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2011 (3) TMI 1723
Issues involved:
The appeal involves the deletion of addition of long term capital gain, applicability of capital gains tax on sale of FSI, and interpretation of relevant legal provisions.
Deletion of long term capital gain:
The appeal was filed by the revenue against the deletion of addition of Rs. 1,62,60,756 as long term capital gain by the Assessing Officer. The Tribunal disposed of the case ex-parte as the assessee did not appear despite notice. The issue revolved around the amount received by the Society on sale of FSI and whether it should be taxed under the head 'capital gains'.
Applicability of capital gains tax on sale of FSI:
The Tribunal considered the case in light of a previous decision involving a similar scenario. It was noted that the Society had sold additional FSI to a developer, and the developer had procured TDRs from a third party. The Tribunal referred to a previous case where it was held that the right acquired by the assessee did not fall within the ambit of section 45 of the Act itself. The Tribunal upheld the decision of the First Appellate Authority, stating that since there was no cost of acquisition for the FSI sold, no capital gains would result from the sale.
Interpretation of legal provisions:
The Tribunal relied on previous decisions to support its conclusion that the gain arising on the transfer of FSI/TDR is chargeable to tax under the head 'capital gain'. However, due to the absence of a cost of acquisition for the asset transferred, there would be no liability to capital gains tax. The Tribunal upheld the order of the learned CIT(A) based on consistent views of the Coordinate Bench in similar cases.
The appeal was dismissed, and the order was pronounced on March 30, 2011.
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2011 (3) TMI 1722
Issues involved: Application for dispensation of meetings of equity shareholders, unsecured lenders, and unsecured creditors u/s 391(1) of the Companies Act, 1956, and convening a meeting of secured creditors.
Equity Shareholders, Unsecured Lenders, and Unsecured Creditors: The application sought dispensation of meetings for these classes as individual consent letters were obtained, approving the scheme. With the submission of necessary documents and consent letters, the court dispensed with the meetings and the notice requirements in newspapers and government gazette.
Secured Creditors: While most secured creditors consented to the scheme, one creditor did not waive the right to attend the meeting. The court directed the convening and holding of a meeting for secured creditors, appointing a Chairman and setting the quorum. Notice for the meeting was to be hand-delivered to all secured creditors, with the Chairman required to report the meeting's outcome to the Court within 15 days.
The application was disposed of with the above directions, ensuring compliance with the Companies Act, 1956, and the specific requirements for convening meetings of different classes of creditors and shareholders.
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2011 (3) TMI 1721
Condonation of delay - extended period of limitation - Held that: - it is clearly established from the records that the petitioner had knowledge and therefore provision of extension of the period of limitation would not be applicable in the facts and circumstances of the present case - appeal dismissed.
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2011 (3) TMI 1720
Issues Involved:
1. Validity of the reopening of the assessment under Section 147.
2. Enhancement of assessment without issuing mandatory notice under Section 251(2).
3. Acquisition of shares in a cooperative bank and its impact on exemption under Section 11.
4. Addition on account of delayed payment of employees' provident fund under Section 36(1)(va).
5. Disallowance under Section 40A(3).
6. Treatment of capital expenses debited to Income & Expenditure Account.
7. Treatment of donations received towards the trust corpus as revenue income.
Detailed Analysis:
1. Validity of the Reopening of the Assessment under Section 147
The Tribunal examined the timing and adequacy of the reasons recorded for reopening the assessment. The assessee argued that the reasons were recorded after issuing the notice, which was undated. However, the Tribunal found that the reasons were recorded prior to issuing the notice, as evidenced by internal correspondence. The Tribunal concluded that the reasons provided were sufficient to constitute a "reason to believe" that there was escapement of income, thus validating the reopening of the assessment under Section 147.
2. Enhancement of Assessment without Issuing Mandatory Notice under Section 251(2)
The Tribunal considered whether the CIT(A) enhanced the assessment without issuing the mandatory notice under Section 251(2). The CIT(A) had confirmed the denial of exemption under Section 11 based on new reasons, which the assessee argued amounted to enhancement. The Tribunal noted that the issue of enhancement is factual and remanded the matter to the CIT(A) to determine if there was an enhancement and if the mandatory notice should have been issued.
