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Showing 101 to 120 of 1437 Records
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2015 (3) TMI 1346
Disallowance of deduction available to Co-operative society u/s 80P - assessee collecting deposits from members by way of corpus funds and other deposits - HELD THAT:- As in the case of Jafari Momin Vikash Co-op. Credit Society Ltd [2014 (2) TMI 28 - GUJARAT HIGH COURT] sub-section(4) of section 80P will not apply to an assessee which is not a co-operative bank. In the case clarified by CBDT, Delhi Coop Urban Thrift & Credit Society Ltd. was under consideration. Circular clarified that the said entity not being a co-operative bank, section 80P(4) of the Act would not apply to it. Revenue's contention cannot be entertained that section 80P(4) would exclude not only the co-operative banks other than those fulfilling the description contained therein but also credit societies, which are not co-operative banks. In the present case, respondent assessee is admittedly not a credit co-operative bank but a credit co-operative society. Exclusion clause of sub-section (4) of section 80P, therefore, would not apply. In the result, Tax Appeals are dismissed.
Referring to SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA BAGALKOT [2015 (1) TMI 821 - KARNATAKA HIGH COURT] section 80P (4) was not applicable to cooperative societies and was restricted only to cooperative Banks which had got licence to do banking business from the RBI. As the assessee dealing only with its members, so it is to be considered a cooperative society only and not a bank. Considering the facts and circumstances of the case, we are reversing the order of the FAA. Effective ground of appeal, filed by the assessee, is decided in its favour.
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2015 (3) TMI 1345
Income from other sources - interest earned on Fixed Deposit prior to communication of project - classification of income - interest earned by the assessee from the nationalised banks as concerned with setting up or commencing of the business - HELD THAT:- The assessee deposited money in the bank is itself not sufficient to show that the deposit was made with a view to carrying out the business in the sense of earning profit by investment.
There was neither setting up nor commencement of business during the year under consideration,that non commencement of the project is continuing since 1993,that the money raised in form of OFCE was not raised for any construction of project or purchase of plant and machinery or for obtaining any license or letter of credit etc. but was only done with a specific and limited purpose to reduce resultant tariff of the project,that had nothing to do with the setting up or commencing of the business, that it was a pure and simple case of accruing of interest income from deposit-we are of the opinion that that the assessee earned the interest from the bank deposits and earning of interest was plainly not in the ordinary course of its business and that the interest earned by the assessee was rightly assessed under the head income from other sources.
We find that the FAA has clearly and logically distinguished the cases relied upon by the assessee. On the other hand,cases quoted by him, while upholding the order of the AO, fortify our view. He has also analysed the audited accounts and various agreements entered into by the assessee.In our opinion, his order does not suffer from any legal or factual infirmity. Considering the peculiar facts and circumstances of the case for the year under appeal, we decide effective ground of appeal against the assessee.
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2015 (3) TMI 1344
Transfer of lease in petitioner's favor - mining lease - grant of prior permission for transfer - subsequent action of transfer of shares by the shareholders of Gotan Lime Stone Khanij Udhyog Pvt. Ltd. on 23.7.2012 to Ultra-Tech Cement Limited resulting in the petitioner-Company becoming a wholly owned subsidiary - principles of natural justice.
Held that:- A bare reading of the provisions of Rule 15 reveals that a previous consent of the competent authority is necessary before a mining lease or any right title or interest therein is assigned, sublet, mortgaged or in any other manner transferred. The requirement of prior consent has also been provided even in a case where a lessee enters into or makes any arrangement, contract or understanding, whereby the lessee is or may be directly or indirectly financed to a substantial extent by or under which lessee's operations and undertaking is or may be substantially controlled by any person or body of person other than lessee. Whereafter, the stipulations regarding transfer, fees, 18 premium etc. have been indicated and exception provided regarding mortgage to State institution, Bank or State Corporation. The sub-rule (4) of Rule 15 provides for execution of a transfer lease deed in Form No. 15 within a period of three months of consent or within such period as may be allowed by the competent authority - Rule 72 of the Rules, which has been invoked by the respondents and relied on during the course of submissions provide that any lease, quarry licence, short term permit or any other permit granted otherwise then in accordance with the provisions of the Rules shall be deemed to be null and void.
From perusal of the show cause notice, the response made by the petitioner, the provisions of Rule 15 & 72 and the order dated 16.12.2014 passed by the respondents, it is apparent that the Secretary while passing the order dated 16.12.2014 has not at all dealt with any of the contentions raised by the petitioner in its reply to the show cause notice and after reproducing the contents of the show cause notice and the contentions raised by the petitioner has jumped on to the conclusion that the reply filed by the Company is an afterthought and was not satisfactory. Not a word has been indicated as to why and how the authority reached to the said conclusion.
