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2011 (12) TMI 697
Issues: Disallowance under Section 43B of the Income Tax Act, 1961 and disallowance towards contribution to the Cooperative Education Fund.
Issue 1: Disallowance under Section 43B of the Act
The Tribunal upheld the order of CIT(A) regarding disallowance under Section 43B for the assessment year 2004-05, stating that the payments were made before the due date for filing the return of income. The tax audit report confirmed the payment of Rs. 13,03,74,047/- before the due date. The Tribunal found no infirmity in the order passed by the CIT(A) and dismissed the appeal on this ground.
Issue 2: Disallowance towards contribution to the Cooperative Education Fund
The Tribunal referred to the statutory provisions of the Multi State Cooperative Society Act and Rule 25 of the Multi State Coop. Society Rules, 2002. It was noted that the respondent assessee, a cooperative society, is required to contribute 1% of net profits annually to the Cooperative Education Fund as mandated by the statute. The Tribunal observed that this contribution is a statutory requirement and should be allowed as a deduction, as it is not an expense but a statutory payment. Previous cases had established that this contribution is not disallowed under Section 43B of the Act. Therefore, the Tribunal dismissed the appeal on this ground as well.
In conclusion, the High Court upheld the decisions of the Tribunal on both grounds, affirming the disallowance under Section 43B and the contribution to the Cooperative Education Fund. The appeal was dismissed accordingly.
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2011 (12) TMI 696
The Bombay High Court upheld the Income Tax Appellate Tribunal's decision that the expenditure on share issue incurred by the assessee is a revenue expenditure and allowable under Section 37 of the Income Tax Act, 1961. The appeal was dismissed with no order as to costs.
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2011 (12) TMI 695
Issues involved: Request for information on Excise returns database u/s RTI Act, denial of information by CPIO u/s 7(9) RTI Act, appeal before Central Information Commission.
Summary:
Issue 1: Denial of information under Section 7(9) of the RTI Act
The Appellant sought information regarding Excise returns database in CD format, but the CPIO rejected the request citing Section 7(9) of the RTI Act, stating it would disproportionately divert resources. The FAA upheld this decision, leading to the appeal before the Commission.
Issue 2: Feasibility of retrieving specific information
The Appellant argued that the Excise returns are maintained using Oracle database system and retrieving specific data fields is feasible through a simple SQL algorithm. The Respondent, however, expressed concerns about the volume of data and resource diversion.
Issue 3: Expert opinion and decision
The Commission sought assistance from a Scientist-D to assess the technical aspects. It was confirmed that retrieving the requested information using SQL algorithm is standard practice and does not amount to creating new information. The Commission ruled that volume of information is not a valid reason to deny the request under the RTI Act.
Issue 4: Provision of information in batches
Acknowledging the concerns about server load, the Commission directed the Respondent to provide the information in CD/DVD format over a period of 3 months in three batches, to ensure server efficiency is maintained.
In conclusion, the Commission ordered the Respondent to provide the requested information as per the specified timeline, thereby disposing of the appeal.
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2011 (12) TMI 694
Issues involved: Appeal against the order of the Commissioner of Income Tax regarding depreciation claim on civil work, erection, and commissioning of windmill for Assessment Years 2004-05 to 2007-08.
ITA No. 6402/Mum/2010 (A.Y. 2004-05):
The Revenue challenged the deletion of disallowances on depreciation claim for civil work, erection, and commissioning of windmill. The Assessing Officer contended that depreciation should be allowed at 5% instead of 80%. The CIT(A) ruled in favor of the assessee based on a Tribunal decision regarding the eligibility of windmill components for higher depreciation. The Tribunal held that the basement for windmill installation is integral to the windmill itself, qualifying for 80% depreciation. The Revenue's appeal was dismissed as the Tribunal found no fault in the CIT(A)'s decision, upholding the higher depreciation claim.
ITA No. 6203 to 6205/Mum/2010 for A.Y. 2005-06 to 2007-08 & 6390/Mum/2010 for A.Y. 2006-07 & 6391 to 6392/Mum/2010 for A.Y. 2007-08 (By Revenue):
The grounds raised in these appeals mirror the issue in ITA No. 6402/Mum/2010. Following the precedent set in the previous case, where the Tribunal upheld the higher depreciation claim, the Revenue's appeals were dismissed. The Tribunal maintained consistency in allowing the depreciation claim for civil work, erection, and commissioning of windmills at 80% based on the integral nature of the components to the windmill structure.
