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2012 (3) TMI 633
Issues involved:
The petitions seek sanction of a Scheme of Amalgamation between Vini Sales and Distribution Pvt. Ltd. and Vini Cosmetics Pvt. Ltd.
Company Application No. 434 of 2011 - Dispensation of Meetings:
- Vini Sales and Distribution Pvt. Ltd., the transferor company, sought dispensation of meetings of equity shareholders and unsecured creditors, as consents were obtained.
- The Court ordered dispensation of meetings for equity shareholders and unsecured creditors of the transferor company.
Company Application No. 435 of 2011 - Dispensation of Meetings:
- Vini Cosmetics Pvt. Ltd., the transferee company, also sought dispensation of meetings for equity shareholders and unsecured creditors, as consents were obtained.
- The Court ordered dispensation of meetings for equity shareholders and unsecured creditors of the transferee company.
Company Petitions for Sanction of Scheme:
- Following the dispensation orders, the present Company Petitions were filed seeking sanction of the Scheme of Amalgamation.
Orders and Directions:
- The Court made orders of admission for both petitions and directed notice issuance to the Regional Director and Official Liquidator.
- Notices of the petitions were published in specified newspapers.
- Affidavits confirmed no objections received against the scheme.
Reports and Recommendations:
- The Official Liquidator confirmed no prejudicial conduct by the transferor company but requested preservation of records and payment of costs.
- The Regional Director made observations, to which the petitioner responded satisfactorily.
Final Decision:
- After considering all submissions, the Court sanctioned the Scheme of Amalgamation with directions for record preservation.
- Costs were quantified for the Central Government Standing Counsel and the Official Liquidator, to be paid by the respective companies.
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2012 (3) TMI 632
Issues involved: Challenge to order of Income Tax Appellate Tribunal by Revenue and assessee, substantial questions of law admitted for consideration.
Issue (a):
The main issue is whether the Tribunal was correct in deleting the addition made by the Assessing Officer, assessing income from various sources under sections 28 to 43 of the Income Tax Act, 1961, instead of treating it as income from the business of operation of qualifying ships as claimed by the assessee.
The Tribunal's decision to delete the addition made by the Assessing Officer, amounting to a significant sum, under profit of the business is being questioned. The crux of the matter lies in the interpretation of provisions of section 28 to 43 of the Income Tax Act, 1961, and whether the income should have been assessed differently based on the nature of the business activity.
Issue (b):
Another important question raised is whether the Tribunal was correct in applying tonnage tax provisions to miscellaneous interest income. The specific amount in question is &8377; 46,10,985. The application of tonnage tax provisions to this income is being challenged based on the facts and circumstances of the case and the relevant laws.
The Tribunal's decision to apply tonnage tax provisions to the miscellaneous interest income is under scrutiny. The correctness of this application in relation to the specific amount involved is being examined in light of the legal framework and the factual context of the case.
The Respondent has waived service, and the case is scheduled to be heard along with another Income Tax Appeal.
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2012 (3) TMI 631
Issues involved:
The issues involved in this judgment are:
1. Addition of capital contribution under Rule 46A of IT Rules, 1962.
2. Addition of unexplained loan under section 68 of IT Act.
Issue 1: Addition of capital contribution under Rule 46A of IT Rules, 1962
The Assessing Officer (AO) made an addition of Rs. 3,00,000 as unexplained capital contribution. The assessee explained that the capital was deposited through account payee cheques from a saving bank account. The ld. CIT(A) found the explanation satisfactory as the amounts were verifiable from bank account copies. The Tribunal noted that the assessee had provided relevant documents to the AO at both assessment and appellate stages. Referring to legal precedents, the Tribunal held that Rule 46A was not violated as the AO had the opportunity to consider the evidence. The appeal of the Revenue was dismissed based on the established facts and legal principles.
