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2009 (4) TMI 948
Issues involved:
1. Taxation of dividend income on a net basis
2. Allowance of expenditure on distribution of refreshment coupons to employees
3. Treatment of amount received on termination of re-insurance division as capital receipt
Taxation of dividend income on a net basis:
The appellant, Revenue, raised the issue of whether the Income Tax Appellate Tribunal (ITAT) was correct in directing the Assessing Officer (A.O.) to tax the dividend income on a net basis. The counsel for the assessee referred to a previous court decision to argue that this question was not a substantial question of law, and therefore, the appeal was dismissed.
Allowance of expenditure on distribution of refreshment coupons to employees:
The appellant questioned the ITAT's decision to allow expenditure on the distribution of refreshment coupons to employees, despite it not being incurred for business purposes. The counsel for the assessee highlighted that the Tribunal had relied on its earlier order in a similar case, which had been accepted by the Revenue. Consequently, this question was also deemed not to be a substantial question of law.
Treatment of amount received on termination of re-insurance division as capital receipt:
The issue of whether the amount received on the termination of the re-insurance division of the assessee company should be treated as a capital receipt was raised. The court noted that this issue was already covered by a previous judgment, and therefore, no substantial question of law was involved in this appeal. As a result, the appeal was dismissed with no order as to costs.
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2009 (4) TMI 947
Possession of bag, contained narcotic substance - On the basis of Information given in writing, P.W.5 met P.W.6 and appraised him - Thereafter, PWs 4, 5 and 6 went to the departmental store and arrested the accused - officers found 5 Kgs of opium - P.W.6 registered a case - accused was convicted - According to the submission advanced on behalf of the accused, the crime ought to have been investigated by another independent officer and not by P.W.6.- HC found substance in this submission and acquitted the accused - Aggrieved by the judgment of the HC, the State, through Inspector of Police, referred a special leave petition under Article 136 -
Whether P.W.6 who registered the crime could have investigated the case or an independent officer ought to have investigated the case - HELD THAT:- In Megna Singh v. State of Haryana [1995 (2) TMI 445 - SUPREME COURT], this Court has taken a categorical view that the officer who arrested the accused should not have proceeded with the investigation of the case. The ratio of Megna's case has been followed by other cases.
In another case in Balasundaran v. State 1999 [1999 (7) TMI 672 - MADRAS HIGH COURT], the High Court took the same view.
'' No doubt the successor to P.W. 5 alone had filed the charge sheet. But there is no material to show that he had examined any other witness. It therefore follows that P.W. 5 was the person who really investigated the case. P.W. 5 was the person who had searched the appellants in question and he being the investigation officer, certainly it is not proper and correct. The investigation ought to have been done by any other investigating agency. On this score also, the investigation is bound to suffer and as such the entire proceedings will be vitiated."
In this view of the legal position, as crystallized in Megna Singh's case, the High Court was justified in acquitting the accused. The appeal, being devoid of any merit, is accordingly dismissed.
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2009 (4) TMI 946
The Bombay High Court set aside the impugned order and remanded the matter back to the Tribunal for de novo consideration. The Tribunal is directed to pass an order according to law within four months. The appeal stands disposed of.
