Assessability of leave and licence income received - to be assessed as profit and gains of business or as income from other sources - Held that:- As discussed the director’s report dated 26/08/2003 with respect to licence fee with American Express Bank, which came to an end on 31/03/2003 after which a new licence agreement was entered into by the assessee with British Deputy High Commission, ratio laid down in Sultan Brother Pvt. Ltd. (1963 (12) TMI 4 - SUPREME COURT), Karanpura Development Company Ltd. vs CIT (1961 (8) TMI 7 - SUPREME COURT) identical fact in the case of Chennai properties [2015 (5) TMI 46 - SUPREME COURT] laid down the proposition that where as per the object clause in the Memorandum of Association, was to acquire and hold properties which in turn were let out, then the income arising from such letting out was assessable in the hands of the assessee as income from business - decided in favour of the assessee.
Claim of expenses on account of staff recruitment/ training expenses - Held that:- The issue arising in the present appeal is squarely covered against the assessee in view of the order of the Hon'ble High Court in the case the assessee.[2015 (6) TMI 638 - ITAT MUMBAI] as held an overall appreciation of the evidence and explanation submitted on behalf of the assessee, we are of the view that the assessee has failed to explain and substantiate that the expenditure on staff training and salary pad to Mr. Naval Kumar was wholly and exclusively for the purpose of business of the assessee. We, therefore, confirm the orders of revenue authorities - Decided against assessee.
Set off of unabsorbed depreciation - rectification of mistake u/s 154 - Assessing Officer opined that in view of section 32(2) of the Act such unabsorbed depreciation is not allowable to be set off of against the income of assessment year 2007-08 - Held that:- The decision in Mepco Industries Ltd. (2009 (11) TMI 24 - SUPREME COURT), Soora Subramanian (2009 (10) TMI 579 - MADRAS HIGH COURT) and Sri Ram Chits (Bang.) Ltd. (2013 (12) TMI 481 - ITAT HYDERABAD) held that the assessment based upon the Supreme Court decision cannot be rectified on subsequent retrospective amendment of law. Thus order of rectification u/s 154 of the Act, for AY 1998-99, levying interest for the first time 234B is not valid and since it was a debatable issue no rectification u/s 154 of the Act is permissible. We are in agreement with the conclusion drawn by the ld. Commissioner of Income Tax (Appeals) because in Mepco Industries Ltd. held that debatable issue cannot be rectified u/s 154 of the Act, thus, the order of rectification dated 14/10/2011 was rightly quashed by the ld. Commissioner of Income Tax (Appeals). We find no infirmity in the order, thus, appeal of the Revenue is dismissed.
Adjustment of sanctioned refund against the demand confirmed - case of appellant is that such adjustment of the refund against pending demands have been held to be bad by various decisions of the Tribunal - Held that:- After sanctioning refund claim, the same was adjusted against the demand confirmed vide Order-in-Original No.01/2006 dated 27.2.2006. The said order of the Commissioner was impugned by the appellant before the Tribunal and even during the relevant period, when the refund was sanctioned, appeal was pending before the Tribunal - The said Final Order of the Commissioner being Order-in-Original No.1/2006 dated 27.2.2006 already stands set aside by the Tribunal vide its Final Order No.22046/2014 dated 13.11.2014 and the matter stands remanded to the original adjudicating authority.
The quantum of refund involved in the present appeal and already sanctioned on merits is required to be given to the appellant in cash - appeal allowed by way of remand.
Capital gain on tenancy rights transfer - Cost with reference to certain modes of acquisition - AO denied the indexation in view of the provisions of section 55(2)(a) - cost of acquisition of tenancy rights is to be treated as nil, if the assessee has not paid any purchase price for the acquisition of the same - Date of acquisition of tenancy rights by the father of the assessee - Held that:- Since the tenancy rights have been dealt with/discussed in section 55(2)(a), the provisions of section 55(2)(b) are not attracted in the case of the assessee. Section 55(3) states that where cost for which the previous owner acquired the property cannot be ascertained the cost of acquisition to the previous owner will be the fair market value on the date on which the capital asset became the property of the previous owner.
Date of acquisition of tenancy rights by the father of the assessee is required to be ascertained and further whether the father of the assessee had acquired the tenancy rights on paying some price or not and whether the provisions of section 55(3) are applicable to the case of the assessee are the questions of facts and law which are required to be determined by way of appreciation of evidence.
