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Showing 161 to 180 of 772 Records
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2012 (4) TMI 673
Issues involved: Challenge to the order of Ld. CIT (A) for A.Y. 2002-03 regarding addition of alleged inflated labour charges.
Summary:
1. The appellant challenged the order of Ld. CIT (A) confirming the addition of ` 1,57,569/- for alleged inflated labour charges. The A.O. observed discrepancies during search proceedings and statements made by individuals involved in inflating expenses.
2. The A.O. disallowed labour charges claimed beyond ` 1.50 per meter, allowing only ` 3.00 per meter and adding the difference of ` 1,57,569/-. This addition was upheld by Ld. CIT (A). The appellant sought restoration of the issue to the A.O. based on a similar case involving Mr. Alpesh B. Gada.
3. The Tribunal, in a related case of Alpesh B. Gada, directed the issue of inflated labour charges to be reconsidered by the A.O. based on evidence and inflation factors. Following this precedent, the current case was also remanded to the A.O. for fresh adjudication on the correctness of the claimed labour charges.
4. Consequently, the appellant's appeal was allowed for statistical purposes, and the issue of alleged inflated labour charges was sent back to the A.O. for reevaluation.
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2012 (4) TMI 672
Issues Involved:
1. Whether the land sold by the appellant is agricultural land within the meaning of Section 2(14)(iii) of the Income-tax Act, 1961.
2. Whether the profits from the sale of such land should be treated as business income or exempt income.
Issue 1: Agricultural Land Definition u/s 2(14)(iii)
The appellant argued that the land sold was agricultural land situated beyond municipal limits and thus not a capital asset u/s 2(14)(iii) of the Income-tax Act, 1961. The AO, however, treated the land as non-agricultural based on various judicial decisions and the fact that the land was sold to industrial houses. The CIT(A) upheld the AO's decision, emphasizing that the land was not under cultivation and was sold at a high price to industrial buyers, which indicated a commercial intent. The Tribunal, however, found that the land was classified as agricultural in revenue records, used for agricultural purposes at the time of purchase and sale, and was situated beyond municipal limits. The Tribunal noted that the AO ignored the Tehsildar's report confirming the agricultural status of the land. Therefore, the Tribunal concluded that the land did not fall under the definition of a capital asset u/s 2(14)(iii) and the gains from its sale were not taxable.
Issue 2: Nature of Income
The AO and CIT(A) treated the profits from the sale of the land as business income, citing the appellant's frequent transactions in land and the high profits earned. The CIT(A) noted that the appellant, a Chartered Accountant, purchased and sold land with the intent to profit, which indicated a business activity. The Tribunal, however, found that the land was shown as a fixed asset in the appellant's books, and there was no development or plotting done to enhance its marketability. The Tribunal held that mere frequency of transactions does not conclusively prove a business activity. It relied on judicial precedents that repeated sales of agricultural land do not constitute an adventure in the nature of trade. Consequently, the Tribunal ruled that the profits from the sale of the land were not business income but exempt income.
Conclusion:
The Tribunal allowed the appeals, ruling that the land in question was agricultural land and not a capital asset u/s 2(14)(iii), and the profits from its sale were not taxable as business income. The Tribunal's decision was based on the agricultural classification of the land in revenue records, the lack of development for resale, and the appellant's intent to use the land for agricultural purposes.
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2012 (4) TMI 671
Issues involved:
The issue involves determining whether the short term capital gains on sale of shares should be treated as business income or as short term capital gain for the assessment year 2007-08.
Summary:
Issue 1: Treatment of short term capital gains as business income
The appellant, Revenue, challenged the order of the Ld. CIT(A) directing the AO to treat the short term capital gains as against the business income treated by the AO. The AO considered the volume and frequency of transactions and held that the assessee was carrying out trading activities in shares. However, the Ld. CIT(A) applied the principle of consistency and treated the gains as short term capital gains based on similar facts from the previous assessment year. The Tribunal found that the assessee consistently showed investment in shares and not as stock-in-trade. Referring to the previous year's decision, the Tribunal upheld the Ld. CIT(A)'s order in treating the gains as short term capital gains, emphasizing the intention of the assessee to retain shares as investments.
Decision:
The Tribunal rejected the Revenue's grounds, upholding the Ld. CIT(A)'s treatment of gains from the sale of shares as short term capital gains and not as business income. The appeal by the Revenue was dismissed, and the order was pronounced on 18th April 2012.
