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2008 (7) TMI 1009
Issues involved:
The judgment involves the issue of addition of cash credits by the Assessing Officer and the subsequent deletion of the same by the learned Commissioner, which was upheld by the Tribunal. The key question was whether the findings recorded by the learned CIT(A) in deleting the addition made by the assessing officer on account of unexplained cash credits were justified in law.
Details of the Judgment:
Search Operation and Notices u/s 158BD:
A search operation was conducted, and notices were issued under Section 158BD. The assessee filed a return in response to the notice declaring nil as undisclosed income. The initiation of proceedings under Section 158BD was challenged on the grounds that regular returns for earlier years had already been filed.
Assessing Officer's Findings:
The Assessing Officer noted a credit of Rs. 1,00,000 and another credit of Rs. 3,87,000. Out of the latter, Rs. 2,00,000 was explained from a transfer entry, and the remaining Rs. 1,87,000 was added to the income. Additionally, an amount of Rs. 8,000 was also added with no explanation provided regarding its source.
Decision of Commissioner and Tribunal:
The Commissioner found that the credit entries were part of the details filed by the assessee along with regular returns for the relevant assessment years. Citing precedents, it was held that these entries could not be subject to proceedings under Chapter XIV-B. The Tribunal affirmed this decision, emphasizing that entries in regular books of accounts can be considered under Chapter XIV-B only if not disclosed to the department.
Interpretation of Sections 158BA and 158BB:
The Court analyzed Sections 158BA and 158BB, highlighting that assessments under Chapter XIV-B are in addition to regular assessments. The undisclosed income for the block period should not include income already assessed in regular assessments. The computation of undisclosed income under Section 158BB involves reducing disclosed income from the aggregate total income of the block period.
Conclusion:
Since the returns for the relevant year were filed before the search operations, and the income in question was already shown in those returns, it could not be added again during assessment under Chapter XIV-B. The appeal was dismissed, ruling in favor of the assessee and against the Revenue.
This judgment clarifies the treatment of disclosed income in regular returns during block assessments and underscores the importance of considering such disclosures in determining undisclosed income for the block period.
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2008 (7) TMI 1008
Reopening of the assessment u/s 148 - time limitation - change of opinion - after the expiry of four years of the completion of the original assessment - beyond time-limit provided in the proviso to s. 147 - deduction on interest - Tribunal set aside the order of the CIT(A) and annulled the assessment proceedings without going into the merits of the case - HELD THAT:- We are of the view that we cannot find fault with the reasoning given by the Tribunal in non-suiting the Revenue for reopening the assessment. After extracting the relevant provision, viz., s. 147 of the IT Act and the proviso thereto, the Tribunal has recorded a clear finding to the effect that the assessee has truly and fairly disclosed the facts regarding interest vide item No. 3 in the note forming part of the return.
Having recorded the above findings, the Tribunal had also referred to the judgment of this Court in the case of Apollo Hospitals Enterprises Ltd. vs. Asstt. CIT [2006 (6) TMI 88 - MADRAS HIGH COURT] to sustain their view point.
Therefore, it is manifestly clear that particulars about the claim of interest amount are very much available before the AO while he was framing the original assessment, and after taking into consideration the claim on interest in respect of the abovesaid amount, the original assessment was framed.
The subsequent reopening of the assessment is nothing but in our considered view also a mere change of opinion to follow the earlier year assessment order, which is not the reason for reopening of the assessment u/s. 147 of the IT Act. Further, the reopening of the assessment cannot also be brought within the exemption stated therein for reopening after the period of four years.
Hence, the appeals are dismissed as no question of law, much less, a substantial question of law, has to be decided by this Court.
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2008 (7) TMI 1007
Classification or categorization of the income - "income from long-term capital gain" OR "income from other sources" - amount in issue was paid to the appellant only to safeguard Mr. Dalvi from any claim(s) likely to be made against him by the person who had booked the flats through the appellant, since Mr. Dalvi did not construct the flats as agreed by him earlier - HELD THAT:- It is clear that the appellant has not received the amount in issue from Mr. Dalvi towards either acquiring or releasing or relinquishing any right or title or interest whatsoever, in the immovable property. The appellant was paid separately for relinquishing his interest in the immovable property, appropriate amount along with interest. Obviously therefore, the amount in issue cannot be said to be an amount received by the appellant as a compensation for relinquishing his interest in the immovable property and therefore cannot be considered under the head "Capital gain".
