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Showing 101 to 120 of 1817 Records
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2013 (11) TMI 1723
Issues involved: Appeal against order of CIT(A) regarding disallowance under u/s 40A(3) for AY 2005-06 & 2006-07.
Summary:
The appeals by the Revenue challenged the CIT(A)'s deletion of disallowance u/s 40A(3) of Rs. 14,43,280/- made by the Assessing Officer for cash expenditure on land purchase. The CIT(A) found that the expenditure was not claimed in the profit & loss account but debited to work-in-progress, following a similar precedent. The ITAT also upheld this view in a related case. The Revenue contended that the CIT(A)'s order was erroneous, but after hearing both sides, the ITAT upheld the CIT(A)'s decision, stating that the disallowance under u/s 40A(3) was not applicable as the expenditure was not claimed in the profit & loss account. The ITAT dismissed the Revenue's appeals, affirming the CIT(A)'s order for both cases.
Detailed Judgment:
In both cases, the Revenue appealed against the CIT(A)'s deletion of the disallowance u/s 40A(3) of Rs. 14,43,280/- for cash expenditure on land purchase. The CIT(A) found that the expenditure was not claimed in the profit & loss account but debited to work-in-progress, following a similar precedent set in a related case. The ITAT also upheld this view in the related case. The Revenue contended that the CIT(A)'s order was erroneous, but after hearing both sides, the ITAT upheld the CIT(A)'s decision, stating that the disallowance under u/s 40A(3) was not applicable as the expenditure was not claimed in the profit & loss account. The ITAT dismissed the Revenue's appeals, affirming the CIT(A)'s order for both cases.
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2013 (11) TMI 1722
Issues involved:
The judgment involves the estimation of production of bricks and the application of gross profit rate.
Estimation of Production of Bricks:
The Department and the assessee raised cross-appeals against the order of the learned CIT(A) regarding the estimated production of bricks. The Departmental appeal questioned the direction to restrict the estimated production to 35,00,000 bricks, while the assessee's appeal challenged the estimation based on the sanctioned capacity of the kiln and the gross profit rate applied. The AO had initially framed the assessment at an income different from the one declared by the assessee, based on the production of bricks. The assessee argued that continuous extraction of soil had led to the need to purchase soil from outside for brick manufacturing. The learned CIT(A) found the AO's estimation to be exaggerated and unrealistic, considering the details available on record. The learned CIT(A) concluded that the production should be near the licensed capacity sanctioned by the Mining Department and estimated the total production at 35 lakhs for the year. The Department contested this estimation, while the assessee argued for a lower estimation and a different gross profit rate. Ultimately, the Tribunal found the learned CIT(A)'s estimation and gross profit rate application to be unjustified and deleted the addition made based on these grounds.
Application of Gross Profit Rate:
The learned CIT(A) had applied a gross profit rate of 22 per cent, higher than the 18 per cent declared by the assessee. The Tribunal noted that the learned CIT(A) did not consider the past history of the assessee or comparable cases in determining the gross profit rate. The Tribunal found the addition based on the higher gross profit rate to be unjustified and deleted it. The Tribunal also cited a previous decision supporting their view. Consequently, the Department's appeal was dismissed, and the assessee's appeal was allowed.
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2013 (11) TMI 1721
Issues Involved:
1. Determination of Arm's Length Price (ALP) for the sale of shares.
2. Applicability of Section 92C and the appropriate method for share valuation.
3. Legitimacy of the Transfer Pricing Officer's (TPO) method.
4. Levy of interest u/s 234B of the Income-tax Act, 1961.
Summary:
1. Determination of Arm's Length Price (ALP):
The assessee, a US company, transferred its 91% shareholding in an Indian company, VPCSI, to VIHS and VIHM. The shares were valued at Rs. 10.32 per share based on a valuation certificate by Deloitte Haskins & Sells, using the Comparable Uncontrolled Price (CUP) method, which considered Net Asset Value (NAV) and Profit Earning Capacity Value (PECV). The TPO rejected this method, applying the Discounted Cash Flow (DCF) method instead, and determined the ALP at Rs. 36.31 per share.
2. Applicability of Section 92C and Appropriate Method:
The assessee contended that the computation provisions of Section 92C failed as no prescribed method was available for the valuation of shares. The assessee argued for the "Yield Method" as the most appropriate method, citing various judicial pronouncements. However, the Tribunal found that Section 92C was applicable and upheld the use of the DCF method, as it was consistent with the subsequent assessment year 2008-09.