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2012 (4) TMI 670
Income from lease rent is assessable under the head Income from business - Held that:- The undisputed facts are that the assessee has leased out its plant and machinery in the year 1995. Hence, while considering the claim of the assessee for the years ending 31.3.1996 and 31.3.97, the Tribunal held that there is nothing on record to show that the assessee had no present intention to revive its business at appropriate time, as the gap between the year of closure and the years under consideration at that point of time was very narrow.
We are concerned with the assessment year 2007-08 and we have to consider the facts and circumstances prevailing as on 31-03-2007. About 12 years have passed and hence we are in agreement with Ld D.R that the assessee has not brought on record any material to show that it has intention to revive its business activities. AR submitted that steps are being taken to revive the business, yet we are unable to accept his contention for want of supporting materials. Accordingly, in our view, the Ld. CIT(A) was not correct in placing reliance on the decision of the Tribunal without appreciating the facts prevailing in the year under consideration.
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2012 (4) TMI 669
Issues Involved:
1. Deletion of disallowance of Rs. 6,42,045/- claimed as revenue expenditure.
2. Deletion and restriction of addition u/s 14A related to apportionment of expenses.
3. Allowance of incentive paid to dealers.
4. Depreciation claim on plant and machinery.
5. Initiation of penalty u/s 271(1)(c).
6. Charging of interest u/s 234B, 234C, and 234D.
Summary:
1. Deletion of disallowance of Rs. 6,42,045/- claimed as revenue expenditure:
The Revenue contended that CIT(A) erred in deleting the disallowance of Rs. 6,42,045/- as major repairs were considered as capital assets. The Tribunal found that the issue was covered by the assessee's own case in ITA No. 594/Chd/2008, where similar expenses were allowed as current repairs. Hence, this ground of appeal by the Revenue was dismissed.
2. Deletion and restriction of addition u/s 14A related to apportionment of expenses:
The Revenue challenged the deletion of Rs. 2,34,99,000/- out of Rs. 2,59,99,000/- and the restriction of disallowance to Rs. 25 lacs u/s 14A. The Tribunal noted that the issue was covered in favor of the assessee by the Tribunal's order in ITA No. 594/Chd/2008. It was held that no disallowance u/s 14A was warranted as there was no finding of interest/expenditure attributable to earning dividend income. Thus, these grounds of appeal by the Revenue were dismissed.
3. Allowance of incentive paid to dealers:
The Revenue contended that CIT(A) erred in directing the AO to allow incentive paid to dealers where PAN was provided. The Tribunal found that the issue was covered in favor of the assessee by the Tribunal's order in ITA No. 270/Chd/2006. It was held that the incentive paid to dealers was a business expenditure and should be allowed. Hence, this ground of appeal by the Revenue was dismissed.
4. Depreciation claim on plant and machinery:
The assessee contended that CIT(A) erred in disallowing Rs. 1,89,27,512/- by restricting the depreciation claim on plant and machinery to 15% instead of 40%. The Tribunal found that the assessee satisfied the conditions for accelerated depreciation under Rule 5(2) of the Income Tax Rules, supported by certificates from the Ministry of Science and Technology. Hence, this ground of appeal by the assessee was allowed.
5. Initiation of penalty u/s 271(1)(c):
The assessee challenged the initiation of penalty u/s 271(1)(c). The Tribunal held that the issue was premature and dismissed this ground of appeal.
6. Charging of interest u/s 234B, 234C, and 234D:
The assessee contested the charging of interest u/s 234B, 234C, and 234D. The Tribunal held that charging of interest is mandatory and consequential, and hence, dismissed this ground of appeal.
Conclusion:
The appeal of the Revenue was dismissed, and the appeal of the assessee was partly allowed.
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2012 (4) TMI 668
Issues Involved:
1. Validity of the Notice dated 14.09.2009 u/s 147/148 of the Income Tax Act, 1961.
2. Whether the re-assessment proceedings initiated were based on a change of opinion.
Summary:
Issue 1: Validity of the Notice dated 14.09.2009 u/s 147/148 of the Income Tax Act, 1961
Vatika Limited challenged the Notice dated 14.09.2009 issued u/s 147/148 of the Income Tax Act, 1961, and the subsequent order dated 02.12.2010 by the Assessing Officer rejecting the objections raised by the petitioner. The Assessing Officer had recorded reasons to believe that income amounting to Rs. 377.44 lakhs had escaped assessment due to the forfeiture of Rs. 3,53,76,361/- being treated as capital expenditure, which is not allowable. The second reason regarding bad debt of Rs. 23,68,182/- was not pressed by the Revenue and was accepted by the Assessing Officer.