In conclusion, all appeals by the Revenue were dismissed based on the consistent application of the Tribunal's decision regarding the eligibility of windmill components for higher depreciation rates.
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2011 (12) TMI 693
Issues Involved:
1. Determination of appropriate punishment under Section 21(a) or Section 21(b) of the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act) in the absence of exact quantity/percentage of narcotic drug/psychotropic substance found in the seized contraband.
2. Necessity and implications of conducting a Purity Test to ascertain the exact quantity of narcotic drug/psychotropic substance in mixtures.
3. Interpretation of relevant legal provisions and judicial precedents regarding the classification of quantities (small, intermediate, commercial) of narcotic drugs/psychotropic substances.
Issue-wise Detailed Analysis:
1. Determination of Appropriate Punishment under Section 21(a) or Section 21(b) of the NDPS Act:
The primary question addressed was whether, in the absence of the exact quantity/percentage of narcotic drug/psychotropic substance in the seized contraband, the punishment should be imposed under Section 21(a) or Section 21(b) of the NDPS Act. The appellant was found guilty by the Trial Court for possessing 1.370 kilograms of heroin and was sentenced under Sections 8(c) r/w Section 29 and Section 8(c) r/w Section 21 of the NDPS Act. The argument presented was that without knowing the exact quantity of heroin in the mixture, the accused should be convicted under Section 21(a), which pertains to small quantities.
2. Necessity and Implications of Conducting a Purity Test:
The appellant's counsel relied on the Supreme Court judgments in E. Micheal Raj vs. Narcotic Control Bureau and State of NCT of Delhi v. Ashif Khan @ Kalu, which emphasized the necessity of conducting a Purity Test to determine the exact quantity of narcotic drug in a mixture. The Supreme Court in E. Micheal Raj's case held that without a Purity Test, it must be assumed that the quantity of the narcotic drug is small. This was contrasted with judgments from the Madras High Court, where convictions under Section 21(b) were upheld even without Purity Tests, treating the quantity as intermediate.
3. Interpretation of Relevant Legal Provisions and Judicial Precedents:
The court analyzed various judgments and legal provisions, including the definitions of "commercial quantity" and "small quantity" as per Sections 2[viia] and 2[xxiiia] of the NDPS Act and the notification dated 19.10.2001. The court noted the amendments made by Act 09/01, which provided graded sentences based on the quantity of the narcotic drug involved. The court also referred to the Supreme Court judgment in Harjit Singh vs. State of Punjab, which distinguished between pure opium and mixtures, emphasizing the necessity of Purity Tests for mixtures to establish the exact quantity of narcotic drug.
Conclusion and Judgment:
The court concluded that if the contraband is a mixture or preparation with or without a neutral material, it is necessary to conduct a Purity Test to ascertain the exact quantity of the narcotic drug/psychotropic substance. In the absence of such a test, it should be construed that the quantity is small, and punishment should be imposed under Section 21(a). However, if the contraband is a narcotic drug/psychotropic substance simplicitor, there is no need for a Purity Test, and the entire quantity should be considered for determining the appropriate punishment.
Specific Directions:
1. For mixtures or preparations falling within entry No.239 of the notification dated 19.10.2001, a Purity Test is mandatory to determine the exact quantity of the narcotic drug/psychotropic substance.
2. For narcotic drugs/psychotropic substances simplicitor, the entire quantity should be considered without a Purity Test.
3. In pending cases, including appeals, courts and prosecuting agencies should forward samples for Purity Tests to ascertain the percentage of the narcotic drug/psychotropic substance in mixtures or preparations.
4. The ratio laid down in E. Micheal Raj's case regarding Purity Tests applies to offenses committed on or before 17.11.2009. For offenses committed on or after 18.11.2009, the entire quantity of the mixture/preparation shall be decisive.
The court directed the Registry to list the relevant cases before the learned Single Judges for appropriate orders and to circulate the order to all Special Courts for NDPS Act in the State.
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2011 (12) TMI 692
Issues Involved:
1. Validity of the order passed by the Chairman, Industrial Facilitation Council.
2. Applicability of Section 18(3) of the Micro, Small and Medium Enterprises Development Act, 2006 vis-Ã -vis the Arbitration and Conciliation Act, 1996.
