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Showing 101 to 120 of 1054 Records
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2011 (2) TMI 1537
Issues Involved:
1. Whether the Appellant-Bank can exercise a general lien on the title deeds deposited by the deceased borrower.
2. Whether the liability of the guarantor stands extinguished upon his death.
3. Whether the Appellant-Bank was justified in retaining the documents under Section 171 of the Indian Contract Act.
Summary:
Issue 1: General Lien on Title Deeds
The Appellant-Bank claimed a general lien on the title deeds deposited by the deceased borrower, N.P.S. Mahendran, as security for loans availed by M/s. Aarthi Bala Tea Plantations and M/s. Sanjay Bala Tea Plantations. The Respondents, after repaying the entire loan, requested the return of the title deeds. The Bank refused, citing outstanding dues from M/s. Somerset Tea Plantation, for which the deceased stood as a guarantor. The Court held that the Bank's claim of general lien u/s 171 of the Indian Contract Act was not justified as the title deeds were deposited for a specific loan and not for any other liabilities.
Issue 2: Liability of Guarantor Post-Death
The Appellant-Bank argued that the liability of the guarantor does not extinguish upon death and can be enforced against the estate inherited by the legal heirs. The Court agreed, stating that u/s 131 of the Contract Act, the liability of the guarantor continues for transactions existing at the time of death. However, the Court emphasized that the specific contract of mortgage for the deceased's loan did not extend to other liabilities.
Issue 3: Justification of Retaining Documents
The Court examined whether the Appellant-Bank was justified in retaining the documents under Section 171 of the Indian Contract Act. It was found that the title deeds were deposited specifically for loans availed by M/s. Aarthi Bala Tea Plantations and M/s. Sanjay Bala Tea Plantations, and not for any other loans. The Court cited that the Bank's general lien does not apply when there is a specific contract to the contrary. The Court also noted that the Bank initially acknowledged the repayment and agreed to return the documents but later refused, which was not appreciable.
Conclusion:
The Court concluded that the Appellant-Bank was not justified in retaining the title deeds and directed the Bank to return the documents to the Respondents within two weeks. The appeal was disposed of with no costs.
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2011 (2) TMI 1536
Issues involved: Appeal by revenue against CIT(A)'s order regarding deduction for prior period expenses.
Grounds of appeal:
1. CIT(A)'s order deemed erroneous in law and facts.
2. CIT(A) should have upheld AO's disallowance of deduction for prior period expenses.
3. CIT(A) failed to recognize that such expenses can be claimed in a succeeding year based on accrual.
4. Revenue argues CIT(A)'s decision is unacceptable.
Details of the judgment:
1. Revenue raised multiple grounds related to prior period expenses, emphasizing non-crystallization and accrual.
2. Assessee's counsel argued that since prior period income was offered, expenses should be allowed, citing assessing officer's own recognition of both in the assessment order.
3. Tribunal observed that the assessing officer accepted prior period income but disallowed expenses, contrary to considering the status as a whole.
4. Tribunal referenced Delhi High Court judgments supporting the allowance of prior period expenses based on the overall status.
5. Tribunal upheld CIT(A)'s decision in light of legal precedents, dismissing the revenue's appeal.
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2011 (2) TMI 1535
Whether application filled before magistrate u/s 156(3) of the Code praying to direct the Officer-in-charge of Police Station to register complaint u/s 156(3) be treated as complaint u/s 200 - In the present case it was alleged by the respondent No. 3 that the police officer in charge of the police station had refused to register her complaint and, therefore, she had made application to the Senior Superintendent of Police as required by Section 154(3) of the Code, but of no avail. Therefore, the respondent No. 3 had approached the appellant, who was then discharging duties as Judicial Magistrate praying to direct the Officer-in-charge of Police Station to register complaint u/s 156(3). Appellant directed to proceed case u/s 200. Feeling aggrieved, the respondent No. 3 invoked jurisdiction of the High Court u/s 482 of the Code to quash the passed by the appellant.
The learned Single Judge expressed the view that the appellant had passed the order ignoring all judicial disciplines and had not at all applied her judicial mind. he severely criticized the conduct of the appellant and recorded his serious displeasure against the appellant for passing such type of illegal orders. Therefore, set aside the order passed by the appellant, and directed the appellant to decide the application of the respondent No. 3 within the ambit of her power u/s 156(3) of the Code. while setting aside the order has given rise to the present appeal.
