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2012 (7) TMI 1015
Issues involved: Appeal against deletion of penalty u/s 271(1)(c) of the Act for the assessment year 2007-2008.
The judgment pertains to an appeal by the Revenue against the deletion of a penalty of Rs. 16,02,393 imposed by the Assessing Officer u/s 271(1)(c) of the Act for the assessment year 2007-2008. The case involved the assessee claiming certain reimbursements in the nature of link charges on a cost to cost basis, which was contested by the Assessing Officer. The Assessing Officer treated the amount as fees for technical services, leading to an addition in the income. The penalty imposed on this amount was subsequently deleted in the first appeal.
The Tribunal considered the submissions and precedents cited, emphasizing that the mere acceptance of an addition does not automatically warrant the imposition of a penalty u/s 271(1)(c). The Tribunal highlighted that both assessment and penalty proceedings are distinct, and the chargeability of the amount in the hands of the recipient is crucial. The Tribunal also noted that the payer deducting tax at source does not conclusively establish tax liability for the recipient. Precedents were cited to support the argument that bandwidth charges cannot be equated to fees for technical services.
The Tribunal observed that the assessee had made a complete disclosure of the relevant particulars regarding the reimbursements in the computation of income. Citing a Supreme Court case, it was emphasized that penalty u/s 271(1)(c) cannot be imposed merely due to the non-sustainability of the claim in law, especially when the furnished particulars were not inaccurate. The Tribunal upheld the deletion of the penalty by the CIT(A) based on the possible view of non-taxability of the line charges.
In conclusion, the Tribunal dismissed the Revenue's appeal and upheld the decision to delete the penalty, emphasizing the proper disclosure made by the assessee and the possible non-taxability of the line charges. The order was pronounced on July 31, 2012.
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2012 (7) TMI 1014
Issues involved: Application u/s 6 of Right to Information Act, 2005 seeking information, delay in supplying information, imposition of costs on appellants, misuse of provisions of the Act.
Application u/s 6 of Right to Information Act: The respondent filed an application seeking information from the Public Information Officer and the Deputy Commissioner of Transport, Mumbai. The desired information was not supplied within the prescribed 30-day period, leading to appeals and a writ petition challenging the order of the State Information Commissioner. The learned Single Judge directed the appellants to furnish the information free of costs within ten days and imposed costs of &8377; 2,000 on the appellants.
Delay in supplying information: The appellants argued that it was humanly impossible to provide the extensive information of 3419 pages within the 30-day period. The learned Assistant Government Pleader contended that the law does not compel a party to do the impossible and highlighted that the letter asking the respondent to pay for the information was issued the day after the 30-day deadline. The respondent, however, emphasized the necessity for timely information supply under the Act and sought a penalty of &8377; 25,000 on the appellants.
Imposition of costs: The respondent's application under Section 6 of the Act was deemed to be filed with a mala fide intention, seeking general and extensive information on various matters. The Court found the application vague and concluded that it was impossible for the appellants to supply the requested information within 30 days. The Court held that the costs imposed on the appellants were not justified, invoking the principle of lex non cogit ad impossibilia, which states that the law does not compel a person to do the impossible. Consequently, the order imposing costs of &8377; 2,000 on the appellants was set aside, and the letters patent appeal was allowed with costs.
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2012 (7) TMI 1013
The Supreme Court dismissed the appeals as no grounds were found for interference with the impugned judgment. (Citation: 2012 (7) TMI 1013 - SC Order)
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2012 (7) TMI 1012
Issues:
The issues involved in the judgment are:
1. Whether the letter dated February 7, 2005 of the Superintendent of Customs could be considered as an appealable order?
2. Whether the minimum obligation on the part of the Revenue was to supply a copy of the bill of entry to the respondent when the triplicate bills of entry were already with the respondents?
