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2011 (11) TMI 790
Issues involved: Assessment years 2006-07 & 2008-9; Reopening of assessment u/s 147 of the Income Tax Act.
ITA No. 4176 (Del)2011:
1. The assessee challenged the proceedings u/s 147 of the Act, arguing lack of valid reasons for income escapement.
2. Dispute over tax liability in India despite no change in facts from previous years.
3. Classification of payments for data transmission services as 'royalty' u/s 9(1)(vi) of the Act and Article 12(4) of the India Netherlands DTAA.
4. Assessability of payments for data transmission services via Space Segment Capacity as business profits and tax liability in absence of Permanent Establishment.
5. Taxability of income from non-resident companies u/s 12(4), 12(2), and 12(8) of India Netherlands DTAA.
6. Burden of proof regarding Permanent Establishment and Royalty payments.
7. Qualification of payments as 'fee for technical services' u/s 9(1)(vii) of the Act and Article 12(5) of the India Netherlands DTAA.
8. Issue of arbitrary attribution of receipts from customers covering India.
9. Levy of interest u/s 234B of the Act.
10. Levy of interest u/s 234D of the Act.
11. Withdrawal of interest u/s 244A of the Act.
The assessee withdrew ground No.1. The issue of tax liability for data transmission services was decided in favor of the assessee based on the decision of the Hon'ble Delhi High Court in the case of "Asia Satellite Telecommunications Co. Ltd." The Tribunal held that the receipts from data transmission services were not taxable under the Act. The Department's appeal against this decision was dismissed by the High Court. As a result, the appeal of the assessee for assessment year 2006-07 was allowed.
ITA No. 4177(Del)2011:
The appeal for assessment year 2008-09 was similar to that of 2006-07, with the exception that the issue of reopening the assessment u/s 147 was not raised. The decision in ITA No. 4176(Del)2011 was applicable to this case as well, resulting in the allowance of the appeal.
In conclusion, both appeals filed by the assessee were allowed based on the findings and decisions made in the respective cases.
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2011 (11) TMI 788
Issues Involved:
The judgment involves the issue of whether interest attributable to shares applied for but not allotted can be considered as part of the cost of acquisition for computing short-term capital gains.
Facts of the Case:
The appellant, an individual, derived income from LIC through commission, capital gains on sale of shares, and income from other sources. The Assessing Officer (AO) noted that the appellant had returned short-term capital gains from the purchase and sale of securities/units of mutual funds, some of which were acquired through the IPO mechanism. The AO observed that the appellant had capitalized interest costs related to shares applied for but not allotted, treating them as part of the purchase price of the shares actually allotted. Consequently, the AO added a certain amount as short-term capital gain to the appellant's income.
Decision of the CIT(A):
The Commissioner of Income Tax (Appeals) held that interest attributable to shares applied for but not allotted is not allowable as there was no capital asset acquired subject to capital gain, and thus dismissed the appellant's appeal.
Appellant's Challenge:
The appellant challenged the addition made by the AO as short-term capital gain before the Appellate Tribunal, arguing that the issue was covered in favor of the assessee by previous Tribunal decisions.
Tribunal's Analysis and Decision:
After considering the submissions and reviewing the facts, the Tribunal found merit in the appellant's plea that the issue was covered by previous Tribunal decisions. Referring to the case of Smt. Neera Jain and Harshad N. Patel, the Tribunal held that interest paid on money borrowed for IPO application should be considered as part of the cost of acquisition for computing short-term capital gains. The Tribunal emphasized that the interest expenditure had a direct nexus with the acquisition of shares and should be allowed as a deduction. As there were no distinguishing features or contrary decisions presented by the Revenue, the Tribunal ruled in favor of the appellant, allowing the grounds raised and directing accordingly.
Outcome:
The Tribunal allowed the appellant's appeal, holding that the interest paid on money borrowed for IPO application should be considered as part of the cost of acquisition for computing short-term capital gains. The decision was pronounced on November 25, 2011.
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2011 (11) TMI 787
Deduction of tax at source on carriage of goods and passengers by any mode of transport - Assessee was liable to deduct tax on the payments made to various contractors u/s. 194C only, and that the provision contained in section 194-I is not applicable.