3. Legitimacy of the TPO's Method:
The Tribunal noted that the TPO's adoption of the DCF method was appropriate and accepted by both parties for the subsequent year. The assessee was given an opportunity to present its computation of ALP under the DCF method, and the TPO was directed to re-visit the computation, following the same pattern and parameters adopted for the assessment year 2008-09.
4. Levy of Interest u/s 234B:
The Tribunal accepted the assessee's contention that it was not obligated to pay advance tax, as it was the duty of the Indian company to deduct tax at the time of sale of shares. The Tribunal directed the assessing authority to delete the levy of interest u/s 234B, citing the judgment of the Delhi High Court in Jacabs Civil Incorporated.
Conclusion:
The appeal was partly allowed. The TPO matter was remitted back to the Assessing Officer for further transmission to the TPO, with directions to re-visit the computation of ALP under the DCF method, consistent with the subsequent assessment year 2008-09. The levy of interest u/s 234B was deleted.
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2013 (11) TMI 1720
Issues involved:
The appeal challenges the order of the Commissioner of Income Tax(A) regarding the disallowance of expenses u/s 14A of the IT Act and Rule 8D for AY 2008-09.
Issue 1: Disallowance u/s 14A of the IT Act
The assessee contested the disallowance of &8377; 4,58,112 u/s 14A of the Income Tax Act, 1961 r/w Rule 8D, arguing that no expenditure was incurred for earning tax-free income. Citing the judgment of the Hon'ble Jurisdictional High Court of Delhi, the assessee emphasized the need for the Assessing Officer to provide cogent reasons for rejecting the claim regarding expenditure related to exempt income. The AR highlighted that share application money should be excluded under Rule 8D as it does not yield tax-free income. The AR also referenced legal precedents to support the contention that certain expenses, such as interest on loans, should not be disallowed under section 14A.
Issue 2: Judicial Review of Disallowance
The ITAT observed that the Assessing Officer did not properly consider the legal principles and judgments cited by the assessee. Referring to the decision in the case of Maxopp Industries Ltd., the ITAT emphasized the requirement for the AO to be unsatisfied with the correctness of the claim before determining the expenditure related to exempt income. The ITAT noted that the share application money in the balance sheet did not generate tax-free income and directed the Assessing Officer to re-examine the issue in line with the legal precedents and provide the assessee with a fair hearing. Consequently, the ITAT allowed the appeal and directed a reassessment by the Assessing Officer.
This judgment highlights the importance of following legal principles and providing a reasoned basis for disallowing expenses related to exempt income under section 14A of the IT Act.
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2013 (11) TMI 1719
Issues Involved:
1. Enhancement of income by CIT(A) u/s 251 of the IT Act.
2. Rejection of cash-flow statement by AO.
3. Additions made by AO under s. 69 of the IT Act.
4. Validity of assessment proceedings initiated by AO.
5. Unexplained investments and income from moneylending business.
Summary:
1. Enhancement of Income by CIT(A) u/s 251:
The CIT(A) enhanced the income by Rs. 2,68,74,825 based on an alleged moneylending business. The assessee argued that the CIT(A) exceeded his jurisdiction under s. 251(1)(a) of the Act by discovering a new source of income not considered by the AO. The Tribunal held that the CIT(A) had indeed traveled outside the record, discovering a new source of income, which is beyond the scope of s. 251(1)(a). Therefore, the enhancement was set aside.
2. Rejection of Cash-Flow Statement by AO:
The AO rejected the cash-flow statement submitted by the assessee, which was used to explain the source of investments. The Tribunal directed the AO to consider and apply the directions contained in the Tribunal's order dated 29th Aug., 2013, which allowed credit to the extent of 40% of the claim made by the assessee in the cash-flow statements for each year.
3. Additions Made by AO under s. 69:
The AO made several additions under s. 69 for unexplained investments in shops, plots, and other assets. The Tribunal upheld some of these additions but directed the AO to recompute the income based on the revised cash-flow statements. Specific additions included:
- Rs. 16,75,000 for investment in the scheme of Viraj Corner.
- Rs. 11,05,000 for investment in Image Plaza.
- Rs. 3,00,000 for investment in Plot No. 18 Ghuje.
