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Showing 121 to 140 of 1070 Records
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2013 (5) TMI 956
Issues involved: Interpretation of deduction under Sections 80HH and 80I/80IA of the Income Tax Act, 1961 for LPG Bottling Plants.
Judgment Summary:
Issue 1:
The main issue was whether the activity of bottling LPG Gas qualifies as production or manufacturing activity for the purpose of deduction under Section 80HH, 80I, and 80IA of the Income Tax Act, 1961. The Tribunal had held that the Appellant was not entitled to the deduction.
The High Court, in a previous judgment, found that the process of bottling LPG Gas constitutes manufacturing activity as it brings a new product into existence, making it marketable. This decision was supported by previous rulings in similar cases. The Revenue did not dispute the applicability of this decision to the current appeals.
Issue 2:
The second question in each appeal pertained to the quantification of the deduction amounts. Following the precedent set by the earlier judgment, the High Court ruled in favor of the assessee and against the Revenue for both Question No.1 and Question No.2 in each appeal.
Therefore, the appeals were allowed, and the questions were answered in the negative, favoring the assessee.
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2013 (5) TMI 955
Issues Involved:
1. Conviction u/s 302 IPC.
2. Credibility of prosecution witnesses.
3. Tainted investigation by the Investigating Officer.
4. Non-payment of dues as motive.
5. Defense arguments and cross-examination.
6. Independent witness testimony.
7. Judicial observations on investigation standards.
Summary:
1. Conviction u/s 302 IPC:
The appellant was convicted u/s 302 IPC by the Trial Court and sentenced to life imprisonment and a fine of Rs. 25,000/-. The High Court affirmed this judgment.
2. Credibility of Prosecution Witnesses:
Maya Devi (PW.3) and Birma (PW.4) testified that they witnessed the appellant dragging the deceased with a rope around her neck. Their presence at the scene was deemed credible despite defense claims about land cultivation practices.
3. Tainted Investigation by the Investigating Officer:
The initial investigation by SI Rajesh Kumar was found to be biased and in favor of the appellant. The High Court noted several lapses, including the failure to document dragging marks and the lack of forensic evidence collection. The investigation was later taken over by another officer who conducted it properly.
4. Non-payment of Dues as Motive:
The prosecution established that the appellant had a dispute with the deceased over Rs. 47,000/- for the sale of a buffalo. This was corroborated by multiple witnesses, including Omkar Singh (PW.8). The defense did not effectively challenge this motive.
5. Defense Arguments and Cross-examination:
The defense argued that the deceased was a woman of easy virtue and that the investigation was delayed and tainted. However, the defense failed to cross-examine key witnesses effectively or provide substantial evidence to support their claims.
6. Independent Witness Testimony:
Omkar Singh (PW.8) testified that the appellant had threatened to kill the deceased days before the incident. His testimony was considered credible and independent, further supporting the prosecution's case.
7. Judicial Observations on Investigation Standards:
The Court emphasized the need for ethical and unbiased investigations, highlighting that a tainted investigation undermines justice. The Court cited previous judgments to stress that lapses in investigation should not necessarily lead to acquittal unless they cast reasonable doubt on the prosecution's case.
Conclusion:
The appeal was dismissed, and the conviction and sentence were upheld. The Court expressed its anguish over the lack of action against the biased Investigating Officer and directed the Chief Secretary of Haryana to examine the case and proceed according to law.
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2013 (5) TMI 954
Issues involved: Appeal against order of CIT(A) under IT Act for assessment year 2007-08, disallowance of interest and commission under section 40A(2)(b) of the Act.
Issue 1 - Disallowance of Interest under section 40A(2)(b) of the Act:
The assessee, a firm/trust in the business of trading, filed its return for 2007-08 declaring income. During scrutiny, the AO disallowed interest expense of Rs. 11,03,2017 paid to related parties under section 40A(2)(b). CIT(A) upheld this disallowance citing excessive payment beyond market rate of 12% per annum. However, the Tribunal's decision for 2008-09 on a similar issue favored the assessee, stating the commission was legitimately paid for business purposes. The Tribunal found the interest rate of 15.5% paid by the assessee to related parties reasonable, considering private financiers' practices. Consequently, the addition of Rs. 11,03,207 was directed to be deleted.
Issue 2 - Disallowance of Commission under section 40A(2)(b) of the Act:
The AO also disallowed sales commission of Rs. 6,00,000 paid to related parties under section 40A(2)(b). CIT(A) confirmed this disallowance due to lack of evidence for services rendered. However, the Tribunal's decision for 2008-09 favored the assessee, allowing the commission payment as legitimate business expenditure. Relying on this decision, the Tribunal held in favor of the assessee for 2007-08 as well, directing the AO to delete the addition of Rs. 6,00,000.