Issue 2: Addition of unexplained loan under section 68 of IT Act
The AO added Rs. 18,00,000 as unexplained loan from M/s. Abhinav Vinimay (P) Ltd. The assessee provided various documents including payment slips, bank account extracts, and fresh confirmation from the creditor. The ld. CIT(A) found that the creditor's identity and creditworthiness were not disputed by the AO. The Tribunal observed that the AO's notice u/s. 133(6) was sent to an incorrect address, and the information sought was inaccurate. As the assessee had submitted all necessary details, the Tribunal upheld the CIT(A)'s decision to delete the addition. The Tribunal concluded that the assessee had discharged the burden of proving the genuineness of the loan, and no violation of Rule 46A was found. The appeal of the Revenue was dismissed based on the facts and legal analysis presented.
In conclusion, the Tribunal upheld the decisions of the ld. CIT(A) in both issues, dismissing the departmental appeal.
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2012 (3) TMI 630
Issues Involved:
1. Whether the assessee has a service Permanent Establishment (PE) in India under the India-USA DTAA.
2. Taxability of marketing and management fees as Fees for Technical Services (FTS) under the India-USA DTAA.
3. Taxability of reimbursement of lease line charges as 'Royalty' under the India-USA DTAA.
4. Liability for interest u/s 234B and 234C of the Income Tax Act.
5. Taxability of reimbursement of expenses as Fees for Included Services (FIS) under the India-USA DTAA.
Summary:
1. Service Permanent Establishment (PE) in India:
The assessee, a US company, provided marketing and management services to WNS India. The CIT(A) directed that the assessee had a service PE in India u/s Article 5(2)(l) of the India-USA DTAA due to the presence of its employees in India. The Tribunal upheld this view, confirming that the marketing and management fees attributable to the service PE should be taxed as business profits under Article 7 read with Article 5 of the India-USA DTAA.
2. Taxability of Marketing and Management Fees:
The CIT(A) held that the marketing and management fees received by the assessee did not qualify as FIS under Article 12(4)(b) of the India-USA DTAA. The Tribunal upheld this decision, referencing a similar case where it was determined that the services did not make available technical knowledge, experience, skill, know-how, or processes to WNS India. Consequently, the fees for services rendered outside India were not taxable in India, and the fees for services rendered in India were attributable to the service PE and taxable as business profits.
3. Reimbursement of Lease Line Charges:
The CIT(A) ruled that the reimbursement of lease line charges by WNS India to the assessee was not taxable as 'Royalty' under Article 12 of the India-USA DTAA. The Tribunal upheld this decision, noting that the arrangement did not involve the use of, or right to use, any industrial, commercial, or scientific equipment, and was merely a reimbursement of actual costs without any income element.
4. Interest u/s 234B and 234C:
The CIT(A) found that the assessee, being a non-resident, had its entire income subject to TDS u/s 195 of the Act, and thus was not liable to pay advance tax. Consequently, the interest u/s 234B and 234C was not applicable. The Tribunal upheld this view, referencing the decision in the case of NGC Network Asia LLC.
5. Reimbursement of Expenses:
The CIT(A) upheld the AO's view that reimbursements of expenses incurred by the assessee on behalf of WNS India were taxable as FIS under Article 12(4) of the India-USA DTAA. The Tribunal remanded the issue back to the CIT(A) for fresh consideration, directing verification of the exact nature of expenses and services rendered.
Conclusion:
The appeals by the revenue were dismissed, and the appeals by the assessee were allowed for statistical purposes.
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2012 (3) TMI 629
Issues involved: Jurisdiction of Civil Court u/s 111 of Companies Act, 1956 for disputes regarding redeemable preference shares.
Summary:
The case involved a challenge to the trial Court's rejection of the plaint under Order 7 Rule 11 CPC on the ground that disputes regarding redeemable preference shares under the Companies Act, 1956 should be decided by the Company Law Board u/s 111 of the Act. The plaintiffs sought declaration and mandatory injunction regarding the redemption of preference shares issued in 1957, which the defendants claimed were subject to a compromise pending before the Company Law Board.
