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2013 (6) TMI 842
Issues involved:
The judgment involves challenges by the Revenue against orders of the ld. CIT(A) regarding the deletion of additions made on account of disallowance of amount debited in grant and aid account and deduction claimed on account of salary for the assessment year 2003-04.
Issue 1 - Deletion of addition on grant and aid account:
In ITA No. 05/Agra/2013, the Revenue contested the deletion of an addition of Rs. 18,17,550/- due to disallowance of amount debited in grant and aid account. The AO denied exemption claimed u/s. 10(23C) and treated the assessee as AOP for taxation purposes. The ld. CIT(A) confirmed this decision. The assessee, running a school, claimed deduction for salary not charged to the income and expenditure account, which was partly reimbursed by the Government of M.P. The Government later informed that the amount would not be reimbursed. The ld. CIT(A) found the claim of the assessee to be correct, considering the salary as revenue expenditure incurred for the purpose of earning income. The Tribunal upheld the decision, stating that the deduction should be allowed if expenditures are incurred wholly and exclusively for the purpose of business or profession.
Issue 2 - Deletion of addition in proceedings u/s. 154:
In ITA No. 04/Agra/2013, the Revenue challenged the deletion of the same addition in proceedings u/s. 154 of the IT Act. The ld. CIT(A) allowed the deduction under u/s. 154, similar to the main appeal against the assessment framed u/s. 143(3). The Tribunal dismissed the departmental appeal on the same issue, stating that a similar appeal arising out of a rectification order u/s. 154 would not be maintainable.
In conclusion, both appeals by the Revenue were dismissed, affirming the decisions of the ld. CIT(A) regarding the deletion of additions on grant and aid account and salary deduction for the assessment year 2003-04.
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2013 (6) TMI 841
The High Court of Gauhati heard a case regarding debit notes issued by respondents without notice. Petitioners can respond to the notices within 30 days, and if objections are submitted, Coal India Ltd. will consider them within two months. Debit notes are suspended until then. The writ petition is disposed of with these directions.
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2013 (6) TMI 840
The Delhi High Court in the case of Manmohan Singh granted the petitioner time to file a reply to the show cause notice by June 11, 2013. The final decision by the Officer concerned was to be passed on June 26, 2013. The petition was disposed of based on the agreed terms.
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2013 (6) TMI 839
Issues Involved:
1. Illegal removal of the petitioner from directorship.
2. Illegal appointment of R-2 and R-3 as directors.
3. Alleged siphoning of funds by the respondents.
4. Discrepancies in the change of registered office.
5. Maintainability of the company petition.
Summary:
1. Illegal Removal of the Petitioner from Directorship:
The petitioner claimed she was illegally removed from her directorship without proper reasons, violating natural justice principles. She did not attend the EGM due to a threat to her life. The court found her removal improper as no Board meeting was held to approve the EGM notice, and she did not receive any notice for such a meeting. The court held that the removal was an oppressive act to gain illegal control of the company, setting aside her removal and restoring status quo ante.
2. Illegal Appointment of R-2 and R-3 as Directors:
The petitioner argued that R-2 and R-3 were appointed as directors without necessity and due procedure, as the company had no business activity. The court found the appointments were made to gain control of a defunct company, amounting to oppression. The appointments were canceled, restoring status quo ante.
3. Alleged Siphoning of Funds by the Respondents:
The petitioner alleged that the respondents siphoned off Rs. 25.57 lakh from the company. The respondents contended the payments were made to creditors in the due course of business. The court noted that the company had no activity since 2007, making the petitioner's claim tenable. The newly constituted Board was directed to appoint a chartered accountant to ascertain the siphoned amounts and recover them.
4. Discrepancies in the Change of Registered Office:
The petitioner contended that the registered office was shifted without proper notice and quorum. The respondents argued that the petitioner had admitted the new address in her petition. The court found discrepancies in the change of the registered office but left the issue to be sorted out by the newly constituted Board.
5. Maintainability of the Company Petition:
The respondents argued that the petition was not maintainable as no case for winding up was pleaded. The court held that the justification for winding up on just and equitable grounds could only be considered after examining the merits. The court found that the petitioner made a case for winding up but decided that winding up would be unfairly prejudicial to the petitioner.
