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Showing 161 to 180 of 886 Records
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2013 (3) TMI 732
Issues involved: Determination of whether the activity of processing waste water amounts to 'Business Auxiliary Services' for the purpose of Service Tax liability.
The appellant, M/s. Odyssey Organics Pvt. Ltd., undertook processing of waste water before it was sent for further treatment and disposal. The department alleged that this activity falls under 'Business Auxiliary Services' and demanded Service Tax along with interest and penalty. The lower appellate authority upheld the demand, leading to the appellant's appeal before the Tribunal.
The appellant argued that a similar matter regarding bio-medical waste was considered by the Board, where it was clarified that such activities do not qualify as 'processing of goods' or 'provision of service on behalf of the client' under taxable services. Citing precedents, the appellant requested a stay on the demand.
The Revenue, represented by the ld. Superintendent (AR), supported the findings of the lower authorities.
After considering the submissions, the Tribunal noted that waste water itself cannot be considered as goods, and referred to a Board Circular regarding bio-medical waste to support the appellant's position. Consequently, the Tribunal found merit in the appellant's case and granted an unconditional waiver from pre-deposit of the dues, staying the recovery during the appeal process.
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2013 (3) TMI 731
Issues Involved:
1. Admissibility of confessional statements made by accused in a separate case (Special Case No. 4 of 2009) as evidence in the present case (Special Case No. 21 of 2006).
2. Applicability of Sections 6, 11, 25, 26, 30, 32, 60, 132, and 35 of the Evidence Act, and Section 18 of the MCOCA.
3. Relevance of Sections 35 and 80 of the Evidence Act.
4. Impact of Article 20(3) of the Constitution of India.
Summary:
1. Admissibility of Confessional Statements:
The primary issue was whether the confessional statements made by the accused in Special Case No. 4 of 2009 could be admitted as evidence in Special Case No. 21 of 2006. The Court held that confessional statements made by individuals who are not co-accused in the present case are inadmissible under the Evidence Act. The confessions recorded by police officers in Special Case No. 4 of 2009 cannot be used in Special Case No. 21 of 2006 as they do not involve the same accused persons.
2. Applicability of Evidence Act and MCOCA:
- Sections 25 and 26 of the Evidence Act: Confessions made to police officers or while in police custody are inadmissible.
- Section 30 of the Evidence Act: Allows confessional statements to be used against co-accused only if they are tried jointly, which is not the case here.
- Section 6 of the Evidence Act: The Court ruled that the confessions do not qualify as "res gestae" since they were made two years after the bomb blasts and lack the necessary contemporaneity.
- Section 11 of the Evidence Act: While the confessions could be relevant to show inconsistency with the prosecution's case, they must be proved by the persons who made them, not by the police officers who recorded them.
- Section 32 of the Evidence Act: Inapplicable as the persons who made the confessions are available and can be called as witnesses.
- Section 60 of the Evidence Act: Requires direct evidence; hence, the confessions must be presented by the individuals who made them.
- Section 132 of the Evidence Act: Protects witnesses from self-incrimination but does not preclude their testimony.
- Section 18 of the MCOCA: Confessions to police officers are admissible only in the trial of the person making the confession or their co-accused, abettor, or conspirator, which is not applicable here.
3. Relevance of Sections 35 and 80 of the Evidence Act:
The Court found that Sections 35 and 80, which pertain to the admissibility of public records and documents, are not applicable in this context as the objective is to establish the truth of the confessional statements, which can only be done by the individuals who made them.
4. Impact of Article 20(3) of the Constitution:
The Court rejected the argument that summoning the individuals who made the confessions would violate their right against self-incrimination under Article 20(3) of the Constitution, as Section 132 of the Evidence Act provides protection against self-incrimination.
Conclusion:
The Supreme Court set aside the High Court's order allowing the summoning of police officers who recorded the confessions in Special Case No. 4 of 2009. The Court ruled that the accused in Special Case No. 21 of 2006 could not use these confessions as evidence unless the individuals who made the confessions testify directly. The appeal was allowed, and the High Court's order was reversed.
