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2013 (4) TMI 850
Issues Involved:
1. Addition u/s 14A for AY 2008-09.
2. Addition u/s 14A for AY 2009-10.
Summary:
Issue 1: Addition u/s 14A for AY 2008-09
The Assessee declared a total income at a loss of Rs. 25,16,414/-, but the AO determined the total income at Rs. 26,67,067/-. The only addition made was u/s 14A at Rs. 51,83,481/-. The AO noticed that the Assessee earned tax-free dividend income of Rs. 3,79,84,245/- from mutual funds and disallowed the entire interest paid of Rs. 39,34,995/- under Rule 8D. The CIT(A) confirmed this disallowance.
The Assessee argued that the AO mechanically applied the provisions of section 14A without considering the accounts. The interest paid was on a loan taken from Ms. Sabita R Narang, which was advanced to M/s Nautilus Trading & Leasing Pvt. Ltd., earning interest income. The Assessee claimed that the disallowance of Rs. 31,21,267/- of interest was not justified due to the direct nexus with taxable income. The CIT(A) did not agree, citing the Special Bench decision in Daga Capital Management.
The Tribunal found that the AO and CIT(A) did not consider the Assessee's explanations and invoked Rule 8D without determining the correctness of the Assessee's claim. The Tribunal held that Rule 8D cannot be invoked without proper satisfaction by the AO as mandated by subsection 2 of section 14A. The Tribunal modified the orders of the AO and CIT(A), directing the AO to disallow one percent of the dividend income as disallowance u/s 14A. The appeal was partly allowed.
Issue 2: Addition u/s 14A for AY 2009-10
The Assessee earned Rs. 1,89,91,244/- as dividend from mutual funds and claimed exemption. The AO directly applied Rule 8D and disallowed Rs. 83,29,250/- u/s 14A, confirmed by the CIT(A). The Tribunal found that the interest payment of Rs. 84,65,740/- had a direct nexus to the interest income of Rs. 84,09,148/- from inter-corporate deposits and could not be considered for disallowance u/s 14A. The Tribunal noted that the AO did not record any satisfaction before invoking Rule 8D, as required by subsection 2 of section 14A. The Tribunal directed the AO to disallow one percent of the dividend income as reasonable for earning exempt income. The appeal was partly allowed.
The Tribunal criticized the mechanical approach of the AO and CIT(A) in passing the orders, noting that the Assessee had established a direct nexus in detailed submissions. The CIT(A)'s findings were not based on the facts available on record. The Tribunal determined a reasonable amount for disallowance u/s 14A based on the facts of the case.
Conclusion:
Both appeals were partly allowed, with the Tribunal directing the AO to disallow one percent of the dividend income as disallowance u/s 14A for both AY 2008-09 and AY 2009-10.
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2013 (4) TMI 849
Issues involved: Jurisdiction of the court in relation to contract disputes, validity of conditions imposed beyond the contract scope, recovery of excise duty without contractual provision.
The judgment dealt with the maintainability of a petition in relation to a contract dispute. The respondents argued that the court lacked jurisdiction and parties should resort to arbitration based on the arbitration clause in the agreement. However, the court held that under Article 226 of the Constitution of India, it could intervene if conditions imposed by the respondents were beyond the contract scope, allowing examination of the matter without arbitration (u/s Article 226).
The dispute arose from the recovery of excise duty by the respondents from the petitioner, which was not provided for in the contract. The court found that while penalties for shortfall were allowed under the agreement, excise duty recovery was not. The respondents had already recovered penalties, and attempting to recover excise duty without contractual provision was deemed impermissible (u/s Clause 10).
The court examined the work order and found no mention of the liability for excise duty by the Contractor. The respondents' attempt to charge excise duty was found to be unjustified, especially considering the variability in production targets and the timing of excise duty payment. The court emphasized that excise duty should be paid upon removal of goods from the factory, not in advance without confirmation of actual production (u/s Central Excise Rules, 2002).
The petitioner argued that their shortfall was within permissible limits and that the excise duty deduction was unwarranted. The court agreed, stating that the respondents could not enforce recovery based on excess excise duty payment when the petitioner had no control over such actions. The court ruled in favor of the petitioner, disallowing the recovery of excise duty and ordering a refund if any amount had been deducted, along with interest (u/s Central Excise Act and principles of fairness).