We agree with the observation of the Tribunal that the amount in issue was paid to the appellant only to safeguard Mr. Dalvi from any claim(s) likely to be made against him by the person who had booked the flats through the appellant, since Mr. Dalvi did not construct the flats as agreed by him earlier.
Thus, considering over all facts and circumstances of the case and the factual findings recorded by all the three lower authorities, we are unable to accept the contentions of the appellant, firstly that the amount in issue received by the appellant is not an income at all, as defined u/s 2(24) of the said Act and that alternatively this income of the appellant is required to be treated as "income from long-term capital gain" and not as "income from other sources" as contemplated by section 14 r/w section 56 of the said Act.
We hold that all the three lower authorities were fully justified in treating the receipt of amount in issue by the appellant, not only as an income but also as income received by the appellant from other source as contemplated by section 14 r/w section 56 of the said Act and subject the same to taxation accordingly.
The appellant has thus, failed to raise any question of law by the present appeal. The appeal is therefore dismissed, accordingly.
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2008 (7) TMI 1006
The Supreme Court dismissed the appeal citing the decision in Commissioner of Central Excise v. M/s. Bajaj Auto Finance Ltd. (Civil Appeal No. 5993/2007).
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2008 (7) TMI 1005
Issues Involved:
The judgment involves the disallowance of proportionate expenditure in respect of exempted dividend income by the Assessing Officer, the decision of the Commissioner of Income Tax (Appeals) to delete the addition, and the rejection of the revenue's appeal by the Income Tax Appellate Tribunal.
Disallowance of Proportionate Expenditure:
The assessee, engaged in various activities including running a business center and earning dividend income, claimed exemption for the dividend income without claiming any expenses against it. The Assessing Officer disallowed proportionate expenditure and added &8377; 11,68,796. The Commissioner of Income Tax (Appeals) deleted this addition, stating that the Assessing Officer's estimation of expenses was based on surmises and conjectures.
Decision of Income Tax Appellate Tribunal:
The Income Tax Appellate Tribunal rejected the revenue's appeal, noting that the Assessing Officer did not provide a cogent reason for disallowing the expenditure. The Tribunal emphasized that without material or basis for disallowance, making an estimate-based disallowance was unjustified. Considering the various activities of the assessee and the nature of dividend income, the Tribunal found no justification for the proportionate disallowance of expenditure.
Conclusion:
Both the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal based their decisions on factual considerations, with no substantial question of law arising for the Court's consideration. Consequently, the Court dismissed the appeal filed by the revenue.
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2008 (7) TMI 1004
Issues involved: Challenge to impugned notice u/s 158BD of the IT Act, 1961 based on search conducted in partnership firm's premises.
Judgment Summary:
Issue 1: Invocation of provision of s. 158BD without fulfillment of mandatory conditions precedent
The petitioners challenged the impugned notice u/s 158BD on the grounds that the authority did not reach the mandatory satisfaction required by law before invoking the provision. The senior counsel argued that no material or books of accounts were seized during the search to support the satisfaction needed for invoking s. 158BD. The counsel referred to relevant legal provisions and judgments to support the contention that the conditions precedent for invoking s. 158BD were not met in this case.
Issue 2: Compliance with provisions of ss. 158BB and 158BD for computation of undisclosed income
The senior counsel emphasized the importance of fulfilling the conditions under ss. 158BB and 158BD for the computation of undisclosed income. Referring to legal precedents, the counsel argued that the power under s. 158BD could only be exercised subject to the fulfillment of statutory conditions. The judgment of the Hon'ble apex Court and a Division Bench of the Court were cited to support the argument regarding the necessity of meeting the statutory requirements.
Issue 3: Independent satisfaction and compliance with legal requirements
The arguments presented by the Revenue's counsel highlighted that the Addl. Director of IT, Bhavnagar, prepared a report leading to the satisfaction recorded by the authority for issuing the impugned notice u/s 158BD. The counsel contended that there was no error of jurisdiction and that the satisfaction was in compliance with the law. The Court was urged not to quash the impugned notices based on the submissions made by the Revenue's counsel.