Issue 2: Whether the re-assessment proceedings initiated were based on a change of opinion
The court examined whether the re-assessment proceedings were valid or merely a change of opinion. During the original assessment proceedings, the issue of forfeiture of Rs. 3,53,76,361/- was specifically examined and verified by the Assessing Officer, who accepted the petitioner's stand. The court noted that the entire facts and background were explained and justified during the original assessment, and no addition was made on this ground in the assessment order dated 31.12.2007. The court held that this constituted a change of opinion, which cannot be a ground for initiating re-assessment proceedings as per the Full Bench decision in CIT v. Kelvinator of India Ltd., (2002) 256 ITR 1, and affirmed by the Supreme Court in CIT v. Kelvinator of India Ltd., (2010) 320 ITR 561 (SC).
The court emphasized that mere doubt or suspicion without any tangible material cannot justify re-opening. The Assessing Officer did not conduct verification or inquiries to show that the explanation given by the petitioner was false. Therefore, the reasons to believe were found to be insufficient.
Conclusion:
A Writ of Certiorari was issued quashing the Notice dated 14.09.2009. Consequently, any re-assessment order passed by the Assessing Officer was treated as void. There was no order as to costs.
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2012 (4) TMI 667
Issues involved: Reduction of penalty u/s 271(1)(c) of the Income Tax Act.
Summary:
The Appellate Tribunal ITAT Mumbai heard an appeal filed by the revenue against the order of the Ld. CIT (A) reducing the penalty from Rs. 4,04,63,019/- to Rs. 7.75 lakhs. The case involved the assessee's claim of bad debts and long term capital loss, which were denied by the Assessing Officer. The penalty notice u/s 271(1)(c) was issued based on these disallowed claims.
In the assessment proceedings, the Assessing Officer disallowed the claim of bad debts and long term capital loss, leading to the imposition of a penalty of Rs. 4,04,63,019/-. The Ld. CIT (A) reduced the penalty to Rs. 2,41,92,646/-. Upon further appeal, the penalty amount was further reduced to Rs. 7.75 lakhs, as the loans and advances in question were to subsidiary or associate concerns, proving their genuineness.
During the appeal, the revenue contended that the penalty reduction was illegal, citing the Assessing Officer's findings and the provisions of sec. 271(1)(c) of the Act. The assessee argued that there was no inaccurate particulars or concealment of income, only a wrong claim made. The ITAT upheld the Ld. CIT (A)'s decision, stating that the assessee was not guilty of furnishing inaccurate particulars of income.
The Tribunal concluded that since the transactions were not false and the assessee was not found guilty of furnishing wrong particulars of income, the penalty reduction was justified. The appeal was dismissed, and the impugned order did not require any interference.
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2012 (4) TMI 666
Issues involved:
The appeal is filed against the order of the CIT(A)-XXV, Mumbai for the assessment year 2005-06. The main issues raised by the assessee include the treatment of long term capital gain as short term capital gain, lack of opportunity for cross-examination of a witness, and the period of holding of shares.
Treatment of Long Term Capital Gain:
The assessee declared long term capital gain on the sale of shares of Fast Track Entertainment Ltd. (FTEL) and invested the gain in NABARD Capital Gain Bonds under section 54EC of the Income-tax Act, 1961. However, the Assessing Officer raised concerns about the genuineness of the transaction, alleging that the shares were used for accommodation entries. The CIT(A) directed the AO to tax the gain as short term capital gain instead of long term, based on the date of purchase of shares and dematerialization.
Cross-Examination Issue:
The assessee argued that they were not given adequate opportunity to cross-examine a witness, Shri Vijay Bhagwandas Shah, whose statement was used against them. The AR submitted various documents to prove the purchase and holding of shares, challenging the AO's reliance on the broker's statement without providing a copy to the assessee.
Period of Holding of Shares:
The AO contended that the shares were not purchased through stock exchange and the payment was not through a bank account. The CIT(A) decided that the shares were purchased in June 2004 instead of April 2003, leading to the treatment of the gain as short term capital gain. The AR argued that the shares were held physically and off-market transactions were permissible, questioning the dematerialization date as proof of purchase.