HELD THAT:- Under the circumstances the appellant had exercised judicial discretion available to a Magistrate and directed that the application, which was submitted by the respondent No. 3 u/s 156(3) of the Code, be registered as complaint and directed the Registry to present the said complaint for recording the statement of the respondent No.3 u/s 200 of the Code. Under the circumstances, the judicial discretion exercised by the appellant, to proceed u/s 200 of the Code could not faulted with nor the appellant could be subject to severe criticism as was done by the learned Single Judge. Therefore, this Court is of the opinion that the disparaging remarks made by the learned Single Judge of the Allahabad High Court, were not justified at all and, therefore, the appeal will have to be accepted.
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2011 (2) TMI 1534
Title: High Court of Bombay Judgment 2011 (2) TMI 1534
Judge: S.C. Dharmadhikari, J.
Key Points:
- Limited grievance about copies of agreement between respondents Nos. 2 and 3.
- Respondent No. 3 to provide agreement copy within two weeks.
- Company court lacks jurisdiction for substantive reliefs sought.
- Application dismissed with liberty to adopt appropriate legal proceedings.
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2011 (2) TMI 1533
Issues Involved:
1. Dismissal of appeal Nos. 94/1992 and 95/1992 for want of prosecution.
2. Imposition of penalty for violation of provisions of FERA.
3. Evidence and arguments presented by both parties.
4. Consideration of retracted statements and corroborating evidence.
5. Interpretation of Sections 9(1)(b) and 9(1)(d) of FERA.
6. Impact of judgment in a criminal case on the penalty imposition.
Issue 1: Dismissal of appeal Nos. 94/1992 and 95/1992 for want of prosecution:
The judgment states that appeal Nos. 94/1992 and 95/1992 were pending since 1992, with no representation on behalf of the appellant. Consequently, these appeals were dismissed for want of prosecution, and the focus shifted to the facts of appeal No. 91/1992.
Issue 2: Imposition of penalty for violation of provisions of FERA:
The case involved an appeal against an order imposing penalties under FERA for violations of specific provisions. The penalties were imposed based on actions related to the receipt of instructions from abroad and subsequent financial transactions, leading to searches and seizures at various premises. The Adjudicating Authority found the appellant guilty and levied penalties, which were challenged in the present appeal.
Issue 3: Evidence and arguments presented by both parties:
The appellant's counsel argued that the appellant, acquitted in a criminal case related to the same violations, should not face penalties. They also contested the lack of evidence regarding the alleged non-resident individual involved in the transactions. The respondent's representative, however, supported the penalties based on corroborating evidence from statements and financial recoveries.
Issue 4: Consideration of retracted statements and corroborating evidence:
The judgment highlighted the reliance on retracted statements of involved parties, including the appellant, in imposing penalties. The presence of recovered funds and statements from individuals like Shri K.K. Jamaluddin and the appellant's wife was used to support the penalty imposition.
Issue 5: Interpretation of Sections 9(1)(b) and 9(1)(d) of FERA:
The judgment discussed the provisions of FERA that prohibit certain financial transactions with non-residents. It emphasized the need for evidence to establish violations and the importance of considering the appellant's business records in the context of the alleged transactions.
Issue 6: Impact of judgment in a criminal case on the penalty imposition:
The appellant's counsel argued that the appellant's acquittal in a criminal case related to the same violations should prevent penalty imposition. They also contested the lack of concrete evidence linking the appellant to the alleged transactions. Ultimately, the tribunal allowed the appeal, setting aside the penalty order and dismissing other related appeals.
This detailed analysis covers the dismissal of appeals, penalty imposition, evidence and arguments, consideration of statements and evidence, interpretation of FERA provisions, and the impact of a criminal case judgment on penalty imposition.
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2011 (2) TMI 1532
Issues:
1. Revision petition filed against order exonerating respondents for contravention of FERA sections.
2. Proper appreciation of evidence by Adjudicating Authority.
3. Delay in filing revision petition.
4. Scope of revisional powers and reasonableness of delay.
5. Exoneration of respondents based on lack of evidence except retracted statement.
6. Imposition of penalty for violation of FERA Section 9(1)(a) without show cause notice.
Analysis:
1. The revision petition was filed against an order exonerating the respondents for contravention of Sections 8(2), 9(1)(b), 9(1)(d), and 9(1)(f)(i) of FERA. The case involved the use of NRE accounts for making payments as gifts to unrelated persons, leading to a search and recovery of foreign exchange. The Adjudicating Authority exonerated the respondents based on the evidence presented, which was challenged in the revision.
2. The appellant contended that the Adjudicating Authority did not properly appreciate the evidence on record, especially regarding the violation of Section 9(1)(a) of FERA. However, the respondent argued that the revision petition should be dismissed due to delay and latches. The Tribunal can interfere in revisional powers only in exceptional cases of manifest mistake or error of law, not for re-appreciation of evidence.