In the final analysis, the Court considered the submissions from both sides and closely examined the compliance with the provisions of law, particularly ss. 158BB and 158BD. It was observed that the impugned notice failed to fulfill the mandatory conditions precedent required before resorting to or invoking s. 158BD. The Court, in line with legal precedents and clear observations from relevant judgments, quashed and set aside the impugned notice dated 16th July, 1998. All the petitions were allowed, and the rule was made absolute. The Registry was directed to place a copy of the judgment in each connected matter.
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2008 (7) TMI 1003
Issues Involved:
1. Deletion of addition on account of royalty payments.
2. Deletion of addition on account of non-compete fees.
3. Deletion of addition on account of depreciation on marketing know-how.
4. Deletion of addition on account of sales promotion/omission.
5. Validity of assessment proceedings and violation of principles of natural justice.
6. Addition of interest under section 14A of the Act.
7. Treatment of payment for acquiring marketing know-how.
8. Addition of provision for doubtful debts under section 115JB.
9. Levy of interest under section 234B and 234C on tax payable under section 115JB.
10. Restriction of disallowance under section 14A.
11. Allowing of depreciation in respect of royalty payments.
Detailed Analysis:
1. Deletion of Addition on Account of Royalty Payments:
The Revenue's appeal contested the deletion of Rs. 75,50,000/- on account of royalty payments made. The Assessing Officer considered the royalty payments as capital expenditure, arguing that they were part of the acquisition cost of brands from M/s. Lyka Labs Ltd. However, the CIT(A) found that these payments were recorded in the books of accounts and were part of the disclosed transactions. The Tribunal upheld the CIT(A)'s decision, emphasizing that the transactions were genuine and recorded in the regular books of accounts, and hence, could not be treated as undisclosed income under Section 158B(b) of the I.T. Act.
2. Deletion of Addition on Account of Non-Compete Fees:
The Revenue challenged the deletion of Rs. 2,25,00,000/- paid as non-compete fees. The Assessing Officer treated this payment as capital expenditure. The CIT(A) disagreed, noting that the payment was recorded in the books and was a disclosed transaction. The Tribunal supported the CIT(A)'s view, stating that the non-compete fees were part of regular business transactions and could not be considered undisclosed income.
3. Deletion of Addition on Account of Depreciation on Marketing Know-How:
The Revenue's appeal included the deletion of Rs. 2,50,00,000/- on account of depreciation on marketing know-how. The Assessing Officer disallowed the depreciation, arguing that the marketing know-how did not qualify as "know-how" under Section 35AB of the I.T. Act. The CIT(A) and the Tribunal found that the marketing know-how was part of disclosed transactions and recorded in the books of accounts, and thus could not be treated as undisclosed income.
4. Deletion of Addition on Account of Sales Promotion/Omission:
The Assessing Officer had estimated Rs. 20,00,000/- as disallowance out of sales promotion expenses. The CIT(A) deleted this addition, and the Tribunal agreed, noting that no material was found during the search to support the disallowance.
5. Validity of Assessment Proceedings and Violation of Principles of Natural Justice:
The assessee's appeal raised issues regarding the validity of assessment proceedings and violation of principles of natural justice, but these were not pressed during the hearing. The Tribunal confirmed the CIT(A)'s order on these issues.
6. Addition of Interest under Section 14A of the Act:
The assessee contested the addition of Rs. 3,60,900/- under Section 14A, arguing that investments were made from own funds and not borrowed funds. The Tribunal accepted the assessee's claim and deleted the addition.
7. Treatment of Payment for Acquiring Marketing Know-How:
The assessee claimed that Rs. 10 crores paid for marketing know-how should be treated as revenue expenditure. The CIT(A) treated it as capital expenditure but allowed depreciation. The Tribunal, referencing similar cases, concluded that the expenditure was revenue in nature and allowed the assessee's claim.
8. Addition of Provision for Doubtful Debts under Section 115JB:
The assessee contested the addition of Rs. 30,98,217/- for provision for doubtful debts while computing income under Section 115JB. The Tribunal found that the provision was for ascertained liabilities and deleted the addition.
9. Levy of Interest under Section 234B and 234C on Tax Payable under Section 115JB:
The Tribunal, following decisions from other cases, held that no interest under Sections 234B and 234C is chargeable while computing income under Section 115JB, and canceled the interest levied.