The trial Court dismissed the suit based on the belief that the jurisdiction of the Civil Court was barred due to the Company Law Board's jurisdiction u/s 111 of the Act. However, the High Court held that the jurisdiction of the Civil Court and the Company Law Board is concurrent, as established in previous judgments. It was emphasized that highly disputed questions of fact should be decided by the Civil Court, not the Company Law Board. Therefore, the impugned judgment dismissing the suit was set aside, and the appeal was accepted.
In conclusion, the High Court ruled that the Civil Court has jurisdiction to try and determine disputes related to redeemable preference shares under the Companies Act, 1956. The case was directed to appear before the District & Sessions Judge for marking the suit to a competent Court for further proceedings, ensuring notice to the defendants before proceeding.
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2012 (3) TMI 628
Issues involved: Rejection of books of accounts by assessing officer, Commissioner (Appeal), and Tribunal based on discrepancies in maintaining records.
Summary:
Issue 1: Rejection of books of accounts
The appellant raised concern over the rejection of books of accounts, arguing that the audit report and chartered accountants' report supported the accuracy of the records. However, the Commissioner (Appeal) highlighted the absence of a consumption register for certain materials, making it difficult to verify production and consumption figures. The Tribunal also noted challenges in verifying raw material consumption and expenditure, ultimately upholding the decision to reject the books of accounts.
Issue 2: Verification of records
Despite the appellant's reliance on the audit report and chartered accountant's certificate, the High Court found significant discrepancies in the maintained books of accounts. The Court agreed with the assessing officer, Commissioner (Appeal), and Tribunal that the discrepancies were substantial, leading to the dismissal of the appeal for lack of merit.
In conclusion, the High Court dismissed the appeal, stating that no substantial question of law was involved, as the findings of the assessing officer, Commissioner (Appeal), and Tribunal were deemed reasonable and not perverse based on the discrepancies found in the books of accounts.
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2012 (3) TMI 627
Issues involved: Allowability of provision for warranty.
Summary:
The appeal was initially dismissed for non-prosecution but later restored upon filing of a Misc. Petition by the assessee. The main issue raised was the allowability of provision for warranty amounting to a specific sum. The appellant contended that the disallowance made by the Deputy Commissioner of Income Tax was erroneous. The CIT(A) had erred in concluding that the average failure rate computed by the appellant for various products sold under warranty was unreasonably high and not based on past experience. The appellant argued that the provision for warranty was created based on estimation of expenditure likely to be incurred on past sales, following a consistent method. The appellant relied on previous decisions in their own case and the decision of the Hon'ble Supreme Court in Rotork Controls India Pvt. Ltd. vs. CIT to support their claim. The Tribunal, considering the facts and materials on record, held in favor of the assessee, stating that the provision for warranty was justified and should not have been disallowed by the CIT(A).
The Tribunal referred to previous orders in the assessee's own case where it was observed that the provision for warranty stood crystallized as soon as the sale was made, and it was at the cost of the assessee's goodwill. The Tribunal held that the provision was not a contingent liability but an ascertained liability based on past experience and industry trends. The Tribunal also highlighted the relevance of the decision of the Hon'ble Supreme Court in Rotork Controls India Pvt. Ltd. and the importance of basing warranty provisions on experience and historical trends. The Tribunal concluded that the disallowance of the provision for warranty was unjustified and ordered its deletion, thereby allowing the appeal of the assessee.
In conclusion, the Tribunal ruled in favor of the assessee, allowing the appeal and holding that the provision for warranty was justifiable based on past experience and industry practices.
Order pronounced in the open court on 16th March, 2012.
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2012 (3) TMI 626
The Delhi High Court ordered to list the case on 1st May, 2012 as the appellant's counsel requested time to verify details regarding earlier Tribunal orders and Revenue appeals. The respondent did not appear. (Citation: 2012 (3) TMI 626 - DELHI HIGH COURT)
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2012 (3) TMI 625
Issues involved: Appeal against deletion of disallowance of vehicle insurance expenses.