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2009 (4) TMI 945
1. ISSUES PRESENTED and CONSIDERED The legal judgment addresses two core issues: Issue 1: Whether the assessee is entitled to a deduction of Rs. 7,11,029 as hire-purchase charges under the Income-tax Act, given the circumstances surrounding the transaction with its sister concern and the financing arrangement with Lloyd Finance Ltd. Issue 2: Whether the disallowance of Rs. 7,03,546 related to bank interest and bill discounting charges is justified, considering the alleged diversion of interest-bearing funds for non-business purposes by providing interest-free loans to sister concerns. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: - Relevant legal framework and precedents: The court considered Section 36(1)(iii) of the Income-tax Act, which allows a deduction for interest on borrowed capital if it is used for business purposes. The precedent establishes that the burden of proof lies with the assessee to demonstrate that borrowed funds were used for business activities. - Court's interpretation and reasoning: The court noted that the transaction was initially intended as a sale of machinery to the sister concern, which did not materialize. The funds were instead treated as a loan repayable to Lloyd Finance. The court emphasized that the onus was on the assessee to prove that the funds were used for business purposes. - Key evidence and findings: The Assessing Officer observed that the Rs. 60 lakhs received from Lloyd Finance was transferred to sister concerns without interest, indicating non-business use. The assessee failed to provide evidence of sufficient non-interest-bearing funds at the time of the transaction. - Application of law to facts: The court applied Section 36(1)(iii) and concluded that the assessee did not meet the burden of proof to show that the borrowed funds were used for business purposes. The immediate transfer of funds to sister concerns suggested non-business use. - Treatment of competing arguments: The assessee argued that the funds were part of a sale transaction and thus not borrowed. However, the court found no evidence supporting this claim, as the funds were treated as a loan in the books. - Conclusions: The court upheld the disallowance of the deduction for hire-purchase charges, affirming that the funds were not used for business purposes. Issue 2: - Relevant legal framework and precedents: Again, Section 36(1)(iii) of the Income-tax Act was pivotal, requiring proof that interest-bearing funds were used for business purposes. The court also considered principles from relevant case law, such as the need for sufficient non-interest-bearing funds to cover interest-free advances. - Court's interpretation and reasoning: The court emphasized the need for the assessee to demonstrate a direct nexus between borrowed funds and business use. The lack of response to the show cause notice and absence of evidence led to the conclusion that funds were diverted for non-business purposes. - Key evidence and findings: The Assessing Officer noted that the assessee had significant sundry debtors and extended credit to sister concerns, suggesting non-business transactions. The court found no evidence of sufficient non-interest-bearing funds at the time of advancing loans to sister concerns. - Application of law to facts: The court applied Section 36(1)(iii) and concluded that the assessee failed to prove the business use of interest-bearing funds. The pattern of transactions indicated diversion for non-business purposes. - Treatment of competing arguments: The assessee contended that overall interest-free funds exceeded interest-free loans given. However, the court required proof of sufficient funds on specific transaction dates, which was not provided. - Conclusions: The court upheld the disallowance of bank interest and bill discounting charges, affirming that the funds were diverted for non-business purposes. 3. SIGNIFICANT HOLDINGS - Preserve verbatim quotes of crucial legal reasoning: "It is well-settled that under section 36(1)(iii) of the Income-tax Act interest payable on the amount borrowed, by whatever name it is called, is allowable as deduction only if it is used for the purpose of the business." - Core principles established: The judgment reinforced the principle that the burden of proof lies with the assessee to demonstrate the business use of borrowed funds. The presence of sufficient non-interest-bearing funds at the time of transactions is crucial to justify interest-free loans. - Final determinations on each issue: The court dismissed the appeal by the assessee, affirming the disallowance of deductions for both hire-purchase charges and bank interest/bill discounting charges due to the failure to prove business use of funds.
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2009 (4) TMI 944
Liability to deduct tax u/s 194J or 194C - Payment of wheeling charges (transmission charges) and State Load Dispatch Centre Charges (SLDC charges) as fees for technical services - liability of interest u/s 201(1A) and tax u/s 201(1) - The Jaipur Vidhyut Vitran Nigam Ltd., the assessee (JVVNL) is a company incorporated under the Companies Act, 1956 - 100 per cent Government company in consonance with a mandate prescribed under the Rajasthan Power Sector Reforms Act, 1999.
What is the nature of payment of wheeling/transmission/ SLDC charges on the basis of documents on records and the facts explained and after considering the nature of such payments as well as facts on records whether the same is liable for deduction of tax at source under the IT Act, 1961 specifically under s. 194J which provides for deduction of tax at source on payment of fees for professional or technical services?
HELD THAT:- From all these clauses of transmission service agreement, it is clear that all the parties involved with generation, transmission and distribution of electricity are to comply with the direction of SLDC and the Regulatory Commission for achieving the economy and efficiency in the operation of power system and therefore question of any person rendering service to another does not arise. The operation and maintenance of transmission lines by RVPNL and the use of these lines by assessee for transmitting energy does not result into any technical services being rendered to the assessee. The technical staff of RVPN by operating and maintaining its grid station and transmission lines simply discharge their function. They do not render any technical service to the assessee.
