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2010 (3) TMI 1151
Issues Involved:
1. Whether the advance payment of Rs. 20,00,000 towards the purchase of property qualifies as an application of income for charitable purposes u/s 11 of the Income Tax Act, 1961.
2. Relevance and applicability of the decision in CIT vs. VGP Foundation 262 ITR 187 to the present case.
Summary:
Issue 1: Application of Income for Charitable Purposes
The assessee, a society registered u/s 12A of the Income Tax Act, claimed that the advance payment of Rs. 20,00,000 for the purchase of property should be considered as an application of income for charitable purposes. The AO and CIT(A) rejected this claim, stating that the assessee had not divested its ownership of the money and retained beneficial interest therein. The AO relied on the decision in CIT vs. VGP Foundation, where funds given as an advance to a sister concern were not considered as applied for charitable purposes.
The Tribunal noted that the assessee had paid Rs. 20,00,000 as an advance to Mr. Manjeet Singh for the purchase of land, which was later registered in the name of the society. The Tribunal emphasized that the payment was made by account payee cheque, and the irrevocable General Power of Attorney executed by Mr. Manjeet Singh confirmed the receipt of the advance and the transfer of possession to the assessee. The Tribunal held that the advance payment constituted an application of income for charitable purposes, as the assessee had acquired a capital asset in the form of land, which was used for the trust's objectives.
Issue 2: Applicability of CIT vs. VGP Foundation
The Tribunal distinguished the present case from CIT vs. VGP Foundation, where the advance was given to a sister concern with trustees as directors, and the amount remained idle without any security or interest. In contrast, the advance in the present case was given to an unrelated third party, and the assessee had taken possession of the property and obtained an irrevocable General Power of Attorney. The Tribunal concluded that the revenue authorities misapplied the decision in CIT vs. VGP Foundation to the facts of the present case.
Conclusion:
The Tribunal reversed the orders of the AO and CIT(A), directing the AO to treat the advance payment of Rs. 20,00,000 as an application of income for charitable purposes u/s 11 of the Income Tax Act. The appeal filed by the assessee was allowed.
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2010 (3) TMI 1150
Issues Involved:1. Whether the income from the sale of shares should be treated as short-term and long-term capital gains or as business income. Summary:Issue 1: Treatment of Income from Sale of SharesThe assessee declared a total income of Rs. 54,04,402, including short-term capital gain of Rs. 50,47,902 and long-term capital gain of Rs. 6,05,87,969 from the sale of shares. The Assessing Officer (AO) questioned why these gains should not be treated as business income, citing CBDT Circular No. 4/2007. The assessee argued that he was an investor, holding shares for long-term capital appreciation and dividends, and had consistently shown shares as investments in his books. He also highlighted that he used his own funds, had limited transactions, and did not claim tax rebate u/s 88E. The AO, despite finding the assessee's submissions convincing, assessed the gains as business income based on several factors, including the substantial value of transactions, the motive to earn profit, and the assessee's professional background related to the share market. The AO relied on multiple judicial decisions to support this assessment. The CIT(A) directed the AO to treat the income from the sale of shares as capital gains, noting that the assessee consistently accounted for shares as investments, had limited transactions, and did not use borrowed funds. The CIT(A) also emphasized the principle of consistency in the absence of new facts. The Revenue appealed, arguing that the assessee's transactions were profit-motivated and should be treated as business income. The assessee countered, emphasizing his long-term holding of shares, consistent treatment as an investor in past assessments, and the absence of borrowed funds. The Tribunal considered various judicial principles and found that the assessee's transactions did not indicate systematic and organized activity for frequent trading. The Tribunal upheld the CIT(A)'s decision, treating the gains as capital gains, citing the principle of consistency and the absence of any new facts or wrong decisions in past assessments. In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s order to treat the income from the sale of shares as short-term and long-term capital gains as declared by the assessee. Result: The appeal filed by the Revenue is dismissed.