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2013 (3) TMI 730
Issues Involved:
1. Valuation of excisable goods cleared for trial and demonstration.
2. Applicability of Rule 4 vs. Rule 8 of the Central Excise Valuation Rules.
3. Alleged suppression of information and non-filing of Form E.R.-1.
4. Maintainability of the writ petition without exhausting statutory remedies.
Summary:
1. Valuation of Excisable Goods Cleared for Trial and Demonstration:
The petitioner, engaged in manufacturing Tungsten Carbide Tools, Tips, and Inserts, cleared these goods for trial and demonstration purposes. The internal audit observed that the petitioner adopted a value at 110% of the cost of production u/s Rule 8 of the Central Excise Valuation Rules, 2000, based on Board's Circular No. 643/34/2002-CX, dated 1-7-2002. However, the audit noted that these goods were not consumed in the production or manufacture of other excisable goods, thus necessitating valuation under Rule 4 of the Valuation Rules.
2. Applicability of Rule 4 vs. Rule 8 of the Central Excise Valuation Rules:
The Additional Commissioner opined that the petitioner contravened Sec. 4(b) of the Central Excise Act, 1944, r/w Rule 4 of the Valuation Rules by failing to adopt the correct value for goods cleared for trial and demonstration. The petitioner argued that Rule 8 was applicable as the goods were not sold, but the court held that Rule 4 applies to goods cleared for trial and demonstration, as they are not cleared for use in the production or manufacture of other articles.
3. Alleged Suppression of Information and Non-filing of Form E.R.-1:
The petitioner did not show the goods cleared for trial and demonstration separately in Form E.R.-1, leading to allegations of suppression of information to evade Cenvat duty. The court noted that these allegations need to be examined by the Appellate Authority, where an appeal is pending.
4. Maintainability of the Writ Petition Without Exhausting Statutory Remedies:
The respondents contended that the writ petition is not maintainable as the petitioner did not exhaust the statutory remedy of an appeal u/s 35 of the Central Excise Act, 1944. The court agreed and directed the petitioner to pursue the appeal process.
Conclusion:
The court concluded that the valuation of goods cleared for trial and demonstration should be determined under Rule 4 of the Valuation Rules. The petition was rejected, and the appellate authority was directed to provide a reasonable opportunity of hearing to the petitioner regarding the allegations of suppression and non-filing of Form E.R.-1.
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2013 (3) TMI 729
Issues:
The judgment involves the rejection of a refund claim u/s Rule 19 of the Central Excise Rules, 2002 read with Notification No. 42/2001-C.E. (N.T.).
Refund Claim Rejection:
The appellant cleared an excisable product for export under ARE-1 procedure without payment of duty. The Customs Officer certified the export on 14-12-2008, but the ARE-1 was received on 12-6-2009. The appellant claimed refund on 30-7-2009. The department sanctioned refund as CENVAT credit, but the appellate authority allowed the department's appeal. The appellant's appeal challenges the appellate Commissioner's order.
Appellant's Submission:
The appellant's counsel argued that the export consignment was shipped promptly upon receiving the LEO. The ARE-1 was delayed and received on 12-6-2009. Copies of shipping documents were submitted to the Central Excise Range officer on 28-4-2009. The appellant provided the ARE-1 certified by Customs as instructed by the Range Officer. The counsel contended that the appellant should not be denied the benefit of Notification No. 42/2001-C.E. (N.T.).
Department's Argument:
The Superintendent (AR) referred to Condition (ii) of Notification No. 42/2001-C.E. (N.T.) and stated that the evidence of export was produced beyond the prescribed six-month period. Therefore, the party could not claim a refund of the duty paid.
Judgment:
After considering the submissions, the Tribunal found that the refund cannot be denied to the appellant. The goods were exported on 14-12-2008 as certified by the Customs Officer. The appellant submitted the required documents within six months, as instructed by the Range Officer. The Tribunal noted that there was no prescribed time limit for producing the ARE-1 and that the appellant complied with the instructions. It was concluded that the appellant did not violate the conditions of Notification No. 42/2001-C.E. (N.T.). The Tribunal set aside the impugned order and allowed the appeal.
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2013 (3) TMI 728
Issues involved:
The legal issue of validity of re-assessment notice issued u/s 148 of the Act before the expiry of time limit for issuing notice u/s 143(2) for completing assessment u/s 143(3).
Assessment on merits of various additions.
