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2013 (5) TMI 896
Grant of bail - Held that:- Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.
While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations.
Taking note of all these facts and the huge magnitude of the case and also the request of the CBI asking for further time for completion of the investigation in filing the charge sheet(s), without expressing any opinion on the merits, we are of the opinion that the release of the appellant at this stage may hamper the investigation. However, we direct the CBI to complete the investigation and file the charge sheet(s) within a period of 4 months from today. Thereafter, as observed in the earlier order dated 05.10.2012, the appellant is free to renew his prayer for bail before the trial Court and if any such petition is filed, the trial Court is free to consider the prayer for bail independently on its own merits without being influenced by dismissal of the present appeal.
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2013 (5) TMI 895
Disallowance u/s 40A(3) - Payments in cash higher than the specified limits 20,000/- - Held that:- Sec 40A(3) is brought for curbing the circulation of black money and if payments made are bonafide, then there is no requirement to make the disallowance - the plea of the assessees needs reconsideration - Issue is set aside - allowed for statistical purposes.
Addition made u/s.68 - genuineness of transaction, identity and capacity of the creditor - Held that:- Assessee was showing the debtors having credit balances - accordingly requested to file the confirmations and PANs of the concerned debtors - the burden is on the assessee to prove the creditworthiness - assessee failed to discharge the burden- Decided against the assessee
Assessee has advanced no interest has been charged - Held that:- The contention of the assessees that there were trade advances on which no interest was charged, has not been properly appreciated by the authorities below - the capital account of the assessee has credit balances - then to that extent it can be said that the assessee has advanced the money interest-free, otherwise also out of assessees’ own capital - Matter Remanded to AO
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2013 (5) TMI 894
Issues Involved:
1. Deletion of addition u/s 40(a)(ia) for non-deduction of TDS.
2. Validity of Revenue's appeal.
3. Application of section 194I vs. section 194C.
4. Liability to deduct TDS for crushing charges.
5. Balance addition of Rs. 26,244.
Summary:
1. Deletion of Addition u/s 40(a)(ia) for Non-Deduction of TDS:
The Revenue challenged the CIT(A)'s decision to delete the addition of Rs. 14,35,040/- made by the AO on account of non-deduction of TDS u/s 40(a)(ia). The CIT(A) held that the crushing charges were part of the trading/manufacturing account and fell under section 28, which is not covered by section 40(a)(ia). The ITAT, however, disagreed, citing the judgments of various High Courts, including the Hon'ble Calcutta High Court in CIT vs. Crescent Export Syndicate, which held that section 40(a)(ia) applies to all expenditures, whether paid or payable, if TDS is not deducted.
2. Validity of Revenue's Appeal:
The assessee argued that the appeal by the Revenue was not maintainable as the CIT(A) had already given a clear finding in favor of the assessee. The ITAT found this argument unconvincing, stating that the law must be read as an integrated code and not selectively.
3. Application of Section 194I vs. Section 194C:
The assessee contended that the payment for crushing charges should fall under section 194I (rent) and not section 194C (contractor). The ITAT rejected this argument, emphasizing that the nature of the payment was for services rendered, thus falling under section 194C.
4. Liability to Deduct TDS for Crushing Charges:
The assessee claimed that they were not liable to deduct TDS as M/s. Shri Balaji Oil Mills was not a contractor in relation to the assessee. The ITAT dismissed this claim, noting that the assessee had taken the factory on rent and the payments were for crushing services, making them liable to deduct TDS u/s 194C.
5. Balance Addition of Rs. 26,244:
The CIT(A) had sustained the disallowance of Rs. 26,244/- out of the total crushing charges. The ITAT upheld this decision, agreeing with the CIT(A)'s interpretation that only the amount payable at the end of the year should be disallowed u/s 40(a)(ia).
Conclusion:
The ITAT allowed the Revenue's appeal, reinstating the addition of Rs. 14,35,040/- and dismissed the assessee's cross-objection. The ITAT emphasized the integrated reading of the Income Tax Act and upheld the applicability of section 40(a)(ia) to all expenditures where TDS was not deducted, irrespective of whether the amount was paid or payable.