3. Acquisition of Shares in a Cooperative Bank and Its Impact on Exemption under Section 11
The CIT(A) denied the exemption under Section 11, citing a violation of Section 13(1)(d) due to the acquisition of shares in a cooperative bank. The Tribunal agreed that the acquisition of shares amounted to a contravention of Section 13(1)(d) but noted that the denial of exemption should be restricted to the income relatable to such shares, as per the proviso to Section 164(2). The Tribunal remanded the matter to the CIT(A) for further examination.
4. Addition on Account of Delayed Payment of Employees' Provident Fund under Section 36(1)(va)
The Tribunal directed that the issue be decided in line with the Supreme Court's judgment in the case of Alom Extrusions Ltd., which held that the amendments to Section 43B are curative and have retrospective application. The Tribunal allowed the assessee's claim, provided the payments were made on or before the due date for furnishing the return of income under Section 139(1).
5. Disallowance under Section 40A(3)
The Tribunal noted that the CIT(A) did not address the merits of the disallowance under Section 40A(3). The Tribunal remanded the matter to the CIT(A) to decide on the merits after considering the documents provided by the assessee, which claimed that none of the payments exceeded the prescribed limits.
6. Treatment of Capital Expenses Debited to Income & Expenditure Account
The Tribunal found that the expenditure on curtains and furnishings, amounting to Rs. 38,642, was revenue in nature and not capital. The Tribunal allowed the assessee's claim, noting that the CIT(A) did not properly address the nature of the expenditure.
7. Treatment of Donations Received Towards the Trust Corpus as Revenue Income
The Tribunal set aside the issue to the CIT(A) for a fresh adjudication, directing the CIT(A) to pass a speaking order and consider the evidence provided by the assessee regarding the donations. The Tribunal noted discrepancies in the return related to corpus donations and instructed the CIT(A) to grant a reasonable opportunity of being heard to the assessee.
Conclusion
The Tribunal partly allowed the assessee's appeal, remanding several issues to the CIT(A) for further examination and fresh adjudication. The Tribunal emphasized the need for proper procedural adherence and consideration of evidence in determining the various grounds raised by the assessee.
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2011 (3) TMI 1719
Issues involved: Interpretation of priority of dues under Section 529-A of the Companies Act, 1956 and Section 38-C of the Bombay Sales Tax Act, 1959.
Summary:
The State of Maharashtra filed a petition challenging the Bombay High Court's order giving priority to workers' dues under Section 529-A of the Companies Act over the State's dues under Section 38-C of the Bombay Sales Tax Act. The delay in filing the petition was condoned. The case involved the winding up of M/s. Konkan Steel Limited and a subsequent application for payment of Sales Tax dues. The Single Judge directed equal treatment for the petitioner and the State of Karnataka along with other creditors based on Section 529-A. The Division Bench allowed an appeal stating that Section 529-A prevails over Section 38-C.
The Supreme Court referred to the Central Bank of India vs. State of Kerala case, emphasizing that the first charge created by legislation takes precedence over other creditors. The Court highlighted that the non obstante clause in Section 529-A of the 1956 Act overrides the clause in Section 38-C of the State Act due to the central legislation's later enactment. It was noted that Section 529-A mandates priority payment of workers' dues over all other debts.
Based on the above analysis, the Supreme Court dismissed the special leave petition, upholding the judgment that workers' dues under Section 529-A hold priority over the State's dues under Section 38-C.
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2011 (3) TMI 1718
Issues involved: Appeal against Value Added Tax Tribunal order, challenge to imposition of tax, validity of Section 6A of the Central Sales Tax Act, 1956.
The Central Sales Tax Appellate Authority, New Delhi, decided the appeal u/s 20 of the Central Sales Tax Act, 1956, against the order of the Value Added Tax Tribunal, Ahmedabad. The Appellate Authority upheld the imposition of tax based on Section 6A of the Act and other relevant provisions, along with considering the facts of the case and the decision of the Supreme Court.
The petitioner initially moved to the Supreme Court in Special Leave to Appeal (Civil) No.35734/2010, which was later withdrawn with liberty to approach the High Court u/s Article 226 of the Constitution of India. The Supreme Court directed the petitioner to file a writ petition, to be considered by the High Court on its own merits.
The writ petition was filed seeking permission to present evidence before the Central Sales Tax Authorities to demonstrate that the goods were dispatched on consignment basis, not as interstate sales. Additionally, the validity of Section 6A of the Act was challenged. However, during arguments, the petitioner decided not to challenge the validity of Section 6A. The Court accepted this decision and closed that aspect of the petition, allowing the petitioner to pursue other reliefs before the appropriate Court.