Section 194J would have application only when the technology or technical knowledge of a person is made available to others and not where by using technical systems, services are rendered to others. Rendering of services by allowing use of technical system is different than charging fees for rendering technical services. The applicability of s. 194J would come into effect only when by making payment of fee for technical services, assessee acquired certain skill/knowledge/intellect which can be further used by him for its own purpose/research. Where facility is provided by use of machine/robot, or where sophisticated equipments are installed and operated with a view to earn income by allowing the customers to avail of the benefit by use of such equipment, the same does not result in the provision of technical service to the customer for a fee.
On going through the paper book filed by the Department we note that as per those papers only some report/letters has been issued by the TDS officer requiring the deduction of tax at source on such, payment. Similarly M/s Hindustan Zinc Ltd. deducting the tax at source under s. 194C in respect of payment of transmission charges to RVPN cannot lay down the law. Here it would be pertinent to mention that even the CIT(A) in assessee's own case for asst. yr. 2006-07 against the order of AO under s. 143(3) has given a finding on p. 54 of his order that these payments are not covered under s. 194C against which no appeal is filed by the Department though we are otherwise convinced with the argument of learned Authorised Representative that s. 194C is not applicable on this payment in view of the detailed submission made in this regard at paper book pp. A-18 to A-21.
The case of CANARA BANK. VERSUS INCOME-TAX OFFICER, TDS - 1, SURAT. [2008 (2) TMI 515 - ITAT AHMEDABAD-B] in respect of payment of MICR charges to SBI which involved human skill and computerised machine and not simply making available the technical equipment working on its own and therefore held to be a payment towards managerial services. The decision in the case of DR. HUTAREW AND PARTNER (I) (P) LTD. VERSUS ITO [2008 (9) TMI 414 - ITAT DELHI-C] is with reference to s. 195 and not s. 194J. In this case also the non-resident to whom payment was made was not maintaining any server for everybody that anyone can feed the data and get the solutions. The solutions were provided on the specific needs of the customers. The information supplied is specific which helps the assessee in finalizing its design. The information supplied to the assessee was a technical information which has been used in further generating the product of the assessee. Therefore, such specific client based information was held not equitable with the standard services provided by telecommunication company. Thus these decisions are quite distinguishable and not applicable on the facts of the present case. We therefore hold that there is no liability to deduct tax at source on payment of transmission/wheeling/SLDC charges under s. 194J or for that matter under s. 194C.
Thus, the lower authorities were not justified in holding that the assessee is liable for deduction of tax at source on the payment of transmission/SLDC charges to RVPN. We thus set aside the order of the lower authorities and allow the ground of the assessee.
Demand of interest under s. 201(1A) relying on Circular No. 275, dt. 29th Jan., 1997 - ITO (TDS) held that the assessee was liable to deduct the tax at source on the payment of transmission/wheeling and SLDC charges - HELD THAT:- The provision of the Act is a measure to compensate the Revenue for delay in payment of taxes. In the present case, RVPN to whom transmission charges are paid are assessed with the same AO with whom the assessee is assessed with. RVPN has regularly filed its return of income for asst. yrs. 2005-06 to 2008-09 declaring nil income and having substantial carry forward of unabsorbed depreciation. For asst. yrs. 2005-06 and 2006-07, RVPN is assessed under s. 143(3) at nil income with substantial carry forward of unabsorbed depreciation. Thus RVPN has no tax liability and it has been allowed the refund of tax which was deducted at source on some other payments by some other parties. Thus, there is no loss of revenue to the Department by not deducting tax at source by the assessee on the transmission payment.
In the present case, from the copy of the IT return for asst. yrs. 2005-06 to 2008-09 and copy of the assessment order for asst. yrs. 2005-06 and 2006-07, it is noted that whatever tax was deduted at source has been claimed/allowed as refund to RVPN. Therefore no interest under s. 201(1A) for earlier years is leviable on the assessee.
Appeal allowed.
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2009 (4) TMI 943
Addition on expenses incurred on legal and professional expenses as capital expenditure - enduring benefit - CIT(A) allowed the claim of the assessee as the expenditure was incurred for increasing the efficiency and import of the assessee in getting the work done for the clients and the assessee did not acquire any asset out of the said payment.