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2013 (4) TMI 848
Issues involved: Conviction and sentence for offences u/s 132/135(1)(a) of the Customs Act, reduction of substantive sentence, application of reformative approach.
Conviction and Sentence: The High Court upheld the petitioner's conviction and sentence for offences u/s 132/135(1)(a) of the Customs Act, awarding a substantive sentence of one year and six months. The petitioner did not press for revision on merits, acknowledging no illegality in the judgment. The recovery of 655.400 gms of gold valued at Rs. 2 lakhs was noted, along with the petitioner's clean antecedents and personal circumstances.
Reduction of Substantive Sentence: The petitioner's counsel argued for reducing the sentence due to the petitioner's 25 years of legal proceedings, 26 days in custody, family responsibilities, and livelihood as a gold ornament repairer. The Court, citing precedents, emphasized the need for a reformative approach and considered legislative benevolence in toning down punishment. The substantive sentence was reduced to the period already undergone, with the fine increased to Rs. 25,000.
Reformative Approach: In light of the petitioner's circumstances and legal principles, the Court reduced the substantive sentence, emphasizing the importance of not subjecting individuals to greater penalties than prescribed by law. The judgment highlighted the need for a balanced approach in criminal justice administration, ensuring that subsequent legislative changes benefiting the accused are applied judiciously. The Court directed the petitioner to deposit the increased fine with the Trial Court within four weeks to avoid further imprisonment.
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2013 (4) TMI 847
Modification of the direction contained in order to facilitate submission of the progress report directly by the CBI to the Court so that the latter may directly send comments to this Court and the reports along with the comments of the Central Vigilance Commission and Enforcement Directorate can be considered by the Court at the same time
Held that:- The request made by Shri Venugopal is accepted and in modification of order dated 2.2.2012 it is directed that henceforth CBI shall directly file reports in this Court with copies to the Central Vigilance Commission and Enforcement Directorate. The Central Vigilance Commission and Enforcement Directorate shall send their comments/observations to the Court within two weeks of the receipt of the copies of the report from the CBI.
Shri Venugopal, learned senior counsel appearing for the Enforcement Directorate handed over another sealed envelope containing the Status Report on the investigation in FEMA and PMLA in 2G Spectrum Case for the period 24.10.2012 to 15.02.2013. The sealed envelopes were opened in the Court. We have perused the same. The Court Masters are directed to re-seal the envelope. We hope and trust that the Enforcement Directorate will make serious endeavour to finalise the investigation as early as possible.
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2013 (4) TMI 846
Issues involved: The issue involves the entitlement of the assessee for 80% depreciation on civil work, electrical items, and fees paid to the Maharashtra Energy Development Agency (MEDA) as part of the windmill.
Depreciation on Civil Work and Electrical Items:
The assessee purchased windmills and capitalized the cost, claiming 80% depreciation. The Assessing Officer disallowed depreciation on certain items, including civil work and electrical items, stating they were not part of the windmills. However, the Ld.CIT(A) held that civil work and foundation are integral parts of the windmill, justifying 80% depreciation. This decision was supported by the ITAT Pune's ruling in similar cases. Regarding electrical items, the Ld.CIT(A) followed precedent and allowed 80% depreciation. The Tribunal affirmed these decisions, stating that the cost of foundation, erection, and installation of the windmill are eligible for 80% depreciation as they are integral to the windmill's functioning.
Fees Paid to MEDA:
The fees paid to MEDA were also considered part of the windmill's expenditure by the Ld.CIT(A) and treated as revenue expenditure. The Tribunal upheld this decision, emphasizing that the fees were integral to the windmill's operation and should be included in the depreciation calculation. The Tribunal's ruling in a similar case supported this interpretation, leading to the dismissal of the revenue's appeal.
In conclusion, the Appellate Tribunal ITAT Pune upheld the Ld.CIT(A)'s decision to allow 80% depreciation on civil work, electrical items, and fees paid to MEDA as part of the windmill. The Tribunal's analysis of the integral nature of these expenses to the windmill's operation guided the decision to dismiss the revenue's appeal.