Issue 1:
The case involved M/s. Ruchi Soya Industries Ltd. filing three Bills of Entry for import, which were proposed to be assessed under Section 14(2) of the Customs Act, 1962. The respondent challenged the final assessment order dated 7-2-2005 by filing an appeal before Commissioner (Appeals), Customs, Jamnagar under Section 130 of the Customs Act, 1962. The Commissioner (Appeals) dismissed the appeal as time-barred, but the CESTAT, Ahmedabad allowed the appeal and set aside the Order-in-Appeal, stating that the letter dated 7-2-2005 could not be considered an appellate order. The Tribunal remanded the matter back to the Commissioner (Appeals) for a fresh decision on merits.
Issue 2:
In response to the order passed by the High Court, the Superintendent of Customs informed the respondent about the final assessment under Section 18(2) of the Customs Act, directing them to pay a differential duty. The respondents requested a copy of the final order along with the bill of entry, which was provided to them on 16-12-2005. The Tribunal held that the communication on 16-12-2005 showing the bill of entry to the respondent should be considered as the relevant date for challenging the same. The Tribunal further stated that the letter dated 16-12-2005 cannot be considered an order passed in appeal by the Commissioner. The Court agreed with the Tribunal's view, dismissing the appeal and ruling in favor of the assessee, stating that the appeal lacked merits.
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2012 (7) TMI 1011
Issues involved: Appeal against addition made u/s.28(iv) of the I.T. Act for assessment year 2007-08.
Summary:
1. The appellant, a company engaged in trading shares, filed an appeal against an addition made by the Assessing Officer (AO) on account of cessation of liability u/s.41(1) of the Act. The AO added an amount of &8377; 2,08,17,130 to the total income for A.Y. 2007-08. The appellant contended that the amount mentioned in the appeal was factually incorrect.
2. The AO based the addition on the advance received against export to Marron Holdings Ltd (MHL) in 1997-98, which remained unpaid. The AO considered the unclaimed advance as income u/s.41(1) of the Act due to the lapse of time.
3. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the addition u/s.28(iv) of the Act, citing the 10-year-old nature of the matter and the appellant's cessation of export activities. The CIT(A) relied on a Bombay High Court decision in a similar case.
4. During the appeal hearing, the appellant argued that the liability to repay the advance still existed, as evidenced by correspondence with MHL and RBI seeking approval for refund. The appellant had not written off the liability from its books.
5. The Tribunal noted that the liability to repay the advance remained on the appellant's balance sheet and had not been written off. Citing relevant court decisions, the Tribunal held that the amount could not be added as income u/s.41(1) or u/s.28(iv) of the Act.
6. The Tribunal observed that the appellant's liability to repay the advance was ongoing, as evidenced by recent correspondence with MHL and RBI. The Tribunal allowed the appeal, deleting the addition made by the authorities.
7. The appeal was allowed in favor of the appellant.
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2012 (7) TMI 1010
Issues involved: Penalty u/s.271(1)(c) on disallowance out of administrative expenditure u/s.14A for A.Y. 2002-03.
Summary:
The appeal was filed against the penalty imposed on disallowance of expenses u/s.14A for earning exempt income. The AO levied the penalty specifically on disallowance of &8377; 66,31,05,360/- made u/s.14A out of administrative and other expenses for earning exempt dividend and interest income. The assessee contended that no expenses were incurred for earning the exempt income. The AO, however, rejected this explanation and levied the penalty. The CIT(A) held that penalty on disallowance of interest u/s.14A was not justified but upheld the penalty on disallowance of administrative expenses on a proportionate basis.
The CIT(A) justified the penalty on administrative expenses disallowance, stating that there was substantial tax-free income and expenses could be attributed to earning this income. The assessee argued that no expenses were directly or indirectly related to earning dividend income. The Tribunal observed that the AO did not point out any expenses related to earning exempt income and the disallowance was made on an adhoc basis. The Tribunal found no reason to confirm the penalty on such adhoc disallowance of administrative expenditure u/s.14A. Consequently, the penalty sustained by the CIT(A) was set aside and deleted, allowing the appeal filed by the assessee.
In conclusion, the penalty on the disallowance of administrative expenditure u/s.14A was deleted, and the appeal was treated as allowed.