HELD THAT:- No enduring benefit can be said to have obtained by the assessee. The consultancy charges were paid to Laxmi and Associates for brokerage charges for obtaining office space on lease for acquiring office space on lease and not for acquiring any capital asset. The consultancy charges were paid to Bharat S. Raut and Co. for preparation of agreement for legal costs cross charges, marketing cost cross charge, advice on exchange control issues for the aforesaid agreement, advice on withholding tax for remittance of the aforesaid agreement for preparing cost sharing arrangement of legal cost and marketing cost with the parent company in USA. The company has also incurred a total amount. It comprises of payment to M/s QSYS Constants for implementing ISO 9001: 2000 based Quality Management System as the major part of the amount was paid for professional fee to M/s QSYS.
In this connection, reliance was placed on various decisions of the Hon'ble High Court in which it has been that any expenditure which improves efficiency and does not lead to any additional asset is a revenue expenditure. Therefore, this expenditure, in our opinion, cannot be treated as capital expenditure.
The consultancy charges paid to Design and Development for planning, designing the interiors, a leased premises. This expenditure also, is to be treated as a revenue expenditure and cannot be said to be capital expenditure as no enduring benefit has been obtained by the assessee. The consultancy charges paid to Keystone for architectural services such as layout plans, work station details, toilet details, false ceiling plan etc.
A similar view in this regard was held in B and A Plantation vs. CIT [1999 (12) TMI 43 - GAUHATI HIGH COURT] and Modi Spinning and Weaving Mills Co. Ltd. vs. CIT,[1992 (10) TMI 76 - DELHI HIGH COURT] observing that expenditure on items like fixing false ceiling, painting, making some structural charges are of a revenue nature. Therefore, the decision of the CIT(A) deserves to be upheld and we do so. Therefore, this ground of the revenue is dismissed.
Disallowance of depreciation on computer peripherals and computers accessories - claimed a depreciation @ 60% - AO did not accept the claim of the assessee and reduced the said deprecation to 25% - CIT(A) accepted the plea of the assessee that the "Router" which is an integral part of the computer system without which it is unable to connect the high speed computers with the internet and also with the internal Local Area Network and allowed the depreciation claimed.
HELD THAT:- We are of the considered view that the decision taken by the CIT(A) in this regard is correct and deserves to be upheld. A "Router" is a device that forwards data packets along networks and is connected to at least two networks, commonly known as Local Area Network (LAN) or Wireless LAN (WAN) and its ISP's network. The usage of the "Router" in the computer is not only required for its functioning, but is an important and an integral part of the computer for increasing the high speed with the interned efficiently. The order of the CIT(A) is, therefore, upheld and the ground of the revenue is dismissed.
The appeal of the revenue is dismissed.
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2009 (4) TMI 942
Issues involved:
1. Payment of commission to several parties without consideration for services rendered.
2. Disallowance of expenditure under section 14A of the Income-tax Act, 1961.
Issue 1 - Payment of Commission:
The High Court considered the appeal regarding the payment of &8377; 32 lakhs as commission by the assessee to various parties. The Tribunal's detailed findings confirmed the genuineness of the payments, stating that there was no evidence of the commission being an accommodation entry or a paper transaction. The Tribunal also noted that the departmental authorities did not conduct any inquiry to prove the transactions as non-genuine. The ITAT expressed satisfaction with the genuineness of the transactions, considering the past payment of commissions and the negligible commission percentage. The High Court upheld the ITAT's decision, emphasizing that it would intervene only if a finding appeared to be perverse, which was not the case here.
Issue 2 - Disallowance under Section 14A:
The second question pertained to the disallowance of &8377; 2 lakhs under section 14A of the Income-tax Act, 1961. The ITAT correctly noted that expenditure cannot be disallowed based on a mere estimate of what could have been incurred to earn exempted income. The Tribunal found no evidence to support that the expenditure was incurred to earn exempted income, thus ruling out the need for disallowance.
In conclusion, the High Court found no substantial questions of law to consider and dismissed the appeal.