Photostat copies of the rent receipts shows that there are certain notable differences and discrepancies in the said receipts when the said receipts are compared with each other e.g. the signatures of the landlord Shri Krishanraj Dwarakadas Kapadia appears to be different on different receipts and even there is tampering in dates of receipts and further in one of the receipts the date has been mentioned as 31st Jan 06 by striking off ‘199’. The possibility of any or some of the receipts to be true or correct cannot be ruled out. We restore this issue to the file of the AO with the direction that the AO will give proper opportunity to the assessee to produce the evidences relating to the tenancy rights and cost of the acquisition of the tenancy rights by the father of the assessee in the property in question and thereafter to decide the issue afresh as per provisions of law and in the light of observations made above.
Whether the provisions of section 54 are applicable in case of transfer of tenancy rights? - Held that:- A.R. of the assessee has fairly admitted that the issue is covered against the assessee by the decision of the co-ordinate Bench of the Tribunal in the case of “Meher R Surti vs. ITO” (2015 (4) TMI 52 - ITAT MUMBAI). So, the issue raised vide ground No.2 is accordingly dismissed.
Addition of advances - Held that:- As confirmed that cheques have been handed over to the appellant only as a measure of security for supply of scrap or for the purpose of obtaining the loan, but all of them have denied having obtained any loan from the appellant. The statements given by those people remains uncontroverted. AO is justified in entertaining doubt that the appellant is engaged in the business of money lending and the cheques have been obtained, only after the amounts were advanced since in the absence of any positive evidence in support of the appellant having lent money to the above persons, we are not in a position to confirm the addition. Additions are deleted.
Estimation of profits, we heard the rival parties. Admittedly, there is no incriminating material seized as a result of search and seizure operation indicating that the Books of Accounts maintained by the assessee are either defective or appellant had inflated the expenditure or suppressed the sales resulting in lower returned income. It is trite law that in the absence of any incriminating material suggesting that book results should be rejected the addition cannot be made on estimate basis in the assessment made u/s. 153A. Accordingly, the addition is deleted. Hence, this ground of appeal filed by the assessee is allowed.
Additions u/s 69A - unexplained money in the bank accounts - corroborative evidence to indicate that the earlier withdrawn money was re-deposited in the bank accounts - Held that:- We find force in the contention of the learned counsel that in the earlier years [2014 (10) TMI 975 - ITAT PANAJI] the Tribunal has decided all these issues in favour of the assessee and against the Revenue. Respectfully following the order of the Coordinate Bench, appeal filed by the Revenue is dismissed.
Maintainability of petition - alternative remedy - rate of VAT - H.P. VAT Act 2005 - sale of cellphone chargers and other accessories - Held that: - It is not in dispute that respondents No. 3 and 4 are authorities constituted under the H.P. VAT Act, 2005, and therefore, even if it is assumed that there is an illegal or irregular exercise of jurisdiction the same would not result in the order being without jurisdiction. Even if there has been some defect in the procedure followed during the hearing of the case, it does not follow that the authority has acted without jurisdiction. It may make the order irregular or defective, but the order cannot be a nullity so long as it has been passed by an authority which was competent to pass the order. There is basic difference between want of jurisdiction and an illegal or irregular exercise of jurisdiction and if there is noncompliance of rules of procedure, the same cannot be a ground for granting one of the writs prayed for. In either case, the defect, if any, can according to the procedure established by law be corrected only by a court of appeal or revision.
The writ petitioner has not only an alternative and efficacious, rather a proper remedy under the provisions of H.P. VAT Act, 2005 and therefore, the present petition is not maintainable.
Scope of section 5(2) of the CST Act - installation and for supply of accessories - whether the finding of the Tribunal that section 5(2) of the CST Act is attracted to the transaction in question is correct or not?
Held that: - Section 5(2) of the CST Act provides that a sale or purchase of goods shall be deemed to take place in the course of import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by transfer of documents of title to the goods before the goods have crossed the customs frontiers of India - In the judgment reported in M/s.Binani Bros. (P) Ltd. v. Union of India [1973 (12) TMI 77 - SUPREME COURT OF INDIA], the question considered was whether the sales by the assessee to Government Department were in course of import and exempted under section 5(2) of the CST Act. Referring to the precedents, the Apex Court held that to occasion import there must exist such a bond between the contract of sale and the actual importation with each link inextricably connected with one immediately preceding it and that without such a bond a transaction of sale cannot be called a sale in the course of the import of goods into the territory of India.