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2012 (7) TMI 1009
Termination of a Constable in the Police Department - Held that:- When we consider the principles laid down in majority of the decisions, the question that looms large before us is when consideration of such claim by the candidates who deliberately suppressed information at the time of recruitment; can there be different yardsticks applied in the matter of grant of relief.
Though there are very many decisions in support of the various points culled out in the above paragraphs, inasmuch as we have noted certain other decisions taking different view of coordinate Benches, we feel it appropriate to refer the above mentioned issues to a larger Bench of this Court for an authoritative pronouncement so that there will be no conflict of views and which will enable the Courts to apply the law uniformily while dealing with such issues.
With that view, we feel it appropriate to refer this matter to be considered by a larger Bench of this Court. Registry is directed to place all the relevant documents before the Hon’ble the Chief Justice for constitution of a larger Bench.
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2012 (7) TMI 1008
Issues involved: Assessment of depreciation based on sale invoice value, scope of Assessing Authority to determine actual market value of equipment.
In this case, the Respondent, an assessee, purchased bio gas and furnace with a stated value of &8377; 50,00,000/- each as per the sale invoice. The Assessing Authority, however, deemed the value inflated at &8377; 2,50,00,000/- and rejected the depreciation claim. The Commissioner of Income Tax upheld this decision, but the Tribunal set it aside, directing the Assessing Authority to re-examine the issue. The Tribunal emphasized the need to consider if the sale value in the invoice aligns with the actual market value, and highlighted the Supreme Court's stance on ownership and usage for depreciation claims. The Tribunal's decision allowed the assessee a fresh opportunity for assessment.
The State contended that the Tribunal's observations might bind the Assessing Officer to accept the invoice value as final, potentially limiting the scope to determine the actual market price. On the other hand, the Respondent's counsel argued that the Tribunal's directive did not restrict the Assessing Authority's discretion to assess the market price, emphasizing the importance of verification from the supplier to ascertain the accuracy of the sale price. The Respondent's counsel refuted the claim that the Tribunal's observations curtailed the Assessing Authority's discretion.
Upon hearing arguments from both sides, it was clarified that the remand was open, allowing the Assessing Authority the freedom to evaluate the sale value based on supplier materials and other relevant information. Consequently, the appeal was disposed of.
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2012 (7) TMI 1007
Provisional order of attachment - offences for which the company and its Directors are sought to be prosecuted - Held that:- The criminal activity alleged against the company and its Directors relates to scheduled offences, at least at the time of the alleged commission and at the time of the lodging of the complaints (though they are not so any more after the amendment). In so far as the Part B offences are concerned, the offences listed therein would come within the meaning of expression "scheduled offence" under Section 2(1)(y) only if the total value involved in such offences is ₹ 30 lakhs and more. This condition is also satisfied in the cases on hand. Therefore, the ingredients of the expression proceeds of crimestand satisfied, in view of the fact (i) that the company is charged of committing scheduled offences and (ii) the property in question is allegedly derived as a result of a criminal activity relating to scheduled offences. Hence I cannot sustain the first contention that since the entire sale consideration for the property was paid by the Bank, it cannot be termed as the proceeds of crime. Prima facie, the property represents the proceeds of crime and it is upto the accused to establish, by evidence, before the criminal court that it is not so. I make it clear that the criminal court should independently go into the question without being influenced by my preliminary finding on this question.
The Authority had the leverage and obligation to wait till the disposal of the writ petition or at least till the stay order was vacated. The Courts have repeatedly held that any proceeding initiated, conducted or concluded in violation of an order of interim stay or injunction is non- est in the eye of law. The Adjudicating Authority should have at least waited for this Court to dispose of the writ petition filed by the Bank or in the alternative, directed the impleadment of the Bank as a party. By virtue of the interim order dated 28.2.2012, this Court has permitted the Bank to proceed with the auction sale of the property under the SARFAESI Act, 2002. The action of the Adjudicating Authority in proceeding with the hearing of the original complaint despite being aware of the interim stay order and also proceeding to pronounce a final order on 26.6.2012, is clearly in defiance of the interim stay order of this Court. Therefore, the whole proceedings are vitiated and even the order dated 26.6.2012 passed during the pendency of these writ petitions is illegal and are liable to be set aside as null and void.