Summary:
Issue 1: Disallowance of vehicle insurance expenses
The Revenue appealed against the deletion of disallowance of Rs. 28,42,119 out of vehicle insurance expenses by the CIT(A). The AO disallowed the amount as the insurance charges were paid for a period falling in the subsequent financial year. However, the CIT(A) allowed the claim based on consistent accounting method followed by the assessee. The Tribunal upheld the CIT(A)'s decision, stating that under the mercantile system of accounting, the assessee is entitled to claim deduction based on incurring the liability, even if the payment is made in a different year. The Tribunal referred to a similar case where the High Court allowed deduction for expenses actually incurred, regardless of the accounting method. Therefore, the Tribunal dismissed the appeal, upholding the deletion of disallowance of vehicle insurance expenses.
End of Summary
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2012 (3) TMI 624
Issues involved: Appeal dismissed as time-barred due to delay in forwarding appeal memo to the correct office.
Summary:
The High Court of Bombay heard the appeal based on the substantial question of law regarding the dismissal of the appeal by CESTAT. The appellant had filed an appeal before the Commissioner of Central Excise (Appeals) against an order but it was mistakenly delivered to the Office of the Assistant Commissioner of Central Excise instead of the correct office, both located in the same building. Despite the appellant's efforts to expedite the process, the appeal was dismissed by the Commissioner of Central Excise (Appeals) as belatedly filed. The appellant then appealed to CESTAT, which also dismissed the appeal. The High Court found that the delay in forwarding the appeal memo to the correct office was not the fault of the appellant. Consequently, the orders of the Commissioner of Central Excise (Appeals) and CESTAT were quashed, and the matter was remanded to the Commissioner of Central Excise (Appeals) for a decision on merits and in accordance with the law. The appeal was disposed of with no order as to costs.
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2012 (3) TMI 623
Issues involved:
The issues involved in this case are related to the exercise of power u/s 263 of the Income-tax Act, 1961, specifically concerning the correctness of the order of the assessing officer and the exemption granted u/s 10B of the Act.
Assessing Officer's Order and Administrative Commissioner's Decision:
The Administrative Commissioner found that the assessing officer's order was erroneous and prejudicial to the interest of the revenue due to lack of enquiry and reasoning in granting exemption u/s 10B. The Commissioner set aside the order for reassessment, emphasizing the necessity for the assessing officer to provide detailed reasons for conclusions in the order itself to enable proper review by higher authorities. The Tribunal upheld the Commissioner's decision, stating that the assessing officer's failure to conduct a thorough enquiry and provide reasoning rendered the original order defective and justifying revision u/s 263.
Judicial Principles and Application of Law:
The Tribunal highlighted the importance of a "speaking order" by the assessing officer, requiring explicit reasoning for conclusions in the assessment order itself. It emphasized that failure to provide reasons could hinder the revisional and appellate authorities' ability to assess the correctness of the decision. The Tribunal noted that the same judicial principles applied to both the assessee and the revenue, necessitating clear and reasoned decisions by the assessing officer to avoid potential challenges to the order.
Applicability of Precedents:
The Tribunal distinguished the cited judgments of Kuttukkaran Trading Ventures and the Delhi High Court from the present case, asserting that the principles laid down in the Apex Court's decision in Malabar Industrial Co Ltd vs Commissioner of Income-tax were more relevant. It referenced the Malabar case to support the Administrative Commissioner's directive for reassessment based on a lack of proper examination and reasoning in the original assessment.
Direction for Reassessment:
The Tribunal upheld the Administrative Commissioner's direction for reassessment, emphasizing the need for an independent review of the materials on record by the assessing officer. It clarified that the reassessment should be conducted impartially, without influence from previous observations, and in compliance with the law, ensuring a fair opportunity for the assessee.