3. The delay in filing the revision petition was a crucial issue raised during the proceedings. The respondent highlighted that the revision was filed after approximately 11 months without any explanation for the delay. The Tribunal considered the reasonableness of the delay, citing precedents that emphasize timely administrative actions.
4. The Tribunal analyzed the scope of revisional powers and the reasonableness of the delay in this case. It was noted that revisional powers can only be exercised in cases of manifest error by the Adjudicating Authority. The lack of a prescribed limitation for filing a revision under FERA does not justify an unreasonable delay, as equitable considerations are essential.
5. The Adjudicating Authority exonerated the respondents primarily due to the absence of substantial evidence apart from a retracted statement. Although the Authority found violations of Section 9(1)(a) of FERA, no penalty was imposed as the show cause notice did not specifically include allegations related to that section. The Tribunal upheld the Authority's decision, stating that the absence of relevant charges in the notice precluded the imposition of penalties.
6. The issue of imposing a penalty for the violation of FERA Section 9(1)(a) without a show cause notice specifically addressing that charge was a significant point of contention. The Tribunal concluded that the Adjudicating Authority's decision was not erroneous, as penalties cannot be imposed in the absence of relevant charges in the show cause notice. Therefore, the revision petition was dismissed for lacking merit.
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2011 (2) TMI 1531
Issues Involved:
1. Infringement of Trademark
2. Passing Off
3. Entitlement to Injunction
4. Delivery Up of Infringing Material
5. Rendition of Accounts
6. Punitive Damages
Summary:
1. Infringement of Trademark:
The Plaintiff, a partnership firm, claimed to have adopted the trademark/trade name/label GIANI'S in 1960 and registered it for various edible items. The Defendants were alleged to have adopted a deceptively similar trademark GIAN'S, infringing the Plaintiff's registered trademark. The court noted that u/s 28 of the Trade Marks Act, 1999, the registered proprietor has the exclusive right to use the trademark and obtain relief for infringement. The court found that the Defendant's mark was visually, phonetically, and structurally similar to the Plaintiff's mark, thus constituting infringement.
2. Passing Off:
The Plaintiff also based its case on passing off, alleging that the Defendants' use of the trademark GIAN'S caused confusion among the public, leading them to believe that the Defendants' products were associated with the Plaintiff. The court reiterated that passing off occurs when the Defendant's mark is so similar to the Plaintiff's that it deceives or causes confusion among consumers. The court found that the Defendants' use of the mark GIAN'S was likely to deceive customers into believing they were purchasing the Plaintiff's products.
3. Entitlement to Injunction:
The court held that the Plaintiff was entitled to a permanent injunction restraining the Defendants from using the trademark GIAN'S. The court emphasized that the Plaintiff had established a long-standing use and reputation of the trademark GIANI'S, and the Defendants' use of a similar mark was likely to cause confusion and deception in the market.
4. Delivery Up of Infringing Material:
Although the Plaintiff sought delivery up of all packaging material, cartons, and goods bearing the infringing mark for destruction, this relief was not pressed during arguments.
5. Rendition of Accounts:
The Plaintiff also sought rendition of accounts or, alternatively, damages amounting to Rs. 20,01,000/-. However, this relief was not pressed during arguments.
6. Punitive Damages:
The court awarded punitive damages of Rs. 20,000/- to the Plaintiff, noting that punitive damages are founded on the philosophy of corrective justice. The court emphasized the need to signal to wrongdoers that the law takes breaches seriously and to compensate for the energy and resources spent by the Plaintiff in litigating against trademark infringement.
Conclusion:
The court restrained the Defendants from using the trademark GIAN'S or any similar mark for their products and awarded punitive damages to the Plaintiff. The name of Defendant No. 2 was deleted from the array of Defendants.
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2011 (2) TMI 1530
Issues Involved:
1. Whether the tendering authority can discharge the tender after exposition of the bid without assigning any reason.
2. Whether the railway respondents acted arbitrarily in discharging the tender without assigning any reason.
Summary:
Issue 1: Discharge of Tender Without Assigning Reason
The common question of law in both writ petitions is whether the tendering authority can discharge the tender after exposition of the bid without assigning any reason in the communication. The court observed that the railway respondents did not provide reasons for discharging the tender in the impugned communications, although reasons were available in the relevant files and disclosed in the affidavit-in-opposition. The court emphasized that public orders made by public authorities must be construed objectively with reference to the language used in the order itself, as established in Commissioner of Police, Bombay Vs. Gordhandas Bhanji (AIR 1952 SC 16) and other precedents.