Conclusion:
After considering the arguments and evidence presented, the ITAT Mumbai upheld the grievance of the assessee and reversed the order of the CIT(A), allowing the appeal. The tribunal found that there was insufficient evidence to support the view taken by the CIT(A) and held that the assessee was entitled to claim exemption under section 54EC for the long term capital gain. The decision highlighted the importance of providing a fair opportunity for the assessee to rebut incriminating material and emphasized the need for prima facie evidence in tax matters.
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2012 (4) TMI 665
Issues involved: Appeal against CIT(A) order for AY 2007-08. Grounds include disallowance of traveling expenses and excess depreciation on computer peripherals.
Disallowance of Traveling Expenses:
The Revenue challenged the deletion of Rs. 1,099,583 disallowed for chartering aircraft. The Revenue argued that the burden is on the assessee to prove the expenditure was for business purposes. The CIT(A) allowed the deduction based on the bill from International Air Charters and TDS certificate. The assessee claimed the aircraft was hired for inspecting press machines at various locations in a short time. However, no evidence was produced to support this claim. The Tribunal found the Assessing Officer did not provide the assessee an opportunity to present evidence. The matter was remanded to the Assessing Officer for the assessee to provide necessary evidence.
Excess Depreciation on Computer Peripherals:
The Revenue contested the deletion of Rs. 55,802 excess depreciation claimed on computer peripherals. The Assessing Officer allowed 15% depreciation instead of the 60% claimed by the assessee. The CIT(A) directed 60% depreciation based on a Special Bench decision classifying necessary computer accessories for operation as part of the computer. The Tribunal upheld the CIT(A)'s decision, stating that accessories and peripherals integral to the computer are entitled to 60% depreciation. The appeal was partly allowed for statistical purposes.
Decision pronounced on 13th April, 2012 by SHRI G.D.AGRAWAL, VICE PRESIDENT AND SHRI I.P.BANSAL, JUDICIAL MEMBER.
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2012 (4) TMI 664
Issues Involved:
1. Disallowance u/s 14A
2. Deletion of penalty paid to RBI
3. Addition of tax-free income from MSTDC Bonds
4. Depreciation on value of investment
5. Deletion of un-reconciled inter-branch entries written off
6. Deduction of ineligible debts relating to leased assets written off
7. Depreciation on computer peripherals
8. Interest on income-tax refund
9. Treating capital gains as business income
10. Higher rate of depreciation on UPS, Printers, and other computer peripherals
11. Computation of profits and gains from securities
12. Disallowance u/s 36(1)(vii)
13. Addition u/s 43B of provision for leave encashment
14. Penalty u/s 271(1)(c)
Summary:
1. Disallowance u/s 14A:
The Assessing Officer disallowed interest on borrowed capital and managerial expenses totaling Rs. 4.10 crores. The CIT (A) deleted the amount based on earlier years' orders. The matter was remitted back to the CIT (A) for fresh adjudication in line with the decision in the assessment year 2002-03.
2. Deletion of Penalty Paid to RBI:
The CIT (A) deleted the disallowance of Rs. 5 lakhs paid to RBI, considering it a technical violation and not a penalty. The Revenue's contention was rejected, and the CIT (A)'s order was upheld based on the Kerala High Court decision in The Catholic Syrian Bank Ltd., 265 ITR 177.
3. Addition of Tax-Free Income from MSTDC Bonds:
The CIT (A) deleted the addition of Rs. 23 lakhs from MSTDC Bonds, treating it as tax-free under section 10(23G). The decision was upheld based on earlier years' findings and the existence of a notification under section 10(23G).
4. Depreciation on Value of Investment:
The CIT (A) allowed the depreciation claim on investments, treating them as stock in trade, following the decision in CIT vs. Nedungadi Bank Ltd 264 ITR 545. The ITAT upheld this decision based on earlier years' rulings.
5. Deletion of Un-Reconciled Inter-Branch Entries Written Off:
The CIT (A) allowed the write-off of Rs. 61.82 lakhs as per RBI guidelines. The ITAT upheld this decision, confirming no double claim was made by the assessee.
