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Showing 141 to 160 of 1191 Records
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2011 (3) TMI 1703
Challenging the judgment of HC for transferring investigation from the Enforcement Directorate (ED) to the CBI - Money Laundering - amassing of illicit wealth - unprecedented amounts - investment in property, shares - in India and abroad - former Ministers - In present case, the basic allegation is amassing of illicit wealth by various former Ministers of the State. The money alleged to have been so earned is of unprecedented amounts and their investment in property, shares etc. not only in India but also abroad. Therefore, he HC also observed that the Central Govt. should exercise the powers u/s 45(1A) of the PML Act for transferring investigation from the ED to the CBI. If such an order is not passed by the Central Govt, any material found by the CBI during investigation, which leads to an inference of money laundering will be shared by the CBI with the ED from time to time, to enable the ED to take such action, as may be necessary. The appellant, aggrieved by the said judgment preferred this appeal.
HELD THAT:- On consideration of the totality of the facts and circumstances, we are clearly of the view that no interference is called for. the CBI is investigating into the commission of these offences alone and presently is not investigating any offence under the PML Act as the investigation under the PML Act is solely and exclusively within the jurisdiction and domain of the ED, which is of course subject to the exercise of powers by the Central Govt. u/s 45 (1-A) of the Act.
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2011 (3) TMI 1702
Issues involved: Assessment of tax amount, eligibility for relief u/s 80IA(4)(I), concept of "principle of mutuality".
Assessment of tax amount:
The appellant contested the tax demand of Rs. 181,820 assessed by the AO for the assessment year 2005-06. The AO noted an excess of income over expenditure of Rs. 47,69,412 disclosed by the appellant, who claimed the entire income as deduction u/s 80IA. However, the AO disallowed the claim and treated the surplus as income.
Eligibility for relief u/s 80IA(4)(I):
The CIT(A) upheld the AO's disallowance of the claim made by the appellant under section 80IA. The appellant argued for relief based on the "principle of mutuality," asserting that as a cooperative society formed by industrial units for effluent treatment, it should be entitled to the deduction.
Concept of "principle of mutuality":
The appellant's representative argued that the issue of "principle of mutuality" was not addressed by the AO or the CIT(A), despite being raised before both authorities. The AO's decision focused solely on the eligibility for deduction u/s 80IA, stating that relief is restricted to enterprises owned by a company or consortium of companies. The CIT(A) also confirmed the disallowance of the deduction u/s 80IA without considering the concept of mutuality.
Judgment:
The ITAT Mumbai set aside the issue of "principle of mutuality" for the AO's reconsideration and adjudication as per law, as it was not addressed by the lower authorities. The appeal of the appellant was allowed for statistical purposes, emphasizing the need for a comprehensive review of the concept of mutuality in relation to the deduction claimed under section 80IA.
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2011 (3) TMI 1701
Issues involved: Challenge to assessment order u/s 2002-03, eligibility for reduction in assessment, failure to consider Amnesty Scheme application.
The petitioner challenged the finalised assessment order u/s 2002-03 through Ext.P1, leading to the judgment in STRE No.212/10 (Ext.P2) by the High Court granting a 25% reduction in the assessed amount. The condition imposed was that remitting 25% of the tax amount due along with interest would result in the granted reduction. The petitioner claimed to have submitted Ext.P3 requesting benefits under the Amnesty Scheme, which was allegedly not considered by the assessing authority, prompting the filing of this writ petition.
The Government Pleader contended that the petitioner did not file a proper application for Amnesty provision in the prescribed format, emphasizing that the Ext.P3 letter was received after the writ petition was filed. Despite this, considering the observations in Ext.P2, the Court opined that the petitioner should be allowed to approach the assessing authority for Amnesty Scheme benefits by submitting a proper application as per the prescribed format. The petitioner's counsel assured readiness to file such an application within a week, with the directive that any application received by the assessing authority must be promptly considered and resolved within a week from receipt.
In light of the above, if the petitioner submits the directed application within the stipulated time frame, any recovery actions will be suspended until a decision is made on the application.