Issue 2: Arbitrary Action by Railway Respondents
The petitioners contended that the railway respondents acted arbitrarily by discharging the tender without assigning any reason, which is against the principles of fairness and transparency. The court referred to several Supreme Court decisions, including Union of India Vs. M.L. Capoor (AIR 1974 SC 87) and Mohinder Singh Gill Vs. The Chief Election Commissioner (AIR 1978 SC 851), which mandate that reasons must be provided for administrative actions to ensure they are not arbitrary. The court found that the railway respondents' failure to incorporate a modified clause in the tender conditions, which was necessary for public interest, led to the discharge of the tender. However, this omission should not prejudice the petitioners who had already exposed their bids.
Conclusion:
The court set aside the decisions contained in the communications dated 04.07.2011 and 29.08.2011, discharging the tenders. It directed that if the petitioners undertake to accept the non-incorporated clause, the railway respondents should consider their highest bids for acceptance. The petitioners were given seven days to furnish an undertaking, and the railway respondents were directed to determine the tender within fifteen days from receipt of the undertaking. The writ petitions were allowed with no order as to cost.
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2011 (2) TMI 1529
Issues:
1. Appeal against imposition of penalty under FERA Act, 1973 for contravention of provisions of Section 8(10) and 8(2).
2. Lack of independent evidence to corroborate retracted statements.
3. Allegations of purchasing foreign exchange without specific details.
4. Discrepancies in names and lack of identification parade.
5. Corroboration of statements by co-accused and legal standards for evidence.
The case involved an appeal against a penalty imposed under the FERA Act, 1973 for contravention of provisions of Section 8(10) and 8(2). The appellant denied allegations of purchasing foreign exchange from a co-accused, Mohamed Omar Mistry, for Rs. 15,00,000. The Adjudicating Authority imposed a penalty of Rs. 3,00,000 based on statements and evidence. The appellant argued that there was no independent evidence to support the retracted statements and that the allegations lacked specificity regarding the nature of the foreign exchange. The appellant's counsel contended that the findings were flawed due to the absence of corroborative evidence.
The respondent supported the Impugned Judgment, asserting that the statements of the appellant and Mohamed Omar Mistry were corroborated by other evidence on record. The Chairperson analyzed the arguments, noting that both statements were retracted. Referring to legal precedent, it was highlighted that retracted statements alone cannot serve as the basis for a penalty under FERA without independent corroborated evidence. Mohamed Omar Mistry's statement lacked specific details about the foreign exchange sold, and discrepancies in names raised doubts about the identification of the appellant.
Citing the Supreme Court's stance on confessional statements by co-accused, the Chairperson emphasized the need for corroboration by independent evidence. The Adjudicating Authority's reliance on the statements of the appellant and Mohamed Omar Mistry, without additional corroboration, was deemed insufficient. The lack of specific details of the foreign exchange and discrepancies in names further weakened the case against the appellant. Consequently, the Chairperson set aside the Impugned Order of penalty, ruling in favor of the appellant due to the absence of substantial evidence and lack of connection between the appellant and the alleged transactions.
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2011 (2) TMI 1528
Accrual of income - taxability of Foreign Dividends - whether liable to be taxed, on net basis, after deducting foreign taxes withheld abroad? - CIT(A) did not accept the assessee’s contention to the effect that foreign dividends are liable to be taxed, on net basis, after deducting foreign taxes withheld abroad - HELD THAT:- Issue as decided in favour of assessee as relying on case of AMBALAL KILACHAND [1994 (4) TMI 67 - BOMBAY HIGH COURT] as held that amount initially available for distribution by the U.K. company cannot be considered as income accruing to the assessee, because the assessee does not have any right to receive the amount so initially declared. He does not have any right to claim any credit for the tax which is deducted on that amount. Therefore, under no circumstances can he claim that the gross amount available for distribution has accrued to him - A shareholder outside the United Kingdom cannot claim any credit for the tax paid by the company. Therefore, the only entitlement of a shareholder outside the United Kingdom is to receive dividend as reduced by the deduction of the corporation tax.
Deduction u/s 80HHE - exclusion on account of maintenance of software and technical support, from the export turnover, to arrive at the deduction - reason for which receipts in respect of software maintenance and technical support have been not been taken into account for the purpose of computing deduction as deduction under section 80HHE is restricted to receipts in respect of ‘development and production of software’ - HELD THAT:- We find that the connotations of ‘software maintenance’ are quite distinct and separate in scope than ‘maintenance’ per se - we direct the Assessing Officer to take receipts, in respect of ‘software maintenance’, into account for the purpose of computing deduction under section 80HHE. To this extent, grievance of the assessee is upheld.
Receipts for technical support services - We uphold the action of the authorities below, but, in view of the Special Bench decision in the case of ITO v. Sak Soft Ltd. [2009 (3) TMI 243 - ITAT MADRAS-D] direct the Assessing Officer to exclude these receipts, both from the export turnover and from the total turnover, which are the numerator and the denominator, respectively, in the formula. The assessee will get the relief accordingly.