The recommendation by the Assistant Mining Engineer was made on 2.4.2012 and by then the resolution and the affidavits had already been filed. So far as the making of inspection on 30.3.2012 is concerned, a look at the inspection report (pg. 72) reveals that the same merely indicates the status of the lease deed and leased area and nothing else, so as to vitiate the report if the same was made without affidavit having been filed in support of the application - the plea raised by the respondents seeking to support the order dated 16.12.2014 qua the pre 25.4.2012 events cannot be sustained.
Whether the action of shareholders of the Company in transferring its shares to Ultra Tech Cement Limited and consequently, the Company becoming wholly owned subsidiary of Ultra Tech Cement Limited amounts to violation of Rule 15(1)(b) of the Rules is the issue which requires consideration - Held that:- For alleging violation of provisions of Rule 15(1)(b) of the Rules, the transaction must be such whereby the lessee i.e. the Company will or may be directly or indirectly financed to a substantial extent or the lessee's operations or undertakings will or may be substantially controlled by any person or body of persons other than lessee. The pre-requisite for coming to a conclusion regarding violation of the provisions of Rule 15 would be an arrival to a conclusion that either the lessee company is directly or indirectly financed, or lessee's operations or undertakings are substantially controlled by any person or body of persons other than lessee - Nowhere in the show cause notice, the order dated 16.12.2014 or in reply to the writ petition, there is any allegation whatsoever by the State indicating either financing or any substantial control on the lessee's operations or undertakings by Ultra Tech Cement Limited. Apparently, only based on the assumed implication of the Company becoming wholly owned subsidiary of Ultra Tech Cement Limited that the present action appears to have been taken by the respondents.
Merely on account of the Company becoming a subsidiary of Ultra Tech Cement Limited on account of certain action of the shareholders of the Company, it cannot be said that the Company is being directly or indirectly financed to a substantial extent or the Company's operations or undertakings are substantially controlled by Ultra Tech Cement Limited, regarding which there are absolutely no allegations or material whatsoever. Therefore, on account of the petitioner-Company becoming subsidiary of Ultra Tech Cement Limited, it cannot be said that ipso facto the provisions of Rule 15(1)(b) of the Rules have been violated by the lessee i.e. petitioner-Company.
Thus, it is apparent that the allegations made in the show cause notice, the reason indicated in the order dated 16.12.2014 and the various plea raised by the respondents in the present writ petition seeking to substantiate the order dated 16.12.2014 have absolutely no substance. Neither the events prior to 25.4.2012 nor the events subsequent to 25.4.2012 can be said to be sufficient for taking action under provisions of Rule 72 of the Rules so as to either cancel the order dated 25.4.2012 and/or cancel the mining lease standing in favour of the petitioner-Company.
Petition allowed.
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2015 (3) TMI 1343
Revision u/s 263 - AO has not disallowed provision for gratuity and provision for leave encashment - rectification u/s. 154 - computation of book profit u/s 115JB - HELD THAT:- CIT has reached to a prima facie conclusion that assessment order is erroneous and so also prejudicial to the interest of Revenue for the reason that the AO has not disallowed provision for gratuity amounting to ₹ 25.75 lakhs and provision for leave encashment amounting to ₹ 11,79,202 while framing assessment u/s. 143(3) and thereafter computing book profit u/s 115JB of the Act.
Even now before us, on merits the assessee has nothing to say rather the assessee on merits has conceded this issue that the same is subject-matter of rectification u/s. 154 of the Act. As the issue is covered in the case of South India Steel Rolling Mills (1997 (2) TMI 10 - SUPREME COURT), we confirm the order of CIT revising the assessment. But the assessment cannot be directed to be reframed de-novo and AO will go into the issues raised by CIT in his order i.e. the issue of provision of leave encasement and provision of gratuity. - Decided against assessee.
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2015 (3) TMI 1342
Disallowance of interest expense - HELD THAT:- CIT(A) has held that the issue of interest expenditure is pending before the Hon’ble Special Court. It is the say of the proceedings in which the said issue of interest was issued by the custodian have been already concluded which fact has already been recorded by the Ld. CIT(A) in the impugned order. We, therefore, direct the CIT(A) to consider this fact while deciding the issue afresh. CIT(A) may also direct for the taxing of income in the hands of the recipient (family members) in accordance with the method of accounting followed by them and as per the provisions of the law. Ground No. 4 is treated as allowed for statistical purpose.
Interest u/s. 234A, 234B and 234C - HELD THAT:- The Tribunal has considered this issue at para-6 of its order and restored the matter to the file of the AO to recompute the interest liability as per the provisions of the law. We direct accordingly. Ground No. 6 is treated as allowed for statistical purpose.
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2015 (3) TMI 1341
Penalty u/s 271(1)(c) - assessee on various dates had not attended the assessment proceedings - admission of additional evidence - Held that:- Though it is a fact that assessee was provided a number of opportunities to submit details as mentioned in Ld. CIT(A)’s order yet the fact remains the additional evidence go to the root of the matter, which were not taken into account by CIT(A) especially in view of the fact that A.O. had issued remand report also.