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2011 (11) TMI 786
The High Court of Bombay ruled that notional interest income on security deposit/advance rent is not liable to be included in income from house property under Section 23(1)(a) of the Income Tax Act, 1961. The decision was based on a previous case Commissioner of Income Tax Vs. J.K. Investors (Bombay) Ltd. The Supreme Court dismissed the Revenue's Special Leave Petition against this decision on November 1, 2002. As a result, all three appeals were dismissed by the High Court.
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2011 (11) TMI 785
Offence under NI Act - Held that:- After perusing the contents of the complaint as also verification statement of the complainant the trial Magistrate ought to have postponed the issuance of process in the facts and circumstances of the case when accused were resident of a place beyond the jurisdiction of the learned trial Magistrate concerned. For this reason and considering the rulings cited before me, the impugned order must be held as unsustainable and, therefore, cannot be countenanced. The same is therefore, quashed and set aside. JMFC, Nagpur and Special Court under section 138 of the N.I. Act shall exercise discretion in accordance with amended provision of Section 202 Cr.P.C. and in the light of the rulings referred above. The complainant shall appear before the learned JMFC and Special Court u/s 138, on 5th December, 2011. The petition is allowed accordingly.
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2011 (11) TMI 784
Issues Involved:
1. Petitioner's claim for seniority over opposite parties 3 and 4.
2. Applicability of service rendered in Fast Track Court towards seniority.
3. Legality of the Full Court's decision rejecting the petitioner's representation.
4. Validity of the selection grade conferred on opposite parties 3 and 4.
Detailed Analysis:
1. Petitioner's Claim for Seniority Over Opposite Parties 3 and 4:
The petitioner sought seniority over opposite parties 3 and 4, arguing that his service as Additional District Judge, Fast Track Court, should be considered continuous and regularized under the Orissa Superior Judicial Service (Senior Branch). The petitioner's representation was rejected by the Full Court, which communicated the decision via letter dated 8.8.2011. The petitioner contended that this rejection was contrary to the Supreme Court's direction in Brij Mohanlal v. Union of India, AIR 2002 S.C. 2096, which mandates that service in Fast Track Courts be deemed as service in the parent cadre. The petitioner argued that his initial appointment followed the statutory procedures under the Orissa Superior Judicial Service Rules, 1963, and the Orissa Judicial Service (Special Scheme) Rules, 2001, and thus, his seniority should be counted from his initial appointment date.
2. Applicability of Service Rendered in Fast Track Court Towards Seniority:
The core issue was whether the service rendered by the petitioner in the Fast Track Court should be considered while fixing his seniority after regularization. The Full Court's Committee rejected the petitioner's representation, stating that his service in the Fast Track Court was ad hoc and could not be counted towards seniority. However, the court observed that the petitioner's appointment was made following statutory procedures and that he continued uninterrupted service until regularization. The Supreme Court in Brij Mohanlal's case had directed that service in Fast Track Courts be deemed as service in the parent cadre, reinforcing the petitioner's claim for seniority.
3. Legality of the Full Court's Decision Rejecting the Petitioner's Representation:
The court found that the Full Court's decision to reject the petitioner's representation was erroneous. The Committee's report, accepted by the Full Court, failed to consider the Supreme Court's binding direction in Brij Mohanlal's case and the statutory provisions under Rule 17 of the Orissa Superior Judicial Service Rules, 1963. The court held that the petitioner's uninterrupted service in the Fast Track Court should be counted towards his seniority, and the Full Court's interpretation was incorrect.
4. Validity of the Selection Grade Conferred on Opposite Parties 3 and 4:
The petitioner argued that the selection grade conferred on opposite parties 3 and 4 was illegal as they were appointed after him. The court noted that the petitioner became eligible for selection grade on 25.4.2007, while opposite parties 3 and 4 were eligible only in February 2008. The court held that the promotion of opposite parties 3 and 4 to the selection grade prior to the petitioner was illegal. The court also rejected the contention that the petitioner's promotion was fortuitous, citing the Supreme Court's decision in Rudra Kumar Sain v. Union of India, AIR 2000 SC 2808, which held that long-term ad hoc appointments could not be considered fortuitous.