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2010 (3) TMI 1149
Issues involved: The judgment addresses issues related to the disallowance of deduction u/s.80HHC on interest-income, DEPB licenses, and loss of trading while computing deduction u/s.80HHC, as well as the exclusion of unite-wise profit and the exclusion of the amount received from export turnover.
Issue 1: Disallowance of deduction u/s.80HHC on interest-income
The Tribunal remanded the matter to the Assessing Officer to determine if the interest income is business income or from other sources. If it is business income, netting will be allowed and 90% will be excluded, following the principles laid down by the Delhi High Court and the Tribunal in previous cases. The issue was set aside for further assessment.
Issue 2: Disallowance of deduction u/s.80HHC on DEPB licenses
The Tribunal referred to a Mumbai Special Bench decision, stating that only the net profit of DEPB should be excluded for computing deduction u/s.80HHC. The matter was to be reverted back to the Assessing Officer for consideration in line with the mentioned case law.
Issue 3: Reduction of loss of trading while computing deduction u/s.80HHC
The Tribunal dismissed the issue in favor of the Revenue, citing a decision of the Honorable apex court regarding the interpretation of section 80HHC and the treatment of profits and losses in export business.
Issue 4: Non-allowance of deduction u/s.80HHC on unite-wise profit
Relying on previous Tribunal decisions and case law, the Tribunal allowed the deduction u/s.80HHC on a unite-wise basis, following consistency in the treatment of such claims in the assessee's case.
Issue 5: Exclusion of amount received from export turnover
The Tribunal set aside the issue to the Assessing Officer for verification of the year to which the export proceeds pertain, emphasizing the need for proper assessment before allowing the deduction. The issue was allowed for statistical purposes.
In conclusion, the Tribunal partly allowed the assessee's appeal on statistical purposes, addressing various issues related to deduction claims under section 80HHC of the Income-tax Act, 1961.
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2010 (3) TMI 1148
Issues Involved:
1. Addition relating to bad debts.
2. Disallowance of staff welfare expenses.
3. Disallowance of diesel expenses.
4. Disallowance of trip and bhatta expenses.
5. Levy of interest under sections 234B, 234C, and 234D.
6. Disallowance of RTO penalty expenses.
7. Disallowance of interest on capital advances.
8. Disallowance of bad debts.
9. Penalty under section 271(1)(c).
Detailed Analysis:
1. Addition Relating to Bad Debts:
The assessee claimed bad debts of Rs. 26,079, which were disallowed by the AO as the assessee failed to establish these advances as revenue receipts. The CIT(A) upheld this disallowance, and the Tribunal found no evidence to take a different view, thus dismissing the ground.
2. Disallowance of Staff Welfare Expenses:
The AO disallowed 50% of the increase in staff welfare expenses due to lack of explanation for the disproportionate increase. The CIT(A) reduced the disallowance to Rs. 1 lakh considering the total freight receipts. The Tribunal upheld this decision, noting the absence of relevant details or evidence from the assessee.
3. Disallowance of Diesel Expenses:
The AO disallowed Rs. 4,00,044 out of diesel expenses due to the assessee's failure to produce truck-wise income and expenses account or trip register. The CIT(A) reduced the disallowance to Rs. 2 lakhs. The Tribunal upheld this, emphasizing the assessee's failure to justify the disproportionate increase in expenses.
4. Disallowance of Trip and Bhatta Expenses:
The AO disallowed 10% of the trip and bhatta expenses due to lack of corroborative evidence. The CIT(A) upheld the disallowance of Rs. 9,44,717. The Tribunal agreed, noting the absence of log books or trip registers and any justification for the increase in expenses.
5. Levy of Interest Under Sections 234B, 234C, and 234D:
The Tribunal noted that the levy of interest under sections 234B and 234C is mandatory. However, for section 234D, it directed deletion for AY 2001-02, following the decision in ITO vs. Ekta Promoters (P) Ltd., but upheld the levy for AY 2004-05.