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2011 (2) TMI 1527
Unexplained/Undisclosed Long Term Capital Gain - deletion of addition - In that case the assessee claimed Long Term Capital Gain and claimed exemption u/s 054EA. The LTCG was shown on account of sale of shares through the brokers. The assessee submitted the copies of bills, share certificates, contract notes etc. during the course of assessment proceedings alongwith details of DD through which the sale proceeds has been received. It was also pointed out that the purchases were made through broking concern M/s. JRD Stock Brokers Pvt. Ltd. The A.O. noticed that the shares were purchased @ ₹ 4/- per share and sold @ ₹ 65/- to ₹ 84/- per share. The A.O. was of the view that the transactions were not genuine and are only accommodation entries. The broker pointed out that he was engaged in giving bogus entries for the purchase and sale of the shares on commission basis. He, therefore, made the addition. The assessee went in appeal before the CIT(A).
HELD THAT:- According to the CIT(A), no defect in share transactions being made by the appellant and as such no adverse inference is drawn. Appellant had done the same as would be done by any person with a prudent mind in order to sell his commodity. It is evident from the record that the AO failed to establish the nexus between the sale proceeds of the shares and so called unaccounted money of the appellant which according to him is mere a bogus entry taken from the broker. Neither the statement of the broker or any other documentary evidence is on record from which it could be established that the appellant had taken entry from the broker M/s J.R.D Stock Broker (P) Ltd. Thus in view of the facts and the law, I hold that on merit the addition is wholly unjustified and is hereby deleted. Therefore, we are of the view that the CIT(A) was right in conclusion that the assessee has dealt in these shares and these transactions cannot be held bogus. The deletion of addition is confirmed.
Hence, the assessee has been successful in proving the long term capital gain earned by him in this case. He has also established that he is exempt from tax qua long term capital gains as has been claimed.
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2011 (2) TMI 1526
Issues Involved:
The issues involved in this case include the validity of a decree passed by the Debt Recovery Tribunal, the request for release of documents, the availability of alternative remedies, and the concept of functus officio.
Validity of Decree and Request for Release of Documents:
M/s. Kalzar Marketing Agency Private Limited and others availed a loan from the respondent-State Bank of India, with R.M. Parthasarathy as a guarantor. After default, the Bank obtained a decree in 2004. The petitioner, claiming to be the legal representative of Parthasarathy, sought the release of documents based on his death certificate and other evidence. The Tribunal found the decree to be non-est in law due to Parthasarathy's death before the mortgage. However, the Tribunal rejected the request for document release, citing the finality of the decree.
Availability of Alternative Remedies:
The respondent-Bank argued that the petitioner should have appealed under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, instead of filing a writ petition directly. The petitioner's failure to implead M/s. Kalzar Marketing Agency Pvt. Ltd. was also highlighted. The Tribunal's finding that the decree was null and void was not challenged by the Bank, making it final. Exceptions to the rule of exhausting alternative remedies were discussed, especially in cases where the order is considered a nullity.
Concept of Functus Officio:
The respondent contended that the Tribunal became functus officio once the order in the original application became final. However, the Court held that if an order is null and void or non-est in law, it can be withdrawn. The Tribunal was deemed unjustified in rejecting the petitioner's request for document return after finding the decree to be non-est. The matter was remitted back to the Tribunal for fresh consideration, directing the petitioner to implead the principal borrower and others for a re-evaluation of the issue.
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2011 (2) TMI 1525
Issues Involved:
1. Ownership and possession of gold ornaments.
2. Applicability of Section 69A of the Income-tax Act, 1961.
3. Reliability of evidence provided by the assessee.
4. Contradictions in statements and documents.
5. Role of the stock register and its maintenance.
6. Legal precedents and their applicability.
Analysis:
1. Ownership and Possession of Gold Ornaments:
The primary issue revolves around whether the gold ornaments found in the possession of the assessee belonged to him or to his employer, M/s. Prakash Gold Palace Pvt. Ltd. (PGPL). The Revenue argued that the gold ornaments should be taxed as the income of the assessee under Section 69A of the Income-tax Act, 1961, due to the lack of satisfactory explanation regarding their ownership and source.
2. Applicability of Section 69A of the Income-tax Act, 1961:
Section 69A was invoked by the Assessing Officer (AO) to bring the value of the gold ornaments to tax, as the assessee was found in possession of the gold without any proper documentation. The section presumes the valuables to be the income of the person found in possession unless satisfactorily explained otherwise. The Tribunal upheld the AO's application of Section 69A, stating that the law presumes possession to be prima facie proof of ownership.