In conclusion, the appeal of the assessee was allowed, and the additions of both interest and commission disallowances were directed to be deleted.
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2013 (5) TMI 953
Issues Involved:
1. Deletion of addition made on account of estimated unaccounted turnover and unaccounted income.
2. Scope of assessment u/s 153A.
3. Estimation of unaccounted turnover and Gross Profit (GP).
4. Telescopy of cash found during search against estimated profit.
5. Penalty u/s 271AAA on estimated profit.
Summary:
1. Deletion of Addition on Account of Estimated Unaccounted Turnover and Unaccounted Income:
The department objected to the deletion of the addition made on account of estimated unaccounted turnover and unaccounted income. The assessee argued that the addition was beyond the scope of assessment u/s 153A and should be based on incriminating documents found during the search. The Tribunal held that the addition can only be made on the basis of material found during the search or gathered by the AO at the time of framing the assessment. The Tribunal directed the AO to take the turnover of the assessee on account of undisclosed turnover for the months of August and September 2005 and compute the profit accordingly.
2. Scope of Assessment u/s 153A:
The Tribunal referred to the decision of the Hon'ble Andhra Pradesh High Court in the case of Gopal Lal Bhadruka Vs. DCIT, which held that the AO can take into consideration material other than what was available during the search for making an assessment of undisclosed income. However, in the present case, no material other than the dispatch register was found during the search. Therefore, the addition can only be made on the basis of the incriminating material found during the search.
3. Estimation of Unaccounted Turnover and GP:
The AO estimated the unaccounted turnover based on the rough cash registers found during the search and applied a GP rate of 4.81%. The CIT(A) directed the AO to estimate the unaccounted sales based on the seized documents relevant to the assessment year. The Tribunal upheld this approach and directed the AO to compute the profit based on the turnover recorded in the dispatch register for the months of August and September 2005.
4. Telescopy of Cash Found During Search Against Estimated Profit:
For the assessment year 2007-08, the CIT(A) allowed the telescopy of Rs. 50,58,000/- found during the search against the estimated profit on account of unrecorded turnover. The Tribunal found no infirmity in this approach and upheld the CIT(A)'s decision, confirming that the profit earned on account of unrecorded turnover should be treated as available with the assessee.
5. Penalty u/s 271AAA on Estimated Profit:
The AO levied a penalty of Rs. 1,79,860/- u/s 271AAA on the estimated profit of Rs. 15,87,500/-. The Tribunal held that penalty cannot be levied on estimated profit and cancelled the levy of penalty, following the precedent set in the case of M/s Shreeji Traders Vs. DCIT.
Conclusion:
The appeals of the assessee for assessment year 2008-09 and Cross Objection No.189/M/2011 were allowed in part, and the appeal in respect of penalty levied u/s 271AAA was allowed. The appeals of the department for assessment years 2006-07 and 2007-08 were dismissed. The order was pronounced in the open court on May 8, 2013.
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2013 (5) TMI 952
Issues Involved:
1. Legality of the penalty imposed on the petitioner.
2. Entitlement to parity with the exoneration of the co-accused, Mr. S.C. Saxena.
Summary:
Issue 1: Legality of the Penalty Imposed on the Petitioner
The petitioner, while working as AEN, was charge-sheeted on October 29, 1997, with four charges of misconduct. The Inquiry Officer initially found the charges proved, but upon further inquiry, found them not proved. The Disciplinary Authority disagreed and imposed a penalty of a 20% cut in the petitioner's monthly pension for five years. The Tribunal upheld this decision, concluding that the prescribed procedure was followed during the disciplinary action.
Issue 2: Entitlement to Parity with Co-Accused Mr. S.C. Saxena
The petitioner argued for exoneration based on the exoneration of Mr. S.C. Saxena, who faced similar charges. The Tribunal noted that the circumstances of Mr. Saxena and the petitioner were different, and thus, parity did not exist. The Tribunal agreed with the Disciplinary Authority's findings that the misconduct magnitude differed between the two.
Court's Analysis and Decision:
The High Court compared the charges against both the petitioner and Mr. Saxena, noting that the misconduct was allegedly committed in connivance. The court observed that if Mr. Saxena was exonerated, the petitioner should not be treated differently. The court highlighted the Supreme Court's principle that similar charges should result in similar penalties unless distinguishing features exist. The court found no dissimilarity in the cases of the petitioner and Mr. Saxena and criticized the authorities for not considering the same mitigating factors for the petitioner as they did for Mr. Saxena.