The Court scheduled the writ petition to be heard before the Bench handling Sales Tax (Admission) matters on 1st April 2011.
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2011 (3) TMI 1717
Issues involved: Interpretation of u/s 14A of the Income Tax Act, 1961 for disallowance of interest paid by the assessee related to exempted income.
Interpretation of u/s 14A:
The appeal by the assessee, a company engaged in investment and finance, for the assessment year 2006-07 raised the issue of invoking section 14A of the Income Tax Act, 1961, regarding the disallowance of interest paid in relation to exempted income. The contention was based on the mixed nature of funds, including own and borrowed funds, with a reference to the decision of the Hon'ble Bombay High Court in CIT vs. Reliance Utilities and Power Ltd. The CIT(A) acknowledged the mixed funds but did not extend the benefit of presumption to the assessee. The Tribunal deemed it necessary to restore the matter to the Assessing Officer for a fresh decision on the applicability of section 14A, emphasizing the need for the assessee to prove the existence of mixed funds and their composition to claim the benefit of the presumption as per the High Court's ruling.
Restoration to Assessing Officer:
In the interest of justice, the Tribunal directed the matter to be sent back to the Assessing Officer for a fresh decision on the application of section 14A concerning the interest disallowance. The Assessing Officer was instructed to allow the assessee an adequate opportunity to present their case regarding the mixed nature of funds and the components involved. It was emphasized that the Assessing Officer should not apply Rule 8D of the Income Tax Rules, as its applicability was determined by the Hon'ble Bombay High Court to be from the assessment year 2008-09 onwards. The Tribunal allowed the appeal of the assessee for statistical purposes, with no costs incurred.
This summary provides a detailed overview of the issues involved in the legal judgment, focusing on the interpretation of section 14A of the Income Tax Act, 1961, and the subsequent decision to restore the matter to the Assessing Officer for further examination.
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2011 (3) TMI 1716
Issues involved:
The issue involves the eligibility of the assessee for deduction u/s. 80IB of the Income-tax Act, 1961 on disallowance made u/s. 40 (a)(ia).
Judgment Summary:
Eligibility for Deduction u/s. 80IB:
The assessee filed a return of income declaring 'NIL' income and claimed a deduction of &8377; 12,82,568/= u/s. 80IB. The Assessing Officer determined the total income at &8377; 17,13,927/=, making an addition u/s. 40 (a)(ia). The CIT [A] confirmed the disallowances but directed the Assessing Officer to grant deduction u/s. 80IB on the enhanced profits. The assessee accepted the CIT [A]'s order, which was challenged by the Revenue before the Tribunal. The Tribunal rejected the Revenue's appeal, leading to the present appeal before the High Court.
Decision and Reasoning:
The High Court found no infirmity with the view taken by the CIT [A] and the Tribunal that the assessee would be entitled to proportionate benefit under Section 80IB on the enhanced profit. The Tribunal's decision was supported by previous orders regarding benefits u/s. 80HHC under similar circumstances. The High Court noted a similar question in a previous case where the Tribunal's view was upheld. Considering the fact-situation, the High Court upheld the Tribunal's order and dismissed the Tax Appeal.
Therefore, the High Court upheld the Tribunal's decision regarding the eligibility of the assessee for deduction u/s. 80IB on the enhanced profit, dismissing the Tax Appeal.
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2011 (3) TMI 1715
Issues Involved: Appeal against deletion of penalty under Rule 96ZQ of Central Excise Rules.
Analysis:
1. Issue 1 - Reduction of Penalty by Commissioner:
The Deputy Commissioner initially imposed a penalty of Rs. 6,00,000 under Rule 96ZQ for non-payment of duty within the stipulated time. Upon appeal, the Commissioner reduced the penalty to Rs. 3,00,000. Both the Department and the assessee filed separate appeals against this decision. The CESTAT at Mumbai dismissed the Revenue's appeal while allowing the assessee's appeal, leading to the Revenue's application for Rectification of the Mistake, which was also dismissed.
2. Issue 2 - Tribunal's Decision on Penalty Deletion:
The Tribunal deleted the penalty under sub-rule (5) of Rule 96ZQ based on the fact that the assessee had paid the entire duty along with interest by 31-7-1999. It was noted that although the duty was not deposited by the due date of 6-9-1999, the amount was paid on 31-7-2009. This deviation from the stipulated timeline under sub-rule (3) of Rule 96ZQ was considered, but the Tribunal found no defect in reducing the penalty based on the circumstances of the case.