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2013 (5) TMI 893
Contribution to Non- Statutory Funds - Disallowance u/s Section 40A(9) - It was contended that contributions made by the assessee to Bata Workers Sickness Benefit Society must not be an allowable expenditure as the Society is neither a body referred to u/s 36(1)(iv) or (v), nor does it satisfy conditions of sub-section 10 of section 40A. - HELD THAT: - All the payments made by the assessee regarding Employees’ contribution to PF and ESIC before the due date of filing of the return are allowed as a deduction.
Decision in the case of CIT VERSUS VINAY CEMENT LTD. [2007 (3) TMI 346 - SC ORDER], relied upon.
Royalty Payment- A Revenue or Capital Expenditure? - In a Royalty agreement it was mentioned that in the event of termination or expiry of the agreement the licensed products were not to be manufactured nor was its trademarks to be used and all to be returned to the licensor. - HELD THAT: - Assesse has derived no enduring benefit nor has assessee obtained any capital asset on the basis of the payment of the royalty as per the agreement. Thus, it cannot be treated as a capital expenditure.
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2013 (5) TMI 892
Issues involved: Cross appeals by the assessee and the Revenue regarding disallowance u/s. 14A @ 20% of exempted income for A.Y. 2007-08.
Assessee's Appeal:
1. The assessee contended that Ld. CIT(A) erred in conferring the disallowance u/s. 14A @ 20% of the exempted income, citing previous years' restrictions to 20% of exempted income.
2. Assessing Officer observed no expenditure attributed to earning exempt income, computed disallowance at &8377; 50,92,351.
3. Ld. CIT(A) found Rule 8D not applicable but disallowed 20% of exempt income as reasonable u/s. 14A.
4. Assessee argued for consistency with earlier years' decisions, directing AO to restrict disallowance to 2% of exempt income. Additional ground not pressed, dismissed.
Revenue's Appeal:
1. Revenue challenged Ld. CIT(A)'s ruling that disallowance u/s. 14A cannot be computed using Rule 8D.
2. AO invoked Sec. 14A r.w. Rule 8D for disallowance, Ld. CIT(A) held Rule 8D not applicable.
3. Tribunal upheld Ld. CIT(A)'s decision, citing Rule 8D as prospective from 1.4.2008, as per Godrej & Boyce Mfg. Co. Ltd. Vs DCIT 328 ITR 81.
4. Assessee's appeal partly allowed, Revenue's appeal dismissed.
This judgment addresses the dispute over the disallowance u/s. 14A of the Income Tax Act for the assessment year 2007-08. The Tribunal ruled in favor of the assessee, directing the Assessing Officer to restrict the disallowance to 2% of the exempt income based on consistency with earlier years' decisions. The Revenue's appeal challenging the applicability of Rule 8D was dismissed, affirming that Rule 8D is prospective from 1.4.2008.
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2013 (5) TMI 891
Issues Involved:
1. Dichotomy of EOU and Non-EOU units and set-off of unabsorbed depreciation.
2. Interest provision on excise duty liability and its treatment in book profit u/s 115JB.
3. Taxability of notional surplus on settlement of sales tax deferral loan.
4. Disallowance of product development expenses as capital expenditure.
5. Treatment of software support and license user fees as revenue expenditure.
Summary:
Issue 1: Dichotomy of EOU and Non-EOU units and set-off of unabsorbed depreciation
The Revenue challenged the CIT(A)'s decision to delete the set-off of unabsorbed depreciation of Rs. 70,36,530 and increase the deduction allowable u/s 10B. The AO rejected the claim u/s 10B due to substantial carried forward losses and lack of separate books for EOU and non-EOU units. The CIT(A) allowed the claim, holding there is no scope for set-off of unabsorbed depreciation of non-EOU units in computing exemption for 100% EOU units. The ITAT upheld the CIT(A)'s decision, citing the Bombay High Court's ruling in CIT Vs. Black & Veatch Consulting Pvt. Ltd. and Karnataka High Court's ruling in CIT Vs. Yokogawa India Ltd., which supported the exclusion of 10A/10B unit profits before setting off brought forward losses of non-10A/10B units.
Issue 2: Interest provision on excise duty liability and its treatment in book profit u/s 115JB
The AO added the provision for interest on excise duty liability to the book profit u/s 115JB, treating it as a contingent liability. The CIT(A) reversed this, considering it an ascertained liability deductible while computing book profits. The ITAT upheld the CIT(A)'s decision, noting that the interest payable on excise duty was a crystallized liability pursuant to a demand raised by the Central Excise Department.