Conclusion:
The High Court set aside the penalty order dated August 12, 2009, and the Tribunal's order dated February 18, 2011. The petitioner was entitled to full pension on superannuation, with arrears to be paid within two months, failing which interest at 9% per annum would apply. The writ petition was allowed with no costs.
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2013 (5) TMI 951
Dishonor of Cheque - Vicarious liability - not involve in day to day conduct of the business - Quashing the summon orders passed by Metropolitan Magistrate in the complaint u/s 138 r/w sec. 141 of the Negotiable Instruments Act, 1881 against the Company Secretary of the accused Company - HELD THAT:- The prime objective of this Court is to remind all the Metropolitan Magistrates in Delhi to carefully scrutinize all the complaint cases being filed under Section 138 r/w 141 of the Act, against the accused companies at the pre-summoning stage and make sure that notice be directed only to those directors or employees of the company who satisfy the principles laid down in the aforesaid judgments. Summons must be issued only after giving due consideration to the allegations and the materials placed on record by the complainant. Undeniably, as per the aforesaid legal pronouncements, Managing Director and the Joint Managing Director are deemed to be vicariously liable for the offence committed by the company because of the position they hold in the company. Problem arises in cases where all the persons holding office in the company are sought to be prosecuted by the complainant, irrespective of whether they played any specific role in the incriminating act. One can also not lose sight of the fact that once such innocent persons are summoned, they have no choice but to seek bail and face the ordeal of trial. Many of such persons also approach the High Court under Section 482 Cr.P.C. to seek quashing of the summoning order and the complaint filed against them and this further increases the burden on the already overburdened Courts.
Therefore, With a view to ensure that the Metropolitan Magistrates dealing with the complaint cases filed under Section 138 r/w Section 141 of the Negotiable Instruments Act have a clear and complete picture of the persons arrayed by the complainant so as to hold them vicariously liable for the commission of the offence by the accused company, court is inclined to direct that the Magistrates must seek copies of Form-32 from the complainant to prima facie satisfy the Court as to who were the directors of the accused company at the time of commission of the alleged offence and on the date of filing of the complaint case. In addition to the above, the Magistrates must also seek information as given which is to be annexed by the Complainant on a separate sheet accompanying the complaint.
The Registry is directed to send a copy of this order to all the Metropolitan Magistrates posted in various district courts of Delhi for necessary compliance. Registry is further directed to send a copy of this order to all the Bar Associations of various district courts of Delhi, so that they can apprise the members of the Bar about the aforesaid directions.
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2013 (5) TMI 950
Issues involved: Jurisdiction to initiate proceedings u/s 153A of the Income Tax Act.
Summary:
The appeals were filed against the orders of the Ld.CIT(A)-41, Mumbai confirming additions made by the AO u/s 143(3) r.w.s. 153A for the Assessment Years 2001-02 & 2002-03. An additional ground was raised challenging the validity of the additions made u/s 153A. The assessment orders revealed that a search action u/s 132 was conducted on various premises related to the Balaji Group, but no such action was taken against the assessee. The DCIT confirmed that no search action u/s 132 was conducted on the assessee. Section 153A mandates a search or requisition u/s 132 or 132A for assessing or reassessing income. As no search was initiated u/s 132 against the assessee, the assessment proceedings were deemed invalid. The Tribunal quashed the assessment proceedings, allowing the additional grounds raised by the assessee, rendering other grounds moot.
The appeals filed by the assessee were allowed, and the assessment proceedings were deemed invalid due to the absence of a valid search u/s 132 against the assessee.
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2013 (5) TMI 949
Issues Involved:1. Disallowance u/s 40(a)(ia) for non-deduction of TDS on direct expenses. 2. Depreciation claim on vehicles. 3. Additional grounds raised by assessee. Summary:Issue 1: Disallowance u/s 40(a)(ia) for non-deduction of TDS on direct expensesThe main issue involved is the disallowance of Rs. 6,04,40,918/- u/s 40(a)(ia) for non-deduction of tax at source on payments made for bleaching, dyeing, embroidery, finishing, and printing charges. The Assessing Officer (AO) found that these expenses exceeded the threshold for TDS u/s 194C and disallowed the expenses for non-deduction of TDS. The CIT(A) partly allowed the appeal, holding that out of the total disallowance, Rs. 4,16,53,215/- had been paid during the year and only Rs. 1,87,87,703/- was payable at the end of the year, thus disallowing the latter amount. However, the ITAT overruled this, following the decision of the Hon'ble Calcutta High Court in the case of Commissioner of Income Tax, Kolkata-IV Vs. Crescent Export Syndicate, which held that the provisions of section 40(a)(ia) apply to all expenses whether paid or payable during the year. Issue 2: Depreciation claim on vehiclesThe AO disallowed the depreciation claim on two cars purchased for Rs. 8,50,000/- and Rs. 20,35,000/- due to lack of supporting bills/vouchers. The CIT(A) vacated this disallowance, noting that no depreciation was claimed in the return of income. The ITAT upheld this decision, directing the AO to allow the depreciation as per law after verifying the records. Issue 3: Additional grounds raised by assesseeThe assessee raised an additional ground before the CIT(A) for allowing depreciation on vehicles at 15% instead of 10%. The CIT(A) dismissed this ground, stating it did not arise from the assessment order. The ITAT, referencing the Supreme Court decision in the case of NTPC, held that the additional ground is a legal issue arising from the assessment record and needs to be adjudicated. The issue was remanded to the AO for fresh consideration. Conclusion:The appeal filed by the assessee is partly allowed for statistical purposes, and the appeal filed by the Revenue is allowed, upholding the AO's assessment order on the issue of disallowance u/s 40(a)(ia) for non-deduction of TDS.