3. Conclusion:
The High Court, after considering the provisions of sub-rule (5) of Rule 96ZQ and the facts presented, upheld the Tribunal's decision to reduce the penalty. Consequently, the appeal against the deletion of the penalty failed, and the appeal was dismissed accordingly.
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2011 (3) TMI 1714
Issues Involved:
1. Non-placement of retractions before the detaining authority.
2. Impact of non-supply of documents on the detenu's right to representation.
3. Reliance on statements made u/s 108 of the Customs Act, 1962.
Summary:
1. Non-placement of retractions before the detaining authority:
The primary issue was that the retractions of statements made by Lokesh Garg on 11.03.2010 and the detenu on 15.06.2010 were not placed before the detaining authority. The court noted that the detaining authority's decision was significantly influenced by the statements of 09.03.2010 and 14.06.2010. The failure to present the retractions, which were critical to the detaining authority's subjective satisfaction, vitiated the detention order. The court emphasized that indirect references in the reply to the bail application could not substitute for direct retractions. Citing precedents like Ashadevi v. K. Shivraj and Deepak Bajaj v. State of Maharashtra, the court held that non-placement of retractions before the detaining authority invalidated the detention order.
2. Impact of non-supply of documents on the detenu's right to representation:
The detenu argued that the non-supply of Lokesh Garg's retraction and other requested documents adversely affected his right to make a representation. The court found merit in this argument, noting that the detenu's ability to challenge the detention was compromised due to the lack of access to crucial documents.
3. Reliance on statements made u/s 108 of the Customs Act, 1962:
The court observed that the detaining authority heavily relied on the statements made u/s 108 of the Customs Act, 1962, particularly the statements dated 09.03.2010 and 14.06.2010. The court highlighted that the retractions of these statements were not considered, which could have influenced the detaining authority's decision. The court rejected the respondents' argument that the subsequent unretracted statement of 23.07.2010 could independently sustain the detention order, noting the interconnected nature of the statements.
Conclusion:
The court quashed the detention order dated 27.08.2010 against the detenu, directing his immediate release unless required in another case. The writ petition was allowed, with no order as to costs.
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2011 (3) TMI 1713
Issues Involved:
1. Validity of circulars issued by the DGCA under Section 5A of the Aircraft Act, 1934.
2. Compatibility of the circulars with Rule 92 of the Aircraft Rules, 1937.
3. Legitimacy of the restrictions imposed by the circulars under Articles 14 and 19(1)(g) of the Constitution of India.
4. Impact on the doctrine of legitimate expectation.
5. Alleged discrimination between private airlines and other entities.
6. Conflict between the 2007 Regulations and Rule 134 read with Schedule XI of the Aircraft Rules, 1937.
7. Whether the writ petition is barred by delay and laches.
Detailed Analysis:
1. Validity of Circulars Issued by DGCA under Section 5A of the Aircraft Act, 1934:
The court examined whether the circulars issued by the DGCA under Section 5A of the Aircraft Act, 1934, were within the scope of the authority conferred by the Act. The court held that Section 5A, read in conjunction with other relevant provisions, empowers the DGCA to issue directions in the interest of security and safety of aircraft operations. The court emphasized that the words "in any case" in Section 5A should be interpreted broadly to cover all categories of cases where security or safety is involved. The circulars were deemed consistent with the provisions of the Act and necessary for ensuring security.
2. Compatibility of Circulars with Rule 92 of the Aircraft Rules, 1937:
The petitioners argued that the circulars were in conflict with Rule 92, which allows airline operators to engage any ground handling service provider permitted by the Central Government. The court clarified that Rule 92 does not confer an absolute right on airline operators for self-ground handling. Instead, it mandates a competitive environment and security clearance. The circulars were found to ensure a competitive environment and were thus consistent with Rule 92.
3. Legitimacy of Restrictions under Articles 14 and 19(1)(g) of the Constitution:
The court held that the restrictions imposed by the circulars were reasonable and in the interest of national security, which is a legitimate ground for imposing restrictions under Article 19(6). The court also found that the classification made by the circulars between different entities was based on intelligible differentia with a rational nexus to the objective of ensuring security and efficiency in ground handling services. Therefore, the circulars did not violate Articles 14 and 19(1)(g).