Conclusion:
The court disposed of Company Petition No. 80 of 2011, setting aside the petitioner's removal from directorship, canceling the appointments of R-2 and R-3, and directing the newly constituted Board to address the siphoning of funds and discrepancies in the registered office change. All interim orders were vacated, and no order as to costs was made.
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2013 (6) TMI 838
Application u/s 9 of the Arbitration and Conciliation Act, 1996, - An objection was raised on behalf of the Appellant on the ground that the Memorandum of Understanding (MOU) was insufficiently stamped and that in consequence, the document could not be acted upon unless the stamp duty and penalty, if any, payable thereon was adjudicated upon - HELD THAT:- The document came before the Court in the course of the proceedings under Section 9. A consideration of the issue could not have been deferred to the arbitration proceedings having regard to the provisions of Section 33(1) of the Bombay Stamp Act, 1958. Article 5(ga) of the Schedule relates to the stamp duty payable on an agreement or MOU where it relates to giving authority or power to a promoter or a developer by whatever name called for construction on, development of or sale or transfer of any immovable property. Prima facie, the document would require stamping and has been insufficiently stamped having regard to the provisions of Article 5(ga) of the Schedule to the Bombay Stamp Act, 1958.
In the circumstances, Court pass the following order :
(i) The MOU is impounded. An authenticated copy of the MOU shall be forwarded by the Prothonotary and Senior Master to the Collector of Stamps, Mumbai Suburban District, for adjudication of the stamp duty and penalty, if any, payable on the document under the provisions of the Bombay Stamp Act, 1958;
(ii) The Collector of Stamps, Mumbai Suburban District shall expedite the determination in terms of clause (i) above and complete the exercise within a period of four weeks of the receipt of a duly authenticated copy of the document together with an authenticated copy of this order from the Prothonotary & Senior Master;
(iii) Pending further orders shall remain stayed;
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2013 (6) TMI 837
Issues involved: Settlement offer withdrawal, payment made, stay on winding up order, time granted for reply filing.
The Supreme Court heard the counsel for both parties and allowed applications for permission and exemption, issuing a notice since the respondent's counsel appeared without the need for formal notice. It was noted that a settlement offer of &8377; 7,52,66,667/- made by the respondent during the winding up petition was no longer available. However, the petitioner's senior counsel handed over two demand drafts totaling &8377; 7,60,00,000/- to the respondent's counsel in court, with the condition that the respondent would accept the amount without prejudice to its rights. Consequently, the order directing the Official Liquidator to take charge of the petitioner Company and the publication of the winding up order were stayed due to the payment made. The respondent was granted six weeks to file a reply, with further proceedings listed thereafter.
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2013 (6) TMI 836
Issues Involved:
1. Jurisdiction of Debt Recovery Tribunal (DRT) to sell assets of a company under liquidation.
2. Validity of the sale of assets of the company (in liquidation) by the Recovery Officer and the issuance of the sale certificate.
Issue 1: Jurisdiction of Debt Recovery Tribunal (DRT) to sell assets of a company under liquidation
The DRT Act provides for the establishment of Tribunals and Appellate Tribunals for the expeditious adjudication of disputes raised by Banks and Financial Institutions for recovering their dues. Section 17 confers exclusive jurisdiction on the Tribunal to entertain, adjudicate, and decide applications filed by banks and financial institutions. Section 18 creates a bar on any other Court or authority from exercising jurisdiction in relation to the matters specified in Section 17, except for the Supreme Court and High Courts under Articles 226 and 227 of the Constitution. Section 19(19) provides for the distribution of sale proceeds among secured creditors in accordance with Section 529A of the Companies Act, 1956. Section 34 of the DRT Act overrides other laws to the extent of inconsistency.
The Tribunal is vested with exclusive jurisdiction for adjudication and execution in relation to disputes relating to the recovery of debts due to banks and financial institutions, and no other Court or authority, including the Civil Court and Company Court, will have jurisdiction.