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2013 (5) TMI 948
Issues Involved:
1. Jurisdiction of the Assessing Officer
2. Method of Valuation of Closing Stock
3. Interest Payment
4. Acceptance of Books of Accounts
5. Addition under Section 69C
6. Acceptance of Affidavits
7. Charging of Interest under Section 234A
8. Protective vs. Substantive Addition
Summary:
1. Jurisdiction of the Assessing Officer:
The assessee challenged the jurisdiction of the assessing officer of Bikaner, arguing that the notice u/s 153A was issued by the Asstt. CIT, Central Circle, Bikaner, while the assessee was regularly assessed by the ITO, Ward-1, Sriganganagar. The court found that the transfer of jurisdiction was valid as it was for administrative convenience and coordinated investigation, and the reasons were recorded and communicated to the assessee. Thus, the grounds challenging jurisdiction were rejected.
2. Method of Valuation of Closing Stock:
The assessee changed the method of valuation of closing stock from market rate to weighted average cost price in the returns filed in response to notice u/s 153A. The court held that the change in the method of valuation of closing stock is permissible if bona fide reasons exist, and only real income can be taxed. The change was considered valid, and the ground was allowed in favor of the assessee.
3. Interest Payment:
The addition of interest payments of Rs. 6,81,333 and Rs. 6,44,000 was made by the assessing officer under section 68, which was contested by the assessee. The court found that since the principal amount of Rs. 60 lakhs was already surrendered as income, the interest payments should not be added again. Thus, the ground was allowed, and the addition was deleted.
4. Acceptance of Books of Accounts:
The books of accounts prepared from seized documents were not accepted by the assessing officer. The court held that the books of accounts prepared from the seized documents should be accepted as they were reliable and gave a true and correct picture of the affairs of the assessee. The rejection of books of accounts was deemed illegal, and the ground was allowed.
5. Addition under Section 69C:
The addition under section 69C for unexplained expenditure was contested by the assessee. The court found that the addition was not justified as the expenses were already accounted for in the books of accounts prepared from the seized documents. Thus, the ground was allowed, and the addition was deleted.
6. Acceptance of Affidavits:
The affidavits submitted by the assessee and his wife regarding the source of ornaments and maintenance of books of accounts were not accepted by the assessing officer. The court held that the affidavits should be accepted unless the deponent is cross-examined. The rejection of affidavits without cross-examination was deemed against the principles of natural justice, and the ground was allowed.
7. Charging of Interest under Section 234A:
The interest under section 234A was contested by the assessee, arguing that the delay in filing the return was due to the delay in receiving the seized documents from the department. The court directed that interest should be waived up to the date of final supply of copies of documents/accounts, and the ground was allowed accordingly.
8. Protective vs. Substantive Addition:
The addition made on a protective basis in the hands of the assessee was contested. The court held that the income surrendered by Dr. S.S. Tantia should be assessed in his hands on a substantive basis and not in the hands of the trust or other entities. The ground was allowed, and the protective addition was deleted.
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2013 (5) TMI 947
Issues involved: Challenge to the correctness of the order of the Ld. CIT(A)-9, Mumbai regarding the deletion of disallowance made u/s. 40A(ia) in respect of charges paid to Stock Exchange for assessment year 2007-08.
Summary:
- The Revenue challenged the deletion of disallowance of Rs. 54,12,157/- made u/s. 40A(ia) in respect of charges paid to Stock Exchange.
- The Assessing Officer disallowed the amount on the grounds of non-deduction of tax at source as charges were considered fees for technical services.
- The Ld. CIT(A) allowed the appeal in favor of the assessee based on precedent.
- The issue of deductibility of transaction charges was discussed, with reference to decisions of the Jurisdictional High Court and the Supreme Court.