We deem it appropriate to set aside the order of Ld. CIT(A) and remit back the issue to the office of Ld. CIT(A) who should readjudicated on the grievances of the assessee after taking into account the additional evidence and remand report. We also direct the assessee to present itself before Ld. CIT(A) for speedy disposal of its appeal and the opportunity granted to assessee should not be misutilized. - Decided in favour of assessee for statistical purposes.
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2015 (3) TMI 1340
Mining Services - environmental clearance with regard to extraction of minor mineral required - Held that:- In case where quarrying/mining/lease which were existing on the date of issuance of Notification dated 14.09.2006 or on the date of issue of the order dated 18.05.2012 by the Government of India, Ministry of Environment and Forests with regard to area less than 5 hectares no environmental clearance with regard to extraction of minor mineral is required. Notification dated 14.09.2006 contemplated obtaining environmental clearance only with regard to new projects/new activities.
Government Order dated 10.01.2014 cannot be relied on by the parties in view of the restraint order issued by the National Green Tribunal dated 27.09.2013 till such time the restraint order continues.
By amendment of Section 14 by Act 37 of 1986 making Section 4 applicable to minor minerals also the provision contained in Section 4 shall be applicable to mining operations by a person holding mining lease or any other kind of mineral concession. It cannot be accepted that mining operation with effect from 10.02.1987 cannot be continued by a person holding any other mineral concession apart from mining lease.
Judgment of the Apex Court in Deepak Kumar's case [2012 (2) TMI 656 - SUPREME COURT OF INDIA] did not contemplate environmental clearance for an area less than 5 hectares with regard to existing mining lease/mining permits on the date of judgment. Paragraph 29 of the judgment clearly directed that leases of minor minerals including their renewal for an area of less than five hectares be granted by the State/Union Territories only after getting environmental clearance.
Environmental clearance as contemplated by Notification dated 14.09.2006 required environmental clearance for new projects/new activities. The Notification dated 14.09.2006 having been applied vide order dated 18.05.2012 of the Government of India, Ministry of Environment and Forests all mining operations for new project and new activities for an area less than 5 hectares after 18.05.2012 required environmental clearance carried through either a mining lease or mining permit.
Interim order passed by the Apex Court on 27.01.2012 was intended by the Supreme Court to operate till the Rules have been framed by the States taking into consideration the guidelines and recommendations of the Ministry of Environment and Forests.
As per Rule 68 no mining/quarrying operations can be permitted without there being an approved mining plan. But such rule is subject to exception as engrafted in Rule 66, i.e., for existing lease holders, time has been allowed to submit mining plan.
Writ Petitions relating to Group - I, Public Interest Litigations are disposed of in accordance with our conclusions and directions contained in paragraph 82. All the Writ Petitions relating to Group - II, challenging quarrying operations by private individuals are disposed of with a direction to the District Collector to examine the right of quarrying owners/mining permit owners (private respondents) to carry mining operations and to issue necessary clarifications/clearance only after being satisfied that such mining operations are in accordance with the 2015 Rules as well as the observations made by this Court in the present case.
Writ Petitions of Groups - III & IV by quarry owners as well as quarry owners seeking police protection are disposed of giving liberty to the petitioners to approach the District Collector for carrying on mining operations which clearance shall be issued by the District Collector only after being satisfied that they are entitled to carry mining operations as per the 2015 Rules and the observations made by this Court in the present case. W.P(C). No. 7632 of 2014 is dismissed upholding the order of State Government dated 19.2.2014 cancelling the quarry lease. All the three cases of miscellaneous Group are disposed of in the following manner:
W.P is disposed of giving liberty to the petitioner to submit appropriate application before the competent authority seeking permit of ordinary earth as per the 2015 Rules.
Writ Appeal No. 1566 of 2014 is dismissed giving liberty to the appellant to make fresh application before the Panchayat for obtaining licence under the Kerala Panchayat Raj Act after obtaining necessary permit for quarrying operations in accordance with the 2015 Rules.
W.P(C) No. 2636 of 2015 is dismissed having become infructuous due to enforcement of 2015 Rules with effect from 07.02.201(i) Writ Petitions relating to Group - I, Public Interest Litigations are disposed of in accordance with our conclusions and directions contained in paragraph 82.
(ii) All the Writ Petitions relating to Group - II, challenging quarrying operations by private individuals are disposed of with a direction to the District Collector to examine the right of quarrying owners/mining permit owners (private respondents) to carry mining operations and to issue necessary clarifications/clearance only after being satisfied that such mining operations are in accordance with the 2015 Rules as well as the observations made by this Court in the present case.
(iii) Writ Petitions of Groups - III & IV (except WP(C). No. 7632 of 2014), by quarry owners as well as quarry owners seeking police protection are disposed of giving liberty to the petitioners to approach the District Collector for carrying on mining operations which clearance shall be issued by the District Collector only after being satisfied that they are entitled to carry mining operations as per the 2015 Rules and the observations made by this Court in the present case.
(iv) W.P(C). No. 7632 of 2014 is dismissed upholding the order of State Government dated 19.2.2014 cancelling the quarry lease.5.