In conclusion, the Tribunal dismissed the appeal, affirming the Administrative Commissioner's decision for reassessment based on the inadequacy of the original assessment order in terms of enquiry and reasoning, as required by the provisions of the Income-tax Act.
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2012 (3) TMI 622
Issues Involved:
1. Deletion of addition u/s 68 on account of share application money.
2. Deletion of addition on account of interest and commission paid on the loan.
3. Deletion of addition u/s 41(1).
4. Deletion of addition on account of unsecured loan and interest paid thereon.
Summary:
1. Deletion of addition u/s 68 on account of share application money:
The Revenue was aggrieved by the deletion of an addition of Rs. 22 lakhs made by the Assessing Officer (AO) u/s 68 on account of share application money received by the assessee company. The assessee provided confirmations, bank statements, and other documents to establish the genuineness of the share application money. The CIT(A) deleted the addition, and the Tribunal found no infirmity in the CIT(A)'s order, noting that the identity of the share applicants was established and the transactions were genuine.
2. Deletion of addition on account of interest and commission paid on the loan:
The Revenue's grievance related to the deletion of addition made on account of interest and commission paid on the loan. The Tribunal referred to its decision in the assessment year 2005-06, where similar additions were made by the AO on account of unsecured loans taken from the Lunkad Group and interest paid thereon. The CIT(A) had deleted the addition, and the Tribunal upheld this deletion.
3. Deletion of addition u/s 41(1):
The Revenue was aggrieved by the deletion of an addition of Rs. 45,86,946/- u/s 41(1). The AO added the amount stating that balances of these parties were outstanding for more than three years. The CIT(A) deleted the addition, noting that the amounts were paid through account payee cheques in subsequent years. The Tribunal found no reason to interfere with the CIT(A)'s order, as the outstanding amounts were duly paid.
4. Deletion of addition on account of unsecured loan and interest paid thereon:
For the assessment year 2005-06, the Revenue was aggrieved by the deletion of an addition of Rs. 1.10 crores from five parties and interest paid thereon. The CIT(A) deleted the addition, observing that the Lunkad Group had issued confirmatory letters supporting the genuineness of the loans and share application money. The Tribunal, referring to its earlier decision in the case of Mittal Group, restored the matter to the AO for fresh consideration, emphasizing that the addition should be made in the hands of the right person as per the Supreme Court's decision in ITO vs. CH Atchaiah.
Conclusion:
The Tribunal upheld the CIT(A)'s deletion of additions on account of share application money, interest, and commission paid on loans, and u/s 41(1). However, it restored the matter of unsecured loans and interest paid thereon to the AO for fresh consideration, following its earlier decision in the case of Mittal Group. The appeals of the Revenue were allowed in terms indicated.
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2012 (3) TMI 621
Issues Involved:
1. Disallowance of Truck Plying Loss
2. Disallowance of Business Expenses
3. Addition u/s 68 for Gift Received in the Form of RIB Bonds
4. Addition u/s 68 for Credit in the Name of M/s. Ranjeet Securities Limited
Summary:
1. Disallowance of Truck Plying Loss:
The assessee contested the disallowance of Rs. 2,45,191/- on truck plying loss. The Tribunal found that the assessee was engaged in the business of truck plying and had maintained books of account. The major expenditure claimed was depreciation amounting to Rs. 2,60,454/- and truck running expenditure of Rs. 1,06,265/-, while earnings from the truck were Rs. 1,65,575/-. The Assessing Officer had declined to accept the loss due to the absence of books of account. However, it was established that the assessee had maintained books of account. The Tribunal directed the Assessing Officer to restrict disallowance of vehicle running expenses to 1/3rd and to allow the claim of depreciation in full as per law, thereby recomputing the loss from truck plying accordingly.