Issue 3: Taxability of notional surplus on settlement of sales tax deferral loan
The AO added the notional surplus of Rs. 70,69,074 arising from the prepayment of sales tax deferral loan to the total income u/s 41(1). The CIT(A) dismissed the ground as it was not pressed by the assessee. The ITAT admitted the additional ground raised by the assessee, restoring the issue to the AO for fresh adjudication in light of the Special Bench decision in Sulzer India Ltd., which held that such surplus is a capital receipt not chargeable to tax.
Issue 4: Disallowance of product development expenses as capital expenditure
The AO disallowed Rs. 13,95,263 claimed as revenue expenditure for product development, treating it as capital expenditure. The CIT(A) upheld the AO's decision. The ITAT restored the issue to the AO for fresh verification, following its earlier decision in the assessee's own case for A.Y. 2001-02.
Issue 5: Treatment of software support and license user fees as revenue expenditure
The AO treated Rs. 76,75,184 paid for software development as capital expenditure. The CIT(A) treated Rs. 59,39,334 as capital expenditure and allowed the rest as revenue expenditure. The ITAT held that the software expenses should be allowed as revenue expenditure, following the Bombay High Court's decision in CIT Vs. Raychem RPG Ltd.
Conclusion:
The ITAT dismissed the Revenue's appeals and allowed the assessee's appeals for statistical purposes, restoring certain issues to the AO for fresh adjudication.
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2013 (5) TMI 890
Issues involved: Interpretation of Rule 6 of the Cenvat Credit Rules regarding payment of duty on goods cleared to SEZ Developers.
Summary:
Issue 1: Duty demands on goods cleared to SEZ Developers
The demands of duty were confirmed by the adjudicating authority based on the appellants availing Cenvat credit on inputs used for manufacturing goods cleared to SEZ Developers. The Revenue argued that the goods cleared to SEZ Developers were exempted, thus the manufacturer is liable to pay 8% to 10% of the price of the goods as per Rule 6 of the Cenvat Credit Rules.
Decision:
The Tribunal referred to the decision in Sujana Metal Products Ltd. v. CCE, Hyderabad, which clarified that supplies made to SEZ units are to be treated as exports. The definition of "export" under the SEZ Act prevails over the Customs Act. Therefore, the application of Cenvat Credit Rules for recovery of amounts on goods supplied to SEZ units does not arise. The amendment to Rule 6(1) of the CCR, 2004 is applicable from when the rule came into existence, and the exception provided under Rule 6(6) applies to supply of exempted goods to SEZ units and developers/promoters.
Conclusion:
The Tribunal found the decision in Sujana Metal Products Ltd. applicable to the present case, setting aside the impugned orders and allowing the appeals on merits. The question of limitation was not addressed as the appeals were allowed based on the merits of the case.
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2013 (5) TMI 889
Issues involved: Dispute over deletion of addition made by Assessing Officer on account of unavailed cenvat balance in the closing stock.
Issue 1: Addition to closing stock on account of modvat credit under section 145A of the Act
The Assessing Officer initially made an addition to the closing stock for unutilized modvat credit under section 145A of the Income Tax Act, 1961, which was confirmed by CIT(A). However, the Tribunal later directed the Assessing Officer to re-compute income in line with section 145A. Despite this, the Assessing Officer again added unutilized modvat in the closing stock without adjusting the opening stock, purchases, and sales. The assessee argued that adjustments were also required in the opening stock based on judgments from the Hon'ble High Courts of Delhi and Bombay. CIT(A) agreed, stating that the adjustment under section 145 was necessary for all stages, not just the closing stock. The Tribunal upheld CIT(A)'s decision, citing the requirement to apply section 145A comprehensively.
In the case, the Appellate Tribunal ITAT MUMBAI addressed the issue of addition to closing stock on account of modvat credit under section 145A of the Income Tax Act. The Tribunal highlighted the necessity of adjustments for tax, duty, cess, or fee at all stages, including opening stock, purchases, sales, and closing stock, as per the method of accounting regularly employed by the assessee. Referring to judgments from the Hon'ble High Courts of Delhi and Bombay, the Tribunal affirmed CIT(A)'s directive to apply section 145A holistically, not limited to the closing stock alone. Consequently, the Tribunal dismissed the revenue's appeal, upholding the decision of CIT(A) in its entirety.