Conclusion:
The court quashed the report of the Committee dated 3.3.2011, the letter rejecting the petitioner's representation, and the notification conferring selection grade on opposite parties 3 and 4. The court directed the re-fixation of the petitioner's seniority from 26.4.2002 and ordered the preparation of a fresh seniority list within two months, following the Supreme Court's judgments and the observations made in this judgment. The writ petition was allowed, and no order as to costs was made.
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2011 (11) TMI 783
Offense under NI Act - whether Criminal case filed u/s 138 of the Negotiable Instruments Act, 1881 referred to by the Magistrate Court to Lok Adalat is settled by the parties and an award is passed recording the settlement, can it be considered as a decree of a civil court and thus executable?
Held that:- 1) In view of the unambiguous language of Section 21 of the Act, every award of the Lok Adalat shall be deemed to be a decree of a civil court and as such it is executable by that Court.
2) The Act does not make out any such distinction between the reference made by a civil court and criminal court.
3) There is no restriction on the power of the Lok Adalat to pass an award based on the compromise arrived at between the parties in respect of cases referred to by various Courts (both civil and criminal), Tribunals, Family court, Rent Control Court, Consumer Redressal Forum, Motor Accidents Claims Tribunal and other Forums of similar nature.
4) Even if a matter is referred by a criminal court under Section 138 of the Negotiable Instruments Act, 1881 and by virtue of the deeming provisions, the award passed by the Lok Adalat based on a compromise has to be treated as a decree capable of execution by a civil court.
In view of the above discussion and ultimate conclusion, we set aside the order dated 23.09.2009 passed by the Principal Munsiff Judge in an unnumbered execution petition and the order of the High Court dated 24.11.2009.
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2011 (11) TMI 782
Issues Involved:
1. Deletion of addition of Rs. 2 lacs made by the Assessing Officer under Section 68 of the Income Tax Act.
2. Deletion of additions made under Section 68 concerning M/s. Hindustan Continental Ltd.
3. Ad hoc disallowance of Rs. 1 lac out of telephone expenses.
Issue-wise Detailed Analysis:
1. Deletion of Addition of Rs. 2 lacs under Section 68:
The Revenue challenged the deletion of an addition of Rs. 2 lacs made by the Assessing Officer under Section 68 of the Income Tax Act, arguing that the assessee failed to prove the creditworthiness and genuineness of the transaction with Shri Hanuman Prasad Luhariwala. The assessee contended that the identity, genuineness, and creditworthiness were established. The Tribunal found that the loans were received through account payee cheques, and Shri Hanuman Prasad Luhariwala, who had a PAN and was filing income tax returns, was examined under oath by the Assessing Officer. The Tribunal concluded that the identity and genuineness of the transaction, as well as the creditworthiness, were not in doubt. The Tribunal affirmed the deletion based on precedents from CIT vs. Metachem Industries (245 ITR 160) and Lovely Exports (216 CTR (SC) 195).
2. Deletion of Additions under Section 68 concerning M/s. Hindustan Continental Ltd.:
The Revenue also challenged the deletion of additions made under Section 68, arguing that the assessee failed to prove the identity, creditworthiness, and genuineness of transactions with M/s. Hindustan Continental Ltd. The Tribunal referred to a detailed discussion in the case of M/s. Agrawal Coal Corporation Ltd. & others, where it was held that the identity of M/s. Hindustan Continental Ltd. was not proved at any stage. The Tribunal noted that the assessee failed to produce the creditors and provide satisfactory evidence of their identity and creditworthiness. The Tribunal emphasized that the onus was on the assessee to establish the identity of the share applicants, which the assessee failed to do. The Tribunal reversed the CIT(A)'s decision, concluding that M/s. Hindustan Continental Ltd. was merely a paper company and its identity was not established, thereby allowing the Revenue's appeal on this ground.
3. Ad hoc Disallowance of Rs. 1 lac out of Telephone Expenses:
The Tribunal addressed the issue of the ad hoc disallowance of Rs. 1 lac made out of total telephone expenses of Rs. 12,29,154/-. The Tribunal found that no reason was assigned for making such an ad hoc disallowance by the Assessing Officer. Furthermore, the Tribunal held that since the company is a juristic person, no disallowance of personal nature could be made in the case of a company. Consequently, the Tribunal reversed the orders of the authorities below on this issue and allowed this ground of appeal of the assessee.