Validity of re-assessment notice u/s 148:
The assessee filed returns under sections 139(1) and 139(5) of the Act for the assessment year 2002-03. The Assessing Officer issued a re-assessment notice u/s 148 of the Act for reopening the assessment, while the time limit for issuing notice u/s 143(2) for completing the original assessment was still available. The assessee contended that the re-assessment notice u/s 148 issued before the expiry of the time limit prescribed u/s 143(2) is not valid. The Hon'ble jurisdictional High Court of Kerala held that income escaping assessment u/s 147 cannot be completed within the time available for issuing notice u/s 143(2) and for completing assessment u/s 143(3). The Tribunal concurred with this view, stating that the re-assessment notice issued within the time limit for issuing notice u/s 143(2) is not valid, leading to the quashing of the assessment order.
Observations on legal issue:
The Tribunal highlighted that the Supreme Court's decision did not address a scenario where re-assessment was initiated within the time available for issuing notice u/s 143(2) and for making a regular assessment u/s 143(3) of the Act. The Tribunal emphasized that for making a re-assessment u/s 147, a regular assessment under section 143(3) is not required. It was noted that the Assessing Officer can initiate and complete an assessment u/s 147 for any year if there is a reason to believe that income chargeable to tax has escaped assessment, irrespective of whether a return was filed or a regular assessment u/s 143(3) was made. The Tribunal's view conflicted with the Delhi High Court's stance, but it upheld the consistent view of the Madras and Delhi High Courts that an income escaping assessment under section 147 cannot be completed within the time available for issuing notice u/s 143(2) and for completing assessment u/s 143(3).
Conclusion:
Based on the binding decision of the Hon'ble High Court of Kerala, the Tribunal held that the re-assessment notice u/s 148 issued within the time limit for issuing notice u/s 143(2) was not valid. Consequently, the assessment order based on the invalid notice was quashed, and the appeal filed by the assessee was allowed.
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2013 (3) TMI 727
Issues involved:
The judgment addresses three main issues:
1. Interpretation of disallowance u/s 40A(3) of the Income-tax Act.
2. Disallowance under Section 40(a)(ia) for a specific payment.
3. Disallowance u/s 40(a)(ia) related to sub-contracted work.
Issue 1: Disallowance u/s 40A(3) of the Income-tax Act:
The Assessing Officer disallowed a sum under Section 40A(3). The CIT(A) deleted the amount based on the exception that petrol was purchased from a site far from the main town where non-cash payments were more common. The Tribunal upheld this decision citing Rule 6DD(g) which exempts payments exceeding Rs. 20,000 made in areas without banking facilities. Both authorities found the payment for petrol justified given the circumstances, leading to no further intervention required.
Issue 2: Disallowance under Section 40(a)(ia) for a specific payment:
The Assessing Officer disallowed a payment under Section 40(a)(ia). The CIT(A) disagreed, stating that each payment was below Rs. 50,000 and proper evidence was submitted. The Tribunal upheld this decision, noting the lack of verification by the Assessing Officer and the availability of necessary details. The issue was deemed factual and required no further consideration, leading to the dismissal of the Tax Appeal.
Issue 3: Disallowance u/s 40(a)(ia) related to sub-contracted work:
A disallowance was made under Section 40(a)(ia) for sub-contracted work. The CIT(A) and Tribunal both found no doubt regarding the genuineness of the transactions, emphasizing the lack of additional inquiry by the Assessing Officer. The issue was deemed factual and not warranting any legal questions, resulting in the dismissal of the Tax Appeal due to the absence of substantial legal issues.
In conclusion, the judgment addressed various aspects of disallowances under different sections of the Income-tax Act, emphasizing the importance of factual considerations and proper verification by the authorities involved.
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2013 (3) TMI 726
Issues involved:
The judgment involves the issue of confirming the disallowance/addition made under section 14A of the Income Tax Act read with Rule 8D, pertaining to the assessment year 2008-09.
Summary:
Issue 1 - Disallowance under section 14A:
The Assessing Officer noted that the assessee earned exempt dividend income but did not offer any disallowance under section 14A. The computation provided by the assessee was used to disallow the amount. The CIT(A) confirmed the disallowance, stating that the onus is on the appellant to establish that borrowed funds were not used for investment in shares. The appellant contended that the disallowance was not justified as the investment was made from own surplus funds. The Tribunal referred to the settled law that there cannot be any estoppel against the statute and upheld the appellant's grievance, following the decision of the Hon'ble jurisdictional High Court.