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2013 (5) TMI 888
Issues involved:
The judgment involves the following issues:
1. Eligibility for deduction u/s 80IB(10) despite violation of provisions.
2. Interpretation of the amendment in Section 80IB(10) regarding commercial area in housing projects.
3. Allowance of deduction under Section 36(1)(iii) for interest expenditure on work in progress.
Issue 1: Eligibility for deduction u/s 80IB(10)
The Tribunal held that the assessee is eligible for deduction u/s. 80IB(10) despite violating the provisions, citing the decision in the case of Brahma Associates. The Tribunal's decision was based on the premise that the amendment in Section 80IB(10) with the insertion of clause (d) w.e.f. 1/4/2005 does not apply to assessment years prior to A.Y. 2005-06. The Tribunal disregarded the fact that the said decision is under challenge with an SLP filed by the Income Tax Department.
Issue 2: Interpretation of the amendment in Section 80IB(10)
The Tribunal also ruled in favor of the assessee, allowing deduction u/s. 80IB(10) based on the decision in Brahma Associates. The Tribunal held that the insertion of clause (d) in Section 80IB(10) from 1/4/2005 does not apply to assessment years before A.Y. 2005-06. It was noted that prior to this amendment, only housing projects without any commercial unit were eligible for deduction u/s. 80IB(10), and the amendment provided a relaxation by allowing a limited commercial area within the housing project.
Issue 3: Allowance of deduction under Section 36(1)(iii)
The Tribunal upheld the order of the CIT(A) allowing deduction under Section 36(1)(iii) for interest expenditure allocable to work in progress forming part of closing stock. This decision was based on the Tribunal's earlier rulings for AY 1997-98, despite the fact that similar decisions for AY 2000-01 were under appeal before the Bombay High Court. The High Court declined to entertain this issue based on the reasons mentioned in a previous order related to a different assessment year.
The appeal was ultimately dismissed with no order as to costs.
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2013 (5) TMI 887
Issues involved: Assessment year 2004-05, validity of reopening assessment u/s 148, dissolution of company post-merger, applicability of amalgamation laws, notice issued to non-existing company.
The appeal before the Appellate Tribunal ITAT Chennai pertained to the assessment year 2004-05 and challenged the order of the Commissioner of Income-tax(Appeals)-I at Coimbatore dated 10.8.2012, arising from the assessment completed u/s 143(3), read with sec. 147 of the Income-tax Act, 1961. The primary issue revolved around the validity of reopening the assessment u/s 148, following the merger of M/s. Meridian Industries Ltd. with M/s. Precot Mills Ltd., approved by the Hon'ble High Court of Madras, leading to the dissolution of the transferor company post-merger.
The Assessing Officer had disallowed certain deductions in the income escaping assessment, including disallowance of dividend receipts and depreciation on windmill. The assessee challenged these additions before the Commissioner of Income-tax(Appeals), along with contesting the validity of the reopening of assessment. The assessee argued that the notice u/s 148 was issued to a non-existing company, as the merger had been approved by the Hon'ble High Court, resulting in the dissolution of the assessee-company post-merger. The Commissioner of Income-tax(Appeals) accepted these contentions, emphasizing that a dissolved company cannot be assessed for income tax, citing relevant legal precedents and annulled the income escaping assessment.
The Revenue appealed the decision, contending that the dissolution of the company post-merger with effect from 1.4.2006 would not invalidate the notice issued u/s 148 on 3.3.2011 for the assessment year 2004-05. The Revenue argued that even though the company was dissolved, the assessment year in question was prior to the dissolution. However, the Tribunal upheld the decision of the Commissioner of Income-tax(Appeals), emphasizing the legal principle that after amalgamation, the transferor company ceases to exist, and the notice should have been issued to the amalgamated company, M/s. Precot Industries Ltd., as the assessee-company was no longer in existence post-merger.
In conclusion, the Tribunal dismissed the appeal filed by the Revenue, affirming the decision of the Commissioner of Income-tax(Appeals) and upholding the annulment of the income escaping assessment due to the dissolution of the company post-merger, emphasizing the legal implications of amalgamation on the existence of the transferor company.
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2013 (5) TMI 886
Issues Involved:
1. Application u/s 439 of the Code of Criminal Procedure, 1973.
2. Offences under Sections 8(c), 22, 23, 24, 25, 27A, 28, 29, 30, and 38 of the NDPS Act, 1985 read with Section 120B of the IPC.