In view of the above, both the writ petitions are allowed, the provisional order of attachment dated 22.2.2012 as well as all further proceedings pursuant thereto including the original complaint and the order of confirmation dated 26.6.2012, are set aside as illegal. I am conscious of the fact that the order of confirmation dated 26.6.2012 was passed during the pendency of these writ petitions and that the same is not under challenge. But it hardly matters, in view of the fact that once the provisional order of attachment dated 22.2.2012 goes, there is nothing for the Adjudicating Authority to confirm. There will be no order as to costs. However, the findings recorded herein shall not have a bearing on the criminal prosecution. Consequently, connected miscellaneous petitions are closed.
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2012 (7) TMI 1006
Issues involved: Central Excise Appeal u/s 35G of the Central Excise Act, 1944 against the order of the Customs, Excise & Service Tax Appellate Tribunal regarding the levy of interest on delayed payment of duty.
Summary:
The respondent-assessee, engaged in the manufacture of battery/dry cell battery, availed CENVAT facility on inputs/raw materials. Supplementary invoices were raised for clearance of Zinc Scrap to their sister unit, resulting in a differential duty payment of Rs. 3,91,723/- in December 2000 for clearances between July and October 2000. The department levied interest of Rs. 32,198/- @ 24% per annum. The Tribunal relied on Section 11AB(2) which exempts cases where duty became payable before the Finance Bill, 2001 received the assent of the President on 11-5-2001, concluding that interest was not payable for the period in question.
The appellant argued that interest could still be charged under Rule 49 of the Central Excise Rules, 1944. However, since the respondent had voluntarily paid the differential duty without a notice of demand, the interest was charged under Section 11AB(2) and not Rule 49. The Tribunal's decision to set aside the interest was upheld, considering the small amount involved and deemed it not necessary for court interference.
In conclusion, the Central Excise Appeal was dismissed by the High Court, affirming the Tribunal's decision regarding the levy of interest on the delayed payment of duty.
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2012 (7) TMI 1005
Issues involved: Appeal against rejection of application for Registration u/s 12AA of the Income Tax Act, 1961.
Summary:
The appellant appealed against the rejection of the application for Registration u/s. 12AA by CIT-III, Baroda, contending that the objects were for the benefit of the "Public" as per section 2(15) of the Income Tax Act, 1961. The appellant argued that the activities and objects were charitable in nature and satisfied all conditions for registration u/s. 12AA. The Ld. A.R. cited a tribunal decision in favor of the assessee, but it was not presented before the CIT. The tribunal found that the CIT's rejection was based on the assessee not falling within the category of institutions meant for charitable purpose. The tribunal decided to send the matter back to the CIT for a fresh decision in light of the tribunal decision, providing the assessee with an opportunity to be heard.
The tribunal's decision was influenced by a previous case where it was held that the trust's objects were to help other member industries, i.e., the public at large. As the factual details of the previous case were not available, the tribunal deemed it necessary for the CIT to reevaluate the matter in comparison to the present case. Ultimately, the tribunal set aside the CIT's order and remanded the matter for a fresh decision after considering the relevant tribunal decision and providing the assessee with a fair opportunity to present their case.
The appeal of the assessee was allowed for statistical purposes, and the order was pronounced in the open court.
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2012 (7) TMI 1004
Issues involved:
The judgment involves the issues of deletion of addition under Section 40(a)(ia) of the Income Tax Act, 1961 and correction of a mistaken figure in relation to Assessment Year 2006-07.