Issue 2 - Net interest expenditure for disallowance under section 14A:
The appellant argued that no disallowance could be made under section 14A as there was no net interest expenditure after setting off interest credited to the profit and loss account. The Tribunal agreed, stating that if no net interest expenditure exists, no part of interest debited can be disallowed as attributable to earning tax-free dividends. The Tribunal upheld the decision of the CIT(A) in deleting the interest disallowance, as all expenses incurred by the assessee had been offered for disallowance.
In conclusion, the Tribunal allowed the appeal filed by the assessee, emphasizing that the disallowance under section 14A should be based on the net figure debited or credited to the Profit & Loss A/c, and not the gross figure. The judgment was pronounced on March 6, 2013.
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2013 (3) TMI 725
Validity of summon order passed by the Metropolitan Magistrate (M.M) u/s 415, 409, 34, 120B of the Indian Penal Code (IPC) against the Managing Director, the Company Secretary and the Directors of the Company and the company - The complainant alleged that the respondents have committed criminal breach of trust and cheating, inasmuch as they have sold off shares of the complainant and misappropriated the entire sale proceeds. Considering the facts of the case magistrate issued the summon.
HELD THAT:- Considering the allegations made in the complaint, documents placed on the record and the evidence led by the witnesses, and after being satisfied that a prima facie case is made out, directed issuance of summons against the respondents to face trial under the aforementioned Sections of IPC. The learned Magistrate has been directed to proceed with the trial against respondent No. 1 u/s of IPC. The issuance of summons against respondents Nos. 2 to 7, namely, the Managing Director, the Company Secretary and the Directors of the Company cannot be sustained and the same are liable to be set aside. So far as respondent No. 1 Company is concerned, the issuance of summons as against the Company under Section 415 IPC also cannot be sustained.
The order of the High Court, therefore, needs no interference by this Court.
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2013 (3) TMI 724
Issues Involved:
1. Calculation of deduction u/s 10A of the Income Tax Act.
2. Set-off of brought forward losses and unabsorbed depreciation against current year profits.
Summary:
Issue 1: Calculation of Deduction u/s 10A
The assessee contested the reduction of the deduction u/s 10A by the Assessing Officer (AO) and confirmed by the CIT(A). The AO observed that the assessee claimed a deduction of Rs. 41,51,891/- u/s 10A for the year under appeal. The AO noted that the assessee had carried forward losses and depreciation from previous years and questioned whether these were related to STPI business transactions. The assessee argued that the deduction u/s 10A should be computed without adjusting for brought forward losses and unabsorbed depreciation, which pertained to non-STPI activities. The AO, however, concluded that the expenses and losses were related to the STPI unit and should be set off against the profits of the STPI unit before allowing the deduction u/s 10A.
Issue 2: Set-off of Brought Forward Losses and Unabsorbed Depreciation
The CIT(A) upheld the AO's decision, stating that the brought forward business losses and unabsorbed depreciation of the non-STPI unit must be set off against the income of the STPI unit before claiming the deduction u/s 10A. The assessee appealed to the ITAT, citing the jurisdictional High Court's decision in CIT(A) vs. Ace Software Exports Ltd., which ruled in favor of the assessee. The High Court held that the deduction u/s 10A should be allowed without adjusting for losses of other units or brought forward losses and unabsorbed depreciation. The ITAT, following this precedent, allowed the assessee's appeal, concluding that the deduction u/s 10A should be computed without adjusting for brought forward losses and unabsorbed depreciation.
Conclusion:
The ITAT ruled in favor of the assessee, allowing the deduction u/s 10A without the adjustment of brought forward losses and unabsorbed depreciation, in line with the jurisdictional High Court's decision. The appeals of the assessee were allowed.
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2013 (3) TMI 723
Issues involved:
The issues involved in the judgment include the quashing of proceedings, investigation, and inquiry conducted by the respondents, as well as the issuance of summons under Section 108 of the Customs Act, 1962. The argument revolves around the necessity of sanction from a competent Magistrate for the enforcement of the power of arrest under the Act and the bailable nature of offenses under the Act.