3. The scope of counterclaims by the buyer under Section 17 of the Act, 2006.
4. The role of the Council as an Arbitrator under Section 18(3) of the Act, 2006.
5. Overriding effect of the Act, 2006 over the Act, 1996.
Summary:
1. Validity of the Order Passed by the Chairman, Industrial Facilitation Council:
The petitioner challenged the order of the Chairman, Industrial Facilitation Council, which proceeded with conciliation despite the petitioner's objections. The Council rejected the petitioner's plea that the dispute should be referred to arbitration as per the agreement under the Arbitration and Conciliation Act, 1996 (the Act, 1996). The Council held that the Micro, Small and Medium Enterprises Development Act, 2006 (the Act, 2006) was a special enactment and took precedence over the Act, 1996.
2. Applicability of Section 18(3) of the Act, 2006 vis-Ã -vis the Act, 1996:
The petitioner argued that Section 18(3) of the Act, 2006 should be read harmoniously with the Act, 1996, and that the latter should prevail. The Court rejected this argument, stating that the Act, 2006, being a special enactment, has an overriding effect as per Section 24 of the Act, 2006. The Court emphasized that the Act, 2006 provides a specific mechanism for dispute resolution, which includes conciliation and arbitration by the Council itself.
3. The Scope of Counterclaims by the Buyer under Section 17 of the Act, 2006:
The petitioner contended that Section 17 of the Act, 2006, which deals with the recovery of amounts due, excludes the possibility of counterclaims by the buyer. The Court rejected this contention, stating that the liability to pay under Section 17 includes the mutual rights of the parties, and the Act, 2006 allows for counterclaims by the buyer against the seller.
4. The Role of the Council as an Arbitrator under Section 18(3) of the Act, 2006:
The petitioner argued that the Council could not act as an Arbitrator if there was an existing arbitration agreement under the Act, 1996. The Court held that Section 18(3) of the Act, 2006 explicitly allows the Council to act as an Arbitrator or refer the matter to arbitration, even if there is an existing arbitration agreement. The Court upheld the Council's decision to proceed with arbitration under the Act, 2006.
5. Overriding Effect of the Act, 2006 over the Act, 1996:
The Court highlighted that the Act, 2006 has an overriding effect as per Section 24, which states that the provisions of Sections 15 to 23 shall prevail over any inconsistent provisions in other laws. The Court noted that the Act, 2006 is a special enactment aimed at promoting and developing Micro, Small, and Medium Enterprises, and its provisions take precedence over the general provisions of the Act, 1996.
Conclusion:
The Court dismissed the writ petitions, upholding the Council's decision to proceed with arbitration under the Act, 2006. The Court emphasized that the Act, 2006, being a special enactment, has an overriding effect and provides a specific mechanism for dispute resolution, which includes the Council acting as an Arbitrator. The petitioner's arguments regarding the applicability of the Act, 1996 and the exclusion of counterclaims were rejected.
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2011 (12) TMI 691
Issues Involved:
1. Classification of income from the sale of agricultural land: business income vs. long-term capital gain.
2. Penalty proceedings under Section 271(1)(c) of the Income Tax Act.
Detailed Analysis:
Issue 1: Classification of Income from Sale of Agricultural Land
Facts and Arguments:
- The assessee claimed income from the sale of agricultural land as long-term capital gain, while the Assessing Officer (A.O.) treated it as business income.
- The land in question was purchased in FY 1994-95 and 1995-96 and was converted into non-agricultural (NA) land in 1999.
- The A.O. noted that the assessee applied for NA conversion and development permissions, indicating an intention to sell the land for profit, thus treating it as stock in trade.
- The assessee argued that the land was held as an investment and agricultural activities were carried out till 1998-99, supported by 7/12 records.
Tribunal's Findings:
- The Tribunal upheld the A.O.'s decision, noting that no substantial agricultural income was declared by the assessee and the major crop shown was grass.
- The Tribunal emphasized that the land was not held for agricultural purposes but for resale, supported by the assessee's actions of converting the land to NA and obtaining development permissions.
- The Tribunal dismissed the assessee's reliance on various judgments, stating that the facts of those cases were different and not applicable.
Conclusion:
- The Tribunal concluded that the income from the sale of the land should be treated as business income and not as long-term capital gain.