Conclusion:
The Tribunal partly allowed the Revenue's appeal by reversing the CIT(A)'s decision concerning the addition under Section 68 related to M/s. Hindustan Continental Ltd. and affirmed the deletion of the addition of Rs. 2 lacs under Section 68 related to Shri Hanuman Prasad Luhariwala. The Tribunal also allowed the assessee's appeal regarding the ad hoc disallowance of Rs. 1 lac out of telephone expenses. This order was pronounced in the open court in the presence of representatives from both sides.
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2011 (11) TMI 781
Whether the decision taken by a listed investment company to dispose of a part of its investment is “price sensitive information” requiring mandatory disclosure to the stock exchange(s) under clause 2.1 of the Code of Corporate Disclosure Practices as specified in Schedule II to the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992?
Held that:- We are in agreement with the learned senior counsel for the appellants that the non-disclosure in the press release was only in regard to the source of funds through which FCGL was to acquire the coal mines and the decision meant only switching of investments which is a part of normal business activity of an investment company.
Interestingly, the adjudicating officer in para 34 of the impugned order has himself observed that the method of funding a project is not per se price sensitive information but nevertheless goes on to hold that since the price of the scrip of FCGL had gone up, the decision of FCGL to dispose of the investment in the Coke company was price sensitive. The adjudicating officer has missed the real point. The price of the scrip of FCGL had gone up not because it decided to dispose of its investment in the Coke company but because of the fact that it acquired coal mines in Australia which information was price sensitive and had been disclosed to the market. We cannot, therefore, uphold the findings of the adjudicating officer.
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2011 (11) TMI 780
Issues Involved:
The judgment involves the consideration of three questions raised by the Revenue regarding the deduction u/s.80IA on interest received on margin money, the netting of interest, and the addition made in respect of the adjustment of electricity price charged by the CPP Unit from the general unit.
Deduction u/s.80IA on Interest Amounting to Rs. 86,66,390 on Margin Money:
The Revenue appealed against the Tribunal's decision allowing the claim of deduction u/s.80IA on the interest received on margin money. The Court noted that similar questions [A] and [B] were admitted in other appeals, while in this case, the question [C] regarding the adjustment of electricity price was not entertained. The Court referred to sub-Section(8) of Section 80IA of the Act, emphasizing the market value consideration for goods or services transferred between businesses. The Tribunal's decision to adopt the market value of electricity at Rs. 5.40 ps. per unit was upheld, considering it as the market value despite the component of electricity duty. The Court admitted the Tax Appeal for consideration of Questions [A] and [B] only.
Netting of Interest Issue:
The Court did not entertain the question raised by the Revenue regarding the netting of interest, as it was not considered necessary in the context of the case. The Tribunal's decision on this issue was not further discussed in the judgment.
Deletion of Addition in Respect of Adjustment of Electricity Price:
The Court did not entertain the Revenue's question regarding the addition made in respect of the adjustment of electricity price charged by the CPP Unit from the general unit. The Court referred to the Tribunal's reasoning on adopting the market value of electricity supplied by the CPP Unit to the general unit at Rs. 5.40 ps. per unit, which was found to be correct. The Court emphasized that the market value consideration was valid, regardless of the component of electricity duty. The question related to this issue was not required to be considered further, and the Tax Appeal was admitted for consideration of other specific questions.
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2011 (11) TMI 779
Issues:
1. Refusal of refund of input-tax credit on the purchase of goods used for export.
2. Interpretation of provisions under the Tamil Nadu Value Added Tax Act, 2006 regarding input-tax credit and refund claims.
3. Compliance with time limits for filing refund claims and the role of form W in the process.
Analysis:
1. The petitioner sought a writ to quash the rejection of the refund claim for input-tax credit on goods used for export. The respondent rejected the claim citing a belated filing of form W, violating specific sections and rules of the Tamil Nadu Value Added Tax Act, 2006.
2. The petitioner contended that they followed the Act by purchasing raw materials locally, using them for manufacturing goods for export, and claiming input-tax credit in compliance with section 19. The petitioner argued that the respondent's rejection was unfounded as they had consistently disclosed input-tax credit in monthly returns and were entitled to a refund of Rs. 32,00,151.30.