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2015 (3) TMI 1339
Reopening of assessment - non supplying of reasons to believe to assessee - Held that:- We find that this letter is nothing but a questionnaire served upon the assessee. By any stretch of imagination, a questionnaire cannot replace or supplement the supply of reasons to the assessee which in the light of the judicial decisions discussed hereinabove is sine-qua- non for reassessment - DR could not adduce any evidence which could suggest that the reasons were actually supplied to the assessee. Considering the facts of the case in the light of the judicial decisions referred to hereinabove, we set aside the assessment order for want of jurisdiction and quash the reassessment order for both the years under consideration. - decided in favour of assessee,
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2015 (3) TMI 1338
Bogus share transaction - Unexplained cash credit for Capital Gains - correct head of income - treatment of gain arising on the transaction of sale, purchase of shares - to be assessed under the head income from long term capital gains as per the assessee or income from other sources as determined by the authorities below - Addition on the basis statement of third party and evidence collected by the department - non giving opportunity of being heard as well as cross examining the person concerned - Held that:- As decided in case of Smt. Smita P. Patil & Ors. Vs. ACIT [2013 (7) TMI 950 - ITAT PUNE] the transaction was with regard to purchase of shares of M/s. Fast Track Entertainment Ltd., which in turn were purchased through the share broker M/s. DPS Shares and Securities Ltd. and the Tribunal had accepted the said transaction as genuine.
The transaction of purchase and sale of shares of M/s. Fast Track Entertainment Ltd. was a genuine transaction and the claim of long term capital gain was allowed in the hands of the assessee therein. In the totality of the above we direct the Assessing Officer to compute the income in the hands of the assessee under the head ‘income from long term capital gains’. - Decided in favour of assessee.
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2015 (3) TMI 1337
Payment of tax at compounded rate - section 8(b) of KVAT Act - assessment years from 2008-09 to 2013-14 - whether the petitioners, who are admittedly dealers engaged in the production of granite metal with the aid of mechanized crushing machines, are entitled to claim exemption from separate assessment, in respect of the M-sand produced by them using VSI/HSI machines, that have not been reckoned for the purposes of compounding under Section 8(b) of the K.V.A.T. Act?
Held that:- The provisions of S. 8(b) of the K.V.A.T., as they stood during the relevant period, envisaged a payment of tax at compounded rates, as an alternative to the regular payment of tax under Section 6 of the Act, for dealers producing granite metal using the aid of mechanized crushing machines. The scheme of the compounding provision suggests that dealers could opt to pay a tax, that was computed as the sum total of the amounts chargeable on specified machines that were used by the dealer in the production of granite metal.
It was envisaged that once the dealer paid tax in accordance with the scheme, by paying a tax computed on the basis of the number of specified machines used by him, he would be entitled to an exemption from separate assessment in respect of the M-sand that was produced in the course of production of granite metal.
The legislative scheme envisaged the payment of compounded tax by reckoning only certain specified machines, from among the various machines that were used in the production of granite metal, and the VSI/HSI machine was not one of them - The demands made on the petitioners, in connection with a separate assessment of the M-sand or Manufactured sand obtained through the use of VSI/HSI machines, cannot be legally sustained - The notices and orders, impugned in these Writ Petitions, are consequently quashed.
Petition allowed.
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2015 (3) TMI 1336
Nature of expenditure - disallowance of product development expenditure - revenue or capital expenditure - Held that:- The expenditure under consideration is similar to the expenditure claimed by the assessee in the earlier years and following the same parity of reasoning, we hold that the assessee is entitled to the claim of expenditure on account of product development as revenue expenditure. See MAX INDIA LTD. [2006 (6) TMI 422 - ITAT AMRITSAR]
Claim of the sales tax subsidy - Held that:- As relying on assessee's own case we direct the Assessing Officer to treat the sales tax subsidy as capital receipt in the hands of the assessee.
Allowability of payments made to M/s L&T Infotech Ltd. on account of annual maintenance charges - Held that:- As in assessment year 2003-04, held that the said expenditure was revenue in nature as it cannot be said to have brought in enduring benefit. The expenditure claimed by the assessee, during the year under consideration, was similar to the expenditure claimed in the earlier years and following the same parity of reasoning, we hold that the annual maintenance charges of ₹ 24,37,500/- paid to L&T Infotech Ltd. is to be allowed as a revenue expenditure.
Expenditure incurred on technical know-how i.e. reimbursement of salary, etc. to John Deere India Pvt. Ltd. - The said disallowance was made in the hands of the assessee following the earlier years starting from assessment year 2001-02 - Held that:- From ratio laid down by the Tribunal in assessee’s own case from year to year, we find no merit in the ground of appeal Nos.3 and 4 raised by the Revenue and hold that the expenditure incurred on technical know-how i.e. reimbursement of salary payable to the John Deere India Pvt. Ltd. is an allowable expenditure
Allowability of deferred sales tax equalization liability confirmed.