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2011 (3) TMI 1700
Issues involved: Delay in executing detention order u/s 3 of COFEPOSA Act, 1974, unreasonable delay, necessity of detention, legality of detention order.
Summary:
1. The detention order was passed under Section 3 of COFEPOSA Act on 15.01.2010 but served on the detenue on 25.11.2010, after a delay of 10 months and 10 days. The detenue was arrested on 05.02.2010 and had been in jail since then. Despite being in custody, the detention order was not served until a writ petition was filed. The petitioner argued that the delay was punitive, not preventive.
2. The respondents requested time to file an additional affidavit to explain the delay but failed to do so. No explanation was provided for the delay in executing the detention order despite the detenue being in custody since 05.02.2010, known to the detaining authority.
3. The counter-affidavit revealed that the detaining authority was aware of the detenue's arrest on 04.02.2010. Various authorities were informed to execute the detention order, but it was not served due to legal proceedings and the detenue being in custody.
4. The delay of 10 months and 10 days in executing the detention order was deemed unreasonable. The detenue being in custody was not a valid reason for the delay. The Supreme Court precedent highlighted the importance of timely execution of detention orders to prevent prejudicial activities.
5. Following the Supreme Court decision, the detention order was set aside, and the detenue was directed to be released unless required in another case. The bail bond previously granted was canceled, and the writ petition was allowed with no costs imposed.
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2011 (3) TMI 1699
Issues involved: Disallowance of loss on share transactions and addition under section 41(1) of the Income Tax Act.
Issue 1 - Disallowance of loss on share transactions:
The assessee claimed a loss on share transactions for the assessment year 2001-02, which was disallowed by the Assessing Officer (A.O.) based on the SEBI and JPC reports related to Ketan Parekh cases. The CIT(A) upheld the disallowance. The appellant contended that the loss was genuine and incurred in the pursuit of business. The counsel provided detailed evidence supporting the claim, including transaction details, market losses, and bank statements. It was argued that the A.O. did not consider all evidence and made general disallowances based on group cases. The Tribunal found that the A.O. did not examine individual details of the assessee and directed a re-examination, considering the facts and giving the assessee an opportunity to present its case. The matter was restored to the A.O. for fresh assessment.
Issue 2 - Addition under section 41(1) of the Income Tax Act:
The A.O. made an addition under section 41(1) on the grounds that a liability had ceased to exist without confirmations. The counsel argued that the addition was not justified as the liability still existed, but confirmations could not be submitted due to adverse market conditions. The Tribunal, without delving into the merits, directed the A.O. to re-examine the issue along with the quantification of loss, which was restored for fresh assessment. The A.O. was instructed to allow the assessee to make submissions, verify if the loss falls under section 73 as speculative, and consider applicable laws before making any disallowance or addition. The issue was restored to the A.O. for further examination.
Conclusion:
The Tribunal allowed the appeal for statistical purposes, emphasizing the need for a thorough re-examination by the A.O. on both issues, considering all evidence and giving the assessee a fair opportunity to present its case.
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2011 (3) TMI 1698
The High Court of Madras directed the petitioner to deposit the entire amount of service tax demanded within ten days. The court ordered the first respondent to take on file the appeals challenging the service tax orders and dispose of them within six weeks. The writ petitions were disposed of with no costs.
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2011 (3) TMI 1697
Issues involved: Provisional assessment of demand u/s 2(M) read with Section 3 (F) of the Trade Tax Act for the Assessment Year 2010-11, grant of partial stay against demand, distinction in modus operandi from Raheja Development Corporation case, legal position on tax imposition for construction work not on behalf of prospective purchasers, entry tax levy, granting of interim stay orders, authority's view on demand merits, granting of complete stay in certain cases, lack of findings on merits in stay orders, direction for expeditious appeal decision, stay on balance tax demand with security provision.