Quashing of Proceedings:
The petitioner invoked the writ jurisdiction of the Court seeking to quash the proceedings, investigation, and inquiry conducted by the respondents, along with the issuance of summons under Section 108 of the Customs Act, 1962. The argument was made that the power of arrest under the Act cannot be enforced without sanction from a competent Magistrate. However, the Court found that there was no document or information available to show that the respondents intended to act under Section 104 of the Act. As the respondents were investigating proceedings related to the import of prohibited foods and had called upon the petitioner to produce documents under Section 108 of the Act, the arguments based on Section 104 were deemed untenable.
Power of Arrest and Summons under the Act:
The argument raised by the petitioner's counsel was based on Section 104 of the Act, which confers the power of arrest upon customs officers empowered by the Commissioner of Customs. The respondents, through their counsel, clarified that they had only called upon the petitioner by issuing summons under Section 108 of the Act. The Court noted that since the respondents were only investigating under Section 108, the arguments raised based on Section 104 were found to be misconceived and aimed at misleading the Court.
Nature of Offenses and Anticipatory Bail:
The argument regarding the bailable nature of the offense was not disputed by the respondents' counsel. It was acknowledged that the offense was bailable, yet the petitioner had obtained an order from the Court to prevent arrest, even though anticipatory bail is not maintainable for bailable offenses. The Court highlighted that the respondents were solely investigating under Section 108 of the Act, leading to the dismissal of the petition for lack of merit.
Conclusion:
In conclusion, the Court dismissed the petition as it found no merit in the arguments presented by the petitioner. The judgment clarified the basis for invoking the writ jurisdiction and emphasized the specific sections of the Customs Act, 1962 under which the respondents were conducting their investigation and issuing summons.
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2013 (3) TMI 722
Issues Involved:
1. Disallowance u/s 36(1)(iii) on account of interest on borrowed funds.
2. Addition u/s 2(22)(e) on account of deemed dividend.
3. Addition on account of excess consumption of steel.
Summary:
1. Disallowance u/s 36(1)(iii) on account of interest on borrowed funds:
The assessee challenged the CIT(A)'s confirmation of disallowance of Rs. 52,820/- u/s 36(1)(iii) made by the Assessing Officer (AO) for interest on borrowed funds. The AO noted that the assessee had diverted interest-bearing funds to group companies without charging interest. Despite the assessee's argument that investments were made from routine business funds and that no interest was paid on unsecured loans, the AO disallowed interest based on the utilization of borrowed capital not being for business purposes. The CIT(A) upheld this disallowance, stating that the assessee failed to establish the business purpose for the advances. The Tribunal, while agreeing with the CIT(A), found merit in the assessee's claim that state capital investment subsidy should be considered as interest-free funds available for making advances. The issue was restored to the AO for verification and recomputation.
2. Addition u/s 2(22)(e) on account of deemed dividend:
The AO added Rs. 17 lakhs as deemed dividend u/s 2(22)(e) since the assessee received loans from Yog Cement Products and Industries Pvt. Ltd. The CIT(A) upheld this addition but accepted that deemed dividends considered in earlier years should be reduced from accumulated profits. The Tribunal directed the AO to verify the difference in depreciation as per Income Tax Act and Companies Act and adjust the accumulated profits accordingly, following the jurisdictional High Court's decision in the case of CIT Vs. Jamnadas Khimji Kothari.
3. Addition on account of excess consumption of steel:
The AO made an addition of Rs. 2,57,089/- due to high steel consumption, which the assessee attributed to poor quality steel but failed to substantiate with evidence. The CIT(A) upheld the addition. The Tribunal, while sustaining the addition, directed that telescoping benefit should be given to the assessee against the excess stock found during A.Y. 2008-09.
Other Appeals:
For subsequent assessment years, similar issues of disallowance u/s 36(1)(iii) and deemed dividend u/s 2(22)(e) were restored to the AO for recomputation as per the directions given in the primary appeal. The addition of Rs. 2,88,375/- for excess stock in A.Y. 2008-09 was confirmed, with telescoping benefit allowed for the addition sustained in A.Y. 2002-03.
Conclusion:
The appeals were partly allowed for statistical purposes, with directions for recomputation and verification by the AO.