6. Disallowance of RTO Penalty Expenses:
The AO made an adhoc addition of Rs. 2 lakhs for RTO penalties. The CIT(A) sustained Rs. 1 lakh of this disallowance, noting the nature of the assessee's business. The Tribunal upheld this, agreeing with the CIT(A) that fines and penalties could not be ruled out and the assessee failed to provide specific details.
7. Disallowance of Interest on Capital Advances:
The AO disallowed Rs. 1,78,682 on interest for capital advances, asserting the use of interest-bearing funds for non-business purposes. The CIT(A) deleted this disallowance, noting no nexus between borrowed funds and advances, and that advances were for business purposes. The Tribunal upheld this, referencing the decision in SA Builders 288 ITR 1 (SC).
8. Disallowance of Bad Debts:
The AO disallowed Rs. 16,42,359 claimed as bad debts due to lack of evidence of recovery efforts. The CIT(A) reduced this to Rs. 1,50,000, allowing the rest as the debts were written off in the accounts. The Tribunal upheld the CIT(A)'s decision, referencing the Supreme Court's decision in TRF Ltd. Vs. CIT, which clarified that post-1989, it's sufficient if the bad debt is written off in the accounts.
9. Penalty Under Section 271(1)(c):
The AO imposed a penalty of Rs. 5,02,599 for disallowed claims, alleging deliberate concealment. The CIT(A) cancelled the penalty, finding no specific false claims or evidence of concealment. The Tribunal upheld this, noting that disallowance on an estimate basis does not automatically warrant a penalty for concealment or inaccurate particulars.
Conclusion:
The Tribunal dismissed the appeals of the assessee and the Revenue for AY 2004-05, partly allowed the assessee's appeal for AY 2001-02, and dismissed the Revenue's appeal for AY 2001-02. The Tribunal emphasized the necessity of evidence and proper justification for claims and disallowances, and the distinct nature of assessment and penalty proceedings.
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2010 (3) TMI 1147
The Supreme Court dismissed the civil appeals after condoning the delay. (Case citation: 2010 (3) TMI 1147 - SC)
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2010 (3) TMI 1146
Promissory estoppels – manufacturing area based exemption – withdrawn of – held that - in exercise of such power under Section 5A of the Act, the authority cannot be permitted to take recourse to the principles applicable for determining whether duty is correctly levied or not. - Once an exemption notification has been issued on the footing that it is in public interest, the authority cannot thereafter refer to loss of revenue as larger public interest for withdrawing such an exemption. - The onus shall be on the respondent authority to establish superior public interest for curtailing or withdrawing an exemption already granted - the two impugned notifications to the extent they curtail/modify/substitute the basis laid down in Original Notification No.39/2001-CE dated 31.07.2001 are declared to be bad in law
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2010 (3) TMI 1145
Issues Involved:
The appeal concerns the calculation of deduction u/s 80IA for Assessment Year 1998-99.
Details of Judgment:
Issue 1: Calculation of deduction u/s 80IA
The assessee claimed a deduction under Section 80IA for the Silvassa unit, returning a total income of Rs. 55.66 Crores with profits of Rs. 70.24 Crores. The Assessing Officer restricted the deduction to Rs. 56.54 Crores, based on the gross total income of Rs. 59.74 Crores after certain disallowances. However, the CIT(A) held that the deduction should be based on the gross total income as computed by the Assessing Officer. The Tribunal upheld this decision, citing a previous case for the same assessee. Section 80IA allows a deduction from profits and gains derived from eligible business, subject to the provisions of the Section and Chapter VIA. The Court found no justification for the Assessing Officer's limitation of the deduction to profits and gains of business only. Referring to a previous judgment, the Court ruled in favor of the assessee, stating that the deduction should be based on the gross total income as computed. The appeal was thus disposed of in favor of the assessee.