Provisional Assessment and Demand: The revisionist, a builder engaged in constructing houses, faced a provisional assessment order raising demand for the transfer of material used in construction as sale to prospective purchasers for various months of the Assessment Year 2010-11. Challenges were made before the First Appellate Authority and Tribunal, resulting in partial stay against the demand. Revisionist contended that the demand had no legal basis and sought complete stay to prevent irreparable loss and business impact.
Legal Position on Tax Imposition: Revisionist argued that their modus operandi, where constructions were not on behalf of purchasers but transferred after construction, differed from the Raheja Development Corporation case. Citing a previous decision by the Apex Court and a Division Bench, it was contended that tax imposition for construction not on behalf of prospective purchasers was not valid under Section 2(M) read with Section 3 (F) of the Trade Tax Act.
Entry Tax Levy: The issue of entry tax levy was highlighted, with numerous writ petitions and revisions pending in the High Court. Reference was made to leading cases where entry tax realization had been stayed upon furnishing security, indicating the complexity and significance of this matter.
Granting of Interim Stay Orders: The Apex Court's stance on granting interim stay orders was discussed, emphasizing the need to assess the merits of demands before requiring payment. Previous decisions of the High Court were cited where complete stay had been granted in certain cases with specific directions, underscoring the importance of evaluating each case individually.
Direction for Appeal Decision: The judgment directed the First Appellate Authority to decide the revisionist's appeals on merits promptly, preferably within a month. A stay on the balance tax demand was granted for six weeks or until appeal disposal, subject to the revisionist providing security other than cash or bank guarantee for the disputed amount within two weeks.
Conclusion: The revisions were disposed of with the directive for expeditious appeal decision and provision for stay on the balance tax demand with security. The judgment aimed to ensure a fair assessment of the revisionist's case while protecting the interests of both the revenue and the revisionist.
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2011 (3) TMI 1696
Issues involved:
The judgment involves appeals against the orders of the learned CIT(A)-XIX, Mumbai for A.Ys. 2003-04, 2005-06 & 2006-07, where the main issue was the assessment of income from letting out property under the head 'income from house property' or 'income from business'.
A.Y. 2003-04:
The Assessing Officer held that income from letting out property should be assessed under 'income from house property', not 'income from business'. The first appellate authority upheld this decision. The assessee's appeal was dismissed based on previous Tribunal decisions and Supreme Court rulings. The grounds related to depreciation claim and interest u/s. 234B and 234C were also dismissed.
A.Y. 2003-04 (Revenue's Appeal):
The revenue's appeal challenged the deletion of addition made on account of notional interest on security deposits. The CIT(A) relied on the decision of the Jurisdictional High Court and dismissed the revenue's appeal based on the principle that notional interest cannot be added to annual rent receipt.
A.Y. 2005-06:
The assessee's appeal for this year was dismissed following the decision in A.Y. 2003-04. The grounds related to the assessment of income and depreciation claim were dismissed. The revenue's appeal for the same year was also dismissed based on the Jurisdictional High Court order.
A.Y. 2006-07:
The assessee's appeal was dismissed following the decisions in earlier appeals. The issue of maintenance charges was not pressed due to the small amount involved. The grounds related to interest u/s. 234B & 234D were dismissed. The revenue's appeal for this year was also dismissed based on the Jurisdictional High Court's decision.
Conclusion:
All appeals were dismissed, upholding the assessment of income from letting out property under 'income from house property'. The decisions were based on previous Tribunal orders and the rulings of the Jurisdictional High Court.
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2011 (3) TMI 1695
The High Court of Kerala upheld the Tribunal's decision to remand the appellant's claim for interest on refund to the assessing officer. The appellant can now file a revision before the Commissioner to address the rejection of the claim.
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2011 (3) TMI 1694
Issues involved: Provisional release of detained goods, suspicion of undervaluation, authenticity of documents, differential duty payment.
Provisional Release of Detained Goods:
The petitioner sought release of goods by paying 30% of the differential duty and furnishing a personal bond, citing similar orders by the Court in other cases. The respondents requested 50% payment for provisional release pending investigation. The Court directed release upon payment of 50% of the duty and furnishing a bond, with final assessment pending.