Issue 2: Validity of the sale of assets of the company (in liquidation) by the Recovery Officer and the issuance of the sale certificate
The application of Section 537(1) of the Companies Act, 1956, which voids any attachment, distress, execution, or sale held without the leave of the Company Court after the commencement of winding up, was considered. The winding up of a company is deemed to commence at the time of the presentation of the petition for winding up under Section 441(2) of the Companies Act. Hence, any sale conducted without the association of the Official Liquidator (OL) would be void.
In this case, the winding up petition was filed on 19.06.1999, admitted on 30.03.2000, and advertised on 23.02.2001. The DRT allowed the application on 26.06.2000, and the Recovery Officer ordered the attachment of the property on 27.06.2005, auctioned it on 05.10.2005, confirmed the sale on 16.11.2005, and issued the sale certificate on 02.02.2006. Since the winding up petition had already been admitted and advertised, the secured creditor cannot claim lack of knowledge of the winding up proceedings.
Conclusion:
1. The DRT is empowered to sell the assets of a company under liquidation at the instance of a secured creditor without the leave of the Company Court but must associate the Official Liquidator as he is deemed to have a pari-passu charge over the assets under Section 529A of the Companies Act, 1956.
2. The sale of the assets of the company (in liquidation) made by the Recovery Officer of the DRT and the issuance of the sale certificate in favor of the second respondent is liable to be set aside.
Order:
1. The application is allowed.
2. The auction conducted on 05.10.2005, the sale confirmation on 16.11.2005, and the sale certificate issued on 02.02.2006 are set aside.
3. Respondents are directed to hand over possession of the property to the Official Liquidator within four weeks.
4. The DRT shall intimate the Sub-Registrar to make necessary entries regarding the cancellation of the sale.
5. The DRT is at liberty to sell the property only after associating the Official Liquidator.
6. The amount paid by the second respondent shall be refunded by the first respondent.
7. The second respondent is at liberty to participate in the new auction.
8. No order as to costs.
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2013 (6) TMI 835
Issues involved: Appeal against CIT order u/s 143(3) for A.Y. 2008-09 regarding deduction u/s 54EC.
Summary:
The appeal was filed by the Assessee against the CIT order for A.Y. 2008-09, challenging the CIT's decision to hold the AO's order u/s 143(3) as erroneous and prejudicial to revenue interests. The main contention was regarding the restriction of exemption u/s 54EC to &8377; 50,00,000 instead of &8377; 90,00,000 allowed by the AO. The Assessee argued that the CIT did not have the authority to revise the order u/s 143(3) while the first appeal was pending before the CIT(Appeals) who could enhance the assessment if necessary.
The case involved the sale of Capital assets resulting in Capital Gains, with investments made in eligible bonds u/s 54EC in two different financial years. The AO allowed a total deduction of &8377; 90 lacs u/s 54EC, which the CIT deemed as an excess claim of &8377; 40 lacs. The dispute centered around the interpretation of the proviso of section 54EC, specifically the ceiling of &8377; 50 lacs per person per financial year for investments in eligible bonds.
The Appellate Tribunal considered the arguments presented by both parties. It noted that the Assessee had invested &8377; 50 lacs in one financial year and &8377; 40 lacs in another, totaling &8377; 90 lacs, which was allowed by the AO. Referring to a previous decision, the Tribunal held that it was permissible to grant deduction for amounts invested in two financial years as long as the investment in one year did not exceed &8377; 50 lacs. Therefore, the Tribunal concluded that the AO had taken a permissible view, and the CIT's action was not justified.
Ultimately, the appeal of the Assessee was allowed, and the Tribunal pronounced the order in favor of the Assessee on 28/6/2013.
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2013 (6) TMI 834
Revision by Commissioner u/s 263 - Assessing officer to record the reasons for decisions - Deduction of interest expenses u/s 36(1)(iii) - For the earlier period, Assessee filed an appeal against the order of the Administrative Commissioner of redoing the assessment for the assessment year 2007-08. He referred his own case for the assessment year 2008-09, where the Tribunal had an occasion to examine the issue and found that a similar interest paid was allowable u/s 36(1), thus the order of the assessing officer should not be erroneous. - HELD THAT:- The assessment order does not contain any reasoning. It is well settled principles of law that administrative orders shall speak for themselves.
