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2013 (12) TMI 1706
Issues involved: Assessment of tax liability on a foreign company for income received under a contract involving activities both inside and outside India, interpretation of tax identity and permanent establishment as per the Agreement for avoidance of double taxation.
Summary:
1. The appellant, a foreign company, filed its income tax return for the Assessment Year 2007-08 showing nil income due to claimed losses from a contract with O.N.G.C. Assessing Officer disallowed deductions and imposed tax on 25% of revenue allegedly for outside India activities. Appellate Tribunal upheld the decision, leading to the present appeal.
2. The appeal focused on taxing 25% of revenue under the contract for allegedly outside India activities within the Indian tax network, separate from the disallowed deductions issue.
3. The Agreement with the Republic of Korea does not specify the mechanism to apportion tax liability for entities with tax identities in multiple countries.
4. Article 7 of the Agreement recognizes tax identities of enterprises in different Contracting States and attributes profits to permanent establishments in each State.
5. Paragraph 2 of Article 7 outlines the attribution of profits to a permanent establishment as if it were a separate enterprise.
6. The Agreement lacks guidance on attributing income to specific tax identities unless profits are generated between different tax entities.
7. The appellant claimed revenue from within and outside India activities without generating revenue between its Indian and Korean tax identities.
8. The appellant, a resident of Korea, acknowledged tax identity in India by filing returns, raising questions on the tax obligations under the Agreement.
9. The Tribunal's decision to tax 25% of revenue without evidence of attribution to the Indian permanent establishment was deemed arbitrary. The appeal was allowed, setting aside the tax liability imposition.
Separate Judgment: The judgment was delivered by Barin Ghosh and U.C. Dhyani, JJ.
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2013 (12) TMI 1705
Issues involved:
1. Deletion of addition under section 2(22)(e) as 'debt' not 'loan/advance'
2. Deletion of addition of unexplained unsecured loans u/s 2(22)(e)
Deletion of addition under section 2(22)(e) as 'debt' not 'loan/advance':
The Revenue appealed against the CIT(A)'s order deleting the addition of Rs. 18,00,000 under section 2(22)(e) treating it as a 'debt' not a 'loan/advance'. The Revenue argued that the assessee had availed loans from a company in which he had substantial interest. However, the CIT(A) allowed the benefit to the assessee based on the nature of the transactions. The Tribunal found that the transactions were in the nature of ordinary business short-term finance entries, not supported by a loan agreement. The Tribunal agreed with the CIT(A) that the entries could be considered as a 'debt' but not a 'loan/advance' as per section 2(22)(e). The Tribunal upheld the CIT(A)'s decision based on the evidence presented.
Deletion of addition of unexplained unsecured loans u/s 2(22)(e):
During assessment, it was found that the assessee had taken loans from various parties, including Rs. 4 lakhs from Shree Ganesh Ispat Industries. The Assessing Officer added this amount to the income as confirmation and PAN details were not provided. The CIT(A) accepted the explanation that the loan was temporary and deleted the addition. The Tribunal upheld the CIT(A)'s decision as the financing entry was supported by bank records and the account details of the lending party. The confirmation and PAN details were later submitted, leading to the acceptance of the loan as genuine. The Tribunal dismissed the Revenue's appeal based on the evidence presented and the CIT(A)'s decision.
*Order pronounced on 23.12.2013.*
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2013 (12) TMI 1704
Issues involved: Appeal against order of CIT(A)-XIX, Kolkata regarding computation of Long Term Capital Gains (LTCG) u/s. 143(3) of the Income-tax Act, 1961 for Assessment Year 2006-07.
Summary:
The appeal was filed by the assessee against the order of CIT(A)-XIX, Kolkata regarding the computation of Long Term Capital Gains (LTCG) u/s. 143(3) of the Income-tax Act, 1961 for Assessment Year 2006-07. The assessee sold one third share of a house property and declared LTCG. The AO computed LTCG based on the market value of the property and the cost of acquisition. The assessee contested the adoption of the cost of acquisition as on 01.04.1981. The Tribunal, after considering the valuation report submitted by the assessee, set aside the issue to the file of AO for recomputation of LTCG based on the fair market value of the property as on 01.04.1981. The appeal of the assessee was allowed for statistical purposes.