Conclusion:
The High Court of Bombay ruled in favor of the assessee, stating that the deduction u/s 80IA should be calculated based on the gross total income as computed by the Assessing Officer, rather than being restricted to profits and gains of business only.
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2010 (3) TMI 1144
The Supreme Court ordered that the flats on the fourth and fifth floors, along with the corresponding parking space, should not be sold or transferred until the lawsuit is resolved. The court requested the case to be resolved within one year. The appeal of the Division Bench was dismissed as a result of this order.
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2010 (3) TMI 1143
Issues Involved:
The judgment deals with the issue of stay of prosecution in a criminal case registered against an abkari contractor under S.57(a) of the Kerala Abkari Act and its impact on the preferential right for the allotment of toddy shops under R.5(1)(a) of the Kerala Abkari Shops Disposal Rules, 2002.
Issue 1: Stay of Prosecution and Preferential Right for Allotment of Toddy Shops
The respondent, a toddy shop licensee, faced prosecution for selling toddy with a high alcohol content, leading to the registration of a criminal case against him. Seeking preferential rights for toddy shop allotment, the respondent argued that the stay of prosecution granted by the Supreme Court entitled him to such preference under R.5(1)(a) of the Rules. The Single Judge granted interim relief based on the stay order, allowing the respondent to continue operating the toddy shop. However, the appellants contended that the registration of the crime disqualified the respondent from receiving preference for shop allotment. The Court considered the arguments and the impact of the stay order on the respondent's eligibility for preferential treatment.
Issue 2: Interpretation of Rule 5(1)(a) and Impact of Stay Order
The Court examined the relevant provision, R.5(1)(a) of the Rules, which grants preference to licensees without registered abkari cases other than under S.56 of the Abkari Act. Despite the stay of further proceedings in the criminal case against the respondent, the Court held that the registration of the crime itself disqualified him from claiming preference under R.5(1)(a). The Court disagreed with the view that a stay of prosecution equated to exoneration, emphasizing that the respondent's registration in a criminal case prevented him from receiving preferential treatment for toddy shop allotment. Consequently, the interim relief granted by the Single Judge was deemed unsustainable, leading to the allowance of the Writ Appeal.
Separate Judgment: W.A.Nos.514, 515 & 516/2010
The issues raised in these appeals were similar to those addressed in W.A.No.513/2010. Following the decision in the main appeal, the Court allowed these appeals as well, vacating the interim orders granted by the Single Judge.
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2010 (3) TMI 1142
Issues involved:
The judgment involves issues related to disallowance of repair and maintenance expenses of building, modification of existing software, and bad debts claimed.
Disallowed repair and maintenance expenses:
The assessee, a public limited company engaged in manufacturing and sale of felts, claimed expenses under "Building repairs" which the Assessing Officer treated as capital expenditure. The assessee argued that the expenses did not create new capital assets but were for better functioning of existing premises. The Tribunal held that expenses on laying Kota Stone and bricks were revenue expenditure as they facilitated existing business operations without creating new assets. The expenses on water proofing and other modifications were also allowed as revenue expenditure based on the nature of benefits derived.
Disallowed modification expenses of existing software:
The assessee spent on customizing and debugging existing software to align with changes in taxation and procedural requirements. The Assessing Officer treated it as capital expenditure for acquiring software. However, the Tribunal held that the expenses were revenue in nature as they were for modifying existing software, not acquiring new software. The expenses were allowed as revenue expenditure.
Disallowed bad debts claimed:
The assessee claimed bad debts in respect of two parties, which were disallowed by the Assessing Officer and the CIT(A) citing lack of justification. The Tribunal observed that the conditions of section 36(2) were fulfilled as the debts were written off in the accounts due to dishonored cheques. Relying on relevant case laws, the Tribunal allowed the claim of bad debts as the debts pertained to sales made earlier.