4. Validity of Assessment Proceedings Initiated by AO:
The assessee challenged the validity of the assessment proceedings, arguing that they should have been initiated under s. 153A r/w s. 143(3) instead of s. 143(3) alone. The Tribunal dismissed this challenge, following the precedent set in the case of Shri Jagdishsingh Amritsingh Bindra for asst. yr. 2007-08, where it was held that the assessment was valid as it complied with the mandatory conditions under s. 153B(1)(b).
5. Unexplained Investments and Income from Moneylending Business:
The CIT(A) made an addition of Rs. 2,68,74,825 for unexplained investments and income from moneylending activities. The Tribunal found that the CIT(A) had no jurisdiction to enhance the income by discovering a new source of income not considered by the AO. Consequently, the addition was deleted.
Conclusion:
The Tribunal partly allowed the appeals of the assessees, directing the AO to recompute the income based on revised cash-flow statements and set aside the enhancement made by the CIT(A) for discovering a new source of income. The appeals of the Revenue were dismissed.
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2013 (11) TMI 1718
The Appellate Tribunal ITAT Ahemdabad allowed the assessee's appeal against the order of Ld. DIT(Exemption), Ahmedabad rejecting the application for registration u/s. 12AA of the Income Tax Act due to absence of trust-deed for verification of activities and examination of objects. The matter is restored back to the file of AO for fresh adjudication after giving proper opportunity to the assessee.
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2013 (11) TMI 1717
Issues involved: Appeal and Cross Objection filed against Commissioner of Income Tax (Appeals) order for assessment year 2007-08.
Disallowance under section 14A:
- Revenue aggrieved by restriction of disallowance under section 14A to a lesser amount.
- Assessee also aggrieved by scaled down disallowance.
- Argument over applicability of Rule 8D for disallowance.
- Tribunal held Rule 8D not applicable for assessment year 2007-08.
- Disallowance under section 14A upheld based on facts and circumstances, restricting it to 1% of exempt income.
Addition to book profit under section 115JB:
- Revenue challenged deletion of addition to book profit.
- Tribunal held section 14A not applicable while computing book profit under Chapter XIV-B, following precedent.
Notional interest on sticky loans:
- Revenue disputed deletion of notional interest on sticky loans.
- Tribunal upheld deletion based on earlier orders and lack of accounting for interest on sticky loans.
Interest income on investment from foreign funds:
- Revenue contested deletion of addition for interest income on investment.
- Tribunal clarified no such addition made by Assessing Officer, upheld deletion based on jurisdictional High Court decision.
Disallowance of depreciation on plant & machinery:
- Revenue objected to deletion of disallowance on depreciation claimed on plant & machinery.
- Tribunal referred to precedent and dismissed the ground in favor of the assessee.
General Ground:
- No specific adjudication needed.
- Appeal by Revenue and Cross Objection by assessee dismissed.
This judgment by the Appellate Tribunal ITAT Kolkata addressed various issues including disallowance under section 14A, addition to book profit under section 115JB, notional interest on sticky loans, interest income on investment, and disallowance of depreciation on plant & machinery. The Tribunal considered legal precedents and relevant provisions to make decisions on each issue, ultimately dismissing the appeal and cross objection.
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2013 (11) TMI 1716
Issues Involved:
1. Addition made by the AO on account of capital gain for the assessment years 2003-04, 2006-07, and 2007-08.
2. Assessee's claim for deduction on account of security charges for the assessment year 2007-08.
Summary:
Issue 1: Addition made by the AO on account of capital gain (Assessment Years 2003-04, 2006-07, and 2007-08)
The Revenue's appeals for the assessment years 2003-04, 2006-07, and 2007-08 were heard together and disposed of by a single consolidated order. The solitary issue raised by the Revenue related to the addition made by the AO on account of capital gain, which was deleted by the learned CIT(A). The AO had received information regarding the sale of two properties of land at Bikaner by the assessee for a sale consideration of Rs. 9 lakhs each, against the value adopted by the Sub-Registrar for stamp duty at Rs. 27,50,000. The AO issued a notice u/s 148 and assessed the long-term capital gain at Rs. 1,14,72,466.