3. Reliability of Evidence Provided by the Assessee:
The assessee and his employer, PGPL, provided various documents and statements to establish that the gold ornaments were part of PGPL's trading stock and that the assessee was merely a carrier. However, the Tribunal found significant inconsistencies and contradictions in the statements and documents provided. For instance, there was no valid transfer/issue voucher found with the assessee at the time of apprehension, and the stock register was not maintained in the regular course of business.
4. Contradictions in Statements and Documents:
The Tribunal noted several contradictions in the statements made by the assessee and PGPL's representatives. The assessee claimed to have brought the gold from Chennai, while the stock register indicated a different story. Additionally, the Director of PGPL denied issuing any gold to the assessee from the Chennai office. These contradictions undermined the credibility of the explanations provided by the assessee and his employer.
5. Role of the Stock Register and Its Maintenance:
The stock register of PGPL's Cochin branch was produced as evidence to show that the gold ornaments belonged to the company. However, the Tribunal found that the stock register was not maintained in the regular course of business and was prepared only after the gold was seized. The Tribunal observed that the stock register did not record the issue of ornaments to employees for canvassing orders, further questioning its reliability.
6. Legal Precedents and Their Applicability:
The Tribunal referred to several legal precedents, including the Supreme Court's judgment in Chuharmal vs. CIT, which supports the presumption of ownership based on possession under Section 110 of the Indian Evidence Act. The Tribunal dismissed the assessee's reliance on the P.R. Metrani vs. CIT case, clarifying that the presumption under Section 132(4A) is limited to search and seizure proceedings and does not apply to regular assessments.
Conclusion:
The Tribunal concluded that the assessee failed to satisfactorily explain the possession of the gold ornaments. The contradictions in the statements and documents, along with the unreliable stock register, led to the decision that the gold ornaments should be taxed as the income of the assessee under Section 69A. Consequently, the Tribunal set aside the order of the Commissioner of Income-tax (Appeals) and allowed the Revenue's appeal.
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2011 (2) TMI 1524
Issues involved:
The judgment involves the admissibility of employer's contribution and damages under section 530 of the Companies Act, 1956 and section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.
Admissibility of Employer's Contribution:
The company was ordered to be wound up, and the official liquidator took possession of the assets. The appellant filed a claim for employer's contribution towards employees provident fund, which was admitted as a preferential claim under section 530 of the Companies Act. The employer's contribution was determined by the competent authority under the EPF Act, and the claim was submitted after the delay was condoned. The claim for employer's contribution prior to the winding up order was admitted as a preferential claim under section 530 of the Companies Act. The claim for damages, however, was held inadmissible as it was claimed after the passing of the winding up order.
Admissibility of Damages:
The appellant contended that the damages should be recovered as a preferential claim on a priority basis under section 11(2) of the EPF Act. The counsel argued that the rejection of the claim for damages by the official liquidator was contrary to the provisions of the EPF Act. The official liquidator, on the other hand, argued that damages claimed after the issuance of the recovery certificate were not preferential claims under section 530 of the Companies Act. The official liquidator stated that due to the available funds and the claims of secured creditors and workmen, the damages claimed were not admissible.
Legal Analysis:
The court considered the facts that the employer's contribution and damages were determined under the EPF Act. The employer's contribution was admitted as a preferential claim under section 530 of the Companies Act. However, the damages claimed were held inadmissible as they were determined after the winding up order. The court noted that no recovery could be made for damages without a recovery certificate issued under the EPF Act. Therefore, the rejection of the claim for damages by the official liquidator was upheld as no error was found in the decision.
Conclusion:
The court dismissed the company application as it lacked merit, and no costs were awarded. The judgment reaffirmed the admissibility of the employer's contribution as a preferential claim under section 530 of the Companies Act but upheld the rejection of the damages claim as it was made after the passing of the winding up order.
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2011 (2) TMI 1523
Issues involved: Appeal against CIT(A) order deleting addition of cash credit u/s 68, determination of income from contract business, and working out the assessee's income.
Issue 1 - Cash credit u/s 68:
The Revenue appealed against CIT(A) order deleting Rs. 3,80,696 addition on account of cash credit u/s 68, arguing that the investment was made during the financial year, not before commencement of business. The Ld. Counsel for the assessee cited a previous ITAT decision in favor of the assessee for a different assessment year. After hearing both parties, it was held that the addition was invested by the members of AOP, supported by their statements and evidence of sufficient sources of investment. The Ld. First Appellate Authority's decision to delete the addition was upheld, and the appeal was dismissed.
Issue 2 - Income from contract business:
The Revenue challenged the determination of income from contract business by CIT(A), contending that the income was underestimated. However, the issue was dismissed as it was already decided in favor of the assessee by a previous ITAT decision for a different assessment year.