- The AO was directed to allow expenditure on VSAT and Leaseline charges but to disallow transaction charges pending the outcome of the Special Leave petition filed by the assessee.
- The Revenue's appeal was partly allowed based on the above considerations.
This judgment clarifies the treatment of various charges paid to the Stock Exchange, distinguishing between VSAT, Leaseline, and transaction charges. It emphasizes the importance of tax deduction at source and refers to relevant legal precedents to determine the deductibility of such charges. The decision highlights the significance of following jurisdictional High Court rulings and awaiting the outcome of pending legal matters before disallowing certain expenses.
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2013 (5) TMI 946
Issues Involved:
1. Assessment of Short Term Capital Gain of Rs. 42 lacs.
2. Disallowance of expenses of Rs. 74,923/- against business income.
Issue 1: Assessment of Short Term Capital Gain of Rs. 42 lacs
The assessee contested the order of the Ld. CIT(A)-1, Jaipur, which confirmed the action of the assessing officer in assessing Short Term Capital Gain of Rs. 42 lacs. The grounds included:
- The assessee was held as the owner of the land sold to his wife, Radha Devi Khatoria, despite the land being sold by Shri Bharat Singh and Shri Vijay Pal Singh via a power of attorney dated 15/11/2006.
- The agreement dated 17/11/2006 through which Radha Devi Khatoria acquired rights from Smt. Manju Yadav was deemed invalid as it was not registered.
- Reliance on the replies given by Shri Bharat Singh and Smt. Manju Yadav in response to notices u/s 131 & 133(6) respectively, without allowing cross-examination.
- Incorrect interpretation of documents and incorrect application of sec. 50C, ignoring that the assessee did not sell any land to his wife.
The assessing officer concluded that the assessee executed a sale deed for land measuring 0.30 hectares, originally owned by Shri Bharat Singh, for Rs. 42 lacs. The Ld. CIT(A) upheld that only 0.15 hectares were transferred to Miss. Manju Yadav, and the remaining 0.30 hectares were sold by the assessee without valid ownership, thus invoking sec. 50C for capital gains computation.
Issue 2: Disallowance of expenses of Rs. 74,923/- against business income
The Ld. CIT(A) confirmed the disallowance of expenses claimed by the assessee, stating that no evidence was provided to show that such expenses were incurred wholly and exclusively for business purposes.
Judgment:
1. Assessment of Short Term Capital Gain:
- The ITAT found that the assessee executed the sale deed as a power of attorney holder, not as the owner of the land. The sale consideration of Rs. 42 lacs was adopted by the stamp valuation authority, but the assessee had no independent right in the land.
- The ITAT concluded that the assessee was neither the owner nor the deemed owner of the land, and thus, the capital asset could not be considered his property. Therefore, the application of sec. 50C was unjustified.
- The addition of Rs. 42 lacs as capital gains was directed to be deleted.
2. Disallowance of Expenses:
- The ITAT upheld the Ld. CIT(A)'s decision, as the assessee failed to provide evidence that the expenses were incurred for business purposes.
- The disallowance of Rs. 74,923/- was sustained.
Conclusion:
The appeal by the assessee was partly allowed, with the deletion of the addition of Rs. 42 lacs as capital gains and the sustenance of the disallowance of Rs. 74,923/- in business expenses. The order was pronounced in the open court on 27.05.2013.
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2013 (5) TMI 945
Rejection of books of accounts u/s 145(3) - Unexplained Expenditure u/s 69C - Assessee was using the project completion method of accounting for years. Assessee's books of accounts were rejected by A.O. as he did not produce them during assessment proceedings. CIT(A) reexamined the issue and estimated the profit at 10% of the gross receipts after approving the rejection of the books of account. Also, ld. CIT(A) deleted the addition made by the A.O. u/s 69C of the IT. Act, 1961. - HELD THAT:- The approach adopted by the ld. CIT(A) regarding estimated income and Section 69C is correct and reasonable in comparison to the AO, thus approved the order of the ld. CIT(A).
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2013 (5) TMI 944
Issues Involved:
1. Legal propriety of the order taking cognizance by the learned Additional Chief Judicial Magistrate.
2. Justification of the High Court's order discharging the accused-respondent.
Summary:
Legal Propriety of the Order Taking Cognizance:
The Supreme Court examined whether the Additional Chief Judicial Magistrate's order taking cognizance was legally valid. The Court referred to various precedents, including *Ranjit Singh v. State of Punjab*, *Kishori Singh v. State of Bihar*, and *M/s. India Carat Pvt. Ltd. v. State of Karnataka*. It concluded that the Magistrate is entitled to take cognizance of an offence under Section 190(1)(b) of the Code of Criminal Procedure even if the police report suggests no case against the accused. The Magistrate can independently apply his mind to the facts emerging from the investigation and take cognizance if deemed fit. Therefore, the order taking cognizance by the learned Additional Chief Judicial Magistrate was found to be legally sound.