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2015 (3) TMI 1335
Unexplained credit u/s 68 - CIT-A deleted the addition by admitting additional evidence at appellate stage - Held that:- As far as the issue of admission of additional evidences is concerned before us the assessee has filed only copies of the accounts and copies of the TDS certificate, which cannot be construed as evidences because for proving the loans u/s 68. Assessee is required to file confirmation as well as show credit worthiness of such parties therefore we decline to admit these papers as additional evidence because assessee is in the guise of these copies of accounts asking for more opportunity which is not permissible under the law. Therefore, application for admission of additional evidence is rejected.
In the light of the rejection of application for additional evidence the ground raised by the assessee required to be dismissed because assessee has miserably failed to prove the loans to the extent of ₹ 41,59,000/- because no confirmation or any evidence proving such transaction was furnished before AO or even before CIT(A) or even before us.
CIT(A) has discussed four items of loans in case of G.S.Bricks, New Bharat Shuttering Store, Pyare Lal Rajinder Kumar, Punjab Trading Co. from whom loans of ₹ 2 Lacs, ₹ 2 Lacs, ₹ 3 Lacs, and ₹ 3.50 lacs have respectively been taken. However the relief has been allowed to the extent of ₹ 20 lacs without any discussion in respect of the rest of the items amounting to ₹ 9,50,000/-. In the four cases, in our opinion the CIT has correctly accepted the loans because the amount comes through cheques and confirmation of PAN numbers were furnished.
However, since no discussion has been made in respect of other loans to the extent of ₹ 9,50,000/- therefore we set aside the order of Ld. CIT(A) in respect of the rest of the items amounting to ₹ 9,50,000/- and remit the matter back to his file with a direction to decide the issue after recording findings in respect of such items also - Appeal of the Revenue is partly allowed for statistical purposes.
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2015 (3) TMI 1334
Disallowance paid by the assessee to ITC Health Club and India Habitat Centre Health Club - Allowable business expenditure - Held that:- AR has canvassed that the assessee is a very eminent Doctor and he has taken the membership in order to visit the people who undergo cardio training/exercise at the health clubs and monitor their performance of heart functions in order to ascertain the necessity of cardio exercises for the wellness of heart and also to determine the correlation between the cardio exercise and its effect on the overall health of the people at these health clubs.
There is no documentary or any other evidence in support of such pleadings. Assessee’s plea is completely baseless and not convincing. Therefore, we are unable to agree with this contention of theAR. The membership taken by the assessee is purely for his personal benefit and it has nothing to do with the profession and business of the assessee. - Decided against assessee.
Disallowance of amount actually paid to event management services - amount was paid without deducting the TDS - Held that:- This amount for event management services was paid without deducting TDS. Assessee himself had given in writing that amount be offered for taxes. The assessee’s submission with regard to offering amount to taxes has in a way restricted Assessing Officer to make further inquiry on these expenses. In these factual matrix of this case, we find that the decision of ITAT, Special Bench in the case of Merilyn Shipping and Transporters vs. Addl. CIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] is not applicable to the facts of the assessee’s case. Therefore, we find no merits on this issue in the assessee’s appeal and the same is accordingly rejected.
Disallowance u/s 14A r/w Rule 8D - Held that:- We find that the expenditure related to the earning of exempted income like STT and brokerage were shown in the withdrawals. The assessee is also having personal drawings of ₹ 27,97,024/- for the year under consideration. All these facts show that the assessee is not debiting the expenditure related to the exempted income in its Income& expenditure account and the revenue has failed to pinpoint any specific instance in this regard. Therefore, we allow this ground of assessee’s appeal.
Disallowance u/s 14A r/w Rule 8D - direct and proximate nexus between the exempted income and the expenditure claimed - Held that:- Revenue has failed to pinpoint any expenditure in the Income & expenditure account. Further, the assessee is incurring such expenses from his personal drawings. Accordingly, this ground of assessee’s appeal is allowed.
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2015 (3) TMI 1333
Receipt being rent of "Infrastructure Facilities" installed in the property Let Out - "Business Income" OR "Income from House Property" - whether receipts for providing certain facilities to its tenants can be called to be part of rental income of the assessee - Held that:- As perused the lease deed and infrastructure agreement executed on 1.9.2003 and other relevant documents we find that the assessee has claimed these receipts as income from house property in assessment year 2005-06 and the Assessing Officer has accepted the same.
Once the AO has treated these receipts as income from house property in assessment year 2005-06, we find no justification in treating the same receipts in succeeding year as business income - where the assessee has received certain charges for providing certain facilities along with rental income, the entire receipts shall be income from house property and not business income. We, therefore, find no merit in the order of the CIT(A) confirming the infrastructure receipts as business income of the assessee.