6. Deduction of Ineligible Debts Relating to Leased Assets Written Off:
The CIT (A) allowed the write-off of Rs. 230.24 lakhs as per RBI guidelines. The matter was remitted back to the CIT (A) for fresh adjudication to determine the nature of the amount and consider the bad debt claim as per the law.
7. Depreciation on Computer Peripherals:
The CIT (A) allowed depreciation at 60% on computer peripherals, following the decision in the case of DY CIT v Datacraft India Ltd (2010) 40 SOT 295. The ITAT upheld this decision.
8. Interest on Income-Tax Refund:
The CIT (A) deleted the addition of Rs. 119.31 lakhs as interest on income-tax refund. The ITAT reversed this decision, restoring the Assessing Officer's addition, with the assessee allowed to claim reduction if any amount is subsequently withdrawn.
9. Treating Capital Gains as Business Income:
The CIT (A) directed the Assessing Officer to treat gains on securities as capital gains. The ITAT reversed this decision, treating the gains as business income consistent with the stand taken in assessment year 2002-03.
10. Higher Rate of Depreciation on UPS, Printers, and Other Computer Peripherals:
The CIT (A) allowed higher depreciation at 60% on UPS, Printers, and other computer peripherals. The ITAT upheld this decision.
11. Computation of Profits and Gains from Securities:
The CIT (A) directed the Assessing Officer to verify the computation of income from securities. The ITAT upheld this direction for factual verification.
12. Disallowance u/s 36(1)(vii):
The CIT (A) allowed the deduction of Rs. 635.31 lakhs under section 36(1)(vii). The ITAT remitted the matter back to the CIT (A) for fresh adjudication in line with the directions given in assessment year 2002-03.
13. Addition u/s 43B of Provision for Leave Encashment:
The CIT (A) directed the Assessing Officer to allow the amount actually paid under section 43B before the due date of filing the return. The ITAT upheld this direction.
14. Penalty u/s 271(1)(c):
The CIT (A) deleted the penalty of Rs. 6,13,40,500/- levied under section 271(1)(c) on various disallowances. The ITAT upheld this decision, considering the issues debatable and the claims genuinely made by a public limited bank.
Conclusion:
The appeals filed by the Revenue in ITA Nos. 476 and 581 were partly allowed, and the appeal in ITA No. 716/Coch/2007 was dismissed.
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2012 (4) TMI 663
Issues Involved:
1. Violation of procedure under Section 50 of the NDPS Act.
2. Compliance with procedural safeguards during search and seizure.
3. Impact of non-compliance on the conviction and sentence.
Detailed Analysis:
Violation of Procedure under Section 50 of the NDPS Act:
The primary issue in this appeal is whether there was a violation of Section 50 of the NDPS Act during the search and seizure process. Section 50 mandates that the suspect must be informed of their right to be searched in the presence of a gazetted officer or a Magistrate. The appellant contends that this procedural safeguard was not followed, which should render the recovery of the illicit article suspect and vitiate the conviction.
Compliance with Procedural Safeguards During Search and Seizure:
The prosecution's case is based on the testimony of police officers who conducted the search and seizure. PW-1 and PW-2 testified that the appellant and co-accused were informed of their right to be searched in the presence of another gazetted officer, which they declined. However, the testimonies did not clearly communicate that the suspects were informed of their right to be searched before a Magistrate or a gazetted officer as required by Section 50(1) of the NDPS Act. PW-3's testimony further complicates the issue by suggesting that the accused voluntarily produced the Ganja packets, which contradicts the testimonies of PW-1 and PW-2.
Impact of Non-Compliance on the Conviction and Sentence:
The judgment references the Constitution Bench decisions in *State of Punjab v. Baldev Singh* and *Vijaysingh Chandubha Jadeja v. State of Gujarat*, which emphasize the mandatory nature of compliance with Section 50(1) of the NDPS Act. The failure to inform the suspect of their right to be searched before a gazetted officer or a Magistrate renders the recovery of the illicit article suspect and vitiates the conviction and sentence. The court found that there was a breach of Section 50(1) in this case, as the procedural safeguard was not strictly followed. Consequently, the conviction based solely on the possession of Ganja recovered from the appellant was set aside.