Justification of the High Court's Order Discharging the Accused-Respondent:
The Supreme Court scrutinized the High Court's decision to discharge the accused-respondent, Prem Prakash, based on the setting aside of the cognizance order by the revisional court. The High Court had observed that the order of framing charges could not be sustained as the order taking cognizance had not been challenged. However, the Supreme Court noted that the accused-respondent had suppressed the fact that charges had already been framed against him by the trial court. This suppression of facts amounted to playing fraud with the court. The principle "when infrastructure collapses, the superstructure is bound to collapse" was deemed inapplicable as the order was obtained through fraudulent means. The Supreme Court invoked its power under Article 142 of the Constitution to set aside the High Court's order and restore the order framing charges, directing the trial to proceed.
Conclusion:
The appeal was allowed, and the orders passed by the High Court and the learned Additional District and Sessions Judge, No.1, Jodhpur, were set aside. The trial pending before the learned Additional District and Sessions Judge, No. 3, Jodhpur, was directed to proceed in accordance with law.
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2013 (5) TMI 943
Issues Involved:
1. Estimation of the cost of construction and addition on account of unexplained investment.
2. Treatment of anonymous donations and their taxability.
3. Denial of exemption u/s 11 based on the nature of the institution.
4. Validity of reopening assessments u/s 147 based on the DVO's report.
Summary:
Issue 1: Estimation of Cost of Construction and Unexplained Investment
The Revenue challenged the CIT(A)'s decision regarding the estimation of the cost of construction of a college building. The Assessing Officer (AO) had rejected the assessee's books of account u/s 145(3) and estimated the cost using CPWD rates, adding a difference of Rs. 4,14,19,828 as unexplained investment u/s 69B. The CIT(A) considered the DVO's report, which showed a nominal difference of 6.58% between the declared investment and the estimated cost, and deleted the addition. The Tribunal upheld the CIT(A)'s decision, noting that differences below 10% are typically ignored in judicial pronouncements.
Issue 2: Treatment of Anonymous Donations
The AO treated Rs. 75 lakhs received as anonymous donations as capitation fees, denying exemption u/s 11. The CIT(A) observed that the assessee paid tax on these donations u/s 115BBC and utilized the funds for charitable purposes. The Tribunal confirmed that the assessee, being registered u/s 12A, should be granted exemption u/s 11, as the donations were used for educational activities.
Issue 3: Denial of Exemption u/s 11
The AO denied exemption u/s 11, alleging the institution was profit-oriented. The CIT(A) ruled that the assessee, registered u/s 12AA, was eligible for exemption as it utilized funds for charitable purposes. The Tribunal supported this view, stating that surplus income below 15% of total receipts does not negate the charitable nature of the institution.
Issue 4: Validity of Reopening Assessments u/s 147
The Revenue contested the CIT(A)'s annulment of assessments reopened based on the DVO's report. The CIT(A) found that reopening assessments solely on the DVO's report without independent application of mind by the AO was invalid. The Tribunal upheld this decision, citing judicial precedents that the DVO's report alone cannot justify reopening assessments u/s 147.
Conclusion:
The Tribunal dismissed all appeals by the Revenue, confirming the CIT(A)'s decisions on all issues. The order was pronounced in the open court on 28/05/2013.
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2013 (5) TMI 942
Issues Involved:
1. Disallowance u/s 40(a)(ia) on processing charges paid to SBI.
2. Disallowance u/s 40(a)(ia) on clearing house charges.
3. Deduction u/s 36(1)(viia) for Bari Brahmana Branch.
4. Depreciation on wooden partitions.
5. Disallowance u/s 40(a)(ia) on interest paid to Jammu Development Authority.
Summary:
1. Disallowance u/s 40(a)(ia) on processing charges paid to SBI:
The AO disallowed Rs. 87,67,358/- u/s 40(a)(ia) for non-deduction of tax at source u/s 194J on processing charges paid to SBI. The CIT(A) deleted the disallowance, stating that processing charges are integral to interest and no tax was required to be deducted. The Tribunal concurred, noting that processing charges are part of interest as defined in section 2(28A) and thus, provisions of section 194A and 194J are not attracted. Ground No.1 of the Revenue was dismissed.