Suspicion of Undervaluation:
Petitioner argued against suspicion of undervaluation, claiming unfair treatment compared to other importers. Allegations of under-invoicing were deemed unsubstantiated by the Court, labeling the detention of goods as mala fide. Respondents contended discrepancies in documents and pricing, alleging under-invoicing to evade customs duty.
Authenticity of Documents:
Petitioner relied on Sections 74 and 78 of the Indian Evidence Act, asserting the authenticity of submitted documents. Respondents questioned the genuineness of the original contract and Apostille certification, pointing out discrepancies in pricing and details. Court emphasized cooperation in the investigation process.
Differential Duty Payment:
The Court ordered provisional release upon payment of 50% of the differential duty and a personal bond, with final assessment pending completion of adjudication proceedings. Both parties were directed to cooperate fully in the customs duty assessment process. No costs were awarded, and the connected motion was closed.
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2011 (3) TMI 1693
Issues Involved: The validity of the search and consequential additions to the assessee's income.
Validity of Search:
The assessee challenged the validity of the search proceedings based on the contention that the search warrant was issued in the name of both the assessee and his wife, suggesting that the assessment should have been made jointly as an AOP or BOI. The assessee relied on the judgment of the Hon'ble High Court of Karnataka in a specific case where it was held that an order of block assessment on an individual assessee is invalid if the authorization for search is issued in more than one name. The argument was supported by a similar decision of the Hon'ble Allahabad High Court. The learned DR argued that the joint warrant did not imply an AOP status for the assessee and his wife. The Tribunal referred to the decision of the Hon'ble jurisdictional High Court in a previous case where it was held that assessments in individual hands are improper when the authorization is issued in joint names. Consequently, the Tribunal set aside the assessments, ruling in favor of the assessee.
Consequential Additions to Income:
Following the search action and issuance of notice u/s 153A, the assessee filed a revised return of income excluding certain portions that were erroneously offered in the original return. However, the AO made additions to the income, stating that the earlier declared income should be considered for computation purposes. The CIT(A) enhanced the income for certain assessment years. The assessee appealed, challenging both the validity of the search proceedings and the additions made to the income. The Tribunal, having decided in favor of the assessee on the issue of search validity, did not delve into the other issues raised by the assessee on merits. Consequently, the appeals filed by the assessee were allowed, and the assessments in individual hands were set aside.
This judgment by the Appellate Tribunal ITAT Bangalore addressed the issues of the validity of the search proceedings and consequential additions to the assessee's income for the relevant assessment years. The Tribunal's decision was based on the interpretation of the search warrant issued in joint names and the legal implications thereof, as established in previous judicial precedents.
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2011 (3) TMI 1692
Issues involved: Cross appeals regarding disallowance of cash purchases u/s 40A(3) and addition on account of purchase of motorcycle and expenses on telephone and business promotion.
Disallowance of cash purchases u/s 40A(3):
The Assessing Officer disallowed an amount of Rs. 2,41,56,021 representing 25% of total purchases due to unverifiable cash payments. The CIT(A) disallowed 20% of cash purchases amounting to Rs. 1,16,03,862 as vendors' identity was not ascertainable. Assessee argued that most cash bills were below Rs. 20,000 and submitted purchase memos, but CIT(A) upheld the disallowance. Tribunal found internal memos unreliable and upheld 20% disallowance on cash purchases, while accepting account payee cheque purchases.
Purchase of motorcycle:
Assessee showed a motorcar as closing stock without claiming it as an expenditure. CIT(A) upheld addition of Rs. 7,95,639 stating lack of evidence for business purpose. Tribunal found motorcycle included in closing stock and no expenditure claimed, thus deleted the addition.
Expenses on telephone and business promotion:
CIT(A) disallowed 20% of vehicle running and maintenance expenses, stating the motor-car was for personal use. Assessee argued expenditure was for business purpose citing a court judgment. Tribunal deleted the disallowance based on the judgment.
In conclusion, the appeal of the assessee was partly allowed, and the appeal of the revenue was dismissed.