Issue 3 - Working out assessee's income:
The Revenue raised concerns about the calculation of the assessee's income, arguing that it was significantly lower than the contractual receipts shown. This issue was also dismissed based on the previous ITAT decision in the assessee's favor for a different assessment year.
The ITAT Agra Bench, comprising P. K. Bansal (Accountant Member) and H. S. Sidhu (Judicial Member), dismissed the Revenue's appeal, upholding the CIT(A) order regarding the cash credit u/s 68 and the determination of income from contract business. The decision was based on the members of AOP investing the amount in question and providing evidence of the sources of their investment. The appeal was pronounced dismissed on 04.02.2011.
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2011 (2) TMI 1522
Validity of Re-Assessment Proceedings u/s 147 - Reason to Believe - non independent application of mind by AO - Borrowed satisfaction - AO initiated proceedings on the basis of information received by investigation wing that the assessee has purchased a plot of land and he could not give any specific clarification during the course of inquiry regarding such investment - As per CIT(A), there was reason to believe for initiating such proceedings
HELD THAT:- In the present case, it is crystal clear AO acted upon the information received from the Investigation Wing, where it was not stated that the investment in purchase of land was out of undisclosed income of the assessee or out of income which escaped assessment.
As per Sec. 147, AO must have reason to believe that any income chargeable to tax has escaped assessment. However, it cannot be said that if there is any investment it is sufficient to believe that the income to that extent escaped assessment because there may be so many sources for making investment and it is not necessary that only on the basis of investment it can be presumed that the income to that extent escaped assessment. There should be a concrete finding before coming to the conclusion that any income has escaped assessment and merely on the basis of the information provided by any another Wing of the Income-tax Department, the AO cannot believe that there was income which has escaped assessment.
In present case, AO simply acted upon the information of ADIT (Investigation) and did not apply his own mind to the information to arrive at a belief independently that on the basis of material which he had before him the income had escaped assessment. We are, therefore, of the view that the ld. CIT(A) was not justified in confirming the action of the Assessing Officer.
Therefore, initiation of proceedings u/s. 147 cannot said to be a valid proceeding. We are fortified by the decision of ITO, WARD 6 (2) , KANPUR VERSUS RICH CAPITAL & FINANCIAL SERVICES LTD. [2010 (9) TMI 1214 - ITAT LUCKNOW], where it was held that proceedings u/s 147 cannot be initiated either on the basis of mere suspicion or for making fishing or roving enquiries the initiation of the proceedings u/s 147 of the Act on this ground was also illegal and bad in law.
AO without referring to any material which could justify his conclusion that the income of the assessee escaped assessment, instantiated the proceedings u/s. 147, the said action was not justified because the said action appears to be on suspicion and for making roving enquiries. In that view of the matter, assessments framed on the basis of notices issued u/s. 148 are set aside considering the same as illegal and bad in law, hence vitiated - Decision in favour of Assessee
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2011 (2) TMI 1521
Issues: Disallowance of expenditure related to ESOPS treated as perquisite to employees u/s 37(1) of the I.T. Act.
Summary:
The Appellate Tribunal ITAT Hyderabad heard two appeals by the assessee against orders of the CIT(A)-V, Hyderabad for the assessment years 2005-06 and 2006-07. The issue in both years was the disallowance of expenditure on ESOPS treated as perquisite to employees. The Assessing Officer questioned the eligibility of the expenditure u/s 37(1) of the I.T. Act, despite the assessee citing a decision from ITAT Chennai Bench. The Assessing Officer disallowed the expenditure, which was upheld by the CIT(A). The Tribunal noted that a previous decision against the assessee covered the current issue. The assessee accepted this, and the Tribunal confirmed the lower authorities' orders, leading to the dismissal of both appeals.
In conclusion, the Tribunal dismissed both appeals of the assessee, upholding the disallowance of expenditure related to ESOPS treated as perquisite to employees u/s 37(1) of the I.T. Act.
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2011 (2) TMI 1520
Taxability under head "income from other sources" - interest income generated from the amount (amount contributed as share capital money, deposited into bank and pledge against bank guarantee issued FDR) - Tribunal arrived at a finding that the interest earned on the aforesaid amount was not inextricably linked for the setting up of the project - HELD THAT:- On these facts being established, the Tribunal applied the ratio of the judgment of this Court in the case of INDIAN OIL PANIPAT POWER CONSORTIUM LIMITED, NEW DELHI VERSUS INCOME TAX OFFICER [2009 (2) TMI 32 - DELHI HIGH COURT] as well as the COMMISSIONER OF INCOME TAX VERSUS PANEM COAL MINES LTD. [2009 (9) TMI 1016 - DELHI HIGH COURT].