Each assessment year is separate and independent. Therefore, merely because this Tribunal allowed the claim of the assessee for the assessment year 2008-09 it does not mean that the assessing officer need not pass a speaking order.
In view of the Decisions in COMMISSIONER OF INCOME-TAX VERSUS SUNIL KUMAR GOEL. [2005 (1) TMI 34 - PUNJAB AND HARYANA HIGH COURT] and M/S FATEH CHAND CHARITABLE TRUST VERSUS COMMISSIONER OF INCOME TAX AND ANOTHER [2013 (6) TMI 67 - ALLAHABAD HIGH COURT] and Apex Court, it is obligatory on the part of the assessing officer to record reasons in the assessment order. Recording of reason would not only enable the revisional / appellate authorities to discharge their function effectively but also repose confidence in the system.
The appeal of Assessee thus was rejected.
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2013 (6) TMI 833
Issues involved: Challenge to the order of the CIT u/s. 263 of the Act for Assessment year 2004-05 regarding depreciation on intangible assets acquired prior to 1.4.1998.
The Appellate Tribunal ITAT MUMBAI, in the case where the assessee challenged the order of the CIT u/s. 263 of the Act, held that the CIT rightly invoked jurisdiction u/s. 263 as the AO did not question the claim of depreciation on property time sharing unit, which was considered erroneous and prejudicial to the interest of the Revenue. The Tribunal modified the CIT's direction, instructing the AO to verify if the property time sharing unit falls under the category of intangible assets, providing a reasonable opportunity for the assessee to be heard. The appeal filed by the assessee was dismissed.
During the assessment proceedings, the AO issued relevant questions regarding the depreciation claimed on land and lease assets. The assessee's responses indicated that depreciation was not claimed on land and that the company was entitled to depreciation on leased assets as per Section 32 of the I.T. Act, 1961, supported by a decision of the Apex Court. The Tribunal noted that the AO did not question the claim of depreciation on the property time sharing unit, leading to the conclusion that the CIT rightly invoked jurisdiction u/s. 263.
The CIT, in invoking jurisdiction u/s. 263, found that the Assessing Officer did not apply his mind regarding the allowance of depreciation on intangible assets acquired prior to 1.4.1998, resulting in excessive depreciation being allowed. The fixed assets schedule showed depreciation claimed on intangible assets, leading to the decision that the AO's order was erroneous and prejudicial to the Revenue's interest.
The Tribunal upheld the CIT's decision to invoke jurisdiction u/s. 263, emphasizing that the AO's failure to question the depreciation claim on the property time sharing unit was a valid reason for the CIT's action. The Tribunal modified the CIT's direction, instructing the AO to verify the categorization of the property time sharing unit as an intangible asset after providing a hearing opportunity to the assessee.
In conclusion, the Appellate Tribunal ITAT MUMBAI affirmed the correctness of the CIT's order u/s. 263, highlighting the importance of verifying the classification of the property time sharing unit as an intangible asset, and dismissed the appeal filed by the assessee.
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2013 (6) TMI 832
Issues Involved: Appeal against deletion of penalty u/s 271(1)(c) for inaccurate particulars of income.
Summary:
1. The Revenue appealed against the deletion of penalty u/s 271(1)(c) by the Commissioner of Income Tax (Appeals) for the assessment year 2000-01.
2. The assessment was reopened under section 147 disallowing set off of carry forward losses relating to an amalgamating company.
3. The Assessing Officer issued a notice under section 271(1)(c) for furnishing inaccurate particulars of income, which led to the penalty.
4. The Commissioner of Income Tax (Appeals) deleted the penalty based on legal precedents, including the decision of the Hon'ble Supreme Court in CIT Vs. Reliance Petroproducts Pvt. Ltd.
5. The Departmental Representative supported the penalty, while the counsel for the assessee argued against it, citing the admission of the appeal by the High Court.
6. The Tribunal held that the penalty was not justified as the High Court admitted the appeal involving a substantial question of law, and also based on the Supreme Court's ruling that a claim not sustainable in law does not amount to furnishing inaccurate particulars of income.