Deletion of Addition u/s 40(a)(ia):
The appellant questioned the deletion of addition of Rs. 28,01,585 under Section 40(a)(ia) of the Income Tax Act, 1961 due to non-filing of Form No.15J as required under Section 194C(i)(3) of the Act. The Tribunal had extensively quoted a decision from an earlier case, indicating that the issue had been previously addressed. Another amount of Rs. 16,82,066, initially added as income by the Assessing Officer, was deleted by CIT (Appeals) based on the fact that the single payment in a day did not exceed Rs. 20,000. The Tribunal upheld this finding, supported by the Assessing Officer's report and the reliance of CIT (Appeals) on the same remand report. Given these fact findings, the Court decided not to interfere with the matter, especially considering the aggregate tax involved was marginally over Rs. 10 lakhs.
Correction of Mistaken Figure:
The Court acknowledged a mistake in the figure mentioned in one of the questions raised by the appellant, which should have been read as Rs. 16,32,666 instead of Rs. 1,68,20,666. Leave was granted to correct this figure. The Tribunal had addressed two issues, with one relating to the incorrect figure and the other to the deletion of addition under Section 40(a)(ia). Despite the different figures involved, the Court found no reason to interfere with the Tribunal's decision based on the fact findings and the amount of tax at stake.
Conclusion:
The Court dismissed the appeal and the connected application, directing all parties to act on a xerox signed copy of the order.
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2012 (7) TMI 1003
Issues Involved:
The issues involved in the judgment are the challenge to the order of the Tribunal directing the petitioners to deposit a certain amount as pre-deposit for maintaining an appeal, and the question of whether the petitioners should be exempted from payment of service tax for raw materials supplied by the service recipient.
Challenge to Tribunal Order:
The writ petition was filed challenging the Tribunal's order directing the petitioners to deposit Rs. 60 lacs as pre-deposit for maintaining the appeal. The petitioners argued that they should be exempted from payment of any service tax for raw materials supplied by the service recipient, as they were not purchased by the appellants. The Tribunal was urged to grant full waiver of the pre-deposit amount, citing previous decisions where full waiver was allowed in similarly situated cases. The High Court held that the Tribunal should have granted full waiver to the petitioner and set aside the order passed by the Tribunal, allowing the appeal to proceed without any pre-deposit requirement.
Exemption from Service Tax:
The petitioners contended that they should be exempted from payment of service tax for cement and steel raw materials supplied by the service recipient for construction, as they were not purchased by the appellants. Reference was made to a decision by the Tribunal and another decision by the Bombay High Court, where full waiver of pre-deposit was granted in similar cases. The High Court agreed with the petitioner's argument and held that the Tribunal should have allowed 100% waiver of the pre-deposit amount, as the show cause notice was issued beyond one year from the date of filing. The High Court granted full waiver to the petitioner and directed the Tribunal to decide the appeal on merits expeditiously.
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2012 (7) TMI 1002
Issues Involved:
The primary issue in this case is whether the CESTAT was justified in directing the appellant to deposit the entire amount of service tax confirmed by the Commissioner.
Details of the Judgment:
1. The appellant had provided buses on hire to a company and a school for transporting employees and students. The adjudicating authority initially dropped proceedings to recover service tax but later, the Commissioner held that the appellant was liable to pay service tax as a tour operator. The appellant appealed to the CESTAT with a request for waiver of predeposit. The CESTAT, in its order dated 19th April 2012, directed the appellant to deposit the entire confirmed service tax amount.
2. The CESTAT's order revealed a difference of opinion among its members regarding the predeposit issue. It was noted that in a similar case involving Jai Somnath Transport, the Tribunal had granted unconditional leave for predeposit. Consequently, the High Court quashed the CESTAT's order and directed it to hear the appeal on merits without requiring any predeposit.
3. The High Court's decision to set aside the CESTAT's order was based on the inconsistency within the Tribunal's members and the precedent set in a comparable case. The appeal was disposed of with no costs awarded to either party.