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2009 (4) TMI 941
Issues involved:
The judgment involves challenges to penalty levied under section 271(1)(c) of the Income Tax Act in three separate appeals by M/s Mayur Overseas, M/s Raj Overseas, and M/s Yati Overseas for assessment years 2003-04 and 2004-05.
M/s Mayur Overseas:
M/s Mayur Overseas, engaged in manufacturing and export of carpets, filed its return of income claiming deduction under section 80-IB on export incentives. The AO disallowed the claim based on previous Tribunal orders. The CIT(A) upheld the disallowance, leading to penalty proceedings under section 271(1)(c). The assessee argued that the issue was debatable, citing similar cases where penalties were deleted. The ITAT considered the facts and found the claim to be bona fide, given the conflicting views on the admissibility of the deduction. Relying on various judgments, the ITAT allowed the appeal and deleted the penalty.
M/s Raj Overseas and M/s Yati Overseas:
Similarly, M/s Raj Overseas and M/s Yati Overseas, also involved in carpet manufacturing and export, faced disallowance of deduction under section 80-IB by the AO and CIT(A). The penalty under section 271(1)(c) was imposed, leading to appeals. The assessees argued that the issue was debatable, supported by expert opinions and legal precedents. The ITAT, considering the conflicting views of different High Courts and the bona fide nature of the claim, allowed the appeals and deleted the penalties in line with the recent order in a similar case.
Conclusion:
The ITAT, after thorough consideration of the facts and legal arguments, allowed all three appeals by M/s Mayur Overseas, M/s Raj Overseas, and M/s Yati Overseas, deleting the penalties imposed under section 271(1)(c) based on the debatable nature of the issue regarding the admissibility of deduction under section 80-IB on export incentives like duty drawback and DEPB.
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2009 (4) TMI 940
The Bombay High Court dismissed the appeal stating that if there is a change in closing stock, there must be a corresponding adjustment in the opening stock, in accordance with section 145A of the Income Tax Act, 1961. No substantial question of law was found. (2009 (4) TMI 940 - BOMBAY HIGH COURT)
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2009 (4) TMI 939
Issues Involved:
1. Imposition of penalty u/s 158-BFA (2) of the IT Act, 1961.
2. Determination of undisclosed income for the block period.
3. Validity of penalty proceedings and satisfaction of conditions for penalty imposition.
Summary:
1. Imposition of Penalty u/s 158-BFA (2) of the IT Act, 1961:
The primary issue in this appeal is the imposition of penalty u/s 158-BFA (2) of the IT Act, 1961. The search and seizure operation u/s 132 of the IT Act was conducted on the assessee's business premises, leading to the discovery of discrepancies in stock and unaccounted transactions. The assessing officer determined an undisclosed income of Rs. 43,85,705/- and initiated penalty proceedings. The assessee argued that the penalty was not applicable as the conditions for concealment of income or furnishing inaccurate particulars were not met. However, the assessing officer concluded that the provisions of section 158-BFA (2) did not require such conditions and imposed a penalty of Rs. 30,26,126/-.
2. Determination of Undisclosed Income for the Block Period:
The assessee filed a return showing nil undisclosed income for the block period. However, the assessing officer found discrepancies in stock and unaccounted purchases, leading to additions totaling Rs. 43,85,705/-. The assessee did not appeal against these additions, which included excess cash found, trading additions, and unaccounted purchases. The appellate authorities upheld the assessing officer's determination, emphasizing that the undisclosed income had attained finality and the penalty was automatic under section 158-BFA (2).
3. Validity of Penalty Proceedings and Satisfaction of Conditions for Penalty Imposition:
The assessee contended that the initial satisfaction for penalty imposition was not recorded, citing the decision in CIT vs. Ram Commercial Enterprises. However, the appellate authorities noted that the provisions of section 158-BFA (2) differed from section 271(1)(c) and did not require such satisfaction. The penalty was deemed automatic for undisclosed income determined in excess of the amount shown in the return. The assessee's failure to disclose the true income and the acceptance of the assessing officer's determination without appeal led to the conclusion that the penalty was rightly imposed.