Conclusion:
The Tribunal allowed the appeal, deleting the disallowances of repair and maintenance expenses, modification expenses of existing software, and bad debts claimed. The judgment was pronounced on 5th March, 2010.
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2010 (3) TMI 1141
Appeal filed u/s 253(2) - seek a correction of a mistake - HELD THAT:- In view of the facts and circumstances of the case and the legal position , We find that the CIT(A) has rightly held that the additions in respect of unaccounted expenses claimed by the assessee could not be made u/s 69C. In an appeal filed u/s 253(2) the department could not travel beyond the order of the CIT (A) and say that AO had erroneously invoked section 69C and that he should have made the addition u/s 37(1). The scheme of section 253(2) does not permit such a stand on the part of the department.
In the case of Indian Steel & Wire Products Ltd. v. CIT [1993 (6) TMI 20 - CALCUTTA HIGH COURT], the Court held that a fresh plea which altogether changes the complexion of the case as originally brought before the CIT(A), cannot be raised at the stage of hearing before the Tribunal. The Tribunal is supposed to decide only the issues which were the subject-matter of the first appeal. In the result, all the three appeals filed by the department are dismissed.
Per Vijay Pal Rao, Judicial Member - HELD THAT:- Following the decisions case of the Tarajan Tea Co. (P.) Ltd. [1993 (7) TMI 67 - GAUHATI HIGH COURT], Thanthi Trust [1998 (2) TMI 62 - MADRAS HIGH COURT], Assam Tribune [2006 (4) TMI 85 - GAUHATI HIGH COURT]. It is clear that the Tribunal has the jurisdiction and power to entertain a fresh plea on the subject-matter of the appeal before it and to pass necessary directions for ascertainment of relevant facts and deciding the issue by applying the correct provisions of law. In the case in hand the subject-matter is same for which the learned Departmental Representative has raised a plea that the claim of unaccounted expenditure is required to be decided u/s 37(1) and not u/s 69C as wrongly applied by the AO. Since the claim of the expenditure was disallowed by the AO, therefore in any case by entertaining this plea and remanded the matter to the AO for correcting the application of law shall not amount to enhancement of assessment.
In view of the above discussion and decisions of the Hon’ble Supreme Court and the Hon’ble High Courts, the contentions raised by the learned Departmental Representative are accepted. The orders of the lower authorities are set aside and the matter is remanded to the record of the AO for reconsidering the claim of the assessee for unaccounted expenditure u/s 37(1).
THIRD MEMBER ORDER Per Pradeep Parikh, Vice-President - Whether, on the facts and circumstances of the case, the Tribunal had jurisdiction to accept the fresh plea of the learned DR and direct the AO to examine the assessee’s claim u/s 37(1) - HELD THAT:- In the light of the discussion and cases, I agree with the view taken by the ld. J.M. to hold that the plea raised by the ld. D.R. is to be accepted and the matter is to be remanded to the AO for considering the claim of the assessee for claiming deduction of unaccounted expenditure u/s 37(1).
The matter may now be placed before the Division Bench to give effect to the majority view.
Per Abraham P. George, Accountant Member. - In all these three appeals there arose difference of opinion between Members of the Division Bench hearing the appeal. Therefore the matter was referred to the Third Member. Hon’ble Vice-President acting as Third Member has agreed with the view of the Learned Judicial Member. Therefore in view of the majority decision the orders of the lower authorities are set aside and matter is remanded to the record of the AO for reconsidering the allowability or otherwise of the claim of unaccounted expenditure, u/s 37(1).
In the result, the appeal filed by the revenue is allowed for statistical purposes.
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2010 (3) TMI 1140
Issues Involved:
1. Adjournment Request and Opportunity of Being Heard
2. Genuineness of Trade Creditors and Addition u/s 68
3. Powers of the Tribunal u/s 254(2)
Summary:
1. Adjournment Request and Opportunity of Being Heard:
The assessee's grievance was that the appeal in ITA No.1277/08 was disposed of without conceding to the request for adjournment or affording an opportunity of being heard. The Tribunal, after considering the request for adjournment, decided the issue on merits based on available records, reasoning that sufficient opportunities had already been provided.