The assessee contended that the activity of selling plots was a business activity, having converted the inherited land into stock-in-trade in 1999. The AO rejected this claim, treating the land as a capital asset and assessing the profit as capital gain. The learned CIT(A) accepted the assessee's claim, noting that the assessee was engaged in the business of selling plots of land, supported by substantial, systematic, and organized activity over several years. The CIT(A) found no requirement under the law for the assessee to inform the department about the conversion of land into stock-in-trade.
The ITAT upheld the CIT(A)'s decision, agreeing that the land was converted into stock-in-trade in 1999, and the profit from its sale was chargeable to tax as business income. The ITAT referenced the Supreme Court decision in Raja J. Rameshwar Rao vs. CIT, which held that acquiring land with the intention to sell it after development constitutes a business venture.
Issue 2: Assessee's claim for deduction on account of security charges (Assessment Year 2007-08)
For the assessment year 2007-08, the Revenue's appeal also included the issue of the assessee's claim for deduction on account of security charges of Rs. 1,03,000 as business expenditure. The ITAT held that since the main issue was decided in favor of the assessee, treating the income from the sale of plots as business income, the security charges were deductible as business expenditure.
Conclusion:
All appeals of the Revenue were dismissed, and the ITAT upheld the orders of the learned CIT(A) for the respective assessment years, recognizing the income from the sale of plots as business income and allowing the deduction for security charges as business expenditure.
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2013 (11) TMI 1715
The Supreme Court dismissed the Special Leave Petition (S.L.P.) regarding respondent No. 1 as the prayer made in I.A. No. 1 was granted. (Case Citation: 2013 (11) TMI 1715 - SC)
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2013 (11) TMI 1714
Taxability of the capital gains - Absence of Cost of Acquistion - The assessee entered into a development agreement - The developer agreed to construct a building and hand over few premises to the assessee. Further, the developer was entitled to sell the remaining flats. The contention of the assessee was that he had sold right to load TDR and though it being a capital asset, which is not taxable since no cost of acquisition for right to load TDR was involved. - HELD THAT:- Assessee falls within the purview of section 50C of the Act and it was a clear case where capital gain arose on account of grant of development rights by the assessee which is evidenced by the development agreement. - Decided against assessee.
Exemption claimed by the assessee u/s 54 - The Revenue challenged the Ld. CIT(A)'s decision to allow exemption u/s 54 for the cost of construction of certain floors. - HELD THAT:- Ld.CIT(A) has allowed the claim of the assessee for exemption u/s 54 of the Act by relying on the decision of the [2010 (8) TMI 482 - KARNATAKA HIGH COURT] wherein it has been held that residential flats constitute ‘a residential house’ for the purpose of section 54 and further held that four residential flats cannot be construed as four residential houses for the purpose of section 54. It has to be construed only as ‘a residential house’ and the assessee is entitled to the benefit accordingly. The fact that residential house consisted of several independent units cannot be an impediment for granting relief under said section, even if such independent units are situated side by side, on different floors or are purchased under separate sale deeds.
Assessee is entitled for exemption under section 54 of the Act in respect of all the flats.
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2013 (11) TMI 1713
Issues Involved:
1. Legality of the directive to debit freeze the petitioner's bank account.
2. Compliance with the procedure prescribed under the PMLA.
3. Availability of alternative remedies under the statutory scheme of the PMLA.
4. Jurisdiction of the High Court under Article 226 of the Constitution of India.
Summary:
1. Legality of the directive to debit freeze the petitioner's bank account:
The petitioners challenged the action of respondent No.2 in issuing a directive dated 12.07.2011 to respondent No.3 bank to debit freeze their Current Account No.003010200078603, and the consequent action by the bank on 09.09.2011. The petitioners argued that this action was illegal as the procedure prescribed under the PMLA was not followed.
2. Compliance with the procedure prescribed under the PMLA:
Respondent No.2 issued a provisional attachment order No. 7/2011 u/s 5 of the PMLA, attaching properties including two wind turbines acquired by the petitioner. This order was confirmed by the Adjudicating Authority u/s 8(3) of the PMLA. The respondents argued that the directive to freeze the account was within their investigatory powers under the PMLA, which includes attachment, search, and seizure of properties involved in money laundering. The court found substance in the respondent's contention that the statutory mandate under the PMLA allows for such actions to prevent the proceeds of crime from changing hands.