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2011 (3) TMI 1691
Issues Involved:
1. COD Approval
2. Disallowance under Section 14A
3. Addition on account of Bad Debts Recovered
4. Determination of Rural Branches for Deduction under Section 36(1)(viia)
5. Prior Period Expenses and Income
Issue-wise Detailed Analysis:
1. COD Approval:
The Tribunal noted that COD approval was not granted for specific grounds of appeal for various assessment years. Consequently, these grounds were dismissed for technical reasons. The grounds dismissed due to lack of COD approval were:
- Assessment year 2002-03: Ground Nos. 1 & 3
- Assessment year 2003-04: Ground Nos. 2, 3 & 4
- Assessment year 2004-05: Ground Nos. 3 to 5 & 8
- Assessment year 2005-06: Ground Nos 1 & 5 to 8
- Assessment year 2006-07: Ground Nos 1, 6 & 7
2. Disallowance under Section 14A:
The Tribunal addressed the disallowance made under Section 14A of the I.T. Act, which pertains to expenses related to earning tax-free income. The assessee argued that no disallowance should be made as investments in securities were incidental to the main banking business and incurred due to statutory requirements. However, the Tribunal upheld the CIT(A)'s decision to disallow 2.5% of the tax-free income as overhead and administrative expenses, emphasizing that even in the absence of specific accounts, an estimate of expenses attributable to exempt income must be made. The Tribunal cited various legal precedents to support this view, including the Bombay High Court's decision in Godrej & Boyce Mfg. Co. Ltd. and the Delhi Tribunal's decision in Punjab National Bank.
3. Addition on account of Bad Debts Recovered:
The Tribunal addressed the issue of bad debts recovered during the year, which the assessee had reduced from its income. The Tribunal upheld the CIT(A)'s decision that the recovered bad debts should be included as income under Section 41(4) of the I.T. Act, as the assessee failed to provide year-wise details of bad debts written off and recovered. The Tribunal noted that the auditor's report indicated that the recovered amounts were credited to the Profit & Loss Account, implying that the provisions of Section 41(4) were applicable.
4. Determination of Rural Branches for Deduction under Section 36(1)(viia):
The Tribunal examined the criteria for determining rural branches for the purpose of deduction under Section 36(1)(viia). The assessee argued that the Census 1991 figures should be used as the Census 2001 figures were not published before the first day of the previous year relevant to the assessment year 2003-04. The Tribunal agreed with the assessee, stating that the final population figures from Census 2001 were released in December 2003 and hence were not applicable for the relevant assessment years. The Tribunal directed the Assessing Officer to compute the deduction based on Census 1991 figures.
5. Prior Period Expenses and Income:
For the assessment year 2006-07, the Tribunal addressed the issue of prior period expenses and income. The assessee contended that similar issues in earlier years were decided in their favor by the Tribunal. The Tribunal remitted the issue back to the Assessing Officer, directing the assessee to provide relevant details and supporting proofs. The Assessing Officer was instructed to compute the relief in accordance with the Tribunal's directions from earlier years.
Conclusion:
The Tribunal's judgment addressed multiple issues across different assessment years, including the necessity of COD approval, the disallowance under Section 14A, the treatment of bad debts recovered, the determination of rural branches for deductions, and prior period expenses and income. The Tribunal upheld the CIT(A)'s decisions on most issues, providing detailed reasoning and references to relevant legal precedents. The judgment emphasized the importance of proper documentation and adherence to statutory requirements in tax assessments.
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2011 (3) TMI 1690
Issues Involved:
1. Validity of the assessment order under section 158BC of the Act.
2. Computation of the time limit for passing the assessment order under section 158BE of the Act.
3. Legality of the special audit directed under section 142(2A) of the Act.
Issue-wise Detailed Analysis:
1. Validity of the Assessment Order:
The primary issue was whether the assessment order was invalid as it was allegedly passed beyond the statutory time limit prescribed under section 158BE of the Act. The assessee argued that the assessment order was time-barred, as the search concluded on 31.12.2002, and the assessment order should have been passed by 31.12.2004. However, the order was passed on 06.07.2007. The Tribunal concluded that the assessment order was indeed passed beyond the prescribed time limit, and thus, the assessment was quashed and canceled.