Conclusion:
The Supreme Court concluded that the procedural breach under Section 50(1) of the NDPS Act necessitates the setting aside of the conviction and sentence of the appellant. The court also extended this benefit to the co-accused (A1 and A2), who had not appealed, following the precedent set in *Ashok @ Dangra Jaiswal v. State of Madhya Pradesh*. Thus, the impugned judgment convicting and sentencing the appellant and co-accused was quashed and set aside, and they were acquitted of the charges under Section 8(c) read with Section 20(b)(i) of the NDPS Act.
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2012 (4) TMI 662
Issues Involved:
1. Cross-examination of the Clerk of Ramrao Adik Education Society.
2. Appreciation of the Settlement Petition filed by Ramrao Adik Education Society.
3. Deletion of addition of Rs. 18,27,500/- on account of unaccounted capitation fees.
4. Validity of reopening the assessment u/s 147 of the Act.
Summary:
Issue 1: Cross-examination of the Clerk of Ramrao Adik Education Society
The learned CIT(A)-I, Surat erred in holding that the A.O. had not afforded cross-examination of the Clerk of Ramrao Adik Education Society, despite the fact that the Clerk had admitted the receipt of capitation fees from the assessee before the authorized Officer during the course of search in his statement on oath. The AO issued summons to the Clerk, but he did not attend. The learned CIT(A) asked the AO to give cross-examination opportunity to the assessee, but the Clerk did not cooperate.
Issue 2: Appreciation of the Settlement Petition filed by Ramrao Adik Education Society
The learned CIT(A) did not appreciate that Ramrao Adik Education Society had filed a settlement petition before the Settlement Commission, Mumbai, wherein they surrendered the entire amount of capitation fees received, including those from the assessee. However, the Society did not provide a student-wise breakup of the surrendered amount.
Issue 3: Deletion of addition of Rs. 18,27,500/- on account of unaccounted capitation fees
The learned CIT(A) deleted the addition made by the AO of Rs. 18,27,500/- on account of unaccounted capitation fees paid by the assessee to Ramrao Adik Education Society for securing admission of his son in the M.B.B.S. course. The CIT(A) observed that the AO failed to provide cross-examination of Shri Shashikant Mandavkar, who had given a statement regarding the donation. The AO did not bring any other evidence on record for making the addition, and the statement of Shri Mandavkar could not be admitted as evidence. Therefore, the diary entry could not be relied upon for making the addition.
Issue 4: Validity of reopening the assessment u/s 147 of the Act
The learned CIT(A) held that the reopening of the assessment was valid as the AO had specific outside information along with prima facie evidence in the form of a diary noting and statement of the person who wrote the diary. The AO acted independently on the basis of this information and not on the directions of any higher authority. The assessee's argument that there was no objective satisfaction on the part of the AO for reopening the assessment and that the reopening was wrong because the name mentioned in the diary was that of the assessee's son and not the assessee was not accepted.
Conclusion:
The appeal by the Revenue and the cross-objection filed by the assessee were both dismissed. The order of the learned CIT(A) deleting the addition of Rs. 18,27,500/- was upheld, and the reopening of the assessment u/s 147 was confirmed as valid.
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2012 (4) TMI 661
Issues involved: Cross appeals filed by the revenue and the assessee against the order of the CIT(A)-II, Pune, relating to A.Y. 2004-05.
Revenue's Appeal:
The Revenue filed an appeal with a delay of 696 days, seeking condonation of the delay, which was granted. The issue revolved around disallowing deduction u/s 10A for certain sales amounts and the eligibility of the assessee's new unit for the deduction. The CIT(A) upheld the disallowance of deduction for certain sales but allowed it for the new unit. The Revenue contended that the new unit was formed by reconstructing an existing business, making it ineligible for deduction u/s 10A. However, the Tribunal, based on the provisions of Section 10A, held that the deduction should be allowed for the turnover of sales by the new unit, as the profit was a result of work executed by the new unit. The Tribunal dismissed the Revenue's grounds and allowed the assessee's appeal, in line with a previous decision for A.Y. 2003-04.
Assessee's Appeal:
The assessee challenged the denial of the claim under section 10A for revenues of a specific amount, arguing that the contracts were entered into prior to the commencement of the new unit but the actual work was executed from the new unit. The Tribunal, considering the provisions of Section 10A, allowed the deduction for the turnover of sales by the new unit, emphasizing that the profit was a result of work done by the new unit. The Tribunal dismissed the Revenue's grounds and allowed the assessee's appeal, citing a previous decision for A.Y. 2003-04.