4. Doctrine of Legitimate Expectation:
The petitioners contended that the circulars violated their legitimate expectation to continue providing self-ground handling services. The court held that while the doctrine of legitimate expectation is recognized, it is subject to change in policy, especially when such change is justified by public interest and security concerns. The court found that the change in policy was neither arbitrary nor unreasonable and thus did not violate the doctrine of legitimate expectation.
5. Alleged Discrimination:
The petitioners argued that the circulars discriminated against private airlines by allowing only certain entities to provide ground handling services. The court found that the classification was reasonable and based on security considerations. The petitioners were not debarred from forming joint ventures to provide ground handling services, ensuring a level playing field.
6. Conflict with Rule 134 and Schedule XI:
The petitioners argued that the 2007 Regulations conflicted with Rule 134 and Schedule XI, which set conditions for granting permits to operate scheduled air transport services. The court clarified that Rule 134 and Schedule XI do not confer an inalienable right to provide ground handling services. The 2007 Regulations, issued under Section 42 of the Airports Authority of India Act, were found to be consistent with the overarching need for security and did not conflict with Rule 134.
7. Delay and Laches:
The court rejected the argument that the writ petition should be dismissed on the grounds of delay and laches. The court noted that the petitioners had been consistently representing their concerns to the authorities, and the implementation of the circulars had been deferred multiple times. Given the continuous engagement and the substantive issues involved, the court decided to hear the petition on merits.
Conclusion:
The court upheld the validity of the circulars and the 2007 Regulations, finding them consistent with the statutory framework and constitutional provisions. The restrictions imposed were deemed reasonable and necessary for ensuring national security and efficient ground handling operations. The writ petition and all interim applications were dismissed.
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2011 (3) TMI 1712
Issues involved: Appeal by revenue against CIT(A) order for A.Y. 2007-08 regarding deduction u/s 80P(2)(a)(vi) for a Dist. Federation of Labour Co-op. Societies.
Summary:
The appeal was filed by the revenue against the CIT(A) order for A.Y. 2007-08 concerning the entitlement of the assessee to deduction u/s 80P(2)(a)(vi). The assessee, a co-operative society, provided services to its Member societies and claimed deductions under various sections of the Act. The Assessing Officer disallowed the deduction u/s 80P(2)(a)(vi) and recomputed other deductions. However, the CIT(A) allowed the claim, leading to the revenue's appeal. The Tribunal noted that similar disallowances were made in previous years but were overturned by the Tribunal and upheld by the CIT(A). Citing a judgment of the Hon'ble Supreme Court, the Tribunal upheld the CIT(A)'s decision to allow the deduction u/s 80P(2)(a)(vi) of the Act. Consequently, the appeal of the revenue was dismissed.
In conclusion, the Tribunal upheld the CIT(A)'s decision to allow the deduction u/s 80P(2)(a)(vi) for the co-operative society, based on past precedents and legal principles, leading to the dismissal of the revenue's appeal.
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2011 (3) TMI 1711
Issues Involved:
1. Classification of income as business income or short-term capital gains.
2. Charging of interest u/s 234A, 234B, and 234C of the Act.
Summary:
Issue 1: Classification of Income
The primary issue in this appeal is whether the sum of Rs. 6,56,773/- should be treated as business income or short-term capital gains. The AO examined the details and found that the assessee engaged in frequent buying and selling of shares with varying holding periods. The AO treated the profit on shares held for less than one year as business income, citing reasons such as the profit motive, frequency of transactions, magnitude of sales and purchases, short holding periods, and the infrastructure employed for share transactions. The CIT(A) confirmed the AO's order for similar reasons.
The assessee argued that she is a housewife with no trading experience, inherited the shares, and treated them as investments. She referred to the decision in the case of Shri Sugamchand C. Shah, where it was held that shares held for less than a month should be treated as business income, and those held for more than a month but up to twelve months should be treated as short-term capital gains. The assessee contended that the AO's partial acceptance of long-term capital gains indicates recognition of her investment intent.
The Tribunal considered the rival submissions and relevant case law, including Gopal Purohit vs. JCIT and Sarnath Infrastructure (P) Ltd. vs. ACIT. It was noted that the assessee maintained books showing shares as investments, and the Revenue had accepted this in previous years. The Tribunal concluded that the assessee is neither fully a trader nor fully an investor. It directed the AO to treat profits on shares held for less than one month as business income and those held for more than one month but up to twelve months as short-term capital gains.