3. The respondent, in defense, cited time limits for refund claims under sections 18 and 19 of the Act, emphasizing the importance of filing form W within 180 days for zero-rated sales. However, the court noted that the petitioner had diligently filed returns in form I within the prescribed time, indicating compliance with the Act's provisions. The court highlighted the necessity for the assessing officer to consider monthly returns promptly and pass orders accordingly.
4. The judgment emphasized that the provisions for input-tax credit were beneficial and required timely assessment of claims. The court allowed the writ petitions, setting aside the rejection of the petitioner's claim and directing the assessment to be done in accordance with section 22 of the Act based on the details provided in form I. The court stressed the importance of expeditious assessment to facilitate the refund process.
5. In conclusion, the court ruled in favor of the petitioner, emphasizing adherence to statutory provisions, timely filing of returns, and the need for assessing officers to consider refund claims promptly. The judgment highlighted the significance of procedural compliance and the duty of authorities to facilitate legitimate refund claims under the tax legislation.
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2011 (11) TMI 778
Issues involved:
1. Correctness of method of accounting u/s 145(1)
2. Deletion of addition on sale price of properties
3. Re-working cost of land in Qutub Enclave Complex
4. Deletion of addition on contribution to Shelter Fund
5. Treatment of rent receipts from DLF Centre
1. Correctness of method of accounting u/s 145(1):
The Income Tax Appellate Tribunal was questioned on setting aside the Commissioner of Income Tax (Appeals) order regarding the method of accounting followed by the assessee. It was debated whether the correct income could be detected from the accounts and if the Assessing Officer was justified in invoking the provisions of the First Proviso to Section 145(1) of the Income Tax Act, 1961. The Tribunal's decision was under scrutiny in this regard.
2. Deletion of addition on sale price of properties:
Another issue raised was the deletion of the addition made by the assessing officer on account of sale price concerning constructed/built-up properties. The correctness of the Income Tax Appellate Tribunal's decision in this matter was being examined.
3. Re-working cost of land in Qutub Enclave Complex:
The Assessing Officer and the Commissioner of Income Tax (Appeals) were questioned on the correctness of re-working the cost of land at the average purchase price in Qutub Enclave Complex, now known as DLF city. The method involved dividing the end of the year by saleable area, including lands earmarked for various community buildings in each phase.
4. Deletion of addition on contribution to Shelter Fund:
The Income Tax Appellate Tribunal faced scrutiny for deleting the addition made by the Assessing Officer on account of contribution to the Shelter Fund. The correctness of this deletion was being evaluated.
5. Treatment of rent receipts from DLF Centre:
Lastly, the Commissioner of Income Tax (Appeals) was questioned on directing the Assessing Officer to assess the rent receipts from DLF Centre, which included air conditioning charges, as 'Income from House Property'. The legality of this directive was being examined.
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2011 (11) TMI 777
The Supreme Court dismissed the Review Petition filed against a judgment dated 6th July, 2011, where the appeal was allowed with costs of Rs. 50,000. Delay was condoned, and after reviewing the petition and relevant documents, the court found no grounds for a review, leading to the dismissal of the petition.
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2011 (11) TMI 776
Issues involved: Dispute regarding setting off of brought forward business loss and unabsorbed depreciation against short term capital gain u/s 50 of the Income Tax Act.
Summary:
Issue 1: Setting off of brought forward business loss and unabsorbed depreciation against short term capital gain
The appeal by the revenue was against the order of CIT(A) for the assessment year 2006-07, specifically concerning the setting off of brought forward business loss and unabsorbed depreciation against short term capital gain u/s 50 of the Income Tax Act. The assessee had business income set off against brought forward business loss and unabsorbed depreciation, resulting in a net business loss for the year. The AO disallowed the claim, but CIT(A) referred to relevant case law and allowed the set off. The dispute was whether the short term capital gain should be treated as business income for the purpose of set off. The Tribunal, following precedent, held that the nature of gain from the sale of depreciable assets deemed as short term capital gain under section 50 should be considered as business income, allowing the set off of unabsorbed depreciation and business loss against it.