Disallowance of foreign travel expenses incurred towards the visit of the Director, Shri. U.S. Halwasia and his wife to Egypt and U.S.A - Held that:- We find force in the contention of the Revenue that if the assessee has undertaken the foreign travel to explore business opportunities, there must have been some correspondence exchanged between the assessee and its foreign clients/consultant/advisers, but nothing is placed on record. He has also placed reliance upon the aforesaid judgments, but on a careful perusal, we find that in those judgments, it has been held that onus is upon the assessee to prove that foreign visits were undertaken for the business purpose. No doubt, assessee can undertake foreign travel to explore business opportunities, but the onus is entirely upon the assessee to establish, by placing some documentary evidence, that the foreign travel was undertaken for the business purpose. In the absence of any documentary evidence, we are unable to accept the contention of the assessee that the foreign travel was undertaken to explore the business opportunities. We, therefore, find no infirmity in the order of the CIT(A) on this issue and we accordingly confirm the same.
Disallowance of the educational expenses incurred in connection with sponsorship of the educational expenses of Shri. Mukund Halwasiya, Director for his studies abroad for professional course in Accounts and Finance - Held that:- Tribunal in the assessee's own case for assessment year 2005-06 with the submission that the impugned issue was raised before the Tribunal and the Tribunal has decided the issue in favour of the assessee by holding that the expenditure was incurred for business purposes. Copy of the order of the Tribunal is placed on record. Since the impugned issue has already been adjudicated by the Tribunal in assessment year 2005-06 and the claim of expenditure incurred on education of Shri. Mukund Halwasiya was allowed, we find no reason to disallow the claim in the impugned assessment year. We, therefore, following the order of the Tribunal for assessment year 2005-06, allow the claim of the assessee after setting aside the order of the ld. CIT(A) in this regard.
Disallowance of business promotion - held that:- Disallowance was made on ad hoc basis. It has been repeatedly held by various judicial forums that if the Assessing Officer is not satisfied with the maintenance of the books of account, he may dispute the particular entry and make disallowance, but disallowance on ad hoc basis should be avoided. In the instant case, nothing is borne out from the orders of the lower authorities as to whether the AO has raised any query in respect of a particular entry. He has simply made ad hoc disallowance, which is not permissible under the law. We accordingly set aside the order of the ld. CIT(A) and delete the addition in this regard.
Disallowance under section 14A - Held that:- We are of the view that no disallowance under section 14A of the Act can be made on account of this investment made for allotment of shares under section 14A of the Act. Moreover, provisions of sub-section (1) and (2) of section 14A were introduced by the Finance Act, 2006 w.e.f. 1.4.2007 relevant to the assessment year 2007-08. Therefore, these provisions cannot be invoked for making disallowance under section 14A of the Act.
As carefully examined the provisions of rule 8D and we find that this rule was introduced w.e.f. 24.3.2008, and the relevant assessment year would be 2008-09. Therefore, computation of disallowance under rule 8D is not called for in the impugned assessment year i.e. assessment year 2006-07. CIT(A) has not examined the issue of investment in shares and mutual funds at ₹ 19,91,741/-, but in any case for making disallowance, sub-sections (1) & (2) of section 14A cannot be invoked in the impugned assessment year i.e. assessment year 2006-07, as it was introduced w.e.f. 1.4.2007 by the Finance Act, 2006. Therefore, we are of the considered view that no disallowance under section 14A is called for for investment in shares and mutual funds and advances given to M/s G.R. Maintenance & Services Pvt. Ltd. for allotment of shares. We accordingly set aside the order of the CIT(A) in this regard and delete the addition.
Disallowance u/r 8D - Held that:- AO as per rule 8D of the rules and we find that the Assessing Officer has treated the investment out of mixed funds and he has computed the disallowance by applying the formula given in rule sub-rule (2) clause (3) of rule 8D of the rules; whereas no disallowance can be made where it is established that the investment in shares are made out of own funds available with the assessee. In the instant case, it has been established that the investment in shares were made by the assessee out of own funds available with it. Therefore, no disallowance can be made on account of expenditure incurred by way of interest during the previous year. Whatever disallowances are to be made that can only be made as per clause (3) of sub-rule(2) of rule 8D of the rules. We, therefore, set aside the order of the ld. CIT(A) and direct the Assessing Officer to re-compute the disallowance as per clause (3) of sub-rule(2) of rule 8D of the rules.
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2015 (3) TMI 1332
The Supreme Court of India dismissed Civil Appeal No. 8191 of 2003 and granted leave for Civil Appeal No. 3061 of 2015, which stands disposed of according to the signed order.
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2015 (3) TMI 1331
Deduction claimed u/s 10B denied - claim disallowed by the AO by holding that Prajna (India) was formed by a splitting up of the business of M/s. Dynamech - rectification petition - Held that:- As already held that for splitting up to be effective, transfer of assets needs must be there from the old unit, to the new unit, which is entirely absent here. Then, the facts of the present case are not in pari materia with those of ‘Chenab Information Technologies (P) Ltd.’ [2008 (8) TMI 597 - ITAT MUMBAI] in as much as it has been observed therein that the new unit carried on the existing business of the old unit, using the same employees.