3. Seizure and analysis of contraband substances.
4. Previous applications by co-accused.
5. Arguments for and against granting bail.
Summary:
1. Application u/s 439 of the Code of Criminal Procedure, 1973:
This application was filed u/s 439 of the Code of Criminal Procedure, 1973 in connection with NDPS Special Case No.5 of 2012 for offences under the NDPS Act, 1985 and Section 120B of the IPC.
2. Offences under Sections 8(c), 22, 23, 24, 25, 27A, 28, 29, 30, and 38 of the NDPS Act, 1985 read with Section 120B of the IPC:
The prosecution alleged involvement in illegal export/smuggling of narcotic drugs and psychotropic substances. The DRI officers seized 37 packets containing Methamphetamine Hydrochloride from M/s. Anshanu Exports, Ahmedabad. The total value of the seized material was Rs. 37 Crores in the illicit international market.
3. Seizure and analysis of contraband substances:
The Central Excise officers seized 432 kgs of 1(4-methylphenyl) 2-methylaminopropan-1-one and 81 kgs of Ketamine Hydrochloride from M/s Kamud Drugs Pvt. Ltd. The DFS Gandhinagar confirmed the substances as Methamphetamine Hydrochloride and Ketamine Hydrochloride, covered under the NDPS Act, 1985. The total value of the seized Methamphetamine Hydrochloride was approximately Rs. 432 Crores.
4. Previous applications by co-accused:
Co-accused Abhijit Prabhakar Konduskar's application for retesting the samples was rejected. Another co-accused, Sujal Vijaybhai Patel's bail application was dismissed, with the court emphasizing the rigours of Section 37 of the NDPS Act and the non-applicability of exceptions under Section 8.
5. Arguments for and against granting bail:
The applicant contended that the testing methods were flawed and that he had been in jail since 23.12.2011. The learned APP opposed the bail, citing the serious nature and gravity of the offence. The court found no merit in the application, upheld the credibility of the DFS Gandhinagar's report, and emphasized the serious nature of the offence and the punishment prescribed.
Conclusion:
The application for bail was dismissed, and the rule was discharged.
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2013 (5) TMI 885
Issues Involved:
1. Disallowance of broken period interest on purchase of securities.
2. Disallowance of contribution to Retired Employees Medical Benefit Scheme.
3. Disallowance of contribution towards Trust fund as per Supreme Court's direction.
4. Disallowance of expenditure u/s 14A read with Rule 8D.
Summary:
1. Disallowance of Broken Period Interest on Purchase of Securities:
The Assessing Officer disallowed the broken period interest on purchase of securities, treating it as a capital outlay based on CBDT instruction and the Supreme Court's decision in Vijaya Bank Ltd vs CIT. However, the CIT(A) deleted the addition, recognizing the interest as revenue expenditure since the securities were held as stock-in-trade. The Tribunal upheld the CIT(A)'s decision, referencing the Supreme Court's ruling in Citi Bank N.A., which allowed broken period interest as revenue expenditure.
2. Disallowance of Contribution to Retired Employees Medical Benefit Scheme:
The Assessing Officer disallowed the contribution to the Retired Employees Medical Benefit Scheme u/s 37(1), considering it non-business expenditure. The CIT(A) and Tribunal, referencing previous Tribunal decisions and the case of State Bank of Travancore, allowed the deduction, recognizing it as a business expenditure incurred out of business expediency.
3. Disallowance of Contribution Towards Trust Fund as per Supreme Court's Direction:
The Assessing Officer disallowed the contribution of Rs. 2 crores towards the Trust fund for empowerment of persons with disability, treating it as non-business expenditure. The CIT(A) upheld the disallowance. However, the Tribunal allowed the deduction, noting that the payment was made as per the Supreme Court's direction and was not gratuitous but a refund of excess interest tax collected, thus qualifying as a revenue expenditure.
4. Disallowance of Expenditure u/s 14A Read with Rule 8D:
The Assessing Officer disallowed Rs. 2,52,54,916/- u/s 14A read with Rule 8D for the expenditure incurred in relation to exempt income. The CIT(A) confirmed the disallowance. The Tribunal, while agreeing with the disallowance under Rule 8D, directed the Assessing Officer to re-work the disallowance by apportioning the expenditure between exempt and taxable income earned from the investments, following the principle laid down by the Special Bench in Vishnu Anant Mahajan.