Conclusion:
The appeal filed by the assessee was dismissed, and the penalty u/s 158-BFA (2) of Rs. 30,26,126/- was upheld. The order was pronounced in the open court on 30.04.2009.
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2009 (4) TMI 938
Estimation of household expenses - Addition on low household withdrawals - assessment u/s. 153A r/w s. 143(3) - assessee explained that the household expenses are met from self-contributions, contributions from his brother, i.e., the other appellant and another family member - expenses declared by the assessee have been held to be inadequate by the AO.
HELD THAT:- We find that before the claim of household expenses made by the assessee is to be rejected, the AO must bring out cogent material and evidence. In this case, reasons advanced by the AO are quite general in nature. In fact, the first reason relating to the household articles pointed out, does not turn much on the subject because such articles are a normal occurrence in urban household. There is no allegation by the AO, much less a finding, that the lifestyle or the expenditure on the gadgets was ostentatiously lavish.
Secondly, even estimation of household expenses admitted by the lady member of the family, can at best, be a yardstick to consider the acceptability of the expenses incurred by the assessee in the AY in question. Considering the amount admitted by the lady member of the family in the year 2003 and also household goods referred to by the AO, in the years under consideration, the amounts returned by the assessee on household expenses cannot be rejected as unbelievable or unreasonable.
Considering in the overall light and on the basis of absence of any adverse material on record, we find no justification with the AO to estimate the household expenses over and above those returned by the assessee in the respective assessment years. We, therefore, set aside the order of the CIT(A), and direct the AO to delete the additions.
Appeals of the assessee are allowed.
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2009 (4) TMI 937
Issues Involved:
1. Penalty u/s 271(1)(c) of the Income Tax Act, 1961.
2. Deemed Dividend u/s 2(22)(e) of the Income Tax Act, 1961.
3. Disallowance of Deduction u/s 80HHC of the Income Tax Act, 1961.
Summary:
1. Penalty u/s 271(1)(c) of the Income Tax Act, 1961:
The assessee challenged the penalty of Rs. 1,01,58,576/- levied u/s 271(1)(c) for alleged concealment of income. The AO had initiated penalty proceedings after disallowing the deduction u/s 80HHC and treating a credit balance from a sister concern as deemed dividend u/s 2(22)(e). The CIT(A) upheld the penalty related to the deemed dividend but noted that the Tribunal had set aside the disallowance of deduction u/s 80HHC for fresh adjudication.
2. Deemed Dividend u/s 2(22)(e) of the Income Tax Act, 1961:
The AO treated Rs. 59,25,916/- out of the total credit balance from M/s. Aagam Design Broderies Pvt. Ltd. as deemed dividend since the partners of the assessee firm had substantial interest in the said company. The Tribunal had earlier confirmed this addition based on the decision in Nikko Technologies (India) Pvt. Ltd. However, the Special Bench in ACIT vs. Bhaumic Colour Pvt. Ltd. later held that deemed dividend can only be assessed in the hands of a shareholder who is both the registered and beneficial shareholder. The assessee argued that it was under a bona fide belief that the amount was not taxable as deemed dividend since the shares were held by the partners and not the firm.
3. Disallowance of Deduction u/s 80HHC of the Income Tax Act, 1961:
The AO had disallowed the deduction u/s 80HHC due to negative income from export business after excluding export incentives. However, the CIT(A) noted that the Tribunal had set aside the disallowance for fresh adjudication in light of retrospective amendments to Section 80HHC by the Taxation Laws (Amendment) Act, 2005. The AO subsequently allowed the deduction u/s 80HHC, making the penalty on this ground unsustainable.
Conclusion:
The Tribunal found that the penalty related to the disallowance of deduction u/s 80HHC was not sustainable as the deduction was later allowed. Regarding the deemed dividend, the Tribunal noted that there was a reasonable justification for the assessee not showing it as deemed dividend in its return, given the subsequent clarification by the Special Bench. The Tribunal concluded that there was no concealment or furnishing of inaccurate particulars of income by the assessee. Therefore, the penalty levied was not justified, and the appeal of the assessee was allowed.
Order pronounced on 17.04.2009.