10. Restriction of Disallowance under Section 14A:
The Revenue's appeal contested the CIT(A)'s restriction of disallowance under Section 14A to Rs. 3,60,900/- as against Rs. 17,26,124/-. The Tribunal's decision in the assessee's appeal rendered this ground moot.
11. Allowing of Depreciation in Respect of Royalty Payments:
The Revenue challenged the allowance of depreciation of Rs. 69,97,585/- in respect of royalty payments. The Tribunal agreed with the CIT(A) that the royalty payments formed part of the cost of acquiring brands and were eligible for depreciation under Section 32 of the Act.
Conclusion:
The Tribunal dismissed the Revenue's appeals and partly allowed the assessee's appeal, confirming the CIT(A)'s decisions on various grounds and emphasizing the importance of proper documentation and genuine transactions in tax assessments.
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2008 (7) TMI 1002
Issues involved: Appeal u/s 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal regarding disallowance of depreciation on the use of boiler shared with sister concerns.
Facts: The assessee, engaged in manufacturing glue flakes, claimed depreciation on a boiler shared with sister concerns. Assessing Officer disallowed depreciation due to shared use. CIT (A) deleted the addition, but ITAT allowed revenue's appeal based on Section 38(2) of the Act.
Legal Analysis: Section 32 allows depreciation for assets used for business. Section 38(2) restricts deductions if assets are not exclusively used for business. ITAT upheld disallowance under Section 38(2) due to shared use of the boiler.
Arguments: Assessee's counsel argued for depreciation based on Delhi High Court and Madras High Court decisions. Revenue's counsel supported ITAT's decision, highlighting shared expenses and lack of evidence on surplus steam sale.
Judgment: Court upheld ITAT's decision, stating the boiler was not exclusively used by the assessee. Cited cases were distinguished as they involved exclusive use for business, unlike the shared use in this case. No substantial question of law found, appeal dismissed.
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2008 (7) TMI 1001
Restoration of appeal - review - the decision in the case of YUSUF DHANANI Versus COMMISSIONER OF CUSTOMS (EP), MUMBAI [2007 (10) TMI 55 - CESTAT, MUMBAI] contested - Held that: - Application filed by the respondents is remitted back to the Tribunal for decision.
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2008 (7) TMI 1000
Issues involved: Appeal u/s 260A of the Income-tax Act, 1961 against order of Income-tax Appellate Tribunal for assessment year 1991-92.
Facts: The appellant, a Co-operative Society in Punjab, claimed exemption u/s 80P(2)(a)(iii) and 80P(2)(a)(iv) for the assessment year 1991-92. Initially, deduction was allowed based on a Punjab High Court decision, but later Supreme Court ruled that deduction u/s 80P(2)(iii) is only for co-operative societies with agriculturist members. Assessing Officer re-opened the case based on this ruling, disallowing deductions claimed.
Commissioner's Decision: Commissioner upheld disallowance u/s 80P(2)(iii) but allowed deduction u/s 80P(2)(iv) citing inapplicability of Supreme Court ruling.
Tribunal's Decision: Tribunal upheld re-opening of the case and re-assessment, stating that notice u/s 148 was validly issued based on law at that time. Even though Supreme Court ruling was overruled later, retrospective amendment made the re-assessment valid.
Grounds of Appeal: Appellant challenged re-opening of assessment post Supreme Court's overruling of the earlier judgment, questioning the validity of notice u/s 148 and consequent re-assessment.
Court's Analysis: Court found no merit in the appeal. Notice u/s 148 was validly issued based on the law at that time, and subsequent developments in law were considered during re-assessment. Retrospective amendment validated the re-assessment, making it legally sound.
Conclusion: Appeal dismissed as no substantial question of law arose from the Tribunal's order.
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2008 (7) TMI 999
Whether the respondent by not maintaining separate accounts in respect of their byproduct viz. spent sulphuric acid cleared under Notification No.4/2006-CE for specific end use are required to maintain separate accounts and because of the failure whether they should pay 10% of the value as required under Rule 6(3)?
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2008 (7) TMI 998
The appeal was filed against the decision of the Commissioner (Appeals) regarding the eligibility for exemption notification No.2/95-CE. The Tribunal found no merit in the appeal filed by the Revenue and rejected it as the matter was already covered by a previous decision cited by the Commissioner (Appeals).