7. Consequently, the penalty u/s 271(1)(c) was deleted, and the appeal of the Revenue was dismissed.
Judgment by Challa Nagendra Prasad, JM:
- The appeal was filed by the Revenue against the deletion of penalty u/s 271(1)(c) for inaccurate particulars of income for the assessment year 2000-01.
- The Tribunal considered the reassessment disallowing the claim for carry forward and set off of business and depreciation losses, leading to the penalty under section 271(1)(c).
- The Commissioner of Income Tax (Appeals) relied on legal precedents, including the decision of the Hon'ble Supreme Court, to delete the penalty, emphasizing that mere disallowance of a claim does not automatically warrant a penalty.
- The Tribunal noted the admission of the appeal by the High Court, indicating a substantial question of law, and followed the Mumbai Bench's decision to hold that the penalty was not exigible.
- Based on the Supreme Court's ruling that a claim not sustainable in law does not amount to inaccurate particulars of income, the penalty was deleted, and the Revenue's appeal was dismissed.
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2013 (6) TMI 831
Issues involved: Interpretation of Section 263 of the Income-tax Act, 1961 regarding deferred expenditure quantification and assessment process.
Judgment Summary:
Issue 1: Assessment under Section 263 for the year 2006-07
The Commissioner of Income-tax invoked Section 263 of the Income-tax Act, 1961, finding the quantification of deferred expenditure by the assessee to be non-uniform. The Commissioner set aside the assessment, directing the Assessing Officer to reevaluate the deferred expenditure calculation and any deviations from previous practices. The Tribunal upheld the Commissioner's order, emphasizing the need for the Assessing Officer to provide reasons for allowing or disallowing the deferred expenditure claim. As the assessment order lacked reasoning, the Tribunal found no fault with the Administrative Commissioner's decision. The Tribunal did not address the specific issue of deferred expenditure quantification, leading to the dismissal of the appeal.
Issue 2: Subsequent assessment orders and pending appeal
Following the Administrative Commissioner's order, the Assessing Officer issued revised assessment orders, which are now under appeal before the Tribunal. The current appeal does not hinder the Tribunal from thoroughly reviewing the pending appeal on all grounds available to the appellant/assessee. Consequently, the present appeal is dismissed summarily.
This judgment highlights the importance of providing detailed reasoning in assessment orders, especially concerning complex issues like deferred expenditure, to ensure a fair and transparent assessment process in accordance with the Income-tax Act, 1961.
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2013 (6) TMI 830
Issues involved:
1. Whether scrap generated in the manufacture of finished products having negligible value are to be treated as excisable goods or not?
2. Applicability of the proviso to Section 3 of the Central Excise Act for clearances under dispute.
3. Applicability of the extended period of limitation under Section 11A to a 100% EOU and whether the demand is barred by limitation.
Summary:
The assessee, a 100% EOU manufacturing cable/cord for telephone instruments, generated scrap during the manufacturing process. The scrap, varying in size, was packed accordingly and sent to markets with proper invoices as it could not be sold to OEMs. Allegations were made that the assessee collected payments exceeding invoice value, leading to an assessment resulting in the levy of duty and penalty under Section 11AC of the Central Excise Act, 1944. The assessee appealed before the CESTAT, while the Revenue also filed an appeal against the relief granted under Section 4(4)(d)(ii) of the Central Excise Act.
Upon reviewing relevant invoices, the Tribunal observed that the assessee had paid duty on the value declared in the invoices and had collected additional amounts from buyers, paying duty on the excess collected. The Tribunal accepted the assessee's calculation of duty payable under Section 4(4)(d)(ii) of the Central Excise Act, directing the Commissioner to correct the error in demanding a higher duty amount. Regarding penalties, the Tribunal differentiated between penalties under Section 11AC of the Central Excise Act and Rule 173Q of the Central Excise Rules, remanding the matter for re-quantification of duty demand and a fresh decision on penalty liability.
Following a remand order by the Tribunal, a fresh order was passed by the Commissioner, leading to another appeal before the CESTAT. The High Court, considering these developments, found no grounds for interference with the Tribunal's order, resulting in the dismissal of the Civil Miscellaneous Appeal without costs.