The genuineness of the documents produced are undisputed. Once the genuineness of these documents are accepted, it could definitely be concluded that in the import of the goods by the respondent, there exists a bond between the contract of sale land the actual importation and each link thereof is inextricably connected with one immediately preceding it. This, therefore, shows that in the transaction in question leading to import and the sale of the equipment to MMDC, all the requirements that are laid down by the Apex Court are satisfied.
The order of the Tribunal concluding that section 5(2) of the CST Act is attracted to the case in hand is perfectly legal and does not merit any interference - revision dismissed.
Revision u/s 263 - wrong allowability of claim of tax credit under section 90 - residential status of assessee - Held that:- When the order of the AO was set aside in respect of issue is relating to the claim of tax credit under section 90 AO went altogether into a different footing and changed the status of the assessee as non-resident. CIT has remitted the matter back to the Assessing Officer specifically with regard to the claim of tax credit under section 90 of the Act and when the information filed by the assessee was found false, again fresh information was filed and the Assessing Officer was directed to pass fresh assessment order after receiving details from Canada Revenue Agency. AO, without following the directions of the CIT, by simply changing the status of the assessee, allowed the claim of the assessee.
The order of the CIT setting aside the assessment his direction to make a fresh assessment in accordance with law cannot be read in isolation, but, it must be read in the context in which the CIT has exercised his powers of revision. In the present case, the ld. CIT has exercised his power in the context of tax credit claimed by the assessee under section 90 of the Act. The status of the assessee as to whether resident or non-resident is not before the CIT.
CIT correctly exercised his power under section 263 and again set aside the order passed by the Assessing Officer. - Decided against assessee.
Imposition of Penalty - Held that: - conduct of the respondent does not appear to be questionable in view of cooperation rendered to the Department to discharge not only tax liability but also interest liability - penalty not justified - appeal dismissed - decided against Revenue.
Accrual of interest - Addition being interest on year marked funds (i.e. Development Fund & Infrastructure Development Fund) - assessment as income - Held that:- CIT(A) has given too much of emphasis on how the monies are invested – in a current account with District Co-operative Bank or in fixed deposits elsewhere. That is not material in the present context. What is material is that income from interest on these funds does not accrue to the assessee and even interest receipts are at the disposal only in accordance with Government directions on disposal of the funds relating to infrastructure development. The assessee does not get any unfettered discretion to use such interest earnings, but these earnings only add up to the corpus which can be used in terms of Government directives and for the purpose of infrastructure development. That aspect of the matter being undisputed it is of considered view that interest in question cannot be treated as income of the assessee. - Decided in favour of assessee.
Offence under PMLA - provisional attachment orders - Held that:- The scheduled offences have been committed and the appellant has connived with others in opening various loans and bank accounts using forged papers and documents and in the process the bank has been defrauded of considerable amount. It was also observed that Shishir P. Dharkar is apparently in control of affairs of the Bank. He has issued certain instructions to the CEO, the appellant, in connection with certain matters and it is not reasonable to believe that he was not in control of things in Pen Bank. He, Shishir P. Dharkar was either Director or Chairman during the period and was in control of the affairs of the Bank. It was also not believed that the acts done by the appellant were not in the knowledge of other and without their approval. The charge sheet has already been filed in the court of law against various persons including the Appellant. In these circumstances the Adjudicating Authority has confirmed Provisional Attachment of the properties. From the tenor of the reply filed by the appellant and the stand taken before the Adjudicating Authority, it appears that the appellant is not claiming any right in the properties which have been attached.
The appellant has admitted that none of the properties of the said appellant has been attached nor he has any interest in any of the properties which have been provisionally attached and in respect of which the attachment order has been confirmed. On the allegation and the pleas of the appellant that he acted bona fide and in the interest of the bank, the alleged offences of opening the bogus accounts and purchasing the properties from the money of the bank in the name of one of the customers, appellant cannot be absolved of by this Tribunal of his acts.
The prima facie observations made by the Adjudicating Authority cannot be challenged successfully by the appellant under Section 26 of the PMLA, 2002. The prima facie observations made by the Adjudicating Authority will not impact the criminal trial in the criminal cases. In the circumstances, even prima facie no inference can be drawn in favour of the appellant on the allegations made by him. In any case in the present proceedings, this Tribunal is concerned with whether the attachment of the properties confirmed by the Adjudicating Authority is entitled to be sustained or not. Merely on the allegations of the appellant that he cannot be held liable for the illegalities committed, the properties which are the proceeds of crime cannot be released from attachment on this ground raised by the appellant.