Conclusion:
The Tribunal's decision addressed the disallowances made by the Assessing Officer and upheld by the CIT(A), providing relief to the assessee in most instances by recognizing the expenditures as business-related and allowing appropriate deductions. The Tribunal also provided clear directions for re-working the disallowance u/s 14A, ensuring a fair apportionment between exempt and taxable income.
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2013 (5) TMI 884
Issues involved:
The issues involved in this case are the deletion of additions made by the Assessing Officer on account of income from undisclosed sources and the failure of the assessee to provide documentary evidence to explain deposits in the bank account.
Deletion of Additions:
The case involved the deletion of additions made by the Assessing Officer on various sums found credited in the bank account of the respondent assessee. The assessee could not provide a satisfactory explanation initially, leading to the additions. However, in the appellate proceedings, additional evidence was admitted by the Commissioner after calling for a remand report. The CIT(Appeals) reversed the decision of the Assessing Officer based on the additional material and other evidence on record. The Tribunal dismissed the Revenue's appeal on the grounds that the assessing authority did not consider each deposit separately, the assessee explained the deposits to the satisfaction of the CIT(A), and there was no adverse material to show that the recovery of advances was not real. The Tribunal was satisfied with the explanation provided by the assessee, and no interference was warranted in the deletion of the additions.
Appreciation of Facts:
The entire issue revolved around the appreciation of facts. The CIT(Appeals) and the Tribunal, based on the materials on record and additional evidence allowed during the appellate proceedings, concluded that the credits were duly explained by the assessee. The Tribunal agreed with the CIT(Appeals) based on independent reasoning. It was held that no question of law arose from the facts presented.
Clarification on Section 68:
The Court clarified that they did not confirm the Tribunal's opinion that certain cash credits found in the bank account but not shown in the accounts, due to the absence of maintained accounts by the assessee, cannot be considered for addition under section 68 of the Income Tax Act.
In conclusion, the Tax Appeals were dismissed by the High Court, affirming the decisions of the CIT(Appeals) and the Tribunal regarding the deletion of additions made by the Assessing Officer.
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2013 (5) TMI 883
Issues Involved: Appeal against CIT(A)'s order directing exclusion of anonymous donations from Sec. 115BBC provisions.
Issue 1: Exclusion of Anonymous Donations
The appellant, a Charitable Trust, filed its income return declaring total income as NIL. The AO determined total income at &8377; 79.83 Lakhs. During assessment, collections were noted, and certain amounts were added to the total income. The FAA held that the trust's activities were charitable, and provisions of Sec. 115BBC were misapplied by the AO. The FAA emphasized that the purpose of Sec. 115BBC was to prevent misuse of anonymous donations by charitable institutions. The FAA deleted the addition made by the AO based on these grounds.
Issue 2: Applicability of Sec. 115BBC
The ITAT, Mumbai, in a previous order, highlighted that Sec. 115BBC aims to curb unaccounted money through anonymous donations to educational and religious trusts, not small donations like those collected in donation boxes. The trust in question runs a veterinary hospital for animals and birds, serving a public good for 176 years. The ITAT emphasized the trust's sincere intentions and public service, noting that known donations were duly accounted for. Referring to decisions of the Bombay and Gujarat High Courts, the ITAT upheld the FAA's decision, dismissing the department's appeal and affirming the exclusion of anonymous donations under Sec. 115BBC.
In conclusion, the ITAT upheld the FAA's decision to exclude anonymous donations from the provisions of Sec. 115BBC, emphasizing the trust's longstanding public service and the genuine nature of the donations received. The appeal filed by the department was dismissed, and the order of the FAA was upheld, resulting in the dismissal of the appeal filed by the Revenue.
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2013 (5) TMI 882
Issues involved: Appeal against deletion of penalty under section 271(1)(c) for non-deduction of TDS on transportation hire charges invoking section 40(a)(ia) of the Income-tax Act, 1961.