Issue 2: Penalty Proceedings under Section 271(1)(c)
Facts and Arguments:
- The A.O. imposed a penalty of Rs. 13,59,517 under Section 271(1)(c) for furnishing inaccurate particulars of income.
- The assessee argued that all necessary details were provided and the issue was debatable, citing several court decisions in support of its contention.
Tribunal's Findings:
- The Ld. CIT(A) deleted the penalty, noting that the assessee had furnished all necessary details and the issue was debatable.
- The Tribunal upheld the Ld. CIT(A)'s decision, agreeing that the rejection of the assessee's claim did not constitute furnishing inaccurate particulars of income.
Conclusion:
- The Tribunal ruled that no penalty should be imposed under Section 271(1)(c) as the issue was debatable and all particulars were disclosed by the assessee.
Combined Result:
- The appeal of the assessee for the assessment year 2000-01 was dismissed.
- The revenue's quantum appeal for the assessment year 1999-2000 was allowed.
- The revenue's penalty appeal for the assessment year 2000-01 was dismissed.
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2011 (12) TMI 690
Issues involved: Appeal against deletion of disallowance of housekeeping charges treated as income from other sources.
Summary:
The Revenue filed an appeal against the order of the ld. CIT(A) deleting the disallowance of housekeeping charges made by the AO. The AO treated a portion of the receipts as income from other sources based on the nature of services provided and infrastructure available. The ld. CIT(A) deleted the addition following the Tribunal's decision in the assessee's own case for a previous year. The Revenue contended that no expenses were allowed for earning income from other sources. However, the Tribunal upheld the ld. CIT(A)'s decision, citing consistency in treatment of income and allowing depreciation under both heads. The Tribunal dismissed the Revenue's appeal, affirming the deletion of the disallowance.
In conclusion, the Tribunal upheld the ld. CIT(A)'s decision to delete the disallowance of housekeeping charges treated as income from other sources, based on consistency in treatment of income and allowance of depreciation under both heads.
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2011 (12) TMI 689
Issues Involved:
1. Plaintiff's claim of trademark infringement and passing off.
2. Determination of whether "GE" and "GENERAL ELECTRIC" are well-known marks.
3. Evaluation of the defendant's use of the mark "GE" and its potential to cause confusion or deception.
4. Plaintiff's entitlement to an injunction and other reliefs.
Issue-Wise Detailed Analysis:
1. Plaintiff's claim of trademark infringement and passing off:
The plaintiff, a large corporation with significant global presence, alleged that the defendants were using the trademark "GE" for their products, which could mislead consumers and members of the trade. The plaintiff argued that the defendants' use of "GE" was aimed at exploiting the plaintiff's established reputation and goodwill.
2. Determination of whether "GE" and "GENERAL ELECTRIC" are well-known marks:
The court examined the extensive use, recognition, and advertising of the trademarks "GE" and "GENERAL ELECTRIC" by the plaintiff. The plaintiff's trademarks were recognized globally, including in India, and had been in use for over 100 years. The court noted the plaintiff's significant advertising expenditure and the numerous trademark registrations held by the plaintiff in various countries. The court concluded that "GE" and "GENERAL ELECTRIC" are well-known marks within the meaning of Section 2(ZG) of the Trademarks Act.
3. Evaluation of the defendant's use of the mark "GE" and its potential to cause confusion or deception:
The court considered whether the defendants' use of "GE" constituted infringement of the plaintiff's well-known marks. The court held that even if the impugned mark is not an exact replica, it can still constitute infringement if it is visually, phonetically, or otherwise similar to the registered trademark. The court found that the defendants' use of "GE" was likely to cause confusion among consumers, who might associate the defendants' products with the plaintiff. The court emphasized that the core distinctive feature of the plaintiff's trademark is the letters "GE," and any use of these letters in a similar manner would constitute infringement.
4. Plaintiff's entitlement to an injunction and other reliefs:
The court granted an injunction restraining the defendants from using the mark "GE" or any similar mark. The court noted that the plaintiff was entitled to seek an injunction even if there was no evidence of actual use of the trademark by the defendants, as the mere application for registration of the trademark by the defendants gave sufficient cause of action to the plaintiff. However, the court did not grant any other reliefs, such as damages, due to the lack of evidence of actual use of the mark by the defendants.