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2013 (3) TMI 721
The Bombay High Court heard a case where the Tribunal confirmed a 5% disallowance of manufacturing and trading expenses and denied a deduction of Rs. 20,16,264 for an annualized write-off paid to Maharashtra Industrial Development Corporation for land use. Key questions of law included the validity of these decisions.
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2013 (3) TMI 720
Issues involved: Interpretation of provisions u/s 80HHC of the Income Tax Act, 1961 regarding inclusion of exchange rate gain on forward contract and exclusion of foreign exchange gain in respect of export profit from export turnover.
Interpretation of exchange rate gain on forward contract:
The Tribunal upheld that exchange rate gain on forward contract is considered as business income based on the decision in Commissioner of Income Tax V/s. Badridas Gauridu (P) Limited (2003) 261 ITR 256 (Bom). Consequently, the Tribunal ruled that foreign exchange gain should be treated as export profit and cannot be excluded from export turnover u/s 80HHC of the Income Tax Act, 1961. Therefore, the Court found no justification to entertain the issue of inclusion of exchange rate gain on forward contract.
Exclusion of foreign exchange gain from export turnover:
The Court noted that the issue of exclusion of foreign exchange gain in respect of export profit from export turnover for computation u/s 80HHC is settled in favor of the assessee and against the Revenue as per the decision in Commissioner of Income Tax V/s. Gem Plus Jewellery India Limited (2011) 330 ITR 175. Consequently, the Court declined to entertain this question as well.
Conclusion:
The appeal by the Revenue for assessment year 2003-04 was dismissed with no order as to costs, as both issues were decided against the Revenue based on previous judicial precedents.
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2013 (3) TMI 719
Issues Involved:
1. Transfer of development right - Incorrect taxation thereof.
2. Warranty expenses of Rs. 68,24,150/-.
3. Set-off of short-term capital loss without applying the provisions of Section 94(7) of the Act.
Summary:
1. Transfer of Development Right - Incorrect Taxation Thereof:
The Ld. CIT observed that the assessee received Rs. 41 Crores for the transfer of development rights to Gera Reality Pvt. Ltd. during F.Y. 06-07. The Ld. CIT concluded that the entire amount should have been taxed in A.Y. 07-08, but only Rs. 5.86 Crores was taxed, rendering the order erroneous and prejudicial to the interest of revenue. The Tribunal found that the Assessing Officer had made detailed discussions and inquiries during the assessment proceedings, and the view taken by the Assessing Officer was permissible in law. Therefore, the order on this issue was not erroneous.
2. Warranty Expenses of Rs. 68,24,150/-:
The Ld. CIT noted that the assessee debited Rs. 68,24,160/- as warranty expenses, which was a provision without evidence of actual expenditure. The Ld. CIT deemed this provision not allowable as an expenditure. The Tribunal found that the Assessing Officer had raised specific queries and received detailed replies from the assessee. Moreover, the issue was covered in favor of the assessee by the Supreme Court decision in Rotork Controls India Pvt. Ltd. Vs. CIT 314 ITR 62. Thus, the order on this issue was not erroneous.
3. Set-off of Short-Term Capital Loss Without Applying Provisions of Section 94(7):
The Ld. CIT observed that the assessee claimed set-off of short-term capital loss arising from dividend stripping, which is not permissible u/s 94(7) of the Act. The Tribunal found that there was no query or inquiry by the Assessing Officer on this issue, making the assessment order erroneous and prejudicial to the interest of revenue. The Tribunal upheld the Ld. CIT's order to the extent of this issue and directed the Assessing Officer to complete the assessment after examining this issue as per the provisions of law.
Conclusion:
The Tribunal partly allowed the assessee's appeal, holding that the order was erroneous and prejudicial to the interest of revenue only concerning the set-off of short-term capital loss and applicability of Section 94(7) of the Act. The Assessing Officer was directed to re-examine this issue.
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2013 (3) TMI 718
Issues Involved: Appeal against penalty order u/s 271(1)(c) of the IT Act, 1961 for asst. yr. 2000-01.
Summary:
The appeal by the Revenue was against a penalty order u/s 271(1)(c) of the IT Act, 1961 for the assessment year 2000-01. The penalty was imposed based on estimated additions made during the assessment. The assessee, an authorized dealer of Indian Oil Corporation, had filed its return of income declaring a lower total income than assessed. The additions made by the Assessing Officer included amounts related to sales of mobile oil and spare parts, stock shortages, and disallowed expenses. The penalty proceedings were initiated in 2003, resulting in a penalty of Rs. 5,50,000 being imposed. In the first appeal, the entire penalty was deleted, leading to the Revenue's current appeal.