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2013 (4) TMI 845
Issues involved: Bail on medical grounds u/s PMLA Case No.1/2011
Summary:
The High Court of Bombay, in the case involving bail on medical grounds u/s PMLA Case No.1/2011, considered the request for bail due to the serious ailments of the Applicant. The Applicant, aged 77, suffering from various health issues, sought bail for medical treatment at a private hospital, Cumballa Hill Hospital in Mumbai. The opinion of the Chief Medical Officer, Mumbai Central Prison, highlighted the need for long-term nursing care and multi-speciality treatment for the Applicant. The Applicant's family, including his brother-in-law and wife, undertook the responsibility of the treatment expenses. The Respondent argued that there was no emergency requiring hospitalization based on the earlier medical opinions. However, the Court upheld the medical reports, emphasizing the severity of the Applicant's health conditions, which necessitated prolonged medical care and attention.
The Court rejected the Respondent's contention that only extreme medical emergencies warranted such applications, emphasizing the need for long-term care given the Applicant's serious ailments and age. The Court granted bail for three months on medical grounds, with a cash bail amount set at Rs. 50,000. The Applicant was permitted to receive treatment at Cumballa Hill Hospital under the care of specified doctors. The Court directed that the Applicant must not leave Mumbai for treatment without prior permission. The order was to be implemented immediately, with a review scheduled after three months.
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2013 (4) TMI 844
Rectification of order of revision passed by CIT u/s 263 - Assessee moved the rectification application u/s. 154 before the CIT. CIT forwarded the rectification application u/s. 154 to the A.O. - Jurisdiction of CIT to delegate the power to rectify the order to AO - HELD THAT: - It is well settled law that rectification application shall have to be considered and disposed of as per law by the same authority who has passed the order, on which rectification application has been filed. The ld. Commissioner was, therefore, having no power to delegate his authority to decide the application u/s. 154 to the A.O. Since the order u/s. 263 has been passed by the ld. Commissioner, therefore, rectification application u/s. 154 should not have been forwarded to the Assessing Officer for reconsideration.
Decision in the case of, MALABAR INDUSTRIAL CO. LTD. VERSUS COMMISSIONER OF INCOME-TAX [2000 (2) TMI 10 - SUPREME COURT], and COMMISSIONER OF INCOME-TAX VERSUS SMT. RG. UMARANEE. [2002 (11) TMI 49 - MADRAS HIGH COURT], relied upon.
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2013 (4) TMI 843
The appeal was filed by the assessee against an order dated 26-11-2012 of Director of Income-tax (Exemptions) Chennai. Despite no appearance on behalf of the assessee, the appeal was dismissed for non-prosecution as the assessee showed no interest in prosecuting the case. The decision was based on the case of CIT v. Multiplan (India) Ltd. Order was pronounced on 15th April 2013 in Chennai.
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2013 (4) TMI 842
Addition of professional receipts - Held that - the assessee had raised an invoice on 30.7.2010 and accounted the receipt as income in its books of account for the previous year 2010-11 - to support this audit report and invoice was furnished - on the principles of natural justice and fairness the issue is remitted back to the file of the AO
Unpaid Service tax - Held that - The moment the service tax is realised it becomes payable to the Govt. account and if it is not paid it partakes the character of income of the assessee since the assessee could utilise this amount in any manner whatsoever there is no restriction placed on its utilisation - Since service tax realised is included in the total income the same is to be allowed as a deduction in the year it is paid to the Government account - Decided against the assessee
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2013 (4) TMI 841
Issues involved:
The appeal involves the computation of book profits under section 115JB of the Income Tax Act, 1961, specifically regarding the treatment of disallowance under section 14A in the calculation of book profit for deemed total income u/s 115JB.
Comprehensive details of the judgment for each issue involved:
1. Computation of Book Profits under Section 115JB:
The issue raised in the appeal pertains to the computation of book profits under section 115JB of the Act. The Assessing Officer had added back the disallowance worked out under section 14A to the net profits of the business for tax liability calculation. The CIT (Appeals) allowed the claim of the assessee based on a previous Tribunal decision in the assessee's own case for the assessment year 2008-09. The Tribunal, relying on an earlier decision of the Chandigarh Bench, held that the disallowance under section 14A should not be added back to the book profits under section 115JB. The Tribunal directed the Assessing Officer to adopt the book profits as per the Profit & Loss Account without making an addition for the disallowance under section 14A, as such disallowance is not applicable for determining book profits under section 115JB.