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2012 (7) TMI 1001
Approval of a scheme of arrangement - reserve utilized for the purpose of declaring dividends - Held that:- The reserve can be utilized for the purpose of declaring dividends. Since, aforesaid aspect was not pointed out to the learned Counsel for the appellant, either at the time of hearing of the petition or when the matter was kept for dictating the order, in our view, there was no justification in imposing such a condition, while sanctioning the Scheme in connection with nonutilization of amalgamation reserve for the purpose of declaring dividend. Here, it is required to be noted that no objection was taken by the Regional Director to the said clause and even the shareholders have unanimously approved the Scheme with the original Clause-10.5. Considering the same, it cannot be said that incorporation of the said clause is in violation of public policy and as held by various Courts, such amalgamation reserve can be utilized for the purpose of declaring dividends. Even, the learned Single Judge of this Court has, earlier, taken the similar view. In view of the same, the direction given by the learned Single Judge that such amalgamated reserve shall not be used, in any manner, for declaring dividend, requires to be set aside and the Scheme is held to have been sanctioned as a whole, including the original Clause-10.5 of the Scheme.
In view of the above discussion, all the appeals are ALLOWED. The Scheme is SANCTIONED as a whole, including the original CLAUSE-10.5 of the Scheme.
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2012 (7) TMI 1000
The Appellate Tribunal ITAT Agra dismissed the stay application of the assessee as they did not appear despite service. The appeal has been fixed for hearing in due course. The order was pronounced on 20.07.2012.
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2012 (7) TMI 999
Issues Involved:
1. Legality of the order passed by CIT(A).
2. Sustenance of penalty imposed u/s 271(1)(c) of the I.T. Act, 1961.
3. Imposability of penalty u/s 271(1)(c) in respect of specific additions and disallowances.
4. Confirmation of penalty levy on estimated trading addition and disallowances.
Summary:
1. Legality of the Order Passed by CIT(A):
The assessee challenged the order dated 29.09.2010 passed by CIT(A) as "bad in law and bad in facts."
2. Sustenance of Penalty Imposed u/s 271(1)(c) of the I.T. Act, 1961:
The CIT(A) confirmed the penalty imposed by the AO u/s 271(1)(c) for concealing particulars of income and furnishing inaccurate particulars. The penalty was based on the assessee's failure to show commission income properly and discrepancies found during a survey u/s 133A. The AO rejected the books of accounts u/s 145(3) and estimated the turnover and profit, leading to an addition of Rs. 2,22,212/- to the total income. The CIT(A) relied on the judgment in M/s. Dharmendra Textile Processors, 306 ITR 277, to justify the penalty.
3. Imposability of Penalty u/s 271(1)(c) in Respect of Specific Additions and Disallowances:
The assessee argued that the penalty should not be imposed on estimated income and disallowances, citing that the business involved dealing with illiterate farmers and local retailers, making it difficult to maintain proper records. The assessee contended that the penalty was based on estimation and not on actual concealment or furnishing of inaccurate particulars. The assessee relied on the judgment of the Rajasthan High Court in 168 ITR 715 (Raj).
4. Confirmation of Penalty Levy on Estimated Trading Addition and Disallowances:
The Tribunal noted that the penalty u/s 271(1)(c) depends on whether the assessee has concealed particulars of income or furnished inaccurate particulars. The Tribunal distinguished the case from CIT Vs. Handloom Emporium, 282 ITR 431 (All), stating that the present case involved estimation of income after rejecting books of accounts, not specific unrecorded sales. The Tribunal also considered the Supreme Court's judgment in Reliance Petro Products Pvt Ltd 322 ITR 158, which clarified that penalty is not justified for bona fide omissions or wrong claims made without deliberate default.
Conclusion:
The Tribunal concluded that the penalty u/s 271(1)(c) is not leviable in cases of income estimation after rejecting books of accounts. The AO failed to provide specific instances of inaccurate particulars or concealment of income. The Tribunal canceled the penalty of Rs. 1,74,594/- levied by the AO and sustained by the CIT(A), allowing the appeal filed by the assessee.
Result:
The appeal filed by the assessee is allowed.