The Tribunal noted that the assessee had sold one third share of a house property and declared LTCG. The AO computed LTCG based on the market value of the property and the cost of acquisition. The assessee contested the adoption of the cost of acquisition as on 01.04.1981, claiming a different fair market value. The Tribunal considered the valuation report submitted by the assessee valuing the property as on 01.04.1981 at a different amount. As the assessee had produced a valuation report from a registered valuer, the Tribunal directed the AO to compute the LTCG based on the fair market value of the property as on 01.04.1981, considering the valuation report provided by the assessee.
The Tribunal found that the AO should have considered the fair market value of the property as on 01.04.1981, as submitted by the assessee through a valuation report. The Tribunal set aside the issue to the file of AO for recomputation of LTCG based on the fair market value of the property as on 01.04.1981. The appeal of the assessee was allowed for statistical purposes.
In conclusion, the Tribunal allowed the appeal of the assessee for statistical purposes and directed the AO to recomputed the LTCG based on the fair market value of the property as on 01.04.1981, as provided in the valuation report submitted by the assessee. The order was pronounced in the open court on 19th Dec., 2013.
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2013 (12) TMI 1703
Issues involved: Arbitrary exercise of power by Municipal Commissioner in cancelling panel of empanelled lawyers representing Corporation and appointing someone else without approval.
Summary:
The petitioner, a practicing Advocate, was empanelled to represent a Municipal Corporation before the High Court. The Municipal Commissioner cancelled the panel made on 5.3.2013, citing lack of approval by the Empowered Standing Committee, and appointed another lawyer to represent the Corporation. The petitioner challenged this action as arbitrary, contending that the Commissioner's failure to seek approval should not penalize the empanelled lawyers. The Resolution of the Empowered Standing Committee dated 26.8.2013 supported the panel without disapproval. The Court referred to a Supreme Court decision emphasizing the importance of Article 14 in discretionary appointments and held that the Municipal Commissioner's actions were arbitrary and unjust. The Court quashed the cancellation of the panel and the appointment of another lawyer, emphasizing the Commissioner's duty to serve the Corporators and not act above them.
In conclusion, the Court found the Municipal Commissioner's actions to be arbitrary and unjust, quashing the cancellation of the panel and the appointment of another lawyer to represent the Corporation. The Court emphasized the Commissioner's duty to serve the Corporators and not act above them, highlighting the importance of democratic principles in local self-government.
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2013 (12) TMI 1702
Issues Involved:
1. Taxability of interest received from surplus funds.
2. Computation of deduction u/s 10A and 10B of the Income Tax Act.
3. Allowance of management expenses attributable to interest income.
Summary:
Issue 1: Taxability of Interest Received from Surplus Funds
The revenue challenged the Tribunal's order that interest payable on fixed deposits constitutes profits of the business of the undertaking, thus entitling the assessee to benefits u/s 10A and 10B of the Income Tax Act, 1961. The assessee earned interest from deposits in the EEFC account and inter-corporate loans. The Tribunal held that interest income from these sources should be assessed under the head "Income from Business" and extended the benefit under Section 10B for the assessment year 1998-99. However, for the assessment year 2001-02, the Tribunal noted the change in law and applied the formula in sub-section 4 of Section 10B, concluding that the term "profits of the business" is broader than "profits and gains derived by the assessee from a 100% export-oriented undertaking."
Issue 2: Computation of Deduction u/s 10A and 10B
The revenue contended that only profits and gains derived from the export of articles or computer software should be considered, not the profits of the business of the undertaking. They argued that interest from fixed deposits, loans to sister concerns, or EEFC accounts cannot be construed as profits and gains from export. The Tribunal, however, held that the entire profits deriving from the business of the undertaking should be considered while computing the eligible deduction u/s 10B/10A by applying the mandatory formula. The Court agreed with the Tribunal, noting that the amended Section 10B(4) includes all incidental incomes derived from the business of the undertaking.
Issue 3: Allowance of Management Expenses Attributable to Interest Income
The Tribunal allowed management expenses attributable to interest income at the rate of 5%, while the Assessing Officer had computed it at 4%. The Court did not find any cogent reasons provided by the Assessing Officer for applying the lower rate and upheld the Tribunal's decision.