2. Disallowance of Business Expenses:
The assessee also contested the disallowance of telephone expenses, vehicle running and maintenance expenses, and traveling expenses. The Tribunal noted that the Assessing Officer had disallowed these expenses on the basis that the assessee did not maintain any call register or other mechanisms to control telephone expenses. The Tribunal directed the Assessing Officer to restrict the disallowance of vehicle running expenses to 1/3rd and to allow the claim of depreciation in full as per law.
3. Addition u/s 68 for Gift Received in the Form of RIB Bonds:
The Revenue contested the deletion of an addition of Rs. 13,39,252/- made u/s 68 in respect of a gift received by the assessee in the form of Resurgent India Bonds (RIB) from an NRI. The Assessing Officer had disbelieved the genuineness of the gift transaction, citing lack of relationship and documentary evidence to prove love and affection with the donor. The CIT(A) deleted the addition, establishing the identity, genuineness, and creditworthiness of the donor through various documents, including an affidavit and passport. The Tribunal upheld the CIT(A)'s decision, noting that the findings were not controverted by the Revenue with any positive material on record.
4. Addition u/s 68 for Credit in the Name of M/s. Ranjeet Securities Limited:
The Revenue also contested the deletion of an addition made u/s 68 in respect of the credit shown in the name of M/s. Ranjeet Securities Limited. The Tribunal did not provide specific details on this issue in the summary provided, but it can be inferred that the CIT(A) had directed to delete the addition, and the Tribunal upheld this decision as well.
Conclusion:
The appeal of the Revenue was dismissed, and the appeal of the assessee was allowed in part. The Tribunal directed the Assessing Officer to recompute the loss from truck plying and to restrict the disallowance of vehicle running expenses while allowing the claim of depreciation in full as per law.
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2012 (3) TMI 620
Issues Involved:
The judgment involves issues related to the classification of an entity as a charitable organization under Section 2(15) of the Income Tax Act, 1961, the treatment of income and funds diversion for development purposes, and the application for condonation of delay under Section 119(2) of the Income Tax Act.
Issue 1: Classification as Charitable Organization
The appellant, Doon Valley Special Area Development Authority, was established with the objective of planned development and ecological balance maintenance. It performs functions similar to Municipal Authorities and provides basic amenities without the aim of earning profits. Surplus funds are utilized for development purposes, not distributed to members or employees. The State Government directed a specific percentage of income to be transferred to the Infrastructure Development Fund for area development. The Authority's receipts are authorized by the State Government for specific purposes like map fees, supervision charges, and land conversion charges. The Authority applied for registration under Section 12AA of the Income Tax Act, which was granted by the CIT, Dehradun. An application for condonation of delay was filed with the CBDT, pending adjudication. The ITAT decided in favor of the assessee, restoring the issue to the Assessing Officer for fresh consideration due to the delay application.
Issue 2: Treatment of Income and Funds Diversion
The Authority's income is earmarked for specific development purposes as directed by the State Government. It is obligated to transfer a portion of its income to the Infrastructure Development Fund, with the balance considered as income. Despite funds remaining with the Authority, they are administered following State Government instructions. The receipts, authorized by a Special Act, are utilized for area development and basic facilities, aligning with the Authority's objectives. The Authority's creation for general public utility, a charitable object under Section 2(15) of the Income Tax Act, supports its non-profit nature and utilization of surplus for development purposes.
Issue 3: Application for Condonation of Delay
The Authority filed an application for condonation of delay under Section 119(2) of the Income Tax Act with the CBDT, seeking registration from a back date. The CIT rejected the application due to a lack of empowerment to condone the delay after a specific date. The ITAT, considering the delay application, agreed to restore the issue to the Assessing Officer for fresh examination, emphasizing justice and equity. The appeal of the assessee was allowed for statistical purposes, indicating a procedural victory without altering the substantive tax treatment.