2. Genuineness of Trade Creditors and Addition u/s 68:
The assessee, a dealer in rice, had an addition of Rs. 5.04 lakhs u/s 68 due to failure to produce creditors for verification. The CIT(A) sustained the addition, which was later remitted back to the AO by the Tribunal for fresh consideration. During reassessment, the assessee produced only two trade creditors, whose genuineness was not proven. The AO retained the addition, and the CIT(A) deleted Rs. 1.26 lakhs but sustained Rs. 3.78 lakhs. The Tribunal confirmed the CIT(A)'s findings, emphasizing the assessee's failure to prove the genuineness of trade creditors.
3. Powers of the Tribunal u/s 254(2):
The Tribunal, referencing the jurisdictional High Court's ruling in CIT & Anr. v. Mcdowell and Company Ltd. (2009) 310 ITR 215, stated that it has no power to recall and review its earlier order u/s 254(2). The Tribunal dismissed the Misc. Petition, concluding that sufficient opportunities were provided, and the earlier order did not suffer from any infirmity or mistake requiring rectification.
Conclusion:
The Tribunal dismissed the Misc. Petition of the assessee, stating that sufficient opportunities were provided to prove the genuineness of trade creditors, and the Tribunal's earlier order did not require rectification. The Tribunal emphasized its limited powers u/s 254(2) and upheld the addition u/s 68.
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2010 (3) TMI 1139
Issues involved: Appeal by Revenue against deletion of addition for Keyman Insurance Policy premium and Cross Objection by assessee against disallowance of staff welfare, foreign travel, and telephone expenses.
Revenue's Appeal - Keyman Insurance Policy Premium:
The appeal challenged the deletion of addition made by the Assessing Officer on account of disallowance of premium paid for Keyman Insurance Policy. The Tribunal noted that the issue was identical to a previous case and referred to circulars regarding the tax treatment of Keyman Insurance Policy premiums. The Tribunal held that the premium paid on the Keyman Insurance Policy should be allowed as a business expenditure, as clarified by circulars issued by the CBDT. The Tribunal dismissed the Revenue's appeal based on the previous decision and upheld the allowance of the premium as a deduction.
Assessee's Cross Objection - Expenses Disallowance:
The Cross Objection by the assessee contested the disallowance of staff welfare, foreign travel, and telephone expenses. Regarding foreign travel expenses, the Assessing Officer had disallowed 10% due to possible personal use, which was upheld by the CIT(A) at a token amount. The Tribunal confirmed this disallowance. For staff welfare expenses, the AO disallowed 25% due to lack of vouchers, and the CIT(A) made an ad hoc disallowance, which the Tribunal upheld. Similarly, for telephone expenses, the AO disallowed 25% for possible personal use, which the CIT(A) restricted to 1/6th, and the Tribunal confirmed this disallowance. The Tribunal dismissed the Cross Objection, upholding the disallowances made by the authorities.
In conclusion, the Tribunal dismissed both the Revenue's appeal and the Cross Objection of the assessee, maintaining the decisions regarding the Keyman Insurance Policy premium and the disallowance of various expenses.
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2010 (3) TMI 1138
The Supreme Court remitted the case to the High Court for framing a proper question of law and answering it in accordance with the law. The Civil appeal was allowed with no order as to costs.
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2010 (3) TMI 1137
Certificate issued under Regulation 8 of the Customs House Agents Licensing Regulations (CHAIR), 2004 - change in regulations - Held that: - the regulation on selection process was revised with effect from 23.2.2004 only. As far as the petitioners are concerned, the exams were conducted as per the old regulations. By mere change of the oral examination being postponed to a date when the new regulations had come into effect does not mean that the petitioners, who had done their written exams, have to come under the new regulations - even though oral examinations were conducted on the date when the new regulations were made, the petitioners are entitled to have the certificate issued under Regulation 8 of the Customs House Agents Licensing Regulations (CHAIR), 2004 - there is no justification in any discrimination as regards the petitioners who are similarly placed - petition allowed - decided in favor of petitioner.