2. Computation of the Time Limit for Passing the Assessment Order:
The Tribunal examined the computation of the time limit for passing the assessment order under section 158BE. The Tribunal noted that the search operation commenced on 30.12.2002 and concluded on 31.12.2002. Although a prohibitory order under section 132(3) was placed on a wooden cabinet and lifted on 07.02.2003, the Tribunal held that the search effectively concluded on 31.12.2002. The Tribunal relied on the case of Sandhya P. Naik (253 ITR 534) to emphasize that the mere issuance of a prohibitory order does not extend the search period. Thus, the assessment should have been completed by 31.12.2004.
3. Legality of the Special Audit Directed under Section 142(2A):
The Tribunal addressed the legality of the special audit directed under section 142(2A). The assessee contended that the special audit was directed without giving an opportunity of being heard, violating principles of natural justice. The Tribunal referred to the Supreme Court decision in Rajesh Kumar (287 ITR 97), which mandates that the principles of natural justice must be adhered to before directing a special audit. The Tribunal found that the Assessing Officer (A.O.) did not provide an opportunity to the assessee before directing the special audit, rendering the direction void ab initio. Consequently, the period taken for the special audit could not be excluded for extending the time limit for passing the assessment order.
Conclusion:
The Tribunal concluded that the assessment orders passed in both cases were beyond the period of limitation specified under section 158BE and were thus invalid. The Tribunal allowed the appeals of the assessees and quashed the assessment orders. Consequently, the cross-appeals filed by the revenue challenging the orders of the Commissioner of Income Tax (Appeals) were dismissed as infructuous. The judgment emphasized adherence to statutory time limits and principles of natural justice in tax assessments.
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2011 (3) TMI 1689
Issues Involved: The judgment involves the deletion of an addition made on a protective basis by the Ld. Commissioner of Income Tax (Appeals) regarding unexplained cash found in possession of an employee of M/s SAS Servizio Ltd.
Details of Judgment:
Issue 1: Addition of 50,00,000/- made on protective basis
The Assessing Officer concluded that the cash of 50,00,000/- found with the employee belonged to M/s SAS Servizio Ltd. and was unexplained income. The Ld. Commissioner of Income Tax (Appeals) deleted this addition, stating that the company had accepted that the cash belonged to them twice, during the survey and assessment proceedings. The Tribunal upheld this decision, noting that since the company had acknowledged the cash as theirs, there was no need for the addition in the employee's hands on a protective basis.
Key Phrases:
- Addition made on protective basis
- Unexplained cash found in possession
- Company accepted cash belonged to them
- Assessing Officer's conclusion
- Ld. Commissioner of Income Tax (Appeals) decision
- Tribunal's decision
Significant Sentences:
- "Ld. Commissioner of Income Tax (Appeals) erred in deleting the addition of 50,00,000/- made on protective basis which represented unexplained cash of M/s SAS Servizio Ltd. of whom the assessee was an employee."
- "The Assessing Officer concluded that the cash amounting to 50,00,000/- remains unexplained and represents income which has not or would not have been disclosed for the purpose of Income tax."
- "The Ld. Commissioner of Income Tax (Appeals) held that the addition of 50 lacs in the hands of the appellant on protective basis is bad in law and is hereby deleted."
- "The Tribunal upheld the decision of the Ld. Commissioner of Income Tax (Appeals) stating that since the company had acknowledged the cash as theirs, there was no need for the addition in the employee's hands on a protective basis."
Judge's Name: Not Applicable.
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2011 (3) TMI 1688
The Gujarat High Court admitted an appeal questioning whether the Appellate Tribunal was correct in dismissing a tax appeal of the revenue due to low tax effect, despite the notional tax effect exceeding the monetary limit prescribed by the board. The appeal will be heard along with other connected appeals.