2. Disallowance u/s 40(a)(ia) on clearing house charges:
The AO disallowed Rs. 12,89,857/- u/s 40(a)(ia) for non-deduction of tax on MICR charges. The CIT(A) deleted the disallowance, stating that MICR clearing is done by machines without human intervention, following the Supreme Court decision in CIT vs. Bharti Cellular Ltd. The Tribunal upheld this view, confirming that no tax is required to be deducted on MICR charges. Ground No.2 of the Revenue was dismissed.
3. Deduction u/s 36(1)(viia) for Bari Brahmana Branch:
The AO disallowed the deduction u/s 36(1)(viia) for the Bari Brahmana Branch, stating it is not a rural branch due to its population. The CIT(A) allowed the deduction, noting the branch is located in village Kartholi with a population of 314. The Tribunal upheld this, referencing a similar decision by the ITAT Amritsar Bench. Ground No.3 of the Revenue was dismissed.
4. Depreciation on wooden partitions:
The AO allowed 10% depreciation instead of 100% on wooden partitions. The CIT(A) allowed 100% depreciation, considering them temporary structures in rented premises. The Tribunal agreed, noting that wooden partitions in leased premises are not enduring in nature and thus, 100% depreciation is justified. Ground No.4 of the Revenue was dismissed.
5. Disallowance u/s 40(a)(ia) on interest paid to Jammu Development Authority:
The AO disallowed Rs. 2,58,25,857/- u/s 40(a)(ia) for non-deduction of tax on interest paid to Jammu Development Authority. The CIT(A) allowed the claim, following the ITAT Delhi Bench decision in a similar case. The Tribunal upheld this, confirming that Jammu Development Authority is exempt from TDS under section 194A(3)(iii)(f). Ground No.5 of the Revenue was dismissed.
Conclusion:
The appeal filed by the Revenue in ITA No.206(Asr)/2013 was dismissed. Order pronounced in the open court on 28th May, 2013.
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2013 (5) TMI 941
The High Court of Allahabad directed respondent no. 3 to decide on the petitioner's applications for re-exporting goods within one month from the date of the order. The applications had been pending for almost two years. (Case Citation: 2013 (5) TMI 941 - ALLAHABAD HIGH COURT)
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2013 (5) TMI 940
Issues Involved:
1. Deletion of addition on account of investment in earning Agricultural Income.
2. Deletion of addition on account of interest on interest-free loans.
3. Allowance of claim under section 54F of the I.T. Act.
4. Disallowance under section 14A read with Rule 8D.
5. Disallowance under section 40(a)(ia).
Summary:
Issue 1: Deletion of addition on account of investment in earning Agricultural Income
The Assessing Officer (AO) added Rs. 1,66,727/- to the income of the assessee, estimating that 40% of the gross agricultural receipts should be disallowed as expenditure. The CIT(A) deleted this addition, accepting the assessee's claim of reasonable agricultural income based on the size of the land and the arrangement with the cultivator. The Tribunal confirmed the CIT(A)'s order, finding no merit in the Revenue's argument.
Issue 2: Deletion of addition on account of interest on interest-free loans
The AO disallowed Rs. 79,364/- as interest on interest-free advances given to M/s Chandigarh Cable Pvt. Ltd., citing lack of commercial expediency. The CIT(A) deleted the addition, following the Supreme Court's decision in S.A. Builders Ltd. The Tribunal partially upheld the CIT(A)'s order, allowing interest on advances for business purposes but disallowing interest on advances for land acquisition due to the amendment to section 36(1)(iii).
Issue 3: Allowance of claim under section 54F of the I.T. Act
The AO disallowed the assessee's claim of Rs. 5,67,904/- under section 54F for constructing rooms on the first floor of an existing house, distinguishing it from the Madras High Court's decision in CIT v. P.V. Narasimhan. The CIT(A) allowed the deduction, and the Tribunal confirmed this decision, agreeing that construction on the first floor constitutes a new residential house.
Issue 4: Disallowance under section 14A read with Rule 8D
The AO disallowed Rs. 32,930/- under section 14A read with Rule 8D for investment in shares. The CIT(A) confirmed the disallowance. The Tribunal reduced the disallowance to Rs. 5,000/-, noting that Rule 8D was not applicable for the assessment year 2006-07 and considering the small amount of investment and its age.
Issue 5: Disallowance under section 40(a)(ia)
The AO disallowed Rs. 73,79,647/- for non-deduction of TDS on interest payments, distinguishing between hire charges and loan interest. The CIT(A) confirmed the addition. The Tribunal upheld the addition of Rs. 68,52,119/- for loan interest, following the Calcutta High Court's decision, and remitted the issue of Rs. 5,27,528/- hire charges back to the AO for re-examination.
Conclusion:
The Tribunal partly allowed both the Revenue's and the assessee's appeals, confirming some additions, reducing others, and remitting certain issues for further examination.