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2009 (4) TMI 936
The High Court of Bombay dismissed the appeal as no substantial question of law was found in the case. The Tribunal had accepted the transaction by M/s. Goldstar Finvest (P) Ltd. as genuine based on evidence and factual findings. No costs were awarded.
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2009 (4) TMI 935
Issues Involved:
1. Alleged Illegal Allotment of Land
2. Alleged Fraud and Misuse of Position by Society Office Bearers
3. Validity of the Complaint and Proceedings
4. High Court's Quashing of Criminal Proceedings
Issue-wise Detailed Analysis:
1. Alleged Illegal Allotment of Land:
The appellant, a director of the society, alleged that the respondents, who were office-bearers of the society, earned a substantial illegal gain by allotting a site to Gopal for Rs. 2,40,000, which was later sold for Rs. 28,00,000. The complaint suggested that this allotment was fraudulent as the market value of the property was significantly higher. The land in question was initially acquired in 1985-86, and some sites remained vacant. A request was made by Munivenkatappa (Gopal's father) for the release of land, which led to the allotment of the site to Gopal. Within three months, Gopal sold the property at a significantly higher price, but the sale deed showed a lower consideration amount.
2. Alleged Fraud and Misuse of Position by Society Office Bearers:
A complaint was filed before the Joint Registrar of Cooperative Societies, who submitted a report stating that the office-bearers conspired with Gopal to allot the site illegally. The report highlighted that there was no site No. 509 in the approved plan, and the site No. 142 had already been allotted to another individual. The society allegedly shifted site No. 509 to the location of site No. 142 and registered it in Gopal's name without proper authorization, indicating an illegal act by the board of directors.
3. Validity of the Complaint and Proceedings:
The respondents contended that the enquiry was conducted without their participation or notice, and that the proceedings before the Joint Registrar were still pending. The appellant filed a complaint under Section 200 of the Code of Criminal Procedure for an offence under Section 420 read with Section 34 of the IPC. The Magistrate took cognizance and issued summons to the respondents. The respondents filed an application under Section 482 of the Code to quash the criminal proceedings, which the High Court allowed, stating that the complainant did not provide sufficient material to substantiate the allegations and that the complaint seemed to be an abuse of the process of law.
4. High Court's Quashing of Criminal Proceedings:
The High Court quashed the criminal proceedings, reasoning that the complainant did not make Gopal or the subsequent purchaser parties to the case, and there was no material evidence to show the illegal transaction. The High Court opined that the allegations were imaginary and that the proceedings were initiated to settle personal scores. However, the Supreme Court held that the High Court erred in its judgment, as the complaint disclosed a cognizable offence. The Supreme Court emphasized that the allegations of conspiracy and illegal gain from the allotment were sufficient to proceed with the trial, and the appellant had the locus standi to file the complaint. The Supreme Court set aside the High Court's judgment, allowing the appeals and reinstating the criminal proceedings.
Conclusion:
The Supreme Court concluded that the High Court's decision to quash the criminal proceedings was incorrect. The allegations made by the appellant disclosed a prima facie case of conspiracy and illegal gain, warranting a trial. The Supreme Court reinstated the criminal proceedings, emphasizing that all contentions of the parties would be considered during the trial.
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2009 (4) TMI 934
Issues:
1. Whether the assessee is required to reverse the credit on inputs used for job work goods?
2. Interpretation of Cenvat Credit Rules, 2002 in the context of job work activities.
3. Application of Tribunal decisions and Larger Bench decisions on similar issues.
Issue 1: Reversal of Credit on Inputs for Job Work Goods
The case involved a dispute regarding the requirement for the assessee to reverse the credit on inputs used for job work goods. The Revenue issued a show cause notice demanding recovery of credit availed on chemicals and other inputs used for job work processing. The Assistant Commissioner initially dropped the demand, which was upheld by the Commissioner (Appeals). The central issue was whether the assessee, engaged in both manufacturing and job work activities, needed to reverse the credit on inputs used for job work goods.