2. Judicial Precedents and Application of Decisions:
The Revenue contended that the CIT (Appeals) should have followed the decisions of the Mumbai Bench of the Tribunal, but the Tribunal held that the order in the assessee's own case by the Chandigarh Bench should be applied as judicial propriety demands consistency. The Tribunal dismissed the Revenue's plea for referring the issue to a Special Bench, stating that the decision by the Chandigarh Bench in the assessee's case holds binding force, regardless of contrary views by other Tribunals. Thus, the Tribunal upheld the CIT (Appeals) order and dismissed the appeal of the Revenue.
3. Final Decision:
After considering the rival contentions and perusing the record, the Tribunal upheld the order of the CIT (Appeals) and dismissed the appeal of the Revenue. The Tribunal found no merit in the grounds raised by the Revenue and pronounced the order in open court on April 16, 2012.
This summary provides a detailed overview of the judgment, focusing on the computation of book profits under section 115JB and the application of judicial precedents in deciding the appeal.
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2013 (4) TMI 840
Misappropriation/embezzlement by Headmaster of the school- Held that:- In the instant case, there is no allegation of misappropriation/embezzlement or any charge which may cast a doubt upon the integrity of the appellant, or further, anything which may indicate even the slightest moral turpitude on the part of the appellant. The charges relate to accounts and to the discharge of his functions as the Headmaster of the school. The appellant has provided satisfactory explanation for each of the allegations levelled against him. Moreover, he has retired in the year 2002. The question of holding any fresh enquiry on such vague charges is therefore, unwarranted and uncalled for.
The Education Officer (Secondary), Zilla Parishad, Solapur, had filed an affidavit before the High Court, wherein it was stated that a dispute had arisen between the trustees, and in view thereof, an enquiry was initiated against the appellant. The respondents terminated the services of the appellant and many other employees, as a large number of cases had been filed against the Management Committee without impleading the State of Maharashtra, though the same was a necessary party, as the school was a government-aided school. Rules 36 and 37 of the Rules 1981, which prescribe the procedure of holding an enquiry have been violated. The charges levelled against the appellant were entirely vague, irrelevant and unspecific. As per statutory rules, the appellant was not allowed to be represented by another employee. Thus, the procedure prescribed under Rule 57(1) of the Rules 1981 stood violated. No chargesheet containing the statement of allegations was ever served.
As the Tribunal as well as the learned Single Judge have examined all the charges on merit and also found that the enquiry has not been conducted as per the Rules 1981, it was not the cause of the Management Committee which had been prejudiced, rather it had been the other way around. In such a fact-situation, it was not necessary for the Division Bench to permit the respondents to hold a fresh enquiry on the said charges and that too, after more than a decade of the retirement of the appellant. Appeal succeeds and is allowed.
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2013 (4) TMI 839
Application for early hearing - restoration of licence - statutory remedy as provided under Regulation 14 (2) - Held that: - this Court finds it fit and proper to relegate the petitioner to avail the remedy as above. Accordingly, the petitioner is set at liberty to file a proper representation under Regulation 14(2) before the 2nd respondent within two weeks, upon which the same shall be considered and a decision shall be rendered after giving an opportunity of hearing to the petitioner at the earliest, at any rate, within 'one month' from the date of receipt of the representation - petition allowed.
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2013 (4) TMI 838
Entitled to set off the loss on account of forfeiture of license fee (business loss) against income assessed u/s 69 (income from undisclosed sources) - Held that:- Set off is allowable as business loss. See Commissioner of Income-Tax Versus Chensing Ventures [2007 (4) TMI 204 - MADRAS High Court ]. No merit in the appeal of the Revenue.
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2013 (4) TMI 837
Issues Involved: Challenge to order under Section 35G of Central Excise Act, 1944 seeking modification of earlier order u/s. 35F regarding duty deposit; Breach of principles of natural justice in passing order-in-original; Interpretation of "undue hardship" for grant of waiver u/s. 35F.