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2011 (3) TMI 1687
Issues involved: Appeal against CIT(A) order regarding deduction u/s 80 IC for manufacturing activity of anchor rods.
Issue 1: Deduction u/s 80 IC for threading and painting of anchor rods
The Revenue contended that the threading and painting of anchor rods by the assessee did not amount to manufacturing, thus challenging the allowance of deduction u/s 80 IC. The Tribunal found that the issue was previously addressed in the assessee's own case and upheld the CIT(A)'s decision based on the Tribunal's earlier ruling.
Issue 2: Manufacturing of anchor rods by third parties on job work basis
The Revenue argued that manufacturing of anchor rods by third parties on job work basis should not be considered for deduction u/s 80 IC. However, the Tribunal referred to previous rulings in the assessee's case for assessment years 2005-06 and 2006-07, where similar claims were allowed by the Tribunal. The Tribunal upheld the CIT(A)'s decision to allow the deduction u/s 80 IC based on consistency with earlier orders.
In conclusion, the Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s order allowing the deduction u/s 80 IC for the manufacturing activity of anchor rods.
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2011 (3) TMI 1686
Issues involved: Appeal against CIT(A)'s order for A.Y. 2006-07 & 2007-08 regarding adhoc disallowance u/s 14A on tax-free interest income earned from various sources.
A.Y. 2006-07:
1. The CIT(A) made an adhoc disallowance of Rs. 2,68,550 on presumptions and assumptions out of tax-free interest income without considering actual expenditure incurred by the assessee.
2. CIT(A) erred in directing re-computation under rule 8D despite it not being applicable for the assessment year.
3. Addition for presumed expenditure on earning interest & dividend income deemed vague and defective.
4. Lack of documentary evidence for incurring the above addition.
A.Y. 2007-08:
1. Adhoc disallowance of Rs. 3,73,824 u/s 14A on tax-free interest & dividend income without considering actual expenditure.
2. CIT(A) erred in confirming disallowance under rule 8D not applicable for the assessment year.
3. Addition for presumed expenditure on earning interest & dividend income deemed vague and defective.
4. Lack of documentary evidence for incurring the above addition.
The ITAT Delhi Bench considered the assessee's appeals, noting similar disallowances made in the husband's case. Referring to the decision in Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT, the ITAT Delhi Bench 'F' deleted the addition based on lack of actual expenditure incurred for earning interest on tax-free bonds. The Tribunal observed that no actual interest was received, only accrued, hence no expenditure was incurred. The decision of the Special Bench in Daga Capital Management (P) Ltd. was also discussed, noting that Rule 8D is applicable only from AY 2008-09. As the investments were from the assessee's own funds and the income was recurring, the disallowance u/s 14A was deemed unjustified and deleted.
In conclusion, both appeals were allowed, and the disallowance of expenditure was deleted based on the absence of indirect expenses and the nature of the investments being from the assessee's own funds. The order was pronounced on 31-3-2011.
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2011 (3) TMI 1685
Issues involved: Appeal against order of Commissioner of Income-tax(Appeals) granting interest u/s.244A on self-assessment tax refund for assessment year 1993-94.
Summary:
1. The Revenue appealed against the order of Commissioner of Income-tax(Appeals) granting interest u/s.244A on the self-assessment tax refund for the assessment year 1993-94.
2. The Revenue contended that the interest u/s.244A should not be granted as the refund did not arise due to payment of advance tax or taxes paid u/s.199 of the Act during the financial year immediately preceding the assessment year.
3. The assessee had requested the Assessing Officer to grant interest on self-assessment tax, which was initially rejected. However, the Ld. CIT(A) allowed the appeal of the assessee based on a judgment of the Madras High Court in the case of Cholamandalam Investment & Finance Co. Ltd. The Ld. CIT(A) held that the appellant is entitled to interest u/s.244A on self-assessment tax payments.
4. During the hearing, the Ld. DR relied on the Assessing Officer's order, while the Ld. Counsel for the assessee argued that the issue was covered by the decision of the Hon'ble jurisdictional High Court in the case of CIT v. Gujarat State Warehousing Corporation.