Conclusion:
The Court upheld the Tribunal's decision that interest income from surplus funds should be treated as part of the total income for computing deductions u/s 10A and 10B. The first substantial question of law in ITA No.428/2007 was answered in favor of the revenue, and the first substantial question of law in ITA No.447/2007 was answered in favor of the assessee. The second substantial question of law in both appeals did not arise for consideration. The parties were ordered to bear their own costs.
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2013 (12) TMI 1701
Issues Involved:
1. Whether the registration u/s 12A/12AA of the Income Tax Act, 1961, could be cancelled or withdrawn u/s 12AA(3) in view of the amendment in law by way of substitution of section 2(15) by Finance Act, 2008 w.e.f. 01.04.2009.
2. Whether the assessee's activities, in view of interest and rent receipt, are to be regarded as arising in the course of and in furtherance of the objects for which it is established, or is it by way of a commercial exploitation of its resources.
Summary:
1. Legal Issue: Cancellation of Registration u/s 12A/12AA:
The legal issue revolves around whether the registration granted u/s 12A/12AA can be cancelled or withdrawn u/s 12AA(3) due to the amendment in section 2(15) by Finance Act, 2008. The assessee contends that registration once granted can only be reviewed under the terms provided by law, specifically section 12AA(3), which requires a satisfaction that the activities of the trust are not genuine or not carried out in accordance with its objects. The Revenue argues that if the objects of the registered entity are no longer regarded as charitable due to the first proviso to section 2(15), the registration cannot subsist as it becomes inconsistent with the law. The Tribunal noted that the moot point is whether an object that is no longer regarded as charitable under the amended law would still entitle an entity to continue its registration under the Act.
2. Factual Issue: Nature of Assessee's Activities:
The factual controversy is whether the assessee's activities, particularly the interest and rent receipts, are in furtherance of its objects or constitute commercial exploitation. The assessee, an Authority established under the Mumbai Metropolitan Region Development Act, 1974, argues that its activities, including earning interest and rent, are in furtherance of its objects. The Revenue contends that these activities amount to systematic, commercial exploitation of its assets, thus justifying the withdrawal of registration. The Tribunal found that the assessee has not provided sufficient details to establish that the interest and rent receipts are integral to its functioning and in accordance with its objects.
Findings and Conclusion:
The Tribunal concluded that the issue of applicability of section 12AA(3) is factually indeterminate and restored the matter back to the Director of Income Tax (Exemptions) for a fresh examination. The DIT(E) is to allow the assessee a reasonable opportunity to present its case and decide the matter per a speaking order and in accordance with law. The DIT(E) should focus on the factual aspect of whether the conditions of section 12AA(3) are satisfied without being influenced by the first proviso to section 2(15). The Tribunal emphasized that the assessee's case would require examination by the tribunal only if it survives the factual test under section 12AA(3).
Result:
The assessee's appeal is allowed for statistical purposes, and its stay petition is dismissed. The order was pronounced in the open court on December 31, 2013.
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2013 (12) TMI 1700
1. ISSUES PRESENTED and CONSIDERED The core issues considered in this judgment were: - Whether the appellant committed fraud against the revenue by intentionally misdeclaring the description and value of goods to claim a higher Duty Entitlement Pass Book (DEPB) benefit.
- What should be the appropriate quantum of penalty under Section 114(iii) of the Customs Act, 1962, considering the facts and circumstances of the case?
2. ISSUE-WISE DETAILED ANALYSIS Fraud and Misdeclaration: - Relevant Legal Framework and Precedents: The case was adjudicated under Section 114(iii) of the Customs Act, 1962, which imposes penalties for attempts to export goods improperly. The maximum penalty can be the greater of the declared value or the value determined under the Act.
- Court's Interpretation and Reasoning: The Tribunal found that the appellant had grossly misdeclared the value of the goods, which were essentially scrap, to fraudulently claim DEPB benefits. The goods were declared as "Metal Fitted/Un-bonded Rubber Parts-Door Beading" but were found to be of no practical use in automobiles.
- Key Evidence and Findings: The investigation revealed that the goods were valued at 11,000 instead of the declared 1,40,76,720. Statements from various industry experts confirmed that the goods were not suitable for their declared purpose.
- Application of Law to Facts: The Tribunal applied Section 114(iii) and determined that the appellant's actions warranted a penalty due to the fraudulent misdeclaration of goods intended to claim undue DEPB benefits.