Herein, as noted, the employees of M/s. Dynamech have not been proved to have carried on the business of Prajna (India). In ‘Chenab Information Techonologies (P) Ltd.’ (supra), some of the existing staff was found to have been shifted to the new office in the same area taken on lease by making a small investment of about ₹ 2 lakhs in furniture and equipment. These, evidently, are not the facts of the present assessee. In ‘Chenab Information Technologies (P) Ltd.’ (supra) itself, it has been observed that each case has to be evaluated on its own facts to determine whether it is a case of splitting up of existing business or not. In assessee’s case, as discussed, the facts do not lead to a conclusion of Prajana (India) having been formed by a splitting up of the business of M/s. Dynamech.
To sum up, we hold that:
a) The Tribunal rightly recalled its order dated 31.08.2009 in its entirety, for hearing afresh and no prejudice was caused to any interest of the Revenue thereby.
b) The ld. CIT(A) went wrong in holding it to be a case of transfer of capital from the existing business to the new one.
c) The ld. CIT(A) has erred in holding that orders for manufacture were shifted from the existing business to the new one.
d) The ld. CIT(A) has fallen into error in holding that there was a unity of control in the two businesses.
e) The ld. CIT(A) has wrongly held that there was a shifting of staff from the existing unit to the one newly set up.
f) The ld. CIT(A) has erroneously held that tax evasion was the sole reason for setting up the new unit.
f) The ld. CIT(A) has, on the basis of the above misplaced findings, incorrectly held it to be a case of splitting up of existing business.
Thus we hold that the ld. CIT(A) has misdirected himself in sustaining the disallowance of deduction claimed by the assessee u/s 10B of the Act. - Decided in favour of assessee.
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2015 (3) TMI 1330
Exemption u/s 80P denied - income byway of interest generated on the deposits made in National Saving Certificates and Kisan Vikas Patras cannot be treated as income forming part of the banking business and as such the same is not exempted under Section 80P( 2)(a)(i) - Held that:- The Division Bench of this Court in the case of CIT vs. Ratnagiri Dist. Central Cooperative Bank Ltd. [2001 (9) TMI 60 - BOMBAY HIGH COURT] considered income by way of interest derived by assessee formed part of banking business and therefore entitled for exemption under Section 80P(2)(a)(i).
The Judgment of the Apex Court in a case of Madhya Pradesh Cooperative Bank Ltd. vs. Additional C.I.T., referred [1996 (1) TMI 8 - SUPREME COURT] relied on by the Appellant has been overruled in the subsequent Judgment in the case of Commissioner of Income Tax vs. Karnataka State Cooperative Apex Bank [2001 (8) TMI 9 - SUPREME COURT]. In the said case, the Apex Court came to the conclusion that interest income arising from investment made out of reserve fund is exempted under Section 80P( 2) (a)(i) of the Income Tax Act. Tribunal has rightly considered that the said deposit is concerned with the banking business and as such the assessee is entitled for exemption under Section 80P(2)(a)(i) - Decided against revenue.
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2015 (3) TMI 1329
Revision u/s 263 - reassessment passed under Section 148 - Change of registered office - sufficient cause from attending the hearing - Held that:- The petitioner company changed its registered office upon due intimation to the assessing officer and by filing the relevant Form 18 under the Companies Act, 1956, but the notice issued by the Commissioner was at the old address.
Since it is evident that the petitioning assessee was prevented by sufficient cause from attending the hearing or otherwise participating in the proceedings under Section 263 of the Act, it is desirable that the order impugned dated March 21, 2014, which the petitioners have received on February 6, 2015, be set aside with a direction on the relevant Commissioner to issue a notice to the petitioners at the petitioner company’s present address at Room No.865, 8th Floor, 33/1, Netaji Subhas Road, Kolkata-700001.
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2015 (3) TMI 1328
The High Court of Bombay admitted the appeal on substantial questions of law raised in clauses (a) to (e) of paragraph 4. The citation is 2015 (3) TMI 1328 - BOMBAY HIGH COURT. B.R. GAVAI & A.S. GADKARI, JJ. presided over the case. Mr. Pradeep S. Jetly represented the Appellant, while Mr. V. Sridharan and Mr. Prakash Shah represented the Respondent.
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2015 (3) TMI 1327
Application for transfer of appeals on the file of the learned IInd Additional Judge, City Civil Court, Chennai - Jurisdiction - powers and rights of Sessions Judge - power of the Sessions Judge to recall or make over cases to other Additional Judges - Protection of Women from Domestic Violence Act, 2005 - Whether the words, "Criminal Court" referred in Section 408(1) Cr.P.C., means a lower or subordinate Court to a Sessions Judge? - Whether the words "Criminal Court" in Section 408(1) Cr.P.C., includes the Court of Additional Sessions Judge, also?
Held that:- Under the Constitutional Scheme, I am empowered to decide, a question of law, independently of what the other High Courts, have decided and for that matter, the decisions of the other High Courts, may have a persuasive value and they do not a binding precedent. It is true that there must be certain degree of certainty in the law, to be interpreted and applied to all the persons, to which, the Constitution of India, extends, but that principle, does not mean that a High Court is bound by the decision of another High Court, whether it is of the same strength or of a higher composition.