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2008 (7) TMI 997
The Bombay High Court admitted an appeal regarding three substantial questions of law related to depreciation on shunt capacitors leased to Rajasthan State Electricity Board. The questions involved ownership and depreciation allowance in finance lease transactions. The Respondent waived service.
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2008 (7) TMI 996
Issues involved: Tax Appeal u/s 260A of the Income-tax Act for assessment year 2003-04 regarding deduction u/s 10B and u/s 80HHC.
Deduction u/s 10B:
The Revenue appealed against the remand of the matter by the Income-tax Appellate Tribunal for reconsideration of deduction u/s 10B. The Tribunal observed no dispute about the 100% EOU status from 1.11.2002 and directed the Assessing Officer to work out profits and grant relief in line with CBDT Circular. The Standing Counsel argued for keeping the entire issue open for fresh consideration by the Assessing Officer. The Court clarified that the Assessing Officer should reexamine the matter comprehensively.
Deduction u/s 80HHC:
Regarding deduction u/s 80HHC, the Tribunal remanded the issue to the Assessing Officer for decision in light of an amendment, despite the CIT(A) having already considered and rejected the claim. The Court decided not to formulate any question of law on this issue as it was restored to the Assessing Officer for further review.
Conclusion:
The Tax Appeal was dismissed with the clarification that the Assessing Officer should revisit both deduction u/s 10B and u/s 80HHC afresh, considering all aspects of the issues involved.
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2008 (7) TMI 995
The Supreme Court dismissed the appeal in the case with citation 2008 (7) TMI 995. Justices S.H. Kapadia and B. Sudershan Reddy delivered the order.
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2008 (7) TMI 994
Issues Involved:
1. Summary dismissal of writ petition by the High Court.
2. Legality of closure and lockout of the company.
3. Sale of company property without workers' consent.
4. Validity of tripartite agreement.
5. Role and authority of the Representative Union.
6. Jurisdiction of Debt Recovery Tribunal (DRT) and Recovery Officer.
7. Applicability of Sick Industrial Companies (Special Provisions) Act (SICA).
8. Equitable jurisdiction under Article 136 of the Constitution.
Issue-Wise Detailed Analysis:
1. Summary Dismissal of Writ Petition by the High Court:
The appellant's writ petition was summarily dismissed by the High Court, which observed that it was not a fit case to entertain under Article 226 of the Constitution. The Supreme Court upheld this decision, noting that the appellant had alternative remedies available, such as approaching the Debt Recovery Appellate Tribunal or Labour Forum, which he did not pursue.
2. Legality of Closure and Lockout of the Company:
The appellant contended that the company's closure and lockout were illegal as they were done without notice and permission under the Industrial Disputes Act. However, the Supreme Court found that the company had been incurring losses since the eighties, leading to its closure in 1995, and that the BIFR had already recommended winding up the company.
3. Sale of Company Property Without Workers' Consent:
The appellant argued that the sale of the company's property was done without the consent of the workers and at a throwaway price. The Supreme Court noted that the sale was part of a settlement involving all stakeholders, including the Representative Union, and that the property was sold for Rs. 46.65 crores, which was above the distress valuation price.
4. Validity of Tripartite Agreement:
The tripartite agreement between the company, the Representative Union, and the purchaser was challenged by the appellant. The Supreme Court found that the agreement was valid as it was signed by all three parties and that the settlement was in the best interest of all stakeholders, including the workers, who received Rs. 22.21 crores towards their dues.
5. Role and Authority of the Representative Union:
The Representative Union's authority to enter into the settlement was questioned. The Supreme Court upheld the Union's authority under the Bombay Industrial Relations Act, 1946, which gives the Representative Union exclusive rights to represent workers in the industry. The Court cited previous judgments affirming that the decisions of the Representative Union are binding on all employees.
6. Jurisdiction of Debt Recovery Tribunal (DRT) and Recovery Officer:
The appellant contended that the Recovery Officer of the DRT could not have confirmed the sale. The Supreme Court noted that the Recovery Officer acted within his jurisdiction, and the sale was confirmed after following due process, including inviting claims from workers and creditors.