Upon review, the Tribunal found that the penalty was primarily based on estimated additions, most of which had been deleted except for a minor amount. The Tribunal cited legal precedents to establish that penalties under s. 271(1)(c) cannot be imposed solely on estimated additions, as they do not necessarily indicate concealment or inaccurate particulars of income. The Tribunal referenced specific judgments to support its decision, emphasizing that estimated additions do not warrant penalty imposition. Consequently, the Tribunal upheld the decision of the CIT(A) to delete the penalty based on similar reasoning.
Therefore, the Tribunal dismissed the Revenue's appeal, affirming the deletion of the penalty by the CIT(A) due to the nature of the estimated additions and the legal principles governing penalty imposition in such cases.
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2013 (3) TMI 717
Issues involved: Stay of recovery proceedings pending appeal before CESTAT, direction to respondents not to initiate coercive steps for recovery.
The Hon'ble Ms. Justice G. Rohini, in the judgment, addressed the issue of recovery proceedings initiated by the 4th respondent based on a circular dated 01.01.2013 issued by the 2nd respondent, against an order of assessment dated 28.06.2011. The petitioner had filed an appeal before the 5th respondent (CESTAT) along with a stay application, which were still pending. The Court noted that similar writ petitions had been disposed of by directing no coercive steps for recovery until stay petitions were decided by appellate authorities. Considering the pending stay application and appeal before CESTAT, Bangalore, the Court directed the respondents not to initiate any coercive steps for recovery until the stay application was disposed of by CESTAT, Bangalore. The Court clarified that the decision on the stay application and appeal should be independent of the observations made in the judgment. The writ petition was disposed of without costs, and any pending miscellaneous petitions in the matter were closed.
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2013 (3) TMI 716
Issues involved: Disallowance under Section 40(a)(ia) for non-deduction of TDS on transportation charges paid on behalf of clients.
Summary:
Issue 1: Disallowance under Section 40(a)(ia)
The appeal was filed by the assessee against the order passed by the CIT (Appeals) for the quantum of assessment under Section 143(3) for the Assessment Year 2007-08. The disallowance of `7,34,393/- was made under Section 40(a)(ia) for non-deduction of TDS on transportation charges. The Assessing Officer noted that the assessee, a Private Limited Company engaged in Custom House clearing, forwarding, and Shipping Agents business, did not deduct TDS on shipping charges paid on behalf of clients. The assessee argued that as an intermediary, the payments made on behalf of clients were not debited as expenses in the profit and loss account, hence not responsible for TDS deduction. However, both the Assessing Officer and the CIT(A) upheld the disallowance citing legal provisions and Circular No. 715 dated 08.08.1995. The CIT(A) emphasized that non-routing of expenses through the profit and loss account does not absolve the appellant from TDS implications under Section 40(a)(ia).
Issue 2: Arguments and Decision
The assessee contended that it acted as an intermediary on behalf of clients, with payments not reflected as expenses in the profit and loss account. The bills were raised in the name of clients, and TDS deduction under Section 194C was not applicable. The ITAT Mumbai, after considering the contentions and relevant findings, ruled in favor of the assessee. It was established that the assessee acted as a conduit or intermediary, with expenses being reimbursed by clients and not claimed as deductions. As there was no privity of contract between the assessee and clients, and expenses were not claimed in the profit and loss account, Section 40(a)(ia) disallowance was deemed inapplicable. The decision of the Delhi High Court in the case of CIT v/s Cargo Linkers and other precedents supported this position. Consequently, the grounds raised by the assessee were allowed, and the appeal was treated as allowed.
Conclusion:
The ITAT Mumbai allowed the assessee's appeal, overturning the disallowance under Section 40(a)(ia) for non-deduction of TDS on transportation charges paid on behalf of clients.