- Treatment of Competing Arguments: The appellant argued for a reduction in penalty, citing that they themselves had requested the examination of goods. However, the Tribunal found that the misdeclaration was intentional and fraudulent.
- Conclusions: Both members agreed on the fraudulent nature of the appellant's actions but differed on the quantum of penalty.
Quantum of Penalty: - Relevant Legal Framework and Precedents: Section 114(iii) allows for penalties up to the declared value of goods or the determined value, whichever is greater. Precedents emphasize that penalties should be commensurate with the gravity of the offense.
- Court's Interpretation and Reasoning: Member (Judicial) suggested a penalty equal to the DEPB benefit claimed ( 11,26,137), while Member (Technical) argued for a higher penalty ( 50,00,000) to serve as a deterrent for future frauds.
- Key Evidence and Findings: The fraudulent claim involved a DEPB benefit of 11,26,137, with the declared value being 426 times the actual value.
- Application of Law to Facts: The Tribunal considered the severity of the fraud and the potential loss to the government treasury, leading to differing opinions on the penalty's quantum.
- Treatment of Competing Arguments: The appellant's counsel argued that the penalty should not exceed the DEPB benefit, while the respondent emphasized the need for a deterrent penalty due to the fraudulent nature of the act.
- Conclusions: The final decision imposed a penalty of 50,00,000, aligning with the view that a harsher penalty was necessary to deter such fraudulent activities.
3. SIGNIFICANT HOLDINGS - Core Principles Established: The Tribunal reinforced the principle that fraudulent export activities, particularly those involving misdeclaration to claim undue benefits, warrant significant penalties to deter future misconduct.
- Final Determinations on Each Issue: The Tribunal concluded that the appellant committed fraud by misdeclaring the value and description of the goods. Consequently, a penalty of 50,00,000 was imposed, reflecting the seriousness of the offense and the need for deterrence.
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2013 (12) TMI 1699
Issues involved:
The judgment involves the following substantial questions of law:
(A) Disallowance of depreciation on multimodal project
(B) Disallowance of bonus and royalty expenses
(C) Disallowance of obsolete stock/stores
Disallowed Bonus and Royalty Expenses:
The Tribunal confirmed the deletion of disallowance of bonus and royalty expenses as they were paid before the due date of filing the income tax return, making the assessee eligible for deduction under section 43(B) of the Income Tax Act. The CIT(A) also supported this decision based on the crystallization of liabilities during the relevant accounting period, as per the decision in Kedarnath Jute Manufacturing Co. Ltd. Vs. CIT. The Court found no error in this decision and dismissed the appeal regarding this issue.
Obsolete Stock/Stores Disallowance:
The Assessing Officer disallowed a portion of the claim for obsolete stock/stores. The assessee had written off the stock as per Schedule XI of the P and L account, supported by reports of technical committees/personnel indicating zero value. The CIT(A) allowed the write-off but considered 25% of the total amount as scrap value, confirming a 75% disallowance. The ITAT upheld the 25% disallowance, leading to the deletion of 75% disallowance. The Court dismissed the appeal against the deletion of 75% disallowance, as both the CIT(A) and ITAT had confirmed the disallowance to the extent of 25%.
Conclusion:
The Court dismissed the appeal regarding the disallowance of bonus and royalty expenses and the deletion of 75% disallowance for obsolete stock/stores. The judgment focused on the application of relevant provisions of the Income Tax Act and the decisions of lower authorities in determining the allowability of expenses and write-offs.
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2013 (12) TMI 1698
Issues involved: Appeal against order of Commissioner of Income Tax setting aside assessing officer's order to compute income u/s 115JB of the Income Tax Act, 1961 for a Banking Company.
Summary:
1. The appellant, a Banking Company, appealed against the order of the Commissioner of Income Tax directing computation of income u/s 115JB of the Income Tax Act, 1961.
2. The appellant argued that provisions of section 115JB are not applicable to Banking Companies, citing decisions of ITAT Bangalore Bench and Mumbai Bench. The ld. DR did not dispute this contention.
3. The Tribunal, after considering earlier orders and the decision in the case of Dena Bank, held that section 115JB is not applicable to Banking Companies. The order passed by the Commissioner of Income Tax u/s 263 of the Act was vacated based on this finding.