3. Availability of alternative remedies under the statutory scheme of the PMLA:
The court noted that the petitioners had not exhausted the alternative remedies available under the PMLA, such as appealing to the Appellate Tribunal u/s 26 and further to the High Court u/s 42. The court cited previous judgments emphasizing the necessity of exhausting statutory remedies before invoking the writ jurisdiction under Article 226.
4. Jurisdiction of the High Court under Article 226 of the Constitution of India:
The court reiterated that Article 226 is not meant to bypass statutory procedures and remedies. It emphasized that the High Court should not entertain petitions under Article 226 when efficacious alternative remedies are available under the statute. The court referred to the Supreme Court's observations in various cases, including *Asstt. Collector of Central Excise, Chandan Nagar, West Bengal Vs. Dunlop India Ltd. and others* and *Raj Kumar Shivhare Vs. Assistant Director, Directorate of Enforcement & Another*, to support this view.
Conclusion:
The court rejected the petition, holding that the petitioners should have availed the alternative remedies provided under the PMLA. It concluded that intervening at this stage would undermine the statutory mandate of the PMLA. The notice was discharged, and no interference was warranted under Article 226 of the Constitution of India.
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2013 (11) TMI 1712
Restoration application - absence of appellant - Held that: - In view of the dilatory tactics followed, this case is a clear case of abuse of process of law. Therefore, there is no necessity to allow this MA No.55757/2013, which shall unnecessarily burden the Tribunal to make futile exercise wasting its productive time - restoration application dismissed.
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2013 (11) TMI 1711
Accrual of Income - Addition of amount in business income by computed percentage completion method - Question of applicability of AS-7 by ICAI - HELD THAT:- the income in the instant case is to be computed as per system of accounting followed by the assessee or as per accounting followed by the assessee or as per accounting standard AS-7 for charging of income tax. Therefore, as per the provisions of section 145 of the Act the business income is assessable under the Income Tax Act to be computed according to the consistent system of accounting followed by the assessee unless such system is defective and / or from such system of accounting, profit cannot be deduced. The option for choosing the system of account lies with assessee provided the system is consistently followed and non-defective system. Thus, provisions of AS-7 cannot override the provisions of Section 145 so far as the computation of business income for the determination of income is concerned. In Court's view, even a project completion method is also a recognized system of accounting. Simply the Institute of Chartered Accountants of India has recommended percentage completion method does not mean that project accounting or the same is a defective system of accounting. Therefore, the same is upheld and the appeal of the Revenue is dismissed.
Thus it has been found that the assessee is consistently following accounting system of percentage completion method, which is permissible and accepted by ICAI and CBDT with respect to construction work
The decision in the case of Nandi Housing (P.) Ltd. v. Dy. CIT [2003] 80 TTJ (Bang) 750 [2003 (4) TMI 224 - ITAT BANGALORE-C] followed.
Hence, present appeal is dismissed - Decided against the Revenue.
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2013 (11) TMI 1710
Issues Involved:
1. Deletion of addition on account of cessation of liability u/s 41(1) of the Act.
2. Deletion of addition on account of difference in purchases.
3. Deletion of addition made by invoking the provisions of section 41(1) of the Act.
4. Deletion of disallowance of interest.
5. Deletion of disallowance of depreciation claim on car.
Summary:
1. Deletion of Addition on Account of Cessation of Liability u/s 41(1) of the Act:
The AO added Rs. 17,91,334/- as deemed profit under section 41(1) due to the outstanding liability appearing in the balance sheet from FY 2002-03 and 2003-04. The AO argued that the liability had ceased to exist. However, the CIT(A) deleted this addition, stating that the provisions of Sec. 41(1) apply only when the assessee obtains a benefit by way of remission or cessation of trading liability, which did not occur in this case. The Tribunal upheld the CIT(A)'s decision, citing the jurisdictional High Court's ruling in CIT vs. Nitin S. Garg.
2. Deletion of Addition on Account of Difference in Purchases:
The AO disallowed Rs. 13,77,870/- due to discrepancies in purchase claims, arguing that the debit notes provided by the assessee were not genuine. The CIT(A) deleted this addition, noting that the AO failed to disprove the genuineness of the debit notes and that acknowledging shortages by issuing debit notes is an accepted practice. The Tribunal upheld the CIT(A)'s decision as the AO's findings remained uncontroverted.
