CENVAT credit wrongly taken - seeking stay in respect of the interest and penalty - Held that:- In as much as the appellant is not disputing the tax liability they cannot dispute the liability to pay interest as the interest is a consequential liability on account of delay in payment of tax. Thus the appellant directed to make a pre-deposit of interest liability within six weeks and report compliance on 26.10.2012. On such compliance being reported, pre-deposit of penalty is waived and recovery thereof stayed during the pendency of the appeal

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• 2013 (2) TMI 468
  

  Waiver of demand - Stay petition - CENVAT credit on capital goods - Rule 4 (4) of Cenvat Credit Rule 2004 - Depreciation claim on amount of CENVAT credit on capital goods - Appellant claims to have had made amends in their books of accounts and consequently there was no more claim of depreciation under the Income Tax Act. - Held that:- there is no valid documentary evidence of the appellant having relinquished their claim of depreciation. no copy of any revised Income Tax assessment order is available on record. Therefore, the assessee has no prima facie case on merits. Waiver of pre-deposit rejected and Stay petition allowed subject to deposit of duty.

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• 2013 (2) TMI 467
  

  Stay Petition - Valuation of goods - Captive consumption - Rule 4 or under Rule 8 of the Valuation Rules, 2000 - AO argued that in respect of clearances of the goods made to the assessee's other unit, the Rule 8 is applicable - Assessee contended that Rule 8 is applicable only when the entire clearances are made to captive consumption and not when there are independent sales at the factory gate - Held that:- Since the facts of the case ISPAT INDUSTRIES LTD.(2007 (2) TMI 5 - CESTAT, MUMBAI) are similar to the case decided in favour of assessee. Therefore stay granted

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• 2013 (2) TMI 466
  

  SSI Exemption - Using brand/trade name of another - Assessee engaged in the manufacture of aluminum utensils - Chapter 76 of the Tariff - Under a brand name "NIRLEP" - Brand name of "NIRLEP" pertained to and was registered in the name of another - Notification No. 8/99 - Held that:- Following the decision in case of RUKMANI PAKKWELL TRADERS (2004 (2) TMI 69 - SUPREME COURT OF INDIA)and MAHAAN DAIRIES (2004 (2) TMI 73 - SUPREME COURT OF INDIA) that it does not make any difference whether the goods on which the trade name is used are the same in respect of which the trade name is registered. Even if goods are different so long as the trade name of some other company is used, benefit of small scale exemption Notification is not available. In favour of revenue

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• 2013 (2) TMI 465
  

  CENVAT Credit - Capital goods rule 2(a) of the CENVAT Credit Rules 2004 - Whether CENVAT credit was admissible of G.C. Sheets/G.P. Sheets – Assessee claimed these are components/spares/accessories of the cement mill – The effect that the sheets had been used in the Kiln Feed GCT and Kiln ESP Gas Dedusting and also for increasing the storage space in the Storage Yard - AO argued that the sheets had been used for replacing of the roof over the cement mill - Held that:- Question to be settled in this case is on a fact and the same is as to the manner of use of the G.C./G.P. Sheets. Therefore it is not possible to identify any nexus between such finding and the case law discussed in the impugned order.

  Therefore, appeal remand with a direction to the original authority to take fresh decision on the substantive issue after giving the assessee one more opportunity to substantiate their claim and after physical inspection of Plant and Machinery if deemed necessary. Remand back to AO

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• 2013 (2) TMI 464
  

  Penalties imposed for violation of regulations 3 of the SEBI(Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 - whether regulation 4(2)(q) is applicable only to intermediaries and not on trades - SEBI conducted investigations into the trading activity of Shri Kanaiyalal Baldevbhai Patel ( 'KB') an individual trader and Passport India Investment (Mauritius) Ltd.( 'Passport') it was noted that KB had placed and executed orders before the order of Passport and consequently squared off his position when the orders of Passport were placed in the market. Dipak was the portfolio manager of Passport and is also cousin of KB thus providing information regarding forthcoming trading activity of Passport - Held that:- There is no hesitation in holding that the alleged transactions of the appellant are in the nature of "front running"

  As it is an admitted position on both sides that the regulation 4(2)(q) applies only to intermediaries and not to traders trading in the securities market the appellants were right in stating that front running has been prohibited only by intermediaries. In the absence of any specific provision in the Act, rules or regulations prohibiting front running by a person other than an intermediary, it is opined that the appellants cannot be held guilty of the charges levelled against them.

  On considering the fact that when the appellants placed their order, these were screen-based and at the prevalent market price. Admittedly Passport was the major counter-party for trading in the market and was placing huge orders and, hence, possibility of order of traders placing orders for smaller quantities matching with orders of Passport cannot be ruled out. Therefore, it cannot be said that they have manipulated the market. The alleged fraud of Deepak may be a fraud against its employer for which the employer has taken necessary action. In the absence of any specific provision in law, it cannot be said that a fraud has been played on the market or market has been manipulated by the appellants. thus SEBI has erred in holding the appellant guilty of violating regulation 3.

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• 2013 (2) TMI 463
  

  Detention of goods - assessee challenging the Goods Detention Notice - Held that:- Since assessee had paid the disputed tax & the goods have already been released, the larger relief sought for to quash the impugned proceedings becomes infructuous.

  Insofar as the request for finalising the proceedings for composition is concerned, the respondent department is directed to complete the same as expeditiously as possible, preferably, within a period of two weeks from the date of receipt of a copy of this order.

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• 2013 (2) TMI 462
  

  Interest on delayed payment of refunds - whether the provisions of Section 11B of the Central Excise Act, 1944 are applicable for the purpose of service tax - Held that:- There being no dispute regarding belated sanction of refund to the appellant, the appellant is eligible for the interest on such belatedly sanctioned refunds. The amount of interest needs to be calculated by the lower authorities, period after three months of filing of the refund claim by the appellant with the authorities, till the amount is refunded to them. See NIRMA LTD. Versus COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD [2011 (3) TMI 1257 - CESTAT, AHMEDABAD]

  Notification No. 41/07. dated 6-10-2007 itself provides clearly that the relevant date for determination of limitation is the date on which proper officer of Customs makes an order permitting clearance and loading of the goods for exportation. Therefore the finding that the claim is time-barred because it is filed beyond the period when counted from the date of ARE-1 is appears to be against the provisions of Notification No. 41/07-S.T., dated 6-10-2007. Provisions of Section 83 of Finance Act, 1994 clearly provide that provisions of Section 11BB are made applicable to service tax matters, there is no reason as to why this aspect has not been verified before rejecting the refund claim by both the lower authorities - the impugned orders are required to be set aside and the matter is remanded to the original adjudicating authority to verify the facts, correctly record them and also apply the statute correctly to the facts of the case - in favour of assessee as directed.

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