Challenge to Order under Section 35G:
The appellant sought modification of an order dated 23-10-2012 passed by CESTAT directing deposit of 25% duty. Appellant argued for full waiver similar to a sister unit, citing identical challenges. The refusal to modify the order was contested based on breaches of natural justice and reliance on relevant case laws like Sangfroid Remedies Ltd. v. Union of India.
Breach of Principles of Natural Justice:
Allegations of lack of opportunity to cross-examine officers during survey and failure to address these breaches in the order-in-original were raised. Reference was made to judgments like Sangfroid Remedies Ltd. and Wardha Coal Transport Pvt. Ltd. to support the argument that such breaches warrant full waiver.
Interpretation of "Undue Hardship" for Waiver:
The respondent contended that the appellant was not in losses and mere mention of "undue hardship" is insufficient for waiver. Citing precedents like Benara Valves Ltd. v. Commissioner of Central Excise, it was argued that no substantial question of law arises when CESTAT refuses to interfere based on lack of undue hardship.
Separate Appeal on Order dated 7-6-2012:
A separate appeal questioning the order dated 7-6-2012 was mentioned by the appellant, but disputed by the respondent. Findings in the said order indicated the appellant was not in losses and had necessary opportunity, leading to the conclusion that no case of undue hardship existed.
Conclusion:
Considering the arguments and precedents cited, the Court dismissed the central excise appeal, finding no substantial question of law. The discussion highlighted the importance of natural justice, interpretation of "undue hardship," and consistency in CESTAT decisions based on similar facts.
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2013 (4) TMI 836
Issues involved:
- Condonation of delay in filing and re-filing
- Appeal against order passed by Customs, Excise and Service Tax Appellate Tribunal
- Violation of principles of natural justice in serving show cause notices and granting personal hearing
Condonation of delay in filing and re-filing:
The delay in filing and re-filing was condoned by the court.
Appeal against order passed by Customs, Excise and Service Tax Appellate Tribunal:
The revenue was in appeal against the order passed by the Tribunal, which remitted the matter to the adjudicating authority for fresh consideration. The Tribunal found that show cause notices had not been served on the respondent in relation to six advance authorization licenses. The Adjudicating Authority had also not provided an opportunity for personal hearing to the respondent/assessee. The Tribunal directed the Adjudicating Authority to serve show cause notices and grant a hearing to the respondent/assessee, citing a violation of the principles of natural justice.
Violation of principles of natural justice in serving show cause notices and granting personal hearing:
The court noted that the Adjudicating Authority had been informed by the appellant's counsel that an opportunity of personal hearing was granted on remand. The court decided not to interfere with the Tribunal's order, as the matter would be considered on merits by the Adjudicating Authority following the Tribunal's directions. The court acknowledged the appellant's counsel's assertion that the show cause notice had been served on the respondent/assessee, but concluded that this aspect had been considered by the Adjudicating Authority. The court found no substantial question of law requiring consideration and dismissed the appeal.
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2013 (4) TMI 835
The High Court of Kerala upheld the Customs, Excise and Service Tax Appellate Tribunal's order directing the petitioner to make a 50% pre-deposit of the duty demanded within six weeks. The court granted the petitioner an additional one month to comply with the order.
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2013 (4) TMI 834
Issues involved: The appeal by the revenue against the order of the ld.CIT(A) for the assessment year 2009-10 regarding the deletion of addition of contract profit and interest on FDR as income from other sources due to lack of supporting documents and maintenance of accounts.
Summary:
Issue 1: Rejection of books of account and computation of business income
The Assessing Officer rejected the books of account u/s. 145(3) and applied a net profit rate of 8% to compute the business income of the assessee. Deductions were allowed on account of interest and salary paid to partners. The ld. CIT(A) deleted the addition of extra profit and interest on FDRs, relying on previous decisions and the assessee's progressive turnover and profit. The Tribunal upheld the ld. CIT(A)'s decision, stating that the assessee did not produce relevant records before the Assessing Officer, justifying the rejection of book results.
Issue 2: Addition of interest on FDRs as income from other sources
The ld. CIT(A) specifically noted that the addition of interest on FDRs was made without giving the assessee an opportunity of hearing. The FDRs were purchased for security purposes related to the business activities of the assessee. The ld. CIT(A) allowed set off of interest as it was a negative figure, hence not added to the income of the assessee. The Tribunal found no merit in the revenue's appeal, as the ld. CIT(A) passed a speaking order on both grounds, justifying the deletion of the addition on account of interest.