4. As the order of the Commissioner of Income Tax was vacated, the Tribunal did not adjudicate on other grounds raised by the appellant.
5. Consequently, the appeal of the assessee was allowed.
Note: Separate judgment was not delivered by the judges.
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2013 (12) TMI 1697
Issues Involved:
1. Addition of Rs. 1,34,24,319/- on account of income accrual shown as loan written back.
2. Addition of Rs. 1,73,783/- on account of stock discrepancy.
3. Addition of Rs. 32,290/- on account of finished goods supplied as free samples.
4. Allowing relief of Rs. 2,70,262/- on account of deduction u/s 80IB of the Income-tax Act, 1961.
5. Allowing relief of Rs. 6,31,073/- on account of deduction u/s 80HHC of the Income-tax Act, 1961.
Summary:
1. Addition of Rs. 1,34,24,319/- on account of income accrual shown as loan written back:
The assessee claimed that the waiver of a loan taken for acquiring capital assets should be treated as a capital receipt and not taxable. The CIT (A) agreed, stating that the transaction was of a capital nature. The Revenue argued that the assessee benefited from depreciation and thus the amount should be taxable. The Tribunal upheld the CIT (A)'s decision, referencing the case of Mahindra and Mahindra Ltd. Vs. CIT, where a similar waiver was deemed non-taxable as it was a capital receipt.
2. Addition of Rs. 1,73,783/- on account of stock discrepancy:
The AO added the amount due to minor discrepancies in raw material and finished goods. The CIT (A) deleted the addition, accepting the assessee's explanation of wastage and testing. The Tribunal found the shortage negligible and upheld the CIT (A)'s decision.
3. Addition of Rs. 32,290/- on account of finished goods supplied as free samples:
The AO added the amount as the reduction in closing stock was not clear. The CIT (A) deleted the addition, accepting that samples were given for product promotion. The Tribunal upheld the CIT (A)'s decision, finding the practice customary in the industry.
4. Allowing relief of Rs. 2,70,262/- on account of deduction u/s 80IB:
The AO excluded certain incomes from the deduction calculation. The CIT (A) directed the inclusion of some items but excluded others. The Tribunal upheld the inclusion of interest from customers as per Nirma Industries Ltd. Vs. DCIT but excluded insurance claims and other unspecified claims, remanding the issue of written-back provisions to the AO for fresh examination.
5. Allowing relief of Rs. 6,31,073/- on account of deduction u/s 80HHC:
The AO recalculated the deduction by excluding the amount under sub-section (9) of Section 80IA. The CIT (A) disagreed, but the Tribunal sided with the AO, referencing the Special Bench decision in A.C.I.T. Vs. Hindustan Mint & Agro Products (P) Ltd. and the Punjab & Haryana High Court decision in M/S Broadway Overseas Limited, ruling that deductions u/s 80HHC must be computed after reducing the deduction u/s 80IB.
Conclusion:
The appeal of the revenue was partly allowed, with some decisions of the CIT (A) being upheld and others being overturned or remanded for further examination. The order was pronounced in the open court on 23.12.2013.
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2013 (12) TMI 1696
Issues involved: Claim of hereditary rights, partition of properties, interpretation of Hindu Succession Act, 1956.
Summary:
The appellant sought partition and possession of properties based on hereditary rights, claiming ancestral property as HUF property. The suit was dismissed as the plaintiff failed to establish the property as part of an HUF, following legal precedents that inheritance from paternal ancestors is self-acquired property. The appellant challenged the dismissal, arguing entitlement as a coparcener member of an HUF.
The Supreme Court precedent in Chander Sen and Yudhister clarified that a son's right in ancestral property accrues at birth, not inheritance, affected by Section 8 of the Hindu Succession Act, 1956. The appellant's claim lacked evidence of the property being HUF, leading to dismissal of the suit by the Single Judge. The appellant's reliance on Thamma Venkata Subbamma case was deemed misplaced.
The appellant failed to prove the property as HUF, as required by law, and did not establish devolution of HUF interest from the grandfather. The appellant's argument neglected the property's self-acquired status under the law, leading to the dismissal of the appeal. The court upheld the Single Judge's decision, dismissing the appeal and related applications.