Conclusion:
The court decreed an injunction with proportionate costs, restraining the defendants from using the mark "GE" or any mark identical or similar to the plaintiff's registered trademarks "GENERAL ELECTRIC," "GE (monogram)," and "GE." The court did not grant any additional reliefs due to the absence of evidence of actual use of the mark by the defendants.
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2011 (12) TMI 688
Issues Involved:
1. Disallowance of depreciation on fixed assets.
2. Disallowance of deduction under Section 80G of the Income Tax Act.
3. Treatment of income from the sale of plots as business income versus long-term capital gain.
Analysis:
1. Disallowance of Depreciation on Fixed Assets:
The Revenue challenged the deletion of an addition of Rs. 3,92,805/- made by the AO on account of disallowance of depreciation, arguing that the fixed assets were not put to use for business purposes. The AO disallowed the depreciation because the equipment and software were purchased at the end of the financial year and were not installed or put to use, and the payments remained largely unpaid, reflecting the assets as capital work in progress.
The assessee contended that the AO's disallowance was based on assumptions without independent inquiry. The equipment was received earlier than the end of the financial year, and the ERP system's sales module was operational by March 2005. The categorization as work in progress was for financial statement purposes only, and the usability of the asset is the sole criterion for depreciation, not the timing of payment.
The ld.CIT(A) agreed with the assessee, emphasizing that substance should prevail over form and that usability of the asset is the key criterion for depreciation. The Tribunal upheld this view, noting that the invoices and the operational status of the ERP system indicated that the assets were indeed put to use.
2. Disallowance of Deduction under Section 80G:
The Revenue contested the deletion of a disallowance of Rs. 62,500/- under Section 80G. The AO had already considered the gross total income before allowing the deduction under Section 80G and then added Rs. 62,500/- to the total income, which the ld.CIT(A) found uncalled for.
The Tribunal agreed with the ld.CIT(A), noting that the donation of Rs. 75,000/- was already added back to the net profit in the computation of total income, and thus, the amount could not be separately added again.
3. Treatment of Income from Sale of Plots:
The Revenue argued that income from the sale of plots should be treated as business income rather than long-term capital gain. The AO treated the sale of plots as business income and enhanced the value of certain plots based on Section 50C.
The assessee argued that the land was purchased for installing a factory, and due to urbanization, it was converted into plots for better capital appreciation. The sale of plots was an isolated activity, and the land was always shown as a fixed asset, not stock in trade. The ld.CIT(A) agreed, noting that the sale of land was a capital transaction, not a business activity, and Section 50C was not applicable as the plots sold through agreement were not registered.
The Tribunal upheld the ld.CIT(A)'s decision, emphasizing that the intention behind the purchase and the long-term holding of the land indicated it was a capital asset. The Tribunal also noted that the provisions of Section 50C were not applicable to sales made through agreements before the amendment including the word "assessable."
Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the ld.CIT(A)'s decisions on all three issues. The depreciation on fixed assets was allowed, the disallowance under Section 80G was deleted, and the income from the sale of plots was treated as long-term capital gain rather than business income.
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2011 (12) TMI 687
Issues Involved:
1. Validity of recovery notices issued to the petitioner.
2. Applicability of Section 11 of the Central Excise Act, 1944.
3. Liability of the petitioner as a successor to pay dues of the predecessor.
4. Interpretation of auction terms and conditions regarding dues.
Detailed Analysis:
1. Validity of Recovery Notices Issued to the Petitioner:
The petitioner, M/s. Navjeevan Industries, filed a writ petition to quash the recovery notices dated 17-3-2006, 12-5-2006, 1-8-2006, 23-8-2006, and 10-4-2007. The court examined whether these recovery notices were justifiable under the provisions of the Central Excise Act, 1944.
2. Applicability of Section 11 of the Central Excise Act, 1944:
The petitioner argued that Section 11 of the Central Excise Act, 1944, was not applicable as they had only purchased the land and building of M/s. Pinkcity Leminart (P) Ltd. in an auction and not the running business. The respondent contended that under Section 11, the successor is liable for the dues of the predecessor. The court noted that Section 11 allows for the recovery of sums due to the government by attachment and sale of excisable goods belonging to the person liable to pay the same. The proviso to Section 11 clarifies that if a person disposes of their business or trade, the successor can also be held liable for the dues.