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2013 (6) TMI 829
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Depreciation u/s 32(1)(i) & 32(1)(ii) - Disallowances u/s 40(a)(ia) - Revene filed an appeal against the order of Ld. CIT(A) for deleting three disallowances regarding computer software, peripherals to computers and non-verifiability of various expenses incurred by assessee. - HELD THAT: - Assessing officer did not bring on record any material to justify the disallowance of various expenses incurred. Also, relying on Delhi High Court judgement disallowances of depreciation was deleted by Ld. CIT(A). Thus, there is no infirmity in the orders of Ld. CIT(A).
Departmental appeal dismissed
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2013 (6) TMI 828
Issues Involved:
1. Whether the assessee-trust is eligible for exemption u/s 11 of the Income Tax Act, 1961.
2. Whether the activities of the trust fall under the category of 'general public utility' as defined in section 2(15) of the Act.
3. Whether the trust has violated the provisions of section 13 of the Income Tax Act, 1961.
4. Whether expenses incurred on the renovation and maintenance of Nagaur Fort and Ranvas Hotel are application of income for the purposes of section 11 of the Act.
5. Whether the foreign contributions received by the trust are taxable.
6. Whether the trust can set off brought forward deficit from past years against the surplus of the current year.
Summary:
Issue 1: Exemption u/s 11
The assessee-trust is a charitable trust registered u/s 12AA of the IT Act, 1961, and has been consistently pursuing its charitable activities. The AO and CIT(A) denied exemption u/s 11, holding that the trust's activities fall under the fourth limb of section 2(15) and involve commercial activities. However, the Tribunal found that the trust's primary objective is the preservation of monuments, which falls under the main limb of section 2(15) and does not involve commercial activities. Therefore, the trust is eligible for exemption u/s 11.
Issue 2: General Public Utility
The AO categorized the trust under 'general public utility' and denied exemption based on commercial activities like film shooting and hosting dinners. The Tribunal held that these activities are incidental to the main objective of preserving monuments and do not constitute business activities. Hence, the trust's activities do not fall under the proviso to section 2(15).
Issue 3: Violation of Section 13
The AO alleged that the trust violated section 13 by benefiting the settlor and managing trustee. The Tribunal found that the expenses incurred on the renovation and maintenance of Nagaur Fort and Ranvas Hotel were in furtherance of the trust's objectives and did not benefit any specified person. Therefore, there was no violation of section 13.
Issue 4: Expenses on Nagaur Fort and Ranvas Hotel
The AO disallowed expenses incurred on Nagaur Fort and Ranvas Hotel, claiming they were beyond the trust's objectives. The Tribunal held that these expenses were in line with the trust's objective of preserving monuments and were application of income for charitable purposes. Hence, the expenses are allowable u/s 11.
Issue 5: Foreign Contributions
The AO taxed foreign contributions received by the trust, treating them as voluntary contributions. The Tribunal found that these contributions were corpus donations with specific directions for usage and are not taxable u/s 11(1)(d). Even if considered voluntary contributions, they are not income due to specific stipulations on their usage.
Issue 6: Set-off of Brought Forward Deficit
This issue was not pressed by the assessee and hence stands dismissed.
Conclusion:
The Tribunal allowed the appeal of the assessee-trust, holding that it is eligible for exemption u/s 11, its activities do not fall under the proviso to section 2(15), there was no violation of section 13, expenses on Nagaur Fort and Ranvas Hotel are allowable, and foreign contributions are not taxable. The appeal is partly allowed.
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2013 (6) TMI 827
Issues Involved:
1. Addition of Rs. 1,08,79,000/- on account of sale consideration of properties.
2. Addition of Rs. 52,54,314/- on account of unaccounted/differences in inventory.
3. Disallowance of Rs. 15,84,783/- on account of interest expenses.
Summary:
Issue 1: Addition of Rs. 1,08,79,000/- on account of sale consideration of properties
The Assessing Officer (AO) observed that the sale consideration declared by the assessee was lower than the value adopted for stamp duty purposes. The AO added Rs. 1,08,79,000/- to the income of the assessee, considering the circle rate as a reliable yardstick for determining the fair market value. The CIT(A) deleted the addition, holding that section 50C applies only to capital assets and not to properties held as stock-in-trade. The Tribunal noted that while section 50C is not applicable to stock-in-trade, the AO should have examined why the sales were shown at a lower price. The issue was remitted back to the AO for fresh examination and re-adjudication.