Summary:
The appeal by revenue challenged the deletion of penalty by CIT(A) for non-deduction of TDS on transportation hire charges under section 271(1)(c) of the Act. The assessee contended that the TDS provision was introduced in 2004 and they believed payments below a certain limit were exempt. The AO imposed penalty for concealment of income, but CIT(A) deleted it considering the bonafide nature of non-deduction in the first year of obligation. The ITAT upheld the deletion, citing precedents where genuine claims disallowed for TDS non-deduction did not warrant penalty. The genuineness of the expenses claimed was not disputed, leading to the confirmation of the penalty deletion by the ITAT.
The ITAT found that the assessee's claim of expenses was genuine, and the disallowance was solely due to non-deduction of TDS, not because the claim was false. Citing the Supreme Court's ruling in Reliance Petroproducts Ltd, the ITAT concluded that the mere disallowance of a claim due to TDS non-deduction does not justify a penalty under section 271(1)(c) of the Act. The ITAT also referenced a similar case from ITAT Ahmedabad where a penalty was canceled for the same reason. Therefore, the ITAT upheld the CIT(A)'s decision to delete the penalty, as the genuineness of the expenses was not in question.
In conclusion, the ITAT dismissed the revenue's appeal, affirming the deletion of the penalty by the CIT(A) for non-deduction of TDS on transportation hire charges under section 271(1)(c) of the Income-tax Act, 1961.
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2013 (5) TMI 881
Levy of penalty u/s.271(1)(c) - disallowance u/s.40(a)(ia) - Held that:- The Apex Court in the case of Reliance Petroproducts Ltd (2010 (3) TMI 80 - SUPREME COURT) has held that a mere making of the claim which is not sustainable in the law, by itself will not amount to furnishing inaccurate particulars of income. In the present case, admittedly, assessee made a claim but the same was rejected and disallowed not for the reason that the claim was not genuine or was fabricated but in view of provisions of law that assessee did not deduct TDS thereon.We are of the considered that view that the ratio of judgment of Hon’ble Apex Court in the case of Reliance Petroproducts Ltd (supra) squarely applies to the facts of the case before us and, therefore, levy of penalty is not justified.
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2013 (5) TMI 880
Issues Involved: The judgment involves appeals by the Revenue for assessment years 2001-2002, 2002-2003, and 2003-2004, along with a Cross Objection (CO) by the assessee for the assessment year 2001-2002, all directed against the orders of the CIT(A).
ITA No.562/Ahd/2008 (A.Y.2001-2002) Revenue's Appeal:
The Revenue's appeal contested the deletion of a specific amount from the total addition made by the Assessing Officer (AO) as peak credit. The CIT(A) upheld the deletion, finding that the credit entries in the bank account were explained, particularly a significant deposit from a known source. The Tribunal confirmed the CIT(A)'s order, dismissing the Revenue's appeal.
CO No.74/Ahd/2008 - A.Y.2001-2002 (Assessee's CO):
The assessee raised objections regarding the legality and service of notice proceedings under section 147 and the erroneous nature of the notice under Section 148. However, since the Revenue's appeal for the same assessment year was dismissed, the CO of the assessee was also dismissed.
ITA Nos.1510, 1511, and 1512/Ahd/2008 for A.Y.2001-02, 2002-03, and 2003-2004 (Revenue's Appeals):
The Revenue's appeals for these assessment years raised similar issues regarding unexplained cash credits in bank accounts. The CIT(A) provided a detailed order, considering reports from the AO and submissions from the assessee. The CIT(A) found that the deposits were adequately explained, including transfers from other accounts, and noted inconsistencies in the AO's approach. The Tribunal upheld the CIT(A)'s orders for all three assessment years, dismissing the Revenue's appeals.
In conclusion, all appeals by the Revenue and the CO of the assessee were dismissed based on the detailed analysis and findings provided in the orders of the CIT(A) and the Tribunal.