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2010 (3) TMI 1136
Issues involved: Appeal against order passed by CIT under s. 263 of the IT Act for asst. yrs. 1999-2000 and 2000-01.
For asst. yr. 1999-2000:
The assessee, a public sector undertaking in ship building, received waiver benefits totaling &8377; 591.13 crores, including conversion of loans into equity and write off of Government loans and interest. AO added interest amount to book profit u/s 115JA. CIT(A) directed to include &8377; 158.25 crores written off by Government as income. CIT for 2000-01 also directed to recompute book profit due to impact on unabsorbed depreciation.
Legal Analysis:
The power of CIT to revise under s. 263 was explained citing Grasim Industries Ltd. vs. CIT case. The order must be considered 'erroneous insofar as it is prejudicial to the interests of the Revenue.' The Supreme Court held that an incorrect assumption of fact or law application satisfies the requirement. The expression 'prejudicial to the interests of the Revenue' is of wide import.
Decision:
Assessee contended that AO's view on waiver of principal loan portion was valid, hence not erroneous. Quashed CIT's order for both years as AO's view was one of the possible views. Citing Malabar Industrial Co. Ltd. vs. CIT, the order was not erroneous. Both appeals by the assessee were allowed.
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2010 (3) TMI 1135
Issues Involved:
1. Validity of notice u/s 143(2) issued beyond the mandatory period.
2. Jurisdiction of the Tribunal to entertain new grounds raised orally by the assessee.
Summary:
1. Validity of Notice u/s 143(2):
The assessee argued that the notice u/s 143(2) was issued after more than 12 months from the date of filing the block return, making the assessment time-barred. The notice was issued on 15/10/2001, while the return was filed on 19/7/2000. The Department contended that the notice was issued within one year, citing a typographical error in the assessment order. The Tribunal verified the records and confirmed that the notice was indeed issued on 15/10/2001, thus beyond the mandatory period, rendering the assessment invalid.
2. Jurisdiction of the Tribunal to Entertain New Grounds:
The Department argued that the Tribunal could not entertain the new ground as it was not raised before the AO, nor was it part of a written ground or cross-appeal. The Tribunal referred to the judgment of the Jurisdictional High Court in B.R. Bamasi vs. CIT, which allows the assessee to raise a new ground of law orally, provided it does not require additional evidence. The Tribunal admitted the plea, emphasizing that it serves as a defense against the appeal and does not necessitate setting aside the entire assessment.
Conclusion:
The Tribunal dismissed the revenue's appeal, holding that the AO erred in not issuing the notice u/s 143(2) within the mandatory period of 12 months from the date of filing the block return. The decision was supported by the Supreme Court ruling in ACIT vs. Hotel Bluemoon. The appeal was dismissed without addressing other issues.
Order Pronounced:
The order was pronounced on the 23rd day of March, 2010.
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2010 (3) TMI 1134
Issues Involved:
The judgment involves the denial of approval u/s 80G of the Income Tax Act based on the lack of specific charitable objects in the trust deed.
Summary:
The appellant filed for renewal of approval u/s 80G, but the DIT(E) denied it due to the absence of clear charitable objects in the trust deed. The appellant argued that the trust deed did specify charitable objects as per sec.2(15) of the IT Act. They contended that previous approvals were granted based on the same clause in the deed. The appellant also highlighted the deletion of the Proviso u/s 80G(5) from 1.10.2009. They cited judgments supporting trusts with general charitable purposes. However, the DIT(E) emphasized the need for specific charitable purposes and examined the expenditure incurred by the trust. The Tribunal noted the vague nature of the trust's object and upheld the denial of approval u/s 80G, citing the Supreme Court's decision in a similar case. The appeal was dismissed based on the lack of specific charitable objects in the trust deed.