Therefore, the departmental appeal was dismissed, as the issue was covered in favor of the assessee by a previous Tribunal order.
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2013 (4) TMI 833
Application of 8% net profit on the gross receipt - CIT(A) holding the net profit at the rate of 8% be applied on the receipt after the deduction of trade tax and royalty etc. - Held that:- On interest on FDRs, the ld. CIT(A) specifically noted, the addition is made by the Assessing Officer on this head without giving any opportunity of hearing to the assessee. Therefore, on this reason itself, the order of the Assessing Officer is liable to be set aside. Further, the ld. CIT(A) found that FDRS are purchased for security purpose for obtaining the contracts which is connected with the business activities of the assessee. Therefore, set off was allowed out of interest. Since it was a negative figure of interest, therefore, it was considered not to be added to the income of the assessee. On considering of the above facts, particularly when no opportunity has been given by the Assessing Officer before making this addition, the ld. CIT(A) was justified in deleting the addition on account of interest. The ld. CIT(A) has passed the speaking order on both the grounds. Therefore, there is no violation of law. Accordingly, the appeal of the Revenue has no merit and is dismissed.
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2013 (4) TMI 832
Chargeability to wealth tax - Held that:- Insofar as the valuation of land measuring 22.1 acres adjoining to the factory of M/s Industrial Cable (India) Ltd. wherein eucalyptus trees have been grown and were found to be utilized for industrial packing purposes is concerned, the CWT(A) decided the matter in favour of the assessee and the stand taken by the assessee has been accepted after the cases were set aside by the Tribunal pertaining to the assessment years 1996-97 to 1998-99 vide orders dated 24.12.2007.
Regarding land measuring 44 acres pertaining to the assessment years 1996-97, 1997-98 and 1998-99, which is agricultural land and according to the Wealth Tax Officer is chargeable to the wealth tax, the finding of the Wealth Tax Officer was reversed by the CWT(A), whereas the Tribunal has again upheld the order of the Wealth Tax Officer holding that it is chargeable to the wealth tax. It is stated that the said issue is covered by the decision of the Supreme Court in the case of Jagraj Singh Mann v. Commnr. of Wealth Tax, Patiala and another [2011 (12) TMI 535 - SUPREME COURT ], Civil Appeal as decided whereby the appeals filed by the assessee were dismissed and the order of the Wealth Tax Officer was maintained.
No substantial question of law is involved in the appeals wherein the issue with regard to the land measuring 3.60 acres and 22.1 acres is involved and as such, these appeals filed by the assessee as well as by the revenue in respect of the cases of M/s Industrial Cables (India) Ltd. with regard to 3.60 acres and 22.1 acres of land are hereby dismissed.
The rest of the appeals filed by the assessee M/s Industrial Cables (India) Ltd. pertaining to 44 acres of land are covered by the decision of the Supreme Court in Jagraj Singh Mann's case (supra) and are, thus, dismissed.
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2013 (4) TMI 831
Issues involved: Appeal by Revenue against Order by CIT(A) partly allowing assessee's appeal contesting assessment u/s.143(3) for A.Y. 2008-09, claiming error in accepting impugned gain as Long Term Capital Gain (LTCG) instead of business income.
Summary:
1. The appeal raised a single issue regarding the classification of the impugned gain as LTCG instead of business income.
2. The Tribunal noted that the issue had been previously decided in the assessee's favor for the preceding years, leading to the matter being sent back to the A.O. for reevaluation. The Tribunal considered it appropriate to set aside the assessment for A.Y. 2008-09 as well, allowing both parties to present relevant facts for a fresh adjudication in line with the Tribunal's current approach.
3. Consequently, the Tribunal set aside the impugned assessment for A.Y. 2008-09 to the A.O. for a de novo adjudication, emphasizing the need for definite findings of fact and a fair hearing for the assessee.
4. The Revenue's appeal was allowed for statistical purposes, ensuring procedural uniformity and consistency in the decision-making process.
Separate Judgment: No separate judgment was delivered by the judges in this case.
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