Issue 2: Interpretation of Cenvat Credit Rules, 2002
The Tribunal analyzed the application of Rule 3 of the Cenvat Credit Rules, 2002 in the context of the assessee's activities. The case involved the utilization of cenvatable inputs for job work processing without reversing the credit. The Tribunal considered the provisions of Rule 12 and 13 of the Cenvat Credit Rules, 2002, along with the demand for recovery, interest, and penalty imposed by the Revenue. The interpretation of these rules was crucial in determining the assessee's liability to reverse the credit on inputs used for job work activities.
Issue 3: Tribunal and Larger Bench Decisions
The Tribunal referred to previous decisions, including a case involving the present assessee, where the issue had been settled. Citing judgments such as Bharat Gears Ltd., Jindal Polymers, and Shree Laxmi Metal Industries, the Tribunal highlighted the consistent interpretation regarding the reversal of credit on inputs for job work goods. The Tribunal also discussed the Larger Bench decision in Sterlite Industries vs. CCE and the subsequent appeal filed by the Revenue before the Mumbai High Court. The rejection of the Revenue's appeal by the High Court based on the Supreme Court's decision in Escorts Limited vs. Commissioner of Central Excise further supported the Tribunal's dismissal of the Revenue's appeal in the present case.
In conclusion, the Tribunal dismissed the Revenue's appeal, emphasizing the settled nature of the issue based on previous decisions and the rejection of the Revenue's appeal by the Mumbai High Court. The judgment reaffirmed the interpretation of the Cenvat Credit Rules, 2002 in the context of job work activities and upheld the decision in favor of the assessee, highlighting the consistent application of legal principles in similar cases.
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2009 (4) TMI 933
The High Court of Gujarat admitted the case and issued notice to the respondent on the substantial question of law regarding the computation of business profit under Section 80HHC. The question is whether 90% of the profits on transfer of DEPB should be excluded or the total amount received by the assessee.
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2009 (4) TMI 932
Whether appointment of a handicapped person, indisputably, is de' hors the advertisement?
Whether all other districts the Selection Committee had prepared `waitlist' and a large number of appointments had been made therefrom were not specifically been denied?
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2009 (4) TMI 931
Issues Involved:
The judgment addresses the following questions of law:
A) Tax treatment of amount realized on sale of additional quota of free sale sugar.
B) Disallowance of provision for interest on excess levy sugar price and sugar cane price.
C) Deduction of prior period expenses in computation of Book Profit for section 115JB.
D) Charging of interest u/s.234D on refunds granted prior to 1/6/2003.
Tax Treatment of Amount Realized on Sale of Sugar:
The High Court noted that a similar question had been rejected previously in a different case. The Court referred to a specific Income Tax Appeal No.908 of 2008 involving the same issue. The Court dismissed the appeal on this issue.
Disallowance of Provision for Interest on Sugar Prices:
Regarding the provision for interest on excess levy sugar price and sugar cane price, the Court observed that the revenue had accepted an earlier assessment order on the same issue. Therefore, the Court considered this question not substantial for adjudication.
Deduction of Prior Period Expenses:
The Court mentioned that the issue of allowing deduction for prior period expenses was covered by a Supreme Court judgment in the case of Apollo Tyres Ltd. v. Commissioner of Income Tax. As it was already settled law, the Court found no substantial question of law to be decided.
Charging of Interest on Refunds:
On the matter of charging interest u/s.234D on refunds granted before 1/6/2003, the Court highlighted that the relevant provision came into effect from 1/6/2003 and did not have retrospective application. Consequently, the Court concluded that the appeal did not raise any substantial question of law and dismissed it without costs.
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2009 (4) TMI 930
The Gujarat High Court disposed of the petition after the Designated Authority agreed to address the jurisdictional objections raised by the petitioners within four weeks. The petition was withdrawn with permission, leaving the rights and contentions of all parties open.
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2009 (4) TMI 929
Service tax on the elements of inputs used in the photography services - no dispute about maintaining details of inputs in the invoice - decision in the case of SHRI ROOPCHHAYA COLOUR STUDIO Versus COMMR. OF C. EX., HYDERABAD [2007 (8) TMI 264 - CESTAT, BANGALORE] contested, where it was held that inputs (magnet type or other storage devise) are excluded from purview of service tax when they are sold to the clients - Held that: - the decision in the above case upheld - appeal dismissed - decided in favor of appellant.
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