Issue 2: Charging of Interest u/s 234A, 234B, and 234C
The issues related to charging of interest u/s 234A, 234B, and 234C are consequential to the total assessed income. The Tribunal did not provide specific details on these issues, as they depend on the final classification of income.
Conclusion:
The appeal filed by the assessee is partly allowed for statistical purposes. The AO is directed to reclassify the profits based on the holding period criteria specified by the Tribunal. The order was pronounced in open Court on 25/3/11.
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2011 (3) TMI 1710
Issues involved: Appeal against CIT(A) order for assessment year 2005-06 regarding rejection of claim for retention money and deduction of proportionate leasehold premium.
Retention Money Issue:
The Tribunal noted that the issue of retention money had been previously decided against the assessee in a different case. Citing consistency, the Tribunal decided the issue against the assessee. The ground related to retention money was dismissed.
Proportionate Leasehold Premium Issue:
The AO disallowed the deduction claimed by the assessee for proportionate leasehold premium. The CIT(A) upheld the AO's decision. The assessee argued that the issue was covered by a decision of the Hon. Gujarat High Court in a specific case. The Tribunal referred to the findings of the Hon. Gujarat High Court, which concluded that the lease rent paid by the assessee was allowable as revenue expenditure. The Tribunal also mentioned that the Special Leave Petition filed by the Revenue was dismissed by the Hon. Supreme Court, affirming the decision of the Gujarat High Court. Consequently, the Tribunal decided this issue in favor of the assessee.
Conclusion:
The Tribunal upheld the decision against the assessee regarding the retention money issue, as it had been previously decided against them. However, the Tribunal ruled in favor of the assessee regarding the deduction of proportionate leasehold premium, based on the decision of the Hon. Gujarat High Court and the dismissal of the Special Leave Petition by the Hon. Supreme Court.
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2011 (3) TMI 1709
Issues involved: Eligibility of respondent assessee for benefit under Section 80IB of the Income Tax Act for assessment year 2004-2005.
Issue (A): The question raised was whether the assessee was entitled to deduction u/s.80IB of the Act on cattle feed expansion when the conditions stipulated in the section were not fulfilled. The tribunal found that the claim of the assessee should not have been declined on a technical ground and remanded the proceedings for fresh consideration. The tribunal observed that the units set up in the financial years 1993-94 and 1997-98 were considered eligible for the benefit under section 80IB, but for the units set up in the assessment year 2004-2005, deduction was denied on the ground that the audit report was not correctly filed or a separate balance sheet was not filed.
Issue (B): The question raised was whether the Appellate Tribunal was right in law and on facts in restoring the issue to the file of the Assessing Officer for grant of deduction u/s.80IB of the Act amounting to Rs. 1,70,26,645 on cattle feed expansion. The tribunal directed the assessee to furnish all necessary information, including a certificate from an auditor, for computing the eligible profit of the units. The High Court found no reason to interfere with the tribunal's decision, as the tribunal had properly directed the assessee to supply the necessary information for the Assessing Officer to examine the benefit claimed.
In essence, the controversy revolved around the eligibility of the respondent assessee for benefit under Section 80IB of the Income Tax Act for the assessment year 2004-2005 when the assessee expanded its existing units. The tribunal's decision to remand the issues for fresh consideration by the Assessing Officer and to require the assessee to furnish necessary information, including an auditor's certificate, was upheld by the High Court. The tax appeal was dismissed based on the above discussion.
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2011 (3) TMI 1708
Issues involved: Appeal against Tribunal's order regarding deduction u/s 80IB of the Act on cattle feed expansion.
Issue A:
The appellant Revenue challenged the Tribunal's order, questioning the entitlement of the assessee to deduction u/s 80IB of the Act on cattle feed expansion when conditions of the section were not fulfilled.
Issue B:
The Tribunal's decision to restore the issue to the Assessing Officer for granting deduction u/s 80IB of the Act amounting to Rs. 1,70,26,645 on cattle feed expansion was also contested.
Details:
The assessee, Banaskantha Dist. Co.Op. Milk Producers Union Ltd., was assessed under Section 80IB. The Tribunal concurred with the CIT(Appeals) and upheld their order without finding any flaws. The Revenue appealed this decision to the High Court.