No doubt, Judicial Precedents, across the country should maintain uniformity, and that there should be harmony in deciding a point of law, to be followed, but that does not mean that a High Court cannot decide a question of law, on its own, but have to simply follow the decision, decided by another High Court. In a given case, when a Central law is interpreted, every High Court is empowered to independently consider, the question of law, dehors the decisions of other High Court.
Power is conferred on the Sessions Judge in Sub-Section (1) of Section 408 Cr.P.C., to transfer a case from one Criminal Court to another Criminal Court, in the same Sessions Division and such power can be exercised, only for the reasons, stated in sub-Section (2) of Section 408. If the Sessions Judge, deems it expedient for the ends of Justice, to transfer any particular case, from one Criminal Court to another Criminal Court, in his Sessions Division, either on the report of the lower Court or on the application of the party interested or on his own initiative and if the words, "criminal Court" have to be meant to be inclusive of an Additional Sessions Court also, then the Section 408, has to be read, as conferring powers on the Sessions Judge, to withdraw any case, even after the commencement of the trial of a case - As per Section (2) of Section 409, a Sessions Judge may withdraw, trial of a case or hearing of an appeal, from the file of the Additional Sessions Judge, only before the commencement of the trial of a case or hearing of an appeal. Now it is the case of the petitioners that the Sessions Judge, in exercise of the his powers, under Section 408 Cr.P.C., can transfer a case or an appeal, even after the commencement of trial or hearing of an appeal, on the application of a party interested, if it is expedient for the ends of justice. If the principle, what cannot be done directly by the Sessions Judge, in exercise of his administrative powers, under Section 409(2) Cr.P.C., cannot also be done indirectly by the Sessions Judge, under Section 408 Cr.P.C., is applied, then the Sessions Judge, cannot transfer the trial of a case or hearing of an appeal, from one Additional Sessions Judge, to another, within his Sessions Division.
In Section 408 Cr.P.C., the Legislature has used the words, "any particular case", from one Criminal Court to another Criminal Court, in his Sessions Division and whereas, in Section 409 Cr.P.C., when the Sessions Judge, exercises the administrative power, the words, "any case or appeal", are employed. Thus, there is an inbuilt restraint in Section 409(2) Cr.P.C., in exercise of the power conferred on the Sessions Judge and he cannot recall or withdraw any case or appeal, after the commencement of the trial or hearing of an appeal, pending before the Additional Sessions Judge and that is why, the Legislature is cautious in stating that such power can be exercised, at any time, before the trial of the case or hearing of the appeal - The expression "any particular case" used in Section 408(1) Cr.P.C., should be given its natural meaning and effect.
The words "criminal Court" in Sub-Section (1) of Section 408 Cr.P.C., must be read in the context in which it is explained in sub-Section (2) of the same Section, i.e., lower Court and in such circumstances, it can comprehend that, that the words, Criminal Court, refers only to a lower Court and not to a Court of equal jurisdiction. Though the words "Criminal Court" at the first blush, may appear to mean all the criminal Courts, within the Sessions Division of a Sessions Judge, but a close scrutiny of sub-Section (2) of Section 408 Cr.P.C., would make it clear that there is no obscurity and vagueness.
In the light of the law declared by the Apex Court, on the interpretation of statutes or the Section, this Court is of the humble opinion that a Section or any part in the section, has to be read, as a whole and each word, as a whole, used in Section has to be given its meaning to the context, in which, it is used. Each word employed in the legislation has to be given the plain, literal and grammatical meaning and Courts are not empowered to delete or substitute the same, by way of interpretative process. Therefore, it is not open to the petitioners to contend that the opening sentence of sub-Section (2) of Section 408 Cr.P.C., ie., on the report of the lower Court or in particular, the use of the words, "lower Court", is illogical to the context, in which, sub-Section (1) to Section 408 Cr.P.C., is enacted by the Legislature, in the matter of transfer of a case, i.e., from a Criminal Court to another Criminal Court.
By legal fiction, the Sessions Court can, at best, (1) transfer any particular case from a Criminal Court, subordinate to its authority, to an equal, subordinate Court or (2) if such case, is pending on the lower Court, to any superior Court, and (3) not a case pending in the Court, exercising equal jurisdiction. - Powers conferred on the High Court, under Section 407 Cr.P.C., cannot be imported to Section 408 Cr.P.C., not conferred on the Sessions Judge, by High Court. By legislative process, the Sessions Court can only stay the proceedings in the subordinate Court.
The transfer applications filed by the revision petitioners, to transfer Appeal Nos. 142, 144, 176 and 177 of 2014, on the file of the learned IInd Additional City Civil Court, Chennai, are not maintainable in law - There is no manifest illegality in the impugned orders, warranting intervention.
Revision Cases are dismissed.
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