Issue 2: Interpretation of legal provisions
The Tribunal examined the nature of income of deemed short term capital gain under section 50 of the IT Act. Referring to relevant case law, it was established that gain arising from the sale of depreciable assets, though taxed as short term capital gain, should be treated as part of business income. The Tribunal held that unabsorbed depreciation and business loss should be set off against short term capital gain arising from depreciable assets. The decision of a Special Bench of the Tribunal on a different issue did not conflict with this interpretation, as it related to the application of provisions for different assessment years. In this case, the set off was considered against business income, aligning with the Tribunal's decision.
Result: The appeal of the revenue was dismissed, and the set off of brought forward business loss and unabsorbed depreciation against short term capital gain was allowed based on the nature of the income from the sale of depreciable assets.
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2011 (11) TMI 775
Entitled to the benefit of exemption u/s. 80IA(4)(iii) - assessee has received 'approval' and 'notification' from the Central Government and the same has not been withdrawn till date - Held that:- Since the assessee had developed the industrial park duly approved and notified by the Central Government and the same has not been withdrawn for any reasons, the assessee would be entitled to the benefit of deduction u/s. 80IA(4)(iii).
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2011 (11) TMI 774
Unexplained cash credit - Held that:- We find that the assessee referred to cash withdrawals of ₹ 27 lacs. However, we find that no such plea was raised before either of the authorities below and the in the statement recorded during the assessment proceedings when confronted about the receipt of amounts from two purchasers, the assessee had replied vide question No.21 that negotiations were going on in respect of the said refund/forfeiture of the amount received from the said purchasers. In his written submissions the assessee claimed to have refunded the said amount in 2005 and the assessment order in the case was passed on 30.12.2008. Further the assessee has failed to furnish on record any evidence to prove its contention. In the absence of the same we find no merit in the stand of the assessee and rejecting the same we uphold the order of CIT (Appeals) and confirm the addition of ₹ 20 lacs. Similarly in respect of receipt of ₹ 21,53,000/- the assessee has failed to establish its claim of receipt of money. The said amount was deposited in cash in the account of the assessee on various dates. Though the assessee has referred to an agreement to sell but the clauses of the said agreement were found to be at variance with the facts of the case. In the absence of any evidence being filed by the assessee, we confirm the addition
Addition on deposits through account payee cheque in the bank - Held that:- No such evidence was referred to before the authorities below. Further the assessee has failed to file any confirmation or any bank account in order to prove the source of credit entries in his bank account. The onus not being discharged by the assessee we find no merit in the claim of the assessee and hence the same is rejected.
Addition from HDFC Bank and deposit of that amount with Centurion Bank in correct perspective - Held that:- The assessee before the authorities below had failed to file any confirmation from his son in respect of the loans received of ₹ 1,20,000/-. The assessee failed to furnish the bank account to establish the creditworthiness of son of the assessee. Merely because the amount has been received by way of cheque does not satisfy the provisions of the Statute in respect of the cash credits received by the assessee during the year. The onus not having been discharged by the assessee in respect of deposits in the bank account, the deeming provs sof section 68 are applicable. We find no merit in the ground of appeal raised by the assessee and hence the same is dismissed.
Addition to the total income without appreciating the facts and written-submissions made during the assessment proceedings - Held that:- Even before us the assessee had failed to furnish any evidence/confirmation in respect of its claim of having received earnest money. In the absence of the same, we uphold the order of the CIT (Appeals) and dismiss ground raised by the assessee.
Deposit in bank unexplained - Held that:- We are in agreement with the order of the CIT (Appeals) in the absence of the assessee having furnished any evidence and having failed to discharge its onus of establishing the identity, creditworthiness and genuineness of the transaction.
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2011 (11) TMI 773
Issues involved:
The correctness of the order dated 21st January 2009, passed by the Commissioner (Appeals) in the matter of assessment u/s 143(3) of the Income Tax Act, 1961, for the assessment year 2006-07 is questioned.
Admissibility of Additional Evidence:
The Assessing Officer contended that the Commissioner (Appeals) erred in accepting additional evidence without affording an opportunity, as required by Rule 46A of the Income Tax Rules 1962.
Explanation for Bonus Payment:
The Assessing Officer raised concerns about the justification for a one-time sign-off bonus payment of &8377; 7,35,73,500 to employees, questioning the qualifications and terms of employment of the recipients.
Arm's Length Transaction:
The Auditor's acknowledgment in Form 3CEB that the transaction was conducted at arm's length was highlighted, indicating that the amount received was for services rendered to Man Financial UK.