3. Liability of the Petitioner as a Successor to Pay Dues of the Predecessor:
The petitioner maintained that they were not liable for the dues of M/s. Pinkcity Leminart (P) Ltd. as they had not purchased the running business. They cited the case of State of Karnataka v. Shreyas Papers (P) Ltd. to support their argument. However, the respondents relied on the Supreme Court decisions in Macson Marbles Pvt. Ltd. v. Union of India and Dena Bank v. Bhikabhai Prabhudas Parekh & Co., which held that the successor is liable for the predecessor's dues. The court upheld the respondents' view, indicating that the sale by the Rajasthan Financial Corporation was deemed a sale by the owner, thus making the petitioner liable under Rule 230(2) of the Central Excise Rules.
4. Interpretation of Auction Terms and Conditions Regarding Dues:
The court examined the auction notice and found that Clause 18 exempted the purchaser from paying dues related to the State Electricity Board, State Commercial Taxes Department, and State Excise, but not Central Excise. Therefore, the petitioner could not claim exemption from Central Excise dues based on the auction terms. Additionally, the conveyance deed did not specify any exemption from Central Excise dues.
Conclusion:
The court concluded that the recovery notices issued to the petitioner were justified. The provisions of Section 11 of the Central Excise Act, 1944, and Rule 230(2) of the Central Excise Rules were applicable, making the petitioner liable for the dues of M/s. Pinkcity Leminart (P) Ltd. The auction terms did not exempt the petitioner from Central Excise dues. Consequently, the writ petition was dismissed with costs of Rs. 10,000.
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2011 (12) TMI 686
Issues involved: The judgment deals with the maintainability of addition in respect of credits u/s. 68 of the Income-tax Act, 1961 for the assessment year 2003-04.
Background: The individual assessee, engaged in film production and distribution, filed a return of income showing a loss. The Assessing Officer (AO) treated certain unexplained credits as income u/s. 68 of the Act as the assessee failed to provide confirmations for the same. The Commissioner of Income-tax (Appeals) remanded the matter back to the AO for further evidence. The AO found lack of evidence to establish the nature and source of the credits, leading to confirmation of the unexplained credits as income u/s. 68 of the Act.
Arguments: The appellant categorized the credits into two groups and claimed to have fulfilled the onus of proving the credits based on identity, creditworthiness, and genuineness. However, the Revenue contended that mere confirmation from the creditor is not sufficient to prove the credits u/s. 68. Legal precedents were cited by both parties to support their arguments.
Judgment: The Tribunal confirmed the addition of unexplained credits for one category of credits where no evidence was furnished by the assessee. For the other category, although confirmations were provided, the Tribunal found the lack of material to establish the credits on the required parameters. The Tribunal noted discrepancies in the assessee's claims and conduct, leading to the conclusion that the credits were not satisfactorily proved. The disallowance of interest was also confirmed.
Case Law: The Tribunal referred to various legal precedents to support its decision, emphasizing the burden of proof on the assessee to establish the genuineness of credits u/s. 68. The case laws cited by the assessee were found inapplicable to the facts of the case.
Result: The assessee's appeal was partly allowed, with the Tribunal upholding the addition of unexplained credits and the disallowance of interest to the proportionate extent.
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2011 (12) TMI 685
The High Court of Karnataka issued an interim order restraining the respondent from dealing with or disposing of plant and machinery for three weeks. Case CA No 1600/2011 is allowed.
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2011 (12) TMI 684
Issues involved: Application for ad-interim reliefs, valuation of cloud computing business, details of payments made, declaration of dividend, attachment of properties, siphoning of funds.
Ad-interim reliefs and valuation of cloud computing business:
The Plaintiffs sought ad-interim reliefs, leading the Court to direct the valuation of the Defendant No.1 Company's cloud computing business by reputable valuers. The Defendant No.1 was instructed to appoint M/s. KPMG, ENY, or PWC as Valuer and submit the valuation report in a sealed cover by 31st January 2012. Additionally, the Defendant No.1 was required to provide detailed particulars of payments made to various parties from the sale proceeds, as specified in the Affidavit dated 16th December 2011.
Declaration of dividend and attachment of properties:
Concerns were raised regarding the Defendant No.1's intention to declare a dividend at a board meeting scheduled for 3rd January 2012. The Plaintiffs sought to attach the Defendant No.1's properties due to defaults in payments to bondholders. It was argued that shareholders holding a significant percentage might misuse dividends. The Court restrained the Defendant No.1 from making any decisions on dividend declaration pending further orders, emphasizing that any decision taken would be subject to Court approval.