3. Deletion of Addition Made by Invoking the Provisions of Section 41(1) of the Act:
The AO added Rs. 39,92,000/- as deemed profit under section 41(1), arguing that the outstanding liabilities for more than three years had ceased to exist. The CIT(A) deleted this addition by following the precedent set in the assessee's own case for A.Y. 2006-07, which was upheld by the Tribunal. The Tribunal upheld the CIT(A)'s decision.
4. Deletion of Disallowance of Interest:
The AO disallowed Rs. 9,34,300/- as interest not charged on advances, arguing that the assessee did not follow consistency in offering interest income. The CIT(A) deleted this disallowance, noting that the assessee had sufficient interest-free funds and that the enabling conditions for allowance of interest u/s 36(1)(iii) were fulfilled. The Tribunal upheld the CIT(A)'s decision, citing the jurisdictional High Court's decision in Commissioner of Income-tax vs. Raghuvir Synthetics Ltd.
5. Deletion of Disallowance of Depreciation Claim on Car:
The AO disallowed Rs. 2,93,169/- as depreciation on motor vehicles registered in the name of partners, arguing that the legal ownership was with the partners. The CIT(A) deleted this disallowance, noting that the cars were purchased from the firm's funds and used for business purposes. The Tribunal upheld the CIT(A)'s decision, citing the Hon'ble Supreme Court's decision in Mysore Minerals Ltd. vs. CIT.
Conclusion:
Both appeals filed by the revenue were dismissed, and the orders of the CIT(A) were upheld by the Tribunal.
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2013 (11) TMI 1709
Issues involved: Arbitrary withholding of reward u/s reward policy framed by Government for information supplied, appeal against remand order of Delhi High Court to consider rewards afresh by Reward Committee.
The appellant's grievance was that the respondent No. 1 had arbitrarily withheld the reward due to him u/s the reward policy framed by the Government for the information provided by him. The appellant approached the High Court twice in writ jurisdiction and once filed a contempt petition for redressal of his grievance. The matter was remanded to the Reward Committee by the Delhi High Court to reconsider the rewards awarded. The Customs Department discovered evasion of duty by M/s. J.K. Synthetics Limited based on the appellant's information, leading to recovery of Customs duty and penalty. The appellant had been paid &8377; 50 lacs so far based on various decisions by the Reward Committees.
The 7th Reward Committee independently examined the case and recommended a total reward of &8377; 50 lakhs to the informer, which was considered just, fair, and commensurate with the information provided. The Committee opined that the appellant should be awarded an additional amount of &8377; 10 lakhs, making the total reward payable to him &8377; 60 lakhs as a full and final settlement. The Supreme Court increased the reward amount from &8377; 50 lakhs to &8377; 60 lakhs, considering the appellant's long-standing litigation for an appropriate reward under the policy.
The Court acknowledged that the reward does not confer any vested right upon the informer but, in this case, due to the appellant's prolonged pursuit for the reward over the years, the matter needed closure. The interest of justice would be served by awarding the appellant &8377; 60 lakhs as a final settlement. The respondent was directed to pay the balance sum of &8377; 10 lakhs to the appellant within two months. The appeal was disposed of with no order as to costs, emphasizing that the judgment was specific to the unique circumstances of the case and not a precedent for other cases.
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2013 (11) TMI 1708
Issues involved: Appeal against dismissal of appeal for A.Y. 2008-09 and 2009-10 regarding the maintainability of the claim for set off of unabsorbed depreciation allowance.
Summary:
Issue 1: Maintainability of claim for set off of unabsorbed depreciation allowance
The appeals by the Assessee were dismissed for A.Y. 2008-09 and 2009-10 by the CIT(A). The only issue was the maintainability of the claim for set off of unabsorbed depreciation allowance for the earlier years. The claim was disallowed based on the amendment to section 32(2) of the Income Tax Act, 1961, restricting the carry forward of unabsorbed depreciation allowance to eight years. The relevant provision was amended by the Finance Act, 2001, removing this restriction from A.Y. 2002-03 onwards. The Revenue relied on the provision of section 32(2) as amended by Finance Acts of 1996 and 2000. The Special Bench of the tribunal had interpreted that the restriction of eight years would apply to depreciation for A.Ys. 1997-98 to 2001-02. However, the Gujarat High Court opined differently, allowing the claim for indefinite carry forward against profits and gains for subsequent years. The court held that the entire unabsorbed depreciation up to A.Y. 2001-02 shall be governed by the amended provision. The decision of the High Court prevailed over the Special Bench's decision, and the claim was allowed in accordance with the High Court's decision.