Issue 2: Addition of Rs. 52,54,314/- on account of unaccounted/differences in inventory
The AO observed differences between the areas of properties sold as per sale deeds and as per opening and closing stock, leading to an addition of Rs. 52,54,314/-. The CIT(A) deleted the addition, accepting the assessee's reconciliation statement and method of valuation, which had been consistently followed and accepted in earlier years. The Tribunal remitted the issue back to the AO for re-adjudication, directing the AO to verify whether the areas mentioned in earlier years were actually declared in the P&L account of those years.
Issue 3: Disallowance of Rs. 15,84,783/- on account of interest expenses
The AO disallowed the interest expenses, arguing that the interest should have been capitalized as the assessee had not carried out any construction activity during the year. The CIT(A) deleted the addition, noting that the interest was incurred for running the business and the assessee had already capitalized a significant portion of the interest. The Tribunal upheld the CIT(A)'s decision, finding no infirmity in the order and confirming that the interest was paid for business purposes.
Conclusion:
The appeal filed by the revenue is partly allowed for statistical purposes. Ground No.1 & 2 are remitted back to the AO for fresh examination, while Ground No.3 is dismissed. The order was pronounced in the open court on 28th June, 2013.
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2013 (6) TMI 826
Issues involved: The judgment involves issues related to the restriction of disallowance made under section 40A(3) of the Income Tax Act, 1961 and the deletion of addition made on account of disallowance of income tax paid under section 40(a) of the Act.
Issue 1 - Restriction of Disallowance u/s 40A(3): The revenue appealed against the CIT(A)'s order restricting the addition of cash payments made by the assessee in violation of section 40A(3) of the Act. The AO disallowed a portion of the cash payment made for land purchases, citing non-compliance with the exceptions to section 40A(3). The CIT(A) allowed part of the claim but upheld the disallowance on the remaining amount, as it was not covered by the exceptions. The ITAT upheld the CIT(A)'s decision, considering the absence of banking facilities in the villages where payments were made as per Rule 6DD(g) of IT Rules.
Issue 2 - Deletion of Addition u/s 40(a): The revenue challenged the deletion of an addition made on account of disallowance of income tax paid under section 40(a) of the Act. During a search operation, the assessee surrendered income, including income tax paid. The AO allowed credit for a lesser amount surrendered, leading to a discrepancy. The CIT(A) directed the AO to give credit for the full amount disclosed. However, the source of payment of income tax of a specific amount was not clarified. The ITAT remanded this aspect back to the AO for verification and determination, allowing the revenue's appeal for statistical purposes.
In conclusion, the ITAT upheld the CIT(A)'s decision on the restriction of disallowance u/s 40A(3) based on the absence of banking facilities in the villages. However, the ITAT remanded the issue of determining the source of payment of income tax back to the AO for further examination.
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2013 (6) TMI 825
Issues Involved:
1. Jurisdictional issue regarding the assumption of jurisdiction by the Assessing Officer u/s 153C of the Income-tax Act, 1961.
Summary:
Jurisdictional Issue:
The primary issue raised by the assessee was the challenge to the assumption of jurisdiction by the Assessing Officer u/s 153C of the Income-tax Act, 1961. The assessee contended that the documents found during the search operations did not belong to the appellant company within the meaning of section 153C. The CIT(A) had dismissed this ground, referencing a similar decision for the assessment year 2004-05.
The ITAT noted that the same material was considered in the present assessment year for issuing notice u/s 153C. The ITAT had previously quashed the assessment orders for the years 2000-01 to 2004-05 on the grounds that no material belonging to the assessee was found during the search. The ITAT, Bangalore Bench, in the case of DCIT vs. United Spirits Ltd., held that no material belonging to the assessee was found at the premises of the searched person, which could authorize the initiation of proceedings u/s 153C.