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2013 (5) TMI 939
Issues involved: Clarification on the meaning of "access to the engine" and the procedures for preservation and maintenance of the engine.
Clarification on "access to the engine": The petitioner sought access to the engine for integrity checks, maintenance, and testing, including fitting onto an aircraft. The respondents argued that the engine cannot be moved without a bond and must be tested by a governmental agency like Air India Ltd. The court clarified that the petitioner's access means engaging Air India Ltd for preservation and maintenance, with no authority to direct specific actions. Air India Ltd will carry out the works at the petitioner's cost.
Procedures for preservation and maintenance: If Air India Ltd requires moving the engine for testing, the petitioner must provide a provisional release bond. After testing, the engine will be returned to the customs warehouse. These directions do not affect the parties' rights and contentions. Customs Authorities are taking action regarding the engine, which will be in accordance with the law.
This judgment clarifies the scope of "access to the engine" and outlines the procedures for preservation and maintenance, ensuring that Air India Ltd handles the tasks while the petitioner bears the costs.
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2013 (5) TMI 938
Issues involved: Transfer pricing adjustment on sales made to associate enterprise (AE) u/s 92C of the Income Tax Act, 1961.
Summary:
1. Facts: The assessee imported rough diamonds and exported polished diamonds, engaging in international transactions with an AE in Belgium. The Transfer Pricing Officer (TPO) calculated a profit margin of 5.95% on operating costs, leading to a TP adjustment of Rs. 1,17,06,870. The CIT(A) upheld only 3 comparables with a margin of 6.28%, resulting in a reduced adjustment of Rs. 89,04,458.
2. Assessee's Argument: The assessee contested the computation of TP adjustment based on the entire operating cost, emphasizing that adjustments should only apply to AE sales' operating expenses. Citing the Hindustan Uniliver Ltd. case, the assessee argued for a recalculated adjustment specific to AE sales.
3. Revenue's Position: The Revenue referred to the IHG IT Services case and the Finance Act 2012 amendment, asserting that the +/- 5% range benefit should only apply if the arms length price variation stays within 5%. They agreed to adjustments solely concerning AE sales.
4. Judgment: The Tribunal noted discrepancies in the AE sales value and the need for recalculating the TP adjustment specifically for AE sales. Emphasizing that adjustments should be based on international transactions, not total sales, the Tribunal set aside the CIT(A)'s decision and remanded the case to the AO/TPO for a fresh order after reassessment and providing the assessee with a hearing opportunity.
5. Outcome: Both appeals were allowed for statistical purposes, with the order pronounced on 6th May 2013.
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2013 (5) TMI 937
Issues:
The issues involved in this case are the waiver and stay against the demanded amount of service tax and education cesses for the period from April 2004 - March 2009, with specific breakdowns for different categories like Management Consultancy, Manpower Recruitment or Supply Agency, Airport Service, and CENVAT credit.
Management Consultancy Service:
The appellant, a company involved in developing and operating an international airport, faced a demand for service tax on payments made to foreign promoters/shareholders for various services. The demand was under the reverse charge mechanism. The appellant claimed a prima facie case against the demand, particularly regarding the remuneration paid to employees of the Swiss company. The Tribunal found a prima facie case in favor of the appellant as the demand was not sustainable on facts or in law.
Airport Service Demand:
Another significant demand was related to 'airport service' for the period from 2005-06 to 2008-09. The demand was on tender fees and pre-award costs collected from unsuccessful bidders, which were non-refundable as per tender conditions. The appellant argued that these fees were not collected as consideration for any service, making the demand unsustainable. The Tribunal agreed with the appellant's arguments and found a prima facie case in their favor.
Legal Consultancy Demand:
A demand of &8377; 24,11,025/- included legal consultancy services that became taxable only from a specific date. The demand also covered reimbursements made to the Swiss company for bonuses paid to employees. The appellant contended that certain portions of the demand were prior to the introduction of relevant legal provisions, making them unsustainable. The Tribunal favored the appellant's arguments, citing precedents to support their case.
Expenses Reimbursement Demand:
The demand of &8377; 17,15,138/- was related to reimbursements made to foreign companies/promoters for expenses incurred in the airport project. The appellant argued that the demand was prior to the enactment of specific legal provisions and that such reimbursements were not taxable before a certain date. The Tribunal found a prima facie case in favor of the appellant.
CENVAT Credit Issue:
There was no significant debate on the CENVAT credit issue in this case.
Conclusion:
Ultimately, the Tribunal granted a waiver of pre-deposit and stay of recovery against the outstanding dues adjudged against the appellant, considering the prima facie cases made by the appellant in various aspects of the demands raised against them.
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