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2013 (5) TMI 879
Issues Involved:1. Disallowance of payment of commission to foreign agent on account of non-deduction of TDS. 2. Disallowance of payment on partners' insurance premium. Summary:Issue 1: Disallowance of Payment of Commission to Foreign Agent on Account of Non-Deduction of TDSThe Assessing Officer disallowed the payment of commission to a foreign agent due to non-deduction of TDS. The ld. CIT(A) accepted the assessee's contention that TDS was not required as the foreign agents were not liable to pay taxes in India, thus allowing the claim. The Revenue appealed, arguing that the withdrawal of Circular No.23 of 1969 by Circular No. 07 of 2009 invalidated the assessee's claim. The Tribunal, however, upheld the ld. CIT(A)'s decision, noting that the relevant circulars (Circular No.23 of 1969 and Circular No.786 of 2000) were in force during the financial year 2007-08, and the withdrawal by Circular No.7 of 2009 was not retrospective. The Tribunal cited various judgments supporting this view, including CIT vs. Eon Technology (P) Ltd. and DCIT vs. Shri. Sanjiv Gupta, concluding that the assessee was justified in not deducting TDS on the commission paid to the foreign agent. Issue 2: Disallowance of Payment on Partners' Insurance PremiumThe Assessing Officer disallowed the premium paid on life insurance policies purchased in the name of partners, despite the assessee's argument that these were Keyman policies. The ld. CIT(A) upheld this disallowance. The Tribunal, however, found that the policies were purchased to protect the firm's interest, with the firm as the proposer and the partners as the assured persons. The Tribunal referenced the judgment in CIT vs. B.N. Exports, which held that Keyman insurance policies are not confined to employees and can include partners. The Tribunal concluded that the premium paid on these policies is allowable as business expenditure u/s 37(1) of the Act, provided the assessee undertakes that the sum assured will be taxable upon receipt. The Tribunal directed the Revenue to allow the claim subject to this condition. Conclusion:The appeals of the assessee were allowed, and those of the Revenue were dismissed. The Tribunal confirmed that the assessee was not required to deduct TDS on the commission paid to the foreign agent and allowed the insurance premium payments as business expenditure, subject to specific conditions. Order pronounced in the open court on 28/05/2013.
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2013 (5) TMI 878
Issues involved: Three appeals by two different assessees against the order of CIT(A)-40, Mumbai for assessment years 2001-02 & 2002-03.
Case of Bhagaram P. Mali:
The assessee objected to the addition of Rs. 1,00,002/- u/s 69 of the Act for the assessment years 2001-02 & 2002-03. The AO noted gift receipts but found discrepancies in donor bank statements. The CIT(A) upheld the additions. The assessee argued that original assessments were final and no incriminating material was found during the search. The Tribunal agreed, citing the Special Bench decision, and deleted the additions.
Case of Samrathmal P. Mali:
Similar to the previous case, the assessee contested the addition of Rs. 1,00,002/- u/s 69A during assessment u/s 153A. The AO had not made any additions during the original assessment u/s 143(3). Following the precedent set in the previous case, the Tribunal deleted the additions for this assessee as well.
In both cases, the Tribunal ruled in favor of the assessees, deleting the additions made u/s 69A. The appeals of the two assessees were allowed.
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2013 (5) TMI 877
Issues involved: Appeal against order of CIT(A)-1, Surat for assessment year 2007-08.
Issue 1: Unexplained cash credit u/s 68 and interest
- The Assessing Officer made an addition of &8377; 33,35,011/- u/s 68 on account of unexplained cash credit and interest of &8377; 3,10,478/-.
- The assessee received unsecured loans and failed to provide necessary documentation for verification.
- The Assessing Officer concluded that the assessee did not prove the genuineness of the transaction and the capacity of the lenders.
- The CIT(A) deleted the addition after considering the submissions of the assessee and held that the onus had shifted to the Assessing Officer.
- The CIT(A) found that the assessee had submitted confirmations with necessary details for most lenders, fulfilling the onus of proving identity, genuineness, and creditworthiness.
- The loans were received through cheques, and the balance sheets of lenders reflected the loan amounts, proving creditworthiness.
- The Assessing Officer failed to bring any material to rebut the onus of the assessee.
- The CIT(A) relied on legal precedents to support the decision to delete the addition.
- The Revenue's appeal was dismissed as they failed to provide evidence to challenge the CIT(A)'s findings.
In summary, the appeal was related to the addition made by the Assessing Officer on account of unexplained cash credit u/s 68 and interest. The Assessing Officer found that the assessee did not provide sufficient documentation to prove the genuineness of the transactions and the capacity of the lenders. However, the CIT(A) ruled in favor of the assessee, stating that they had fulfilled the onus of proving the identity, genuineness, and creditworthiness of most lenders. The CIT(A) also highlighted that the loans were received through cheques and the balance sheets of lenders supported the transactions. The Revenue's appeal was dismissed as they did not provide any material to challenge the CIT(A)'s decision, and legal precedents were cited to support the deletion of the addition.
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