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2013 (12) TMI 1695
Issues involved:
The judgment involves the following issues:
1. Whether disallowance u/s 14M of the I.T. Act can be made when dividend income is earned on shares held as stock in trade.
2. Permissibility of tribunal to base its decision on decisions by co-ordinate benches without confronting parties.
3. Applicability of judgments by high courts in relation to the issue under appeal.
4. Consistency of tribunal's view on the matter.
5. Principles of apportionment under section 14A in relation to dividend income from shares held as stock-in-trade.
6. Whether any expenditure can be said to be incurred in relation to dividend income when shares are held as stock-in-trade.
Revenue's Appeal (ITA No. 5163/MuW2011):
The Revenue's appeal did not have a difference of opinion between the members, and thus, no confirmatory order was needed. The appeal was decided as per the order proposed by the Accountant Member and concurred with by the Judicial Member.
Assessee's Appeal (ITA No. 5724/MuW2011):
In the assessee's appeal, no submissions were made by the Revenue, and the assessee was unrepresented during the final posting. The points of difference referred to u/s 255(4) by the Members separately included questions regarding disallowance u/s 14M of the I.T. Act when earning dividend income on shares held as stock in trade, permissibility of relying on decisions by co-ordinate benches, applicability of high court judgments, consistency of tribunal's view, principles of apportionment under section 14A, and whether any expenditure can be said to be incurred in relation to dividend income from shares held as stock-in-trade. The Third Member concurred with the view expressed by the Accountant Member, and the appeal was decided as per the majority view.
In conclusion, the Revenue's appeal was dismissed, and the assessee's appeal was partly allowed. The order was pronounced in the open court on December 06, 2013.
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2013 (12) TMI 1694
Issues involved: Appeal by Revenue against CIT(A) order for assessment years 2000-01, 2001-02, and 2003-04 based on search and seizure operation u/s 132 of the I.T. Act, 1961.
Assessment Years 2000-01, 2001-02, and 2003-04:
The Assessing Officer (A.O.) observed unexplained investments in M/s. Sujana Metal Products Limited and interest income on lease deposits. Assessee's explanation challenged the basis of additions, citing lack of incriminating evidence and reliance on a seized "dumb material." CIT(A) held the seized document as inconclusive and lacking corroboration, directing deletion of additions for all years. Legal precedents supported disregarding uncorroborated seized documents for determining undisclosed income. The CIT(A) decision was upheld, emphasizing the need for substantial evidence to support additions.
Fixed Deposits Interest:
CIT(A) upheld additions for fixed deposits interest despite assessee's explanation. Revenue appealed CIT(A) decision, arguing the existence of unaccounted investments. However, the Tribunal emphasized the necessity of direct evidence to substantiate income additions, dismissing the revenue's appeals due to lack of conclusive evidence and reliance on a "dumb document."
Conclusion:
The Tribunal dismissed Revenue's appeals, emphasizing the importance of corroborative evidence and direct proof for income additions. The decision highlighted the inadequacy of relying solely on seized documents without substantial verification, leading to the deletion of additions based on insufficient evidence. The Tribunal's stance underscored the necessity of concrete evidence to support income assessments, ultimately upholding the CIT(A) order to delete the additions.
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2013 (12) TMI 1693
Issues involved: Appeal against rejection of application for approval u/s 80G(5) of the Income-tax Act, 1961 by Commissioner of Income-tax, Rajkot.
Summary:
The appeal was filed by the assessee-trust against the order of the Commissioner of Income-tax, Rajkot-I rejecting the application for approval u/s 80G(5) of the Income-tax Act. The assessee-trust, engaged in charitable activities in the educational field, had applied for approval on 21.05.2012. However, the Commissioner rejected the application citing insufficient evidence of charitable activities and expenditure details. The assessee-trust did not provide the required information despite being asked by the Commissioner. The Commissioner concluded that the trust did not carry out substantial activities and failed to comply with the necessary requirements for approval u/s 80G(5) as per the Act and Rule 11AA. The assessee-trust appealed the decision on various grounds, arguing that they deserved approval u/s 80G(5).