7. Applicability of Sick Industrial Companies (Special Provisions) Act (SICA):
The appellant argued that the sale violated an interim order by BIFR restraining the company from disposing of its assets. The Supreme Court found that the BIFR had recommended winding up the company in 1996, and the sale was part of the settlement process approved by all stakeholders, including the BIFR.
8. Equitable Jurisdiction Under Article 136 of the Constitution:
The Supreme Court emphasized that Article 136 is a discretionary power and should be exercised sparingly. The Court found no extraordinary flaws or grave injustice in the High Court's decision and noted that setting aside the sale at this stage would cause serious prejudice to all parties involved, including the workers.
Final Order:
The Supreme Court dismissed the appeal, stating that it was not a fit case for exercise of discretionary and equitable jurisdiction under Article 136 of the Constitution. The Court also noted that no secured or unsecured creditor had come forward with a grievance, and the Representative Union's decision was binding on all workers. No order as to costs was made.
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2008 (7) TMI 993
Issues involved:
The judgment involves the denial of exemption under Section 11 of the Income Tax Act to a society registered under the Karnataka Societies Registration Act, 1960, due to investments made in financial institutions contrary to Section 11(5) of the Act.
Summary:
Issue 1: Denial of exemption under Section 11 of the Income Tax Act
The assessee, a society created for charity, was denied exemption under Section 11 for the assessment year 1995-96 due to investments made in three financial institutions contrary to Section 11(5) of the Act. The Assessing Officer rejected the explanation offered by the assessee, leading to the assessment of taxable income. The appeal to the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal were dismissed, prompting the present appeal.
Issue 2: Consideration of substantial questions of law
Several substantial questions of law were raised by the assessee, which were re-framed during the hearing. The main question revolved around whether the denial of exemption without considering the explanation offered by the assessee regarding misrepresentation by the investee company was legally valid.
Issue 3: Interpretation of law and application of precedents
The High Court considered the undisputed facts that the society was created for charity and had been granted exemption under Section 11 for previous and subsequent assessment periods. The explanation provided by the assessee regarding investments made due to inadvertence and misrepresentation was rejected by the authorities. The Court referred to a judgment of the Delhi High Court, which held that if the assessee was misled by misrepresentation, they were entitled to claim exemption under Section 11(1)(d) of the Income Tax Act.
Conclusion:
The High Court ruled in favor of the assessee, setting aside the orders of the Assessing Officer, the Commissioner of Income Tax (Appeals), and the Income Tax Appellate Tribunal. It held that the society was entitled to exemption under Section 11(5) of the Act, as the investments were made due to inadvertence and misrepresentation by the investee companies, aligning with the principles established in the Delhi High Court's judgment.
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2008 (7) TMI 992
Issues involved:
The judgment involves the question of penalty imposed by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961 for the assessment year 1996-97.
Details of the judgment:
The appeal was filed by the revenue against the order of the Income Tax Appeal Tribunal canceling the penalty of &8377; 4,85,399 imposed by the Assessing Officer u/s 271(1)(c). The Commissioner of Income Tax (Appeals) had earlier canceled the penalty. The tribunal observed that the issue of interest earned by the assessee on investments made in short term deposits with the bank before commencing business was debatable, with two possible views. The tribunal upheld the cancellation of penalty, stating that the assessee's claim was based on a possible view and not concealment of income. The tribunal noted that since two views were possible, no interference was required in the appeal. The High Court dismissed the appeal, stating that no substantial questions of law arose for consideration, despite the dismissal of the assessee's quantum appeal.
This judgment highlights the importance of a bona fide claim based on a possible view in tax matters, and the significance of debatable issues in determining penalties u/s 271(1)(c) of the Income-tax Act, 1961.
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2008 (7) TMI 991
Assessment u/s 158BC - period of limitation - proper authorization - search u/s 132 - search and seizure were conducted on two days by two different authorised persons - The limitation commences from the last day of the month in which the last panchnama was recorded - Whether Tribunal has power to go into the factual correctness and legality of the Panchnama drawn by the empowered officer executing the last authorisation for Conducting search? - HELD THAT:- In the instant case, the Tribunal has recorded a finding of fact on the basis of material before it in exercise of its power rightly after following the observations made by the Division Bench of Rajasthan High Court in the case of CIT v. Smt. Chitra Devi Soni (supra) on which strong reliance has rightly been placed by the learned counsel appearing for the assessee in support of the finding recorded by the Tribunal on the question of limitation in passing the block period assessment order.