Conclusion:
The Tribunal, following precedent and the provisions of Section 10A, dismissed the Revenue's appeal and allowed the assessee's appeal. The decision was based on the understanding that the deduction should be allowed for the turnover of sales by the new unit, where the profit was generated, even if contracts were initially received by the old unit.
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2012 (4) TMI 660
Income from sale of shares - capital gain or business income - STT - Held that:- The assessee has purchased shares which are delivery based and made the payment and vice versa is not under dispute. Whereas the trader normally makes the purchase and sale during the day without taking delivery and settling the transactions ultimately as at the end of the day without delivery, which is not the case of the assessee. The assessee has been declaring the shares as investment since assessment year 2001-02 is a matter of record and the department has not brought on record any different facts and in the absence of any material change justifying the department to take different view from that taken in earlier proceedings. The department cannot change the stand in the subsequent year. In the facts and circumstances of the present case and decisions of various courts of law relied upon by both the parties, we are of the view that the assessee is a investor and cannot be termed as a trader in shares. Therefore, the AO is directed to accept the claim of the assessee.
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2012 (4) TMI 659
Issues:
The judgment involves a substantial question of law u/s 35G of the Central Excise Act, 1944 regarding the direction to deposit a specific amount as a pre-condition for hearing the appeal on merits.
Summary:
Issue 1: Imposition of Penalty
The appellant was penalized for allegedly showing fictitious input credit and passing on credit without actual production and sales of certain products. The appellant contended that the penalty was imposed without considering relevant facts, especially since the appellant had closed the business and had limited income as a share broker and LIC agent.
Issue 2: Tribunal's Decision
The Tribunal directed the appellant to deposit a substantial amount for hearing the appeal on merits, citing specific findings in the order-in-original. The Revenue supported the Tribunal's decision based on the mentioned findings.
Issue 3: Tribunal's Reference
The Tribunal referred to a similar case where a penalty was imposed and paid by another party. The Tribunal noted the reversal of credit by that party and questioned the fairness of directing the appellant to deposit the credit against them.
Issue 4: Judicial and Technical Members' Views
There was a dissent between the Member (Judicial) and Member (Technical) regarding the fairness of the Tribunal's decision. The matter required further examination by the Tribunal to determine the appellant's involvement in fictitious transactions and the extent of profit gained.
Judgment:
Considering the appellant's financial circumstances and the factual position, the High Court modified the Tribunal's order, reducing the deposit amount from Rs. 30 lacs to Rs. 15 lacs to be paid in three equal instalments. The Court acknowledged the appellant's income tax returns and reduced the financial burden for hearing the appeal. The appeal was partly allowed with no costs incurred.
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2012 (4) TMI 658
The Appellate Tribunal CESTAT KOLKATA dismissed the appeal filed by the Revenue against O/A No.8-10/B-I/06 dated 20.1.06 as it had already been decided in Tribunal's Final Order No.S-369-370/A-557-558/Kol/08 dated 13.5.2008. The appeal was deemed infructuous and was accordingly dismissed.
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2012 (4) TMI 657
Issues Involved:1. Whether the income from the contract receipts is assessable in the hands of the Joint Venture (JV). 2. Whether the provisions of section 40A(2) and section 145 of the Income Tax Act are applicable to the payments made by the JV to its members. 3. Whether the assessment of income in the hands of the JV is justified. Summary:Issue 1: Assessability of Income in the Hands of the Joint VentureThe CIT(A) held that no income on the said contract receipts is assessable in the hands of the Joint Venture for the assessment year 2005-06. Therefore, the addition made by the AO assessing the income at Rs. 5,41,60,960/- cannot be sustained and hence, the same was deleted by him. Issue 2: Applicability of Section 40A(2) and Section 145The AO viewed that the work was executed by each member and considered them as sub-contractors of the JV by the SJVA. He held that the contract receipts received from NHAI and subsequently passed on to individual members amounted to expenditure incurred by the assessee in the execution of the contract work and such expenditure appears to be excessive and unreasonable and hit by the provisions of section 40A(2). He further held that alternatively 2% of the receipts should be estimated as net income clear of all expenses of the assessee by invoking the provisions of section 145 of the Act. The Tribunal, following its earlier decision in the case of M/s Limak Soma Joint Venture, Hyderabad, held that no case