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2012 (3) TMI 619
Disallowance for bad and doubtful debts u/s 36(i)(viia) - Assessee was a scheduled bank in relevent assessment year, before amalgamation - AO concluded that the deduction of 10% of the aggregate average advances made by the rural branches of the bank was not available to the assessee because in the opinion of the AO, the assessee was not a scheduled bank during the year under consideration - CIT(A), allowed the the deduction @ 10% of aggregate average advances made by the rural branches in addition to deduction @ 7.5 % of total income as per provision of Section 36(i)(viia)(a) - HELD THAT:- Following the decision in the case of Catholic Syrian Bank Limited [2012 (2) TMI 262 - SUPREME COURT] order of CIT(A) allowed the deduction sustained.
Disallowance for bad and doubtful debts u/s 36(i)(viia) - written off of irrecoverable debts - Party wise debts not written off - HELD THAT:- Even the Hon'ble Supreme Court in the case of Vijaya Bank, [2010 (4) TMI 46 - SUPREME COURT], observed that, after insertion of Explanation to sec. 36(1)(vii), assessee is required not only to debit the P&L a/c but simultaneously also reduce loans and advances or the debtors from the assets side of the balance sheet to the extent of the corresponding amount so that at the end of the year the amount of loans and advances/debtors is shown as net of provision for impugned bad debt; assessee-bank having, besides debiting the P&L a/c and creating a provision for bad and doubtful debts, simultaneously obliterated the said provision from its accounts by reducing the corresponding amount from loans and advances/debtors on the assets side of the balance sheet, it was entitled to benefit of deduction under s. 36(1)(vii); it was not necessary to close the individual account of each debtor in the books.
In view of the above decision of the Hon'ble Supreme Court, matter restored back.
Disallowance of Expenditure u/s 40(a)(ia) - Assessee has claimed expenses on which TDS was deducted but deposited after filing of return but before due date of filing of ITR u//s 139(1) - HELD THAT:- As a clear finding has been recorded by the ld.CIT(A) to the effect that the assessee has not only deducted tax on audit fee but also deposited the same before due date of filing return u/s 139(1). There is no reason to disallow the claim of deduction in view of the amended provisions of Section 40a(ia), which were amended by the Finance Act, 2008, with retrospective effect from 2005. Accordingly, the AO is directed to allow the same as per the amended provisions of law - Decision in favour of Assessee.
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2012 (3) TMI 618
Issues Involved: Appeal against CIT(A) order deleting addition of non-compete fee u/s 147 for AY 2002-03.
Issue 1: Addition of Non-compete Fee
The assessee, an individual, filed return declaring income of Rs. 3,81,120. Assessment completed u/s 143(3) r.w.s. 147, adding Rs. 6.00 crores as non-compete fee. CIT(A) deleted the addition based on Supreme Court ruling that such compensation is a capital receipt taxable from 01.04.2003. Department argued for setting aside appeal based on similar cases, but Tribunal found no new material submitted to CIT(A) and upheld the decision. Assessee contended that non-compete fee is capital receipt, not taxable as salary, and not covered u/s 28(va) for AY 2002-03. CIT(A) agreed, citing Supreme Court judgment and dismissed Revenue's appeal.
Issue 2: Judicial Interpretation
The CIT(A) relied on the Supreme Court's decision in Guffic Chem Pvt. Ltd. case, distinguishing between revenue and capital receipts for non-compete fees. The Court held that such fees were capital receipts until 01.04.2003, when they became taxable under section 28(va). The Tribunal upheld CIT(A)'s decision, stating that the non-compete fee in question was a capital receipt not taxable as profits in lieu of salary. The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s order.
In conclusion, the Tribunal dismissed the Revenue's appeal against the CIT(A) order deleting the addition of non-compete fee, holding that the fee was a capital receipt not taxable as profits in lieu of salary for the assessment year 2002-03. The decision was based on the Supreme Court's interpretation of such fees as capital receipts until 01.04.2003, when they became taxable under section 28(va).
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2012 (3) TMI 617
Issues involved: Interpretation of deferred income concept in the Income Tax Act, 1961 for assessment year 2006-07.