Adjournment and future proceedings:
The Court decided to stand over the matter to 31st January 2012, indicating that the Notice of Motions for ad-interim reliefs would be addressed before the General Body of shareholders at the AGM fixed on 4th February 2012. The Defendant No.1's actions regarding the declaration of dividend were to be monitored and subject to the Court's subsequent orders.
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2011 (12) TMI 683
Issues involved:
Seeking sanction under Sections 391 to 394 of the Companies Act, 1956 for a Scheme of Amalgamation of two companies and their shareholders.
Details of the judgment:
1. The Petitioners have complied with all requirements and filed necessary affidavits of compliance. They undertake to comply with statutory requirements under the Companies Act, 1956, which is accepted.
2. The Regional Director stated that the Scheme is not prejudicial to the interest of shareholders and the public, except for specific clauses.
3. Clause 5.6 of the scheme requires the Transferee Company to increase its authorized share capital as per Sections 94/97 of the Companies Act, 1956. The Transferee Company undertakes to comply with this requirement.
4. Clause 6.1(d) & (e) states that the excess value of shares issued by the Transferee Company over the net assets of the Transferor Company shall be credited to the General Reserve Account. The Transferee Company undertakes not to use this reserve for future dividends.
5. The Official Liquidator reported that the affairs of the Transferor Company were conducted properly and recommended its dissolution.
6. The Scheme is deemed fair, reasonable, compliant with the law, and not against public policy. No opposition from concerned parties.
7. Both Company Scheme Petitions are made absolute as all statutory compliances have been fulfilled.
8. Petitioner Companies are directed to lodge a copy of the order and the Scheme for stamp duty adjudication and to file with the Registrar of Companies within specified timelines.
9. Costs of &8377; 10,000/- each to be paid by the Petitioner Companies to the Regional Director and the Official Liquidator within four weeks.
10. Filing and issuance of the drawn-up order is dispensed with, and all authorities are directed to act on the authenticated copy of the order and Scheme.
Separate Judgment: None.
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2011 (12) TMI 682
Issues involved: Imposition of penalty for failure to make disclosures under Insider Trading Regulations.
Summary:
1. The appeal challenged a penalty of Rs. 10 lacs imposed for not making required disclosures under Insider Trading Regulations based on trading activities in shares of a company.
2. The appellant, a promoter director, failed to disclose transactions as per regulations, leading to the penalty.
3. The appellant argued not being a director or officer of the company, hence not obligated to comply with the regulations.
4. The case was remanded for fresh consideration as it was unclear if the appellant met the criteria of a director or officer under the regulations.
5. The adjudicating officer failed to establish the appellant's status as a director or officer, and the appellant did not adequately respond to the charges.
6. The case was sent back to the Board for reevaluation, with the appellant given three weeks to provide any explanations, and the previous penalty order was set aside.
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2011 (12) TMI 681
Issues Involved:
1. Parity in pay scales for 'Employees' from the year 1985.
2. Validity of the learned Single Judge's order granting parity from 01.04.1996.
3. Applicability of the doctrine of 'equal pay for equal work'.
Summary:
Issue 1: Parity in pay scales for 'Employees' from the year 1985
The 'Employees' sought parity in pay scales from 1985, the year of amalgamation of copper mining companies with Hutti Gold Mines Co. Ltd. The 'Employer' contended that the amalgamation order protected the existing service conditions but did not mandate parity in pay scales. The Court noted that the amalgamation order (Clause 9) protected the service conditions of employees at the time of amalgamation but did not provide for immediate parity. The Court found insufficient evidence to prove that the 'Employees' were performing similar work to those in gold mining, thus rejecting the claim for parity from 1985.
Issue 2: Validity of the learned Single Judge's order granting parity from 01.04.1996
The learned Single Judge had granted parity in pay scales from 01.04.1996. The 'Employer' argued against this, while the 'Employees' sought parity from 1985. The Court observed that by 1996, the copper units had been converted to gold units, and there were inter-unit transfers and common pay scales at the officers' level. The Court upheld the Single Judge's order, concluding that the 'Employees' were entitled to parity from 01.04.1996, but not from 1985.