for disallowance/addition could be made u/s 40A(2) by the Revenue. The assessing officer has not placed on record any basis for such observation made by him. The CIT(A) found that the assessee maintained regular books of account, which were audited, and the AO did not record any finding that the books of account were not correct and complete. The Tribunal upheld the CIT(A)'s decision that the question of estimating profit does not arise and deleted the addition made in the hands of the assessee. Issue 3: Justification of Income Assessment in the Hands of the JVIn ITA No.150/Hyd/2008, the AO estimated the profit at 2% of the contract receipts passed on to PCL and disallowed the amount claimed to have been paid to STICCO. The CIT(A) held that an amount of Rs. 9,94,877 only is assessable in the hands of the assessee for the assessment year 2005-06. The Tribunal upheld the CIT(A)'s decision but sustained the addition of Rs. 9,94,877 as the assessee could not produce evidence of the filing of the return by STICCO admitting the receipts from the Joint Venture. Conclusion:In ITA No.149/Hyd/2008, the appeal of Revenue is dismissed. In ITA No.150/Hyd/2008, the appeal is partly allowed, sustaining the addition of Rs. 9,94,877. Order pronounced in the Court on: 11.4.2012
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2012 (4) TMI 656
Validity of assessment u/s.143(3) r.w.s 158BC - notice u/s.143(2) was issued and served beyond the period of 12 months from the date of filing of return of income in pursuant to notice u/s.158BC - Held that:- From a perusal of para 4 of the assessment order, it is seen that the Assessing Officer has mentioned, that notice u/s.143(2) and 142(1) were issued to the assessee. During the course of the hearing, it was clarified before the Bench by the learned AR that it is a matter of record that the notice u/s.143(2) has been issued beyond the period of 12 months from the end of the month in which the return was filed. i.e. 19.05.2003. DR has also not disputed this fact and admitted that the notice u/s.143(2) has been issued beyond the period of 12 months. Accordingly, the appeal filed by the department stands dismissed on the preliminary issue raised by the respondent-assessee.
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2012 (4) TMI 655
Non deduction of tds - amounts of expenditure which are payable - Held that:- Addition made by Assessing Officer and sustained by Ld. CIT(A) by invoking the provisions of Section 40(a)(ia) of the Act are hereby deleted as the provisions of section 40(a)(ia) of the Act are applicable only to the amounts of expenditure which are payable as on the date 31st March of every year and it cannot be invoked to disallow which had been actually paid during the previous year, without deduction of TDS.
Disallowance of telephone expenses, petrol expenses and depreciation of car - Held that:- We find that assessee has incurred small amount under the head of telephone, petrol expenses etc., and therefore Assessing Officer was not justified in making ad hoc disallowance at the rate of 20% of total expenses incurred by the assessee. The disallowance appears to be on higher side, therefore we restrict this addition to 10% of the total expenses and AO is directed to recalculate the disallowance accordingly. This ground of assessee is partly allowed.
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2012 (4) TMI 654
Issues involved: Determination of whether the income should be treated as "Business Income" or "Income from House Property" for assessment year 2005-2006.
ITA No.976/Ahd/2009 (Revenue's appeal):
The Revenue appealed against the deletion of an addition of Rs. 8,29,326 made by the AO on account of "Business Income" treated as "Income from House Property." The Revenue argued that the income should be assessed as "Business Income" based on the nature of the activities carried out by the assessee. The assessee, engaged in developing infrastructure for industries and providing services to parties, contended that the income should be assessed as "Income from Business" as per relevant legal precedents. The Tribunal examined the joint business agreement between the assessee and a party, which outlined the provision of infrastructure facilities by the assessee. It was observed that the assessee had organized and continuous business operations, indicating a commercial intent in exploiting its infrastructure facilities. The Tribunal upheld the CIT(A)'s decision to treat the income as business income, dismissing the Revenue's grounds.
CO. No.92/Ahd/2009 (Assessee's CO):
The assessee's Cross Objection (CO) challenged the Revenue's appeal on similar grounds related to the treatment of income as "Business Income" instead of "Income from House Property." The CO was dismissed by the Tribunal as the ground raised was considered merely supportive in nature. Consequently, both the Revenue's appeal and the assessee's CO were dismissed, affirming the treatment of income as business income.
In conclusion, the Tribunal upheld the CIT(A)'s decision to treat the income as "Business Income" rather than "Income from House Property" for the assessment year 2005-2006, based on the commercial intent and organized business operations of the assessee.
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