In the aforesaid two judgments of this Court after discussing the legal principle in detail, the Court has held that if the interest earned on the fund which are to be utilized for purchase of capital asset/ setting up of the business and that is inextricably linked with the setting up of the business, said interest will not be treated as income under the head "income from other sources".
While coming to this conclusion the Court has specifically referred to the judgment of Supreme Court in the case of COMMISSIONER OF INCOME-TAX VERSUS BOKARO STEEL LIMITED [1998 (12) TMI 4 - SUPREME COURT] where it was held that it is well-settled that an income received by the assessee can be taxed under the head "income from other sources" only if it does not fall under any other head of income as provided in Section 14 of the Act. The head "income from other sources" is a residuary head of income.
Thus, no question of law arises - appeal dismissed.
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2011 (2) TMI 1519
Issues involved:
The judgment involves issues related to computation of book profits u/s.115JB of the Act, disallowance u/s.14A of the Act, and disallowance out of vehicle expenses.
Computation of book profits u/s.115JB of the Act (Assessment Year 2004-05):
The assessee contested the computation of book profits u/s.115JB, specifically regarding the disallowance u/s.14A of the Act. The CIT(A) erred in adding disallowance u/s.14A of the Act while computing book profits. However, since there was no dividend income exempt u/s.10(34) during the year, the disallowance u/s.14A was deemed unnecessary. The direction of the CIT(A) to add back the amount computed u/s.14A was set aside, and the grounds raised by the assessee were allowed. The Assessing Officer was directed to delete the addition made.
Disallowance u/s.14A of the Act (Assessment Year 2004-05):
The issue revolved around disallowance u/s.36(1)(iii) made by the Assessing Officer but enhanced by the CIT(A) u/s.14A read with Rule 8D. The matter was remitted back to the Assessing Officer for examination based on previous decisions and the facts presented. The Assessing Officer was directed to decide the disallowance u/s.36(1)(iii)/14A in accordance with relevant court decisions. The ground of appeal was allowed for statistical purposes.
Disallowance out of Vehicle expenses Rs. 1,00,000/- (Assessment Year 2004-05):
The issue involved an ad-hoc disallowance of vehicle expenses. The Assessing Officer disallowed a sum of Rs. 1,00,000 on the basis that part of the business expenses was incurred for non-business purposes. However, it was found that the disallowance was not warranted as the assessee was engaged in business activities. The Assessing Officer was directed to delete the disallowance, and the ground was allowed.
Computation of book profits u/s.115JB of the Act (Assessment Year 2005-06):
Similar to the previous year, the assessee challenged the computation of book profits u/s.115JB, particularly regarding the deduction of dividend income after deducting disallowance u/s.14A of the Act. The CIT(A) had enhanced the disallowance u/s.14A, which was deemed excessive. The Assessing Officer was directed to recompute the book profits after considering the disallowances accordingly.
Disallowance u/s.14A of the Act (Assessment Year 2005-06):
The issue was interlinked with the computation of book profits, as there was dividend income during the year. The CIT(A) had invoked Rule 8D for enhancing the disallowance, which was not upheld due to lack of approval by the Jurisdictional High Court. The Assessing Officer was directed to determine a reasonable amount for disallowance u/s.14A based on facts and law, and to reduce the disallowance while computing book profits u/s.115JB. The grounds were considered allowed for statistical purposes.
The appeals for both Assessment Years 2004-05 and 2005-06 were considered allowed for statistical purposes.
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2011 (2) TMI 1518
Issues involved: Appeal against order deleting addition of Godown rent, Weighbridge rent, and interest expenses u/s 40A(2)(b) of the Income Tax Act, 1961 for the assessment year 2007-08.
Godown and Weighbridge Rent Disallowance:
The Assessing Officer disallowed Rs. 90,000 for godown rent and Rs. 27,000 for weighbridge rent u/s 40A(2)(b) of the Act. The Commissioner of Income Tax (Appeals) deleted both disallowances, citing an increase in rent due to business growth and lack of evidence for excessive payments. The Tribunal set aside the order, directing the assessee to provide old and new rent agreements to re-examine the additions.
Interest Expenses Disallowance:
The Assessing Officer disallowed Rs. 5,40,251 of interest expenses u/s 40A(2)(b). The Commissioner of Income Tax (Appeals) overturned this, stating that interest paid at 18% to family members was not excessive. The Tribunal upheld this decision, referencing precedents and the reasonable interest rate, rejecting the revenue's appeal.
Conclusion:
The Tribunal partly allowed the appeal, upholding the disallowance of Godown and Weighbridge rent additions for reassessment and rejecting the disallowance of interest expenses, deeming them reasonable.
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