Verification of Bonus Payment:
The failure to call for confirmation from employees and their income tax returns to verify if the bonus had already been received and offered for taxation during the relevant year was noted.
Timing of Payments:
The timing of payments was questioned as not reflecting normal practice, as payments were made to employees much after the receipt of the amount.
Summary of Judgment:
The Appellate Tribunal upheld the Commissioner (Appeals)'s decision to delete the addition of &8377; 7,35,73,500, ruling that the amount received by the assessee from its associated enterprise was not to be treated as income. The Tribunal found that the money was received with an obligation to pay over the same to specified persons, and no part of it was retained by the assessee. The Tribunal concluded that the Assessing Officer's grievances were devoid of legally sustainable merits, and the deletion of the addition was justified. The appeal was dismissed on 2nd November 2011.
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2011 (11) TMI 772
The High Court of Delhi dismissed the appeal under Section 260A of the Income Tax Act, 1961 as the issue raised was factual. The dispute was regarding the valuation of zip fasteners, with the Assessing Officer valuing them at Rs. 59.48 per meter and the CIT(A) at Rs. 37.96 per meter, a decision upheld by ITAT. The court found the reasoning of the appellate authorities reasonable and not requiring interference.
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2011 (11) TMI 771
Issues Involved: Appeal against order of CIT(A) regarding exemption u/s 10(23C)(iiiab) of the IT Act for assessment year 2006-2007.
Issue 1: Exemption u/s 10(23C)(iiiab) of the IT Act
The Revenue contended that the assessee, a government-controlled society, did not qualify as an educational institution under the Act as it did not run organized and systematic training courses affiliated with recognized authorities. Citing a decision of the Gujarat High Court, the AO denied the exemption. The AO computed the income of the assessee and issued a demand notice under section 143(3) of the Act. Penalty proceedings under section 271(1)(c) were initiated. The CIT(A) reviewed the matter, considering evidence provided by the assessee, including details of schools, strength, expenditure, and affiliations with the Gujarat Secondary Education Board. The CIT(A) concluded that the assessee met the conditions of section 10(23C)(iiiab) and was entitled to exemption. The Tribunal upheld the CIT(A)'s decision, noting that the assessee was running educational institutions as per the Act and had provided substantial evidence to support its claim. The Revenue failed to provide convincing arguments or evidence against the documents submitted by the assessee.
Decision:
The Tribunal dismissed the appeal filed by the Revenue, confirming the order of the CIT(A) granting exemption u/s 10(23C)(iiiab) to the assessee for the assessment year 2006-2007.
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2011 (11) TMI 770
Issues involved: Impugned auction notice for sale of immovable property u/s Article 226 of the Constitution for recovery of dues. Interpretation of Securitisation Act u/s 13(4) & 13(6) and conflict with Bombay Sales Tax Act u/s 38C.
Issue 1: Impugned auction notice for recovery of dues
The Petitioners challenged an auction notice issued by the Assistant Commissioner of Sales Tax for the sale of their immovable property to recover dues amounting to Rs. 1.22 Crores. The debt of the bank was assigned to an asset reconstruction company, and symbolic possession was taken before the auction notice was issued.
Issue 2: Interpretation of Securitisation Act and conflict with Bombay Sales Tax Act
The Petitioners argued that under Securitisation Act, the property vests in the asset reconstruction company upon a measure being taken u/s 13(4), and the property can only be sold at the behest of the secured creditor. On the other hand, the Revenue contended that the Securitisation Act does not create a first charge on immovable property, and Section 38C of the Bombay Sales Tax Act creates a first charge on the property for sales tax dues.
Judgment Summary:
The Supreme Court held that the Securitisation Act does not create a first charge on immovable property, and state legislation like Section 38C of the Bombay Sales Tax Act creates a first charge that overrides the Securitisation Act. The statutory first charge under the Bombay Sales Tax Act takes precedence over any existing mortgage. The property was rightfully put up for sale by the Revenue to recover sales tax dues, as per the provisions of Section 38C. The judgment in Transcore was distinguished as it did not address the specific conflict between the Securitisation Act and state legislation creating a first charge. The Petition was dismissed, upholding the validity of the auction notice for the sale of the Petitioners' property.
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9911796707