In conclusion, the appeal was allowed based on the decision in General Motors India Pvt. Ltd., directing the allowance of the assessee's claims as per the court's decision.
Order pronounced in the open court on November 27, 2013.
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2013 (11) TMI 1707
Genuineness of the trade credit entries - Fictitious liabilities outstanding for 10 years - Agreement between assessee and creditors that the amount would be retained on payment of interest - Addition under section 41(1) of the Income Tax Act of the Income Tax Act. - Liabilities ceased and written off in PY 31-3-2006 , relevant for the AY 2006-07 , entire tax deposited in the return for the AY 2006-07 - HELD THAT - Under the taxation laws, double tax cannot be levied and since the amount has already been taxed in the AY 2006-07, therefore no substantial question of law arises for consideration. The High Court, in [2009 (12) TMI 34 - PUNJAB AND HARYANA HIGH COURT] held that merely because such liabilities are outstanding for the last six years, it cannot be presumed that the said liabilities have ceased to exist. It is also a conceded position that there is no bilateral act of the assessee and the creditors, which indicates that the said liabilities have ceased to exist. Decision in favor of assessee.
Reopening of the assessment under section 147 r/w s. 148 - To verify the credit entries appearing in the balance sheet - HELD THAT - Insofar as the issue of reopening of the assessment under section 147 r/w section 148 of the Income Tax Act is concerned, the same question is only academic in nature and remains academic as ultimately amount as found by the assessing officer has been taxed though in a subsequent year and therefore, is not required to be considered.
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2013 (11) TMI 1706
Issues involved: Petition under section 391 (1) of the Companies Act, 1956 seeking dispensation of convening meetings of shareholders and creditors and dispensing with filing of the IInd Motion petition for the sanctioning of Scheme of Amalgamation.
Judgment Summary:
1. The petitioner-Transferee Company sought dispensation of convening meetings of shareholders and creditors and dispensing with filing of the IInd Motion petition for the sanctioning of Scheme of Amalgamation u/s 391 (1) of the Companies Act, 1956.
2. The Transferor and Transferee Companies, registered under the Companies Act, 1956, have approved the Scheme of Amalgamation, with details of their main objects in respective Memorandum and Articles of Association.
3. The Transferee Company, a listed company, has specified share capital and shareholders, secured creditors, and unsecured creditors, with the Transferor Company being its wholly owned subsidiary.
4. The Transferee Company prayed for exemption from filing the 2nd motion petition under section 391(1) and 394 of the Companies Act, as the proposed Scheme of Amalgamation would not affect the rights of its members or creditors.
5. Relying on past decisions, the Transferee Company argued that no additional equity shareholders are to be issued, and the voting rights of existing shareholders will not change, hence dispensing with the second motion petition is justified.
6. The Court found that the proposed scheme would not affect the rights of members or creditors, and since the Transferee Company is a wholly owned subsidiary of the Transferor Company, dispensing with the second motion petition was appropriate.
7. The Court ordered the dispensation of convening meetings of Equity Shareholders, Secured, and Unsecured Creditors of the Transferee Company, with a notice of the orders to be published in specified publications.
8. Any interested person has the liberty to apply to the Court for any direction(s) as per law, and the petition was disposed of accordingly.
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2013 (11) TMI 1705
Issues Involved:
1. Jurisdictional Issue
2. Validity of Special Audit u/s 142(2A)
3. Exemption u/s 11
4. Application of Section 10(23C)
5. Violation of Section 13(1)(d)
6. Violation of Section 13(1)(c)
7. Capitation Fee Allegations
8. Cash Seized from Employee
9. Disallowances under Various Sections
10. Set-off of Excess Deficit
11. Donations and Corpus Fund
Summary:
1. Jurisdictional Issue:
The appeals arose from assessments framed u/s 153C r.w.s. 143(3) of the Income-tax Act for A.Ys. 2006-07 and 2007-08. The jurisdictional issue was previously disposed of, and the current appeals focus on other substantive matters.
2. Validity of Special Audit u/s 142(2A):
The assessee did not press the grounds related to the reference for special audit u/s 142(2A), and thus, the discussion on this issue was skipped.