The ITAT emphasized that for proceedings u/s 153C to be valid, the seized documents must belong to the person against whom the proceedings are initiated. In this case, the documents were found to belong to Shri Miglani, not the assessee. The ITAT referenced various judicial pronouncements, including the Gujarat High Court's decision in Vijaybhai N Chandrani v. ACIT, which stated that the condition precedent for issuing notice u/s 153C is that the seized documents must belong to the person being assessed.
The ITAT concluded that the Assessing Officer was not justified in initiating proceedings u/s 153C, as no documents belonging to the assessee were found during the search. Consequently, the ITAT quashed the assessment orders for the relevant years.
Decision:
Respectfully following the ITAT's previous order in the assessee's own case, the preliminary ground of appeal raised by the assessee was allowed, and the assessment order was quashed. Consequently, the appeal of the revenue was also dismissed. Decision pronounced in the open court on 14.06.2013.
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2013 (6) TMI 824
Issues Involved:
1. Applicability of Section 50C of the Income Tax Act, 1961.
2. Addition of separate payment to the sale consideration.
3. Computation of capital gains as short term or long term.
4. Alternative claim for substitution of indexed cost.
Summary:
Issue 1: Applicability of Section 50C of the Income Tax Act, 1961
The AO invoked the provisions of section 50C, treating the transfer of shares in M/s. Kamala Mension Pvt. Ltd. as a de facto transfer of immovable property (two flats) and adopted the stamp duty valuation for computation of Long Term Capital Gain. The Tribunal, following its earlier decision in similar cases, held that section 50C applies strictly to the transfer of land or building and not to shares. Therefore, the AO's decision to invoke section 50C was not upheld, and the addition was deleted.
Issue 2: Addition of Separate Payment to the Sale Consideration
The AO added Rs. 55,28,500/- to the sale consideration, considering it as additional consideration for the transfer of property. The Tribunal found that the transferees infused money into the company's accounts to repay the liabilities of the Directors, not as additional consideration to the transferors. Hence, the addition was deleted.
Issue 3: Computation of Capital Gains as Short Term or Long Term
For A.Y. 2008-09, the AO computed the capital gains as short term, citing depreciation claims. The Tribunal held that since the capital gain arises from the sale of shares and not property, it should be treated as long term capital gain as shown in the returns of income.
Issue 4: Alternative Claim for Substitution of Indexed Cost
The Tribunal dismissed the alternative claim for substitution of indexed cost as infructuous due to the decision on the main issues.
Conclusion:
The Tribunal allowed the appeals in favor of the assessees, deleting the additions made by the AO and confirming the treatment of the gains as long term capital gains. The alternative claims were dismissed as infructuous.
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2013 (6) TMI 823
Issues involved: Appeal against penalty imposed u/s 271(1)(c) for concealment of income related to interest on enhanced compensation claimed u/s 10(37).
Summary:
The appeal was filed against the penalty imposed u/s 271(1)(c) by the Assessing Officer for concealment of income related to interest on enhanced compensation claimed u/s 10(37). The Assessing Officer subjected the interest amount to tax and penalty proceedings were initiated. The appellant contended that the total amount was exempt u/s 10(37) and penalty should not be levied. On appeal, it was argued that the issue was debatable at the time of filing the return and penalty was not justified. The ld. CIT(A) held that penalty is not leviable based on the decision of the Hon'ble Punjab & Haryana High Court. The Revenue argued that the appellant did not show the income from interest in the return, hence penalty was justified. However, it was pointed out that the TDS was duly reflected in the return and interest income was also reflected, though claimed as exempt. The Tribunal found that the issue was indeed debatable at the time of filing the return, and since the appellant accepted the addition post the Supreme Court decision, penalty was not justified. The Tribunal upheld the decision of the ld. CIT(A) and dismissed the appeal of the Revenue.
In conclusion, the Tribunal confirmed the decision of the ld. CIT(A) to delete the penalty imposed u/s 271(1)(c) for concealment of income related to interest on enhanced compensation claimed u/s 10(37).
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