It is not in dispute that the second authorisation dated 12th Dec, 1995 issued by the empowering officer in favour of search conducting officer is the last authorisation for conducting searching in the residence of the assessee at 21.45 p.m. on the same date, which is the last authorisation executed by the search conducting officer, the same was closed at 6 p.m. and Panchnama was drawn to evidence the fact that cash was seized from the residence of the assessee. Therefore, for the purposes of limitation u/s 158BE(1)(a), the block period assessment order passed by the AO is beyond the period of limitation. On this ground also the finding of fact recorded by the Tribunal is based on undisputed facts.
Therefore, we have to accept the finding of fact recorded by it in the impugned judgment on the question of limitation holding that the last Panchnama dated 12th Feb., 1996 on the first authorisation executed by search conducting officer that nothing was found and seized is an undisputed fact and the finding of fact recorded by the Tribunal is based on strong foundation of the provisions of the Act, as last Panchnama stated by the Revenue is not the Panchnama in the eyes of law for the reason that the prohibitory order was passed on 12th Dec, 1995 by the officer after conducting search and nothing was found in the premises of the office of the assessee and drawing the Panchnama to this effect cannot be in the legal term called as last Panchnama. Panchnama dated 12th Feb., 1996 could not have been drawn by the search conducting officer for the purpose of computation of limitation under section 158BE(1)(a) to pass assessment order. Taking the abovesaid Panchnama date as last one to justify the assessment order with regard to limitation, the same is not passed within one year as provided under section 158BE(a) of the IT Act. Hence the findings recorded by the Tribunal on the contentious point of limitation are legal and valid as the same are based on facts and the provisions of the Act.
Therefore, we answer the substantial question of law against the Revenue and confirm the finding of fact recorded by the Tribunal in the impugned judgment on the question of limitation. The Tribunal has rightly rejected the miscellaneous petition of the Revenue holding that the order passed on merits on the question of limitation is not vitiated in law.
In our considered view there is no error apparent on the face of the record. Hence, the order passed in the miscellaneous petition by the Tribunal which is impugned herein in IT Appeal cannot be gone into by this Court as no substantial question of law would arise much less the question framed in the appeal.
Hence, we dismiss the connected appeal for the very same reasons, as we have answered substantial question of law framed regarding the question of limitation in passing the order of block period of assessment. Accordingly, the appeals are dismissed.
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2008 (7) TMI 990
Issues Involved:
The judgment addresses three substantial questions of law raised by the appellant Revenue regarding the chargeability of capital gains to tax in the assessment year 1994-95, the transfer of property within the meaning of section 2(47)(v) of the IT Act, and the applicability of a previous ruling by the Bombay High Court.
Capital Gains Tax Liability (Issue a):
The Tribunal's conclusion that capital gains were not chargeable to tax in the assessment year 1994-95 despite the agreement being signed in March 1994 was challenged. The Court referred to a previous case where it was established that the assessment year for capital gains is when the purchaser is physically put in possession, not when the agreement is made. As the purchaser was put in possession in April 1998, the liability for capital gains tax arose in the assessment year 1999-2000. Consequently, the appeal was dismissed for lack of merit.
Property Transfer Interpretation (Issue b):
The Tribunal's decision that the property was not transferred by the assessee to the purchaser within the meaning of section 2(47)(v) of the IT Act for the assessment year 1994-95 was disputed. Despite the assessee's claim that possession was given in April 1998, evidence suggested otherwise. The Court's ruling in a previous case emphasized the importance of physical possession for determining capital gains liability, leading to the dismissal of the appeal due to lack of substantial legal questions.
Applicability of Previous Ruling (Issue c):
The Tribunal's rejection of the applicability of a previous Bombay High Court ruling in the case of Chaturbhuj Dwarkadas Kapadia vs. CIT was contested. The Court reaffirmed the principle that the assessment year for capital gains tax is when physical possession is transferred, not when the agreement is signed. As the facts aligned with this principle, the appeal was dismissed, and it was noted that the appellant Revenue had already assessed and collected the capital gains tax for the correct assessment year.
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9911796707