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2012 (7) TMI 998
Issues Involved:
1. Deduction u/s 80IB(10) on profit derived from the sale of unutilized FSI.
2. Ownership and approval of the housing project.
3. Compliance with conditions prescribed u/s 80IB(10).
Summary:
1. Deduction u/s 80IB(10) on profit derived from the sale of unutilized FSI:
The Revenue contended that the profit from the sale of unutilized FSI is not derived from the business activity of development and construction of the housing project. However, the Tribunal upheld the CIT(A)'s decision, referencing the ITAT's decision in M/s. Shakti Corporation and others, which allowed the deduction u/s 80IB(10) even if the FSI was not fully utilized. The Tribunal noted that there is no requirement to fully utilize permissible FSI under the scheme of the provisions of Sec.80IB(10) and that the concept of selling unutilized FSI is imaginary and based on surmises and conjectures.
2. Ownership and approval of the housing project:
The Assessing Officer (AO) argued that the land did not belong to the assessee-developer, the approval by the local authority was not in the name of the assessee, and the beneficial ownership was also not in the name of the assessee. Therefore, the AO concluded that the assessee did not have exclusive domain over the project, leading to the rejection of the deduction claim u/s 80IB(10). The Tribunal, however, referred to the Gujarat High Court's decision in Radhe Developers, which stated that ownership of the land is not a prerequisite for claiming deduction u/s 80IB(10). The deduction is available to the entity developing and building the housing project, irrespective of land ownership.
3. Compliance with conditions prescribed u/s 80IB(10):
The CIT(A) allowed the deduction subject to the AO verifying that the assessee met the conditions laid down in the case of M/s. Shakti Corporation and others. The Tribunal found that the assessee fulfilled the prescribed conditions u/s 80IB(10), as discussed in the Radhe Developers case. The Tribunal emphasized that the assessee had developed the housing project at its own cost and risk, and had dominant control over the project, thus qualifying for the deduction.
Conclusion:
The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to allow the deduction u/s 80IB(10) on both counts. The Tribunal found no merit in the Revenue's arguments and upheld the CIT(A)'s appreciation of the conditions laid down in Radhe Developers.
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2012 (7) TMI 997
Issues Involved:
1. Deduction u/s 54 of the Act.
2. Alternative claim of deduction u/s 54F of the Act.
3. Charging of interest u/s 234B, 234C, and 234D of the Act.
Summary:
1. Deduction u/s 54 of the Act:
The assessee, a doctor, sold a property located in a commercial area and claimed a deduction u/s 54 of the Act, asserting it was a residential property. The CIT (A) upheld the denial of this deduction, noting that the property was used and taxed as a commercial property at the time of sale. The Tribunal agreed, emphasizing that the property's commercial use and description in the sale deed as a commercial building disqualified it from the deduction u/s 54, which applies only to residential properties.
2. Alternative Claim of Deduction u/s 54F of the Act:
The assessee alternatively claimed a deduction u/s 54F, arguing that the proceeds were invested in a new residential house. However, the Tribunal found that the newly purchased property was demolished and intended for hospital construction, not residential use. The Tribunal cited the requirement that the new asset must be a residential house and concluded that the assessee did not fulfill this condition, thus denying the deduction u/s 54F.
3. Charging of Interest u/s 234B, 234C, and 234D of the Act:
The Tribunal noted that the levy of interest u/s 234B and 234C is mandatory and consequential, thus dismissing this ground. However, the charging of interest u/s 234D was upheld based on the findings of the Hon'ble ITAT, Delhi, Special Bench in the case of ITO v. Ekta Promoters (P) Ltd.
Conclusion:
The Tribunal dismissed the appeal, affirming the CIT (A)'s decision to deny the deductions u/s 54 and 54F and upholding the mandatory interest charges u/s 234B and 234C, while confirming the interest u/s 234D. The order was pronounced on July 20, 2012, in Bangalore.
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2012 (7) TMI 996
Issues Involved: Challenge to the validity of revision proceeding u/s 263 of the Act for assessment year 2005-06 regarding calculation of interest on partner's current account.
Summary:
1. The appeal challenges the revision proceeding initiated by the Ld. CIT u/s 263 of the Act for the assessment year 2005-06, concerning the calculation of interest on a partner's current account.
2. The Ld. CIT found that interest on the partner's current account was computed