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2013 (3) TMI 715
Issues Involved:
1. Whether the sale of lands should be assessed as 'business income' or 'Long Term Capital Gain'.
2. Whether the assessee is entitled to claim deduction u/s 54EC of the Income-tax Act.
Summary:
Issue 1: Assessment of Sale of Lands as 'Business Income' or 'Long Term Capital Gain'
The revenue challenged the orders of the Ld.CIT(A), Pune, which granted relief to the assessee by treating the Long Term Capital Gain from the sale of lands as 'business income'. The Assessing Officer (AO) argued that the transactions should be assessed under 'business income' due to the nature of the assessee's activities, including share trading and real estate development. The AO cited several reasons, including the assessee's involvement in real estate through her proprietary concern and partnerships, and the lack of "pride possession" in the lands sold. The AO also referenced Circular No.4/2007 of the CBDT and relevant case laws to support his stance.
The Ld.CIT(A) disagreed, noting that the lands were held as investments and not business assets. The Ld.CIT(A) emphasized the long holding period of the lands, their status as agricultural lands in revenue records, and the absence of any development or conversion to non-agricultural use. The Ld.CIT(A) concluded that the AO's assessment was based on presumptions rather than hard facts and that the sale transactions should be treated as 'Capital Gain'.
The Tribunal upheld the Ld.CIT(A)'s decision, noting that the long holding period and lack of development indicated an investment rather than a business motive. The Tribunal found no reason to interfere with the Ld.CIT(A)'s order, confirming that the sale consideration should be assessed under 'Capital Gain'.
Issue 2: Deduction u/s 54EC
The AO denied the benefit of Section 54EC to the assessee, arguing that the sale consideration should be treated as 'business income'. However, since the Tribunal upheld the Ld.CIT(A)'s decision to treat the sale consideration as 'Capital Gain', the assessee is entitled to claim the deduction u/s 54EC.
Conclusion:
The Tribunal dismissed the revenue's appeals, confirming the Ld.CIT(A)'s orders that the sale consideration from the lands should be assessed as 'Capital Gain' and not 'business income'. The assessee is entitled to claim the deduction u/s 54EC of the Income-tax Act.
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2013 (3) TMI 714
Issues involved: Appeal by Revenue against CIT(A)'s order allowing Rebate u/s 88E while computing tax liability under MAT provision and comparison between tax determined under Normal Provision and provisions u/s 115JB.
Issue 1 - Rebate u/s 88E and tax liability under section 115JB:
The Revenue contended that the tax liability under section 115JB was higher than the normal tax, as the assessee did not allow credit of securities transaction tax from tax payable under section 115JB. The assessee argued that tax rebate is applied after determining income tax payable on total income computed as per applicable provisions including MAT. The CIT(A) upheld the assessee's contention citing decisions of ITAT in similar cases. The CIT(A) stated that the comparison between tax determined under normal provisions and under section 115JB should be made before allowing rebate u/s 88E, and the rebate would be available against tax payable under section 115JB. The ITAT upheld the CIT(A)'s decision based on previous rulings and dismissed the Revenue's appeal.
Issue 2 - Interpretation of tax provisions:
The AO's view was that provisions of section 115JB ensure tax collection where the tax liability under normal provisions was much less. The AO relied on Circular No.13 of 2011 and argued that income tax u/s 115JB shall be 10% of the book profit if the tax payable on total income computed under the Act was less than 10% of the book profit. The CIT(A) and ITAT, however, supported the assessee's interpretation, emphasizing the comparison between tax liabilities under normal provisions and section 115JB before allowing rebate u/s 88E. The ITAT cited previous decisions and upheld the CIT(A)'s ruling in favor of the assessee.
Conclusion:
The ITAT Mumbai upheld the CIT(A)'s decision to allow rebate u/s 88E against tax payable under section 115JB, based on the comparison between tax liabilities under normal provisions and section 115JB. The ITAT dismissed the Revenue's appeal, citing previous rulings and maintaining the decision in favor of the assessee.
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2013 (3) TMI 713
Addition of cash deposits made in the bank account treating as undisclosed income - Held that:-
Assessee withdrew cash from his own bank account for the purpose of purchase of land - assessee filed paper book which includes copy of bank account and copy of salary account - merely because there was time gap between withdrawal of cash and cash deposits, explanation of assessee could not be rejected and addition on account of cash deposit could not be made - Held in case of ACIT vs. Shri Joginder Singh [ITA No. 2942 (Del) of 2011] - Decided in favor of assessee
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