Issue 3: Applicability of the doctrine of 'equal pay for equal work'
The Court referred to the Supreme Court's decision in the case of Surjit Singh, which emphasized that the doctrine of 'equal pay for equal work' requires strict pleadings and proof of various factors such as responsibility, educational qualification, and nature of work. The Court found that the 'Employees' did not provide sufficient evidence to prove that they were performing similar work to those in gold mining before 1996. However, post-1996, the integration of units and common pay scales justified the application of the doctrine, granting parity from 01.04.1996.
Conclusion:
The appeals by the 'Employees' for parity from 1985 were rejected, while the appeals by the 'Employer' against the Single Judge's order were also dismissed. The Court upheld the order granting parity in pay scales from 01.04.1996. All appeals were dismissed, with parties bearing their own costs.
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2011 (12) TMI 680
Issues Involved:
The judgment involves the disallowance of software expenditure and the set off of loss from a non-STP unit against profits of the STP unit before arriving at the deduction u/s 10A of the Act.
Disallowance of Software Expenditure:
The assessee, engaged in designing automobile parts, claimed software expenditure as revenue, but the AO treated part of it as capital expenditure. The CIT(A) upheld this decision, considering the software as a tangible asset bringing organizational changes. The assessee contended that software had no enduring benefit and cited relevant case laws. The ITAT, Bangalore, following a decision by the Madras High Court, held that software expenditure for application software is revenue in nature, as it enhances productivity without acquiring a capital asset.
Set Off of Loss Against Profits of STP Unit:
The AO observed the inclusion of income exempt u/s 10A from the STP unit in the loss computation, which was disallowed. The CIT(A) affirmed this decision. However, the assessee relied on a High Court decision, supported by the DR, stating the loss of the non-10A unit cannot be set off against the income of the 10A unit u/s 72. The ITAT, Bangalore, following the High Court ruling, allowed the appeal, stating that the profits u/s 10A should be excluded before setting off losses, contrary to the AO's approach.
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2011 (12) TMI 679
Non deduction of TDS u/s 194C against freight charges - addition made u/s. 40(a)(ia) - liability to submit Form 15-I before the IT Authority as per Rule 29D to authenticate the claim - Held that:- In the present case before the Assessing Officer assessee had submitted that form 15-I received by him could not be deposited with the Ld. CIT. Assessee’s submissions have been reproduced in Para-7(ii) at page-4 of Assessing Officer’s order.
After considering the assessee’s submission Assessing Officer, inter alia, observed that assessee did not submit form 15J by 30.06.2006 because he had not received form 15-I. He was of the view that 15-I was received subsequently when the assessee was confronted with the issue of disallowance under section 40(a)(ia). The availability of form 15-I, however, at the time of assessment proceedings is not doubted. Therefore, in view of decision in the case of Shri Vipin P. Mehta [2011 (5) TMI 503 - ITAT MUMBAI] Assessing Officer is directed to delete the disallowance of ₹ 24.74.376/-. In the result, ground Nos. 1 & 2 of the appeal are allowed.
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2011 (12) TMI 678
Issues involved: Disallowance of DP charges as revenue expenditure and claim of the same as bad debt.
Dispute over disallowance of DP charges: The assessee, a sub-broker dealing in shares, claimed `1,16,521/- towards DP charges as revenue expenditure. The principal broker had debited the amount without providing customer-wise details. The assessee argued that since it was unable to recover the charges due to lack of information from the principal broker, it should be treated as bad debt. The assessee relied on a tribunal decision in a similar case.
Revenue's stance on disallowance: The Departmental Representative contended that the DP charges did not pertain to the assessment year in question and could not be allowed as revenue expenditure. Regarding the claim of bad debt, it was argued that without knowing if the charges were included in previous taxable income, they cannot be considered bad debt u/s 36(2) of the Income Tax Act.
Judgment and reasoning: The Tribunal considered both arguments and found that the claimed expenditure was for a previous year, thus disallowing it as an expense for the current year. Regarding the bad debt claim, the Tribunal distinguished the case from the precedent cited by the assessee, as the charges were not related to brokerage income but were incurred as business expenditure. Without details of customers and charges, it could not be treated as bad debt. Therefore, the appeal was dismissed, confirming the lower authorities' decision.
Conclusion: The Tribunal upheld the disallowance of DP charges as revenue expenditure and rejected the claim for treating it as bad debt, ultimately dismissing the assessee's appeal.
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