The thrust of Section 5 is to attach every property involved in money laundering irrespective of whether it is in possession of the person charged of having committed a scheduled offence or any other person - provided however, it must be shown to have proceeds of crime and further, the proceeds of crime are likely to be concealed, transferred or dealt with in any manner, which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under the Act. The action of attachment is not in relation to a person as such but essentially to freeze the proceeds of the crime.
Any observation made by the Adjudicating Authority in the order impugned by the appellant before this Tribunal will not entitle the appellant to have the order of confirmation set aside.
Prima facie, from the material as detailed even hereinbefore, it cannot be said that there is no evidence against the appellant. In the present facts and circumstances the appellant is not entitled for findings from this Tribunal on the pleas ‘whether the appellant is guilty of the offence alleged against him or not’ and ‘whether he opened the bogus accounts and due money from them to purchase the land in the interest of the business of the bank’.
The properties which have been attached are not in the name of the appellant. The appellant himself has claimed that the properties attached are the properties of the bank though in the name of other persons and those persons are ready to transfer those properties in the name of the bank. Whether this will absolve the appellant of his acts or not is not to be decided by this Tribunal while considering whether the confirmation order of the properties is sustainable in the facts and circumstances and in law.
The Appellant in the facts and circumstances is not entitled to seek quashing of order of confirmation, impugned by the appellant before this Tribunal on any of the grounds as raised by him. No illegality or infirmity in the order challenged before us has been pointed out or canvassed successfully before this Tribunal. There are no grounds to set aside the order of confirmation of the properties which were acquired from the funds of the bank by opening the bogus bank accounts and drawing the money from the same and purchasing the properties in the name of a customer and not in the name of the bank. The properties involved are the proceeds of crime as contemplated under the Act.
Accumulation of income for application to the extent of 15% of net receipts u/s. 11(1)(a) - allowance at 15% of gross receipts or net receipts i.e.; gross receipts less Revenue expenditure - Held that:- The assessee is to be allowed accumulation of income for application for charitable purposes u/s. 11(1)(a) of the Act at 15% of gross receipts following the decision in the case of Bai Sonabai Hirji Agiary Trust v ITO (2004 (9) TMI 300 - ITAT BOMBAY-E). - Decided in favour of assessee
Principles of Natural Justice - the complaint of the appellant was that the third respondent, who was the Adjudicating Officer, is not supplying the copies of various documents, which were being relied on by him - Held that: - We are not impressed by the pleas taken by the appellant as we have already noticed in view of the fact that the adjudicatory order has already been passed, necessarily the appellant will have to challenge it before the statutory Authority. That the appellant would have to deposit the amount, is an obligation attached to the filing of the appeal - appeal dismissed - decided against appellant.
Disallowance of Contribution towards Gratuity & Superannuation Fund and provision for bad debts - Held that:- We find that it is held by Hon’ble Allahabad High Court force in assessee’s own case for A. Y. 2009-10 that it is an undisputed fact that the assessee’s enjoying the benefit of section 80P (2) and the deduction is not dependent on the quantification of claim made by the assessee and therefore if there is any addition made in the income, the deduction allowable u/s 80P (3) also increases by the same amount and as a consequence, the addition becomes tax neutral. Appeal of the assessee is allowed.
Approval of Bench to holding Extraordinary General Meeting u/s 186 of the Companies Act, 1956 - Held that:- On hearing the submissions and pleadings of the Petitioner Counsel, it appears that there are two shareholders in the Respondent Company, one is the Petitioner holding 99.99% shareholding in the company, another is Mr Jeifrey Waterous holding one share in the company, he resigned from the company as director in the year 2011 itself and since then he is not available for attending any meeting of the company. It needless to say one member cannot be situated quorum to hold general meeting, therefore, it can be said that it has become impracicable to hold general meeting of Respondent Company, then the only recourse available to the Petitioner to hold Extraordinary General Meeting (except ACM) in the company is invoking jurisdiction u/s 186 of the Companies Act, 1956.
It is evident under section 186 of the Act 1956, when it is impracticable to hold General Meeting. then any member or director can take recourse under this section to call a meeting of a company other than annual general meeting with the leave of 18. Here, in this Company, no directors are continuing, there is only one shareholder, who ordinarily cannot hold meeting without approval of CLB. Hence, CLB, invoking jurisdiction under section 186 of the Companies Act, 1956, holds that the petitioner alone shall be deemed to constitute a meeting, and authorises the petitioner to call. hold and conduct EoGM on 21.7.2015 at 4.00 PM.