Upon hearing arguments from both sides, the Court reviewed the documents and orders from all adjudicating authorities. The Senior Advocate for the appellant and the advocate for the respondent were questioned on the legal issues. The Court noted a previous related case where an order of remand was upheld. After considering the facts, discussions, and reasons presented by the Tribunal, the Court found no error or perversity in the order of remand. As the decision was based on facts and the correct application of provisions, with no legal questions for determination, the appeal was dismissed.
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2011 (3) TMI 1707
Tax treaty between India and USA (DTAA) - Payment of receipts taxed u/s 09(1)(vii) - HELD THAT:- We have considered the facts of the case and submissions made before us. that the assessee has received payments from persons residents in India. However, the receipts have been taxed u/s 9(1)(vii), Explanation 2, Clause (vi) thereunder. The decision in the case of Asia Satellite Telecommunications Company Limited [2011 (1) TMI 47 - DELHI HIGH COURT] is to the contrary and in favour of the assessee. It is also a matter of fact on record that the assessee is a tax resident of USA and, therefore, the provisions contained in the DTAA are applicable. However, we are of the view that we need not go into the provisions of the DTAA because of the provision contained in Section 90(2). This provision provides that where the Central Government has entered into an agreement with the Government of any country outside India under sub-section (1) for granting relief of tax, or as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of this Act shall applied to the extent they are more beneficial to that assessee. The assessee is found to have incurred no liability to tax . Therefore, even if the provisions of the treaty go against the assessee, it has to be granted the benefit under which no liability to tax can be fastened on the assessee.
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2011 (3) TMI 1706
Issues involved: Appeal against the judgment of Income-Tax Appellate Tribunal regarding the deletion of disallowances on interest payment and excess realization on sale of cement.
Interest Payment Disallowance: The respondent, a State owned Corporation engaged in civil supplies, filed a return of income for the assessment year 2002-2003. The Assessing Officer made additions on account of excess realization of sale of cement. The CIT(Appeals) deleted both additions, which was upheld by the Tribunal. The Tribunal considered the subsidy received by the assessee from the Government, which included the interest component. It concluded that the interest component was already included in the sales price, and no separate interest could be charged from the Government. The High Court found that the peculiar relations between the Government and the assessee justified the deletion of the additions, as the subsidies received factored in the interest component on loans.
Excess Realization on Sale of Cement: The addition of &8377; 36,41,741/- towards excess realization on the sale of cement was also challenged. The margin of &8377; 2/- per bag remained with the assessee, which was treated as income. However, the CIT(Appeals) deleted this addition, a decision upheld by the Tribunal. The Tribunal ruled that the excess amount was not income but a receipt to be refunded to parties including the State Government and NGOs. The High Court agreed with the Tribunal's reasoning, stating that the excess price was not the income of the assessee, especially considering the assessee was not in the business of buying and selling cement. Consequently, the Court found no substantial question of law arising and dismissed the Tax Appeal.
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2011 (3) TMI 1705
Issues Involved:
1. Levy of statutory interest on delayed payment of cost recovery charges for customs staff.
2. Jurisdiction and authority to levy interest under the Customs Act, 1962.
3. Applicability of Section 28AA and Section 142 of the Customs Act, 1962.
4. Estoppel and equitable principles in levying interest.
5. Administrative versus adjudicatory proceedings in the context of cost recovery charges.
Issue-wise Detailed Analysis:
1. Levy of Statutory Interest on Delayed Payment of Cost Recovery Charges for Customs Staff:
The petitioner challenged the imposition of statutory interest on purported arrears of cost recovery charges for customs staff, as ordered by the Commissioner of Customs, Gujarat. The petitioner argued that there was no statutory provision under the Customs Act, 1962, authorizing the levy of interest on delayed payment of such charges. The court examined the notifications and guidelines governing the appointment of the petitioner as Custodian and found no provision for the levy of interest. Consequently, the court concluded that the demand for interest was without legal backing and thus invalid.
2. Jurisdiction and Authority to Levy Interest under the Customs Act, 1962:
The petitioner contended that the levy of interest lacked jurisdiction and authority under the Customs Act. The court noted that Section 28AA of the Act provides for interest on delayed payment of duty, but reimbursement of customs staff costs does not equate to the levy of duty. The court also referenced the Madras High Court ruling in TAN India Limited vs. Collector of Central Excise, which held that interest cannot be levied in the absence of a statutory provision. The court determined that the respondent had no jurisdiction to levy interest on cost recovery charges.