During the hearing, the Authorized Representative for the assessee-trust contended that only the object of the trust needed to be examined at the time of granting approval for exemption u/s 80G, and the application of funds could be reviewed during assessment. He referred to a judgment of the Punjab & Haryana High Court and an ITAT decision supporting this view. On the other hand, the Revenue representative supported the Commissioner's decision, emphasizing the lack of evidence provided by the assessee-trust regarding their expenditure towards charitable activities.
After considering the arguments, the Tribunal referred to the Punjab & Haryana High Court's decision, which stated that the object of the trust should be examined during approval, and fund application could be reviewed during assessment. Following this precedent, the Tribunal set aside the Commissioner's order and directed the grant of approval u/s 80G(5) to the assessee-trust. Consequently, the appeal of the assessee-trust was allowed.
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2013 (12) TMI 1692
Issues involved: Application for recall of order, entry tax vs. tax liability under U.P. Value Added Tax Act, 2008, delay in filing revision, tax liability for purchasing goods from unregistered dealer.
In the present case, the counsel for the assessee applied for the recall of the order dated 11.12.2013, arguing that the subject matter pertained to entry tax, while the order treated it as related to tax liability under the U.P. Value Added Tax Act, 2008. Consequently, the court decided to recall the order and allowed Correction Application No.373172 of 2013. The revision was found to be filed 10 days beyond the stipulated time, but the delay was justified and hence condoned. The office was instructed to assign a regular number to the revision.
Regarding the substantive issue, the revision concerned the assessment year 2010-11, where tax liability was imposed on the assessee for purchasing goods from an unregistered dealer. However, the tribunal, through its order dated 22.3.2013, conclusively determined that the selling dealer was registered at the relevant time, all sales were supported by tax invoices, and payments were made through bank transactions. As a result, since the goods were tax paid, the imposition of entry tax liability on the assessee was deemed unwarranted. Consequently, the revision was found to lack merit and was dismissed.
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2013 (12) TMI 1691
Issues Involved:
1. Validity of the impugned resolution dated 28/09/2013.
2. Maintainability of the petition.
Summary:
Issue 1: Validity of the Impugned Resolution
The petitioner challenged the resolution passed in the EOGM on 28/09/2013 on grounds of malafide intentions and inadequate explanatory statements u/s 173 read with Section 293 of the Companies Act, 1956. The petitioner argued that the decision to sell the unit was based on wrongful motives and lacked detailed particulars, constituting oppression and mismanagement. The respondents contended that the decision was a commercial judgment made by the majority shareholders and should not be interfered with by the court. The court held that the explanatory statement did not meet the requirements of Section 173(2) as it lacked material details such as the name of the buyer and sale consideration. However, the court found no evidence of malafide intentions or continuous oppression. The court directed that once a buyer is identified, another EOGM should be held with detailed information provided to shareholders, and the petitioner should be given an opportunity to present a better offer.
Issue 2: Maintainability of the Petition
The respondents challenged the maintainability of the petition on the grounds that the petitioner failed to justify winding up the company under the just and equitable clause and alleged suppression of material facts. The court rejected these objections, stating that the denial of statutory rights to a shareholder could justify a winding-up order. The court found no evidence of suppression of material facts by the petitioner.
Order:
1. Reliefs sought for setting aside the impugned resolutions were declined.
2. The Board of Directors must serve another notice with detailed information about the proposed sale once a buyer is identified.
3. The petitioner should be given 15 days to present a better offer, which the Board must consider and record reasons for acceptance or rejection.
4. The petition was disposed of with the above directions, and the interim order was vacated. No order as to costs.
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2013 (12) TMI 1690
Issues Involved:
1. Validity of reopening of assessment u/s 147 of the Income-tax Act, 1961.
2. Treatment of unaccounted receipt of the assessee while computing book profit u/s 115JB of the Income-tax Act, 1961.
Reopening of Assessment u/s 147:
The assessment was reopened based on the assessee's deposit from the buyer of office space, claimed as refundable after 270 years, not being shown as part of the sale consideration. The AO proceeded with reassessment, making additions on issues not mentioned in the recorded reasons. The CIT(A) held that for reassessment u/s 147, the AO can only assess income related to the issue that escaped assessment based on recorded reasons. If the AO cannot justify the reopening with the recorded reasons, expanding reassessment scope is not permissible. The AO's actions were deemed without jurisdiction and void ab initio, leading to the cancellation of the order.