As to other reliefs, CLB need not give any special direction for the appointment of Directors as mentioned in relief (a), because EoGM can take a decision with the powers it has, for which CLB need not give any directions.
Sealed cover procedure - case on completion of investigation by the CBI - Held that:- The decision of the DPC to keep the case of the petitioner in the sealed cover cannot be sustained. At the relevant time when the DPC was held on 14.10.2012, none of the three circumstances mentioned in paragraph 2 of the O.M. 14.9.1992 was present to justify resort to the sealed cover procedure. The mere fact that a decision had been taken to initiate disciplinary proceedings and issue a charge-sheet before that date on 28.12.2011, would be of no consequence, in view of the specific requirement in the second paragraph of the O.M. that for resort to sealed cover procedure charge-sheet must have been issued and disciplinary proceedings must be pending. Paragraph 7 also does not help the respondents because it cannot be intended to cover cases where promotion was withheld in the first instance by wrong resort to sealed cover procedure. In the present case the charge-sheet was eventually issued only on 21.6.2013, about six months after the holding of the DPC on 14.10.2012 when the petitioner's case had been wrongly placed in sealed cover. Hence, in my view paragraph 7 would not be attracted.
Accordingly, this writ petition is allowed. It is directed that the sealed cover be opened and if the petitioner was found fit for promotion by the DPC held on 14.10.2012, he be given promotion from the date his immediate junior was promoted. The petitioner would also be entitled to all consequential benefits.
The High Court of Kerala disposed of a writ appeal, directing that a previous judgment would govern the case of the respondent. The appeal was filed against a judgment in a writ petition and was disposed of in accordance with a Division Bench judgment.
CENVAT credit - inputs/capital goods - telecom towers/erection of towers - case of appellant is that the disputed service falls under definition of input service - Held that: - It is an admitted fact on record that the appellant is a service tax assessee, duly registered under the Service Tax statute for providing the telecom services. Installation of telecom towers are for the purpose of providing the output service by the appellant - Since the disputed services have been used by the appellant for erection of the telecom towers, which is used for providing the taxable output service, it will not be appropriate to deny the Cenvat benefit - appeal allowed - decided in favor of appellant.
Validity of notice after case being transferred - Reopening of assessment - file transferred by ITO Ward-26(4) to ITO Ward - 26(3) noticing jurisdiction over the appellant - Held that:- ITO Ward-26(3), New Delhi had proceeded with the framing assessment without issuing fresh notice u/s 148. It means that ITO Ward-26(4), New Delhi had no valid jurisdiction over the appellant, at the time of issuing notice u/s 148 of the Act. In such circumstances, it was held by the Hon’ble Allahabad High Court in the case of CIT Vs. M/s MT Builders Pvt. Ltd., (2012) 349 ITR 271 (All.) that the notice issued by an Officer who had no valid jurisdiction over the assessee is invalid. The notice under Section 148 of the Act issued by the Income Tax Officer, Ward-26(4) is non est in the eyes of law since he had no valid jurisdiction over the appellant either territorial as notified under Section 124 of the Act or by transferring the case under the provisions of Section 127 of the Act.
Now, the question is whether the action of the Income Tax Officer, Ward-26(3) New Delhi was valid in law in concluding the assessment proceedings based on the notice issued under Section 148 of the Act by the Income Tax Officer, Ward-26(4) who had no valid jurisdiction to issue the notice. The issue of valid jurisdiction is a condition precedent to the validity of any assessment under Section 147 of the Act; therefore, the assessment made pursuant to such notice is bad in law. Thus no hesitation to quash the reassessment proceedings since there was no valid notice pursuant to which the reassessment proceeding was made in the present case - Decided in favour of assessee.
Payment of tax with interest before issuance of SCN - succession of business - amalgamation - Held that: - it is an admitted fact that all the transactions were recorded in the Books of Account maintained by the appellant - it is admitted fact that the factory with respect to which the demand under reverse charges was made has been succeeded by the present appellant, during the period in question, amalgamation proceedings was going on before the Hon'ble High Court and the final order was passed only on 2.7.2009 and as such during such transit period, it cannot be said that the appellant have deliberately defaulted in discharging the Service Tax - the appellant have deposited the tax and as such they are entitled to the benefit under the provisions of Section 73(3) of the Finance Act, 1994.
The appellant was entitled to the benefit under the provisions of Section 73(3) and no show-cause notice is required to be issued - penalty set aside - appeal allowed - decided in favor of appellant.
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