Separate Judgment:
No separate judgment was delivered by the judges in this case.
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2010 (3) TMI 1133
Issues Involved:
1. Validity of reopening the case under Sections 147/148 of the IT Act.
2. Confirmation of addition under Section 69 due to alleged difference in stock.
3. Treatment of interest received on share application and share allotment money.
4. Validity of assessment order passed under Section 144/147 when no addition was made on the ground for reopening.
Detailed Analysis:
1. Validity of Reopening the Case under Sections 147/148 of the IT Act:
The assessee challenged the reopening of the case under Sections 147/148, arguing that the conditions laid down under these sections were not satisfied. The Tribunal noted that the original assessment was quashed due to the notice under Section 143(2) not being served within the limitation period. The reopening was initiated on the grounds of incorrect set-off of investment allowance. However, no addition was made on this ground in the reassessment order. The Tribunal emphasized that the reasons recorded for reopening must have a live nexus with the material facts. The reopening was deemed invalid as it was based on non-specific and casual grounds, and the reassessment proceedings were declared null and void.
2. Confirmation of Addition under Section 69 due to Alleged Difference in Stock:
The assessee contested the addition of Rs. 3,15,952 under Section 69, arguing that it was based on a difference in stock as per books and bank statements. The Tribunal found that the addition was merely a repetition of disallowances made in the quashed assessment order. It was concluded that such additions could not be considered as coming to the notice of the AO during the reassessment proceedings. The Tribunal accepted the assessee's contention that these additions were not validly made.
3. Treatment of Interest Received on Share Application and Share Allotment Money:
The assessee argued against the AO's action of treating the interest of Rs. 3,87,114 received on share application and share allotment money as income from other sources instead of business income. The Tribunal noted that this addition was also a repetition from the quashed assessment order and did not come to the AO's notice during the reassessment proceedings. Therefore, the Tribunal ruled that this addition was beyond the AO's jurisdiction under Section 147.
4. Validity of Assessment Order Passed under Section 144/147:
The assessee raised an additional ground, arguing that the assessment order passed under Section 144/147 was invalid as no addition was made on the ground for which the case was reopened. The Tribunal admitted this ground and agreed with the assessee. It was emphasized that the AO's jurisdiction under Section 147 is limited to the items mentioned in the reasons recorded for reopening. Since no addition was made on the initial ground, the AO's action of making other additions was beyond his jurisdiction.
Conclusion:
The Tribunal concluded that the reassessment proceedings were invalid due to the lack of a live nexus between the reasons recorded for reopening and the material facts. The additions made by the AO were not justified as they were merely repetitions of disallowances from the quashed assessment order. The appeal filed by the assessee was allowed, and the reassessment proceedings were declared null and void.
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2010 (3) TMI 1132
Issues involved: Appeal by revenue and cross objection by assessee regarding order of Commissioner of Income tax (Appeals) for assessment year 2005-06.
Issue 1 - u/s 80IB of IT Act:
The revenue challenged the deletion of addition on account of rejection of claim u/s 80IB of IT Act, arguing that ownership of land was a specified condition. The assessee contended that ownership was not a requirement under section 80IB(10) and claimed to have worked as a developer. Legislative changes and tribunal decisions were cited. The Tribunal directed the matter back to the Commissioner of Income tax (Appeals) for fresh consideration.
Issue 2 - Land Registration Charges:
The revenue disputed the deletion of addition for land registration charges borne by the assessee instead of buyers, contrary to market practice. The assessee provided evidence supporting the expenses and justified them for commercial expediency. The Tribunal upheld the Commissioner's decision, dismissing the revenue's grounds and allowing the cross objection of the assessee.
*Note: Separate judgement was not delivered by the judges.*
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9911796707