Summary:
The High Court examined the appellant-Revenue's contention regarding deferred income, stating it is alien to the Income Tax Act, 1961. The case pertained to an order by the Income Tax Appellate Tribunal involving DLF Commercial Developers Ltd. The Tribunal analyzed the membership fees structure of a club, comprising non-refundable upfront payment and periodical monthly payments. It concluded that the upfront payment secured use of facilities for a specified period, requiring the assessee to incur expenses for providing these facilities. The Tribunal's decision was influenced by the High Court's ruling in CIT Vs. Dinesh Kumar Goel (2011) 331 ITR 10, which discussed the concept of income and principles of accountancy in a similar context. Consequently, the Tribunal's application of the law was deemed appropriate, leading to the dismissal of the appeal without costs.
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2012 (3) TMI 616
Issues Involved:
1. Notice to the appellant in penalty proceedings.
2. Mandatory nature of penalty u/s 20 of the RTI Act.
3. Judicial review of penalty imposed by CIC.
Summary:
1. Notice to the appellant in penalty proceedings:
The appellant contended that the learned Single Judge disposed of the writ petition without issuing notice to the appellant, who had sought the information u/s 20 of the RTI Act. The appellant argued that the penalty proceedings are adversarial and the information seeker should be heard. However, the court held that the information seeker has no right of participation in penalty proceedings, which are between the CIC and the erring information officer. The court referenced its judgment in Ankur Mutreja v. Delhi University, stating that the role of the CIC is supervisory and not merely adjudicatory, and the information seeker does not have a locus in penalty proceedings beyond the decision of the complaint/appeal.
2. Mandatory nature of penalty u/s 20 of the RTI Act:
The appellant argued that the use of the word "shall" in Section 20(1) indicates that the imposition of penalty is mandatory. The court, however, noted that the imposition of penalty is dependent on variables such as "without reasonable cause," "malafidely," "knowingly," and "reasonably and diligently." The court held that these expressions are relative and indicative of discretion vested in the authority imposing the punishment. The court cited precedents where similar language was interpreted as not mandating an absolute imperative but allowing for discretion.
3. Judicial review of penalty imposed by CIC:
The court held that the quantum of fine is discretionary and subject to judicial review under Article 226 of the Constitution. The court found that the learned Single Judge had valid reasons for reducing the penalty from Rs. 25,000 to Rs. 2,500, recoverable in ten equal monthly installments. The court upheld the discretion exercised by the Single Judge and dismissed the appeal, finding no merit in the appellant's contentions.
Conclusion:
The court dismissed the appeal, upholding the reduction of the penalty by the learned Single Judge and affirming that the information seeker has no right to participate in penalty proceedings, which are supervisory in nature and not adversarial. The court also clarified that the imposition of penalty u/s 20 of the RTI Act is discretionary and not mandatory.
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2012 (3) TMI 615
"Built up Area" - Deduction u/s 80IB- Assessee is engaged in construction and real estate business. In the year 2002, they constructed some flats, separate sale deeds were executed in respect of the very same purchaser. Admittedly, all these flat totally measured less than 1500 sq. ft. per unit. Assessee claimed 100% benefit of deduction u/s 80IB(10). AO denied the said benefit on the ground that the main flats exceeded the permissible limit of 1500sq. ft. Also, separate sale deeds cannot be executed in respect of the very same purchaser - HELD THAT:- Space occupied by the balcony cannot be taken into consideration as the balcony area was not added to the flats for the purpose of finding out the total built up area prior to 01.04.2005. Similarly, prior to 19.08.2009, there was no prohibition for a person purchasing two flats. AO shall keep in mind the statutory provisions and then pass appropriate orders.
Matter restored back.
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2012 (3) TMI 614
The Delhi High Court, with Justice Rajiv Sahai Endlaw presiding, allowed a writ petition where the Respondents agreed to set aside an order and remit the case back to the Appellate Authority for fresh consideration. Both parties agreed to appear before the Appellate Authority on a specified date.
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9911796707