5. The Tribunal upheld the order of the Ld. CIT(A) stating that the assessee is entitled to interest u/s.244A on self-assessment tax payment based on the Madras High Court judgment and other decisions of the Tribunal. The Tribunal also noted that the issue was covered by the jurisdictional High Court's decision in the case of Gujarat State Warehousing Corporation.
6. Consequently, the Revenue's appeal was dismissed, and the order passed by the Ld. CIT(A) granting interest u/s.244A on self-assessment tax payments was upheld.
Order pronounced on 10th March, 2011.
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2011 (3) TMI 1684
Issues Involved:
1. Maintainability of the addition for Rs. 72.87 lacs on account of under-selling of cashew kernels to sister concerns.
2. Assessee's claim for deduction under section 80HHC on the profit assessed.
Detailed Analysis:
1. Maintainability of the Addition for Rs. 72.87 Lacs:
The principal issue in the appeal is the maintainability of the addition for Rs. 72.87 lacs effected in the assessment due to under-selling of cashew kernels by the assessee to its sister concerns. The assessee sold kernels worth Rs. 431.99 lacs to sister concerns at an average price of Rs. 178 per kg, whereas the closing stock was valued at Rs. 208 per kg, indicating a loss of Rs. 30 per kg. The assessee argued that the selling price was governed by international market rates and not by the cost of production. The Revenue authorities, however, viewed that the sales were not made on an arm's length basis and added the differential amount, invoking the arm's length principle, citing tax avoidance as the sister concerns benefited from deductions under section 80HHC.
The Tribunal noted that the power of assessment is plenary, and the assessing authority has to look at the substance of transactions. If transactions are shown to be calibrated and not representing actual commercial dealings, the assessing officer (AO) can interfere. However, the AO must act reasonably and base assessments on relevant materials, avoiding arbitrary actions. The Tribunal agreed that the figure of average cost of production adopted by the AO was a valid measure in the absence of grade-wise cost data.
The Tribunal further examined if there was sufficient material for the AO to conclude that the books of account did not reflect true and full particulars of transactions with sister concerns. The assessee's explanation for the loss was that the sale rate was de-linked from the cost of production and governed by international prices. However, the Tribunal found the explanation unsatisfactory, noting that the assessee's trading results should align with past performance if the rates were indeed normative. The Tribunal observed that the full facts, including the details of the selling arrangement with sister concerns, were not brought on record and required further investigation.
The Tribunal concluded that the Revenue's challenge to the assessee's bona fides was valid and that the AO could estimate the fair market value based on the average cost of production. However, the matter was remitted back to the first appellate authority to allow the assessee to establish its bona fides and for the Revenue to conduct further investigations if necessary.
2. Assessee's Claim for Deduction Under Section 80HHC:
The assessee claimed the benefit of deduction under section 80HHC on the profit assessed, relying on the decision in the case of Bawa Skin Co. The CIT(A) disallowed the claim, noting that there was no disclaimer by the exporters of the benefit under section 80HHC in respect of the assessee's sales to them. The Tribunal noted that the cited case involved a scenario where the assessee had claimed and was allowed deduction under section 80HHC on its exports, and an addition to the trading account resulted in a corresponding increase in the deduction.
However, in the present case, the assessee had not claimed the deduction under section 80HHC either in its return or revised return of income, and there was no disclaimer of the export benefit by the assessee's buyer in its favor as a supporting manufacturer. Despite this, the Tribunal remitted the matter back to the first appellate authority to enable the assessee to present its case.
Conclusion:
The Tribunal allowed the assessee's appeal for statistical purposes, remitting the matter back to the first appellate authority to allow the assessee to establish its bona fides and for further investigation by the Revenue. The assessee was also given an opportunity to present its case regarding the claim for deduction under section 80HHC. The Tribunal clarified the legal position and its applicability but did not express any final view on the matter, emphasizing the need for a thorough factual determination.
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