3. Exemption u/s 11:
The core issue was whether the assessee trust was entitled to exemption u/s 11. The Assessing Officer denied the exemption, alleging violations of Section 11(5) r.w.s. 13(1)(d) and 13(1)(c) and charging capitation fees. The Tribunal restored the registration u/s 12A, which was initially canceled by the CIT(Central), Pune.
4. Application of Section 10(23C):
The CIT(A) held that the activities of the trust were covered under Section 10(23C), and thus, exemption u/s 11 was not allowable. However, the Tribunal disagreed, stating that the assessee could opt for benefits under either Section 10(23C) or Section 11.
5. Violation of Section 13(1)(d):
The Assessing Officer alleged that the trust violated Section 13(1)(d) by investing in shares of Bharati Sahakari Bank Ltd. The Tribunal, however, held that such investments were made as a condition for obtaining loans and did not constitute a violation of Section 11(5) r.w.s. 13(1)(d).
6. Violation of Section 13(1)(c):
The Assessing Officer claimed that the trust violated Section 13(1)(c) by incurring agricultural expenses for trustees. The Tribunal found no evidence supporting this claim and held that the trust did not violate Section 13(1)(c).
7. Capitation Fee Allegations:
The Assessing Officer alleged that the trust charged capitation fees for admissions, based on cash and documents seized from an employee, Shri R.D. Shinde. The Tribunal found that the evidence did not support the claim that the seized cash belonged to the trust and held that the cash belonged to Shri Shinde.
8. Cash Seized from Employee:
The Tribunal held that the cash seized from Shri R.D. Shinde did not belong to the assessee trust. The presumption u/s 132(4A) was that the cash belonged to the person from whom it was seized, i.e., Shri Shinde.
9. Disallowances under Various Sections:
The Tribunal addressed several disallowances made by the Assessing Officer, including those under Sections 40(a)(ia), 40A(3), and others. Given the restoration of the trust's registration and entitlement to exemption u/s 11, these disallowances became redundant.
10. Set-off of Excess Deficit:
The assessee did not press the ground related to the set-off of excess deficit, and thus, it was dismissed as not pressed.
11. Donations and Corpus Fund:
The Tribunal held that donations collected through coupons could not be treated as part of the corpus fund but were revenue receipts. However, specific donations received by cheques for the corpus were accepted as capital receipts.
Conclusion:
The Tribunal allowed the appeals for A.Ys. 2006-07 and 2007-08, holding that the assessee trust was entitled to exemption u/s 11 and had not violated Sections 11(5) r.w.s. 13(1)(d) or 13(1)(c). The cash seized from Shri R.D. Shinde was held to belong to him, not the trust.
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2013 (11) TMI 1704
Issues involved: Appeal challenging order, non-compliance with Section 250(1) and 250(2) of IT Act, deletion of deduction u/s 35(1)(iv) of the Act.
Appeal of the Revenue - Section 250(1) and 250(2) Compliance:
The Revenue appealed the order of the first appellate authority, alleging non-compliance with Section 250(1) and 250(2) of the IT Act, 1961. The Revenue contended that the Assessing Officer was not provided notice and an opportunity. However, it was observed that the assessee responded to notices, submitted relevant documents, and the Revenue failed to prove otherwise. The Tribunal found no merit in the Revenue's contentions and dismissed the grounds.
Deletion of Deduction u/s 35(1)(iv) of the Act:
The Revenue challenged the deletion of an addition made on account of disallowance of deduction claimed u/s 35(1)(iv) of the Act. The Revenue argued that the claimed deduction was wrongly allowed without proper research by the assessee. However, the Tribunal noted that the Assessing Officer did not disallow a similar claim in a previous assessment year. The Tribunal emphasized that if expenditure is incurred for scientific research related to the business, it qualifies for deduction, regardless of other benefits. The Tribunal cited relevant case laws to support its decision. The Tribunal upheld the deletion of the disallowance, as the research done by the assessee benefitted the public, meeting the conditions for deduction.
Cross-objection No.61/Ind/2013:
The cross-objection filed by the assessee was in support of the impugned order. Since the Tribunal affirmed the conclusions of the impugned order, the cross-objection was considered academic and dismissed as infructuous.
In conclusion, both the appeal of the Revenue and the cross-objection of the assessee were dismissed by the Tribunal.
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