Treatment of Unaccounted Receipt:
The AO, after agreeing with the assessee that certain deposits were not chargeable as income, made an addition on a different issue of unaccounted receipt. The Tribunal cited precedents emphasizing that reassessment must first address the income that led to the reopening, before considering other items. As the AO's actions lacked jurisdiction, the assessment was deemed void ab initio. Consequently, the appeal by the Revenue was dismissed.
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2013 (12) TMI 1689
Issues Involved:
1. Validity of the ranking list for promotion to the cadre of Assistant.
2. Applicability and interpretation of the Circular dated 26th September 2011.
3. Validity of the petitioner's graduation degree from IGNOU for promotion purposes.
Summary of Judgment:
1. Validity of the Ranking List for Promotion:
The petitioner challenged the ranking list (Annex. 11) published by the respondents for promotion to the cadre of Assistant, seeking its annulment. The petitioner argued that his name was included in the panel for promotion in 2008, 2009, and 2010 but was not promoted due to a pending departmental enquiry. Despite qualifying for the computer proficiency test in 2011, the petitioner was not awarded 12 marks for his graduation qualification, which he claimed downgraded his ranking.
2. Applicability and Interpretation of the Circular Dated 26th September 2011:
The petitioner contended that the Circular (Annex. 12) was misinterpreted by the respondents, leading to the denial of 12 marks for his graduation qualification. The respondents argued that the petitioner's B.A degree from IGNOU was invalid under UGC Regulations 1985 (non-formal) as he had not completed 12 years of schooling. The petitioner countered that the Circular omitted the second part of Regulation 2(1) of the UGC Regulations 1985 (non-formal), which allows admission to the first degree course through an entrance test for those without previous academic records.
3. Validity of the Petitioner's Graduation Degree from IGNOU:
The petitioner argued that his B.A degree from IGNOU, obtained after passing the Bachelor's Preparatory Programme (BPP), was valid and recognized by the UGC. The respondents, however, relied on the Supreme Court's judgment in Annamalai University v. Secretary to Government Information and Tourism Department, which held that a degree obtained without completing 12 years of schooling was invalid. The petitioner distinguished his case from Annamalai's case, emphasizing that his degree was valid under the UGC Regulations 1985 (non-formal).
Court's Analysis and Decision:
The Court examined the UGC Regulations 1985 (non-formal) and found that the Circular dated 26th September 2011 had deliberately omitted the second part of Regulation 2(1), which was crucial for the petitioner's case. The Court held that the petitioner's B.A degree from IGNOU was valid and recognized by the UGC. The Court also noted that the respondents had previously awarded the petitioner 12 marks for his graduation qualification in 2008, 2009, and 2010.
The Court concluded that the interpretation of the Circular by the respondents was arbitrary and unreasonable, leading to the denial of the petitioner's rightful promotion. The Court directed the respondents to reassess the petitioner's candidature for promotion by considering his qualifications as a graduate and to award him the requisite marks under Para 17.2.1 of the Policy of 2008. If found suitable, the petitioner should be promoted with all consequential benefits from the date the incumbents lower in the ranking list were promoted.
Final Order:
The writ petition was allowed, and the respondents were directed to reexamine and reassess the petitioner's candidature for promotion within three months, awarding him the requisite marks for his graduation qualification. If found suitable, the petitioner should be promoted with all consequential benefits. No order as to costs.
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2013 (12) TMI 1688
The Supreme Court of India, in a 2013 case, allowed a request to modify an order regarding liability to pay arrears of tax with interest under the Uttar Pradesh Entry Tax Act, 2007. The request was made by senior counsel Mr. R.F. Nariman and was considered reasonable without prejudicing the respondents.
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2013 (12) TMI 1687
Issues involved: Interpretation of Section 44BB of the Income Tax Act, 1961 regarding amount paid or payable.
Summary:
The High Court of Uttarakhand addressed the issue of whether Section 44BB of the Income Tax Act, 1961 allows for the reduction of the amount paid or payable on account of any liability to be incurred by the payee. The Court referred to a previous judgment in Special Appeal No. 204 of 2007, which held that certain payments, including custom duty, would not fall under Section 44BB. However, the Court did not agree with this interpretation and decided to refer the matter to the Honorable Chief Justice for the constitution of a larger Bench for further consideration.
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