3. Applicability of Section 28AA and Section 142 of the Customs Act, 1962:
The court analyzed the applicability of Sections 28AA and 142 of the Act. Section 28AA pertains to interest on delayed payment of duty, which was not applicable to the cost recovery charges. Section 142, which deals with the recovery of sums due to the government, could not be invoked for non-statutory dues like cost recovery charges. The court held that the respondent could not use Section 142 to recover interest on such charges.
4. Estoppel and Equitable Principles in Levying Interest:
The respondents argued that the petitioner was estopped from challenging the interest levy since it had requested installment payments. The court rejected this argument, stating that the petitioner's request for installments did not imply consent to pay interest. Furthermore, the court emphasized that interest could not be levied on equitable grounds without statutory authority. The respondents would need to seek recovery through legal proceedings if they wished to claim interest on equitable grounds.
5. Administrative versus Adjudicatory Proceedings in the Context of Cost Recovery Charges:
The court identified a mix-up between adjudicatory and administrative proceedings in the respondent's actions. The show-cause notices issued to the petitioner included both quasi-judicial and administrative elements. The court clarified that while the respondent could initiate adjudicatory proceedings under Section 45(1) for non-compliance with cost recovery charges, the recovery of such charges was an administrative matter. The court found that the respondent had improperly combined these proceedings, leading to an invalid order.
Conclusion:
The court concluded that the levy of statutory interest on delayed payment of cost recovery charges was without legal authority. It quashed the impugned orders to the extent they levied interest at statutory rates. The petition was allowed, and the rule was made absolute with no order as to costs.
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2011 (3) TMI 1704
Issues Involved:
1. Validity of the Tribunal's order dated 4th March 2002.
2. Determination of the furnace capacity and corresponding duty liability.
3. Applicability of the formula under the Induction Furnace Annual Capacity Determination Rules, 1997.
4. Refund of excess duty paid by the petitioner.
Issue-wise Detailed Analysis:
1. Validity of the Tribunal's order dated 4th March 2002:
The petitioners challenged the Tribunal's order that set aside the Commissioner's determination of the furnace capacity at 3000 kgs and remanded the matter for re-determination using the prescribed formula. The High Court found that the Tribunal's interpretation was erroneous and contrary to the provisions of rule 96ZO(3) of the Central Excise Rules, 1944. The High Court quashed the Tribunal's order and restored the Commissioner's order.
2. Determination of the furnace capacity and corresponding duty liability:
The petitioner company, engaged in manufacturing MS Ingots, had opted to pay duty under sub-rule (3) of rule 96ZO, which allows for a lump sum payment based on furnace capacity. The Commissioner initially determined the furnace capacity at 3.39 M.T., resulting in a higher duty liability. However, upon re-evaluation, the Commissioner determined the capacity at 3000 kgs (3 M.T.) and fixed the duty at Rs. 5 lakhs per month. The High Court upheld this determination, emphasizing that the duty liability should be calculated pro-rata if the furnace capacity is more or less than 3 M.T.
3. Applicability of the formula under the Induction Furnace Annual Capacity Determination Rules, 1997:
The Tribunal had directed the application of the formula under the Determination Rules to ascertain the annual production capacity. However, the High Court clarified that this formula applies only when duty liability is determined under sub-rule (1) of rule 96ZO, not sub-rule (3). The High Court stated that the Commissioner was only required to determine the total furnace capacity for the purpose of sub-rule (3), and not the annual production capacity using the formula.
4. Refund of excess duty paid by the petitioner:
The petitioner had paid excess duty based on the initially higher furnace capacity determination. Following the Commissioner's revised determination, the petitioner sought a refund of the excess amount. The High Court noted that the refund claim had been rejected but should be reconsidered in light of the restored order. The respondents were directed to process the refund claim in accordance with law, including the claim for interest under section 11BB of the Central Excise Act, 1944.
Conclusion:
The High Court allowed the petition, quashed the Tribunal's order, and restored the Commissioner's determination of the furnace capacity at 3000 kgs. The refund claim filed by the petitioners was also restored and was to be processed by the respondents in accordance with law. The High Court emphasized the correct application of rule 96ZO(3) and clarified that the formula under the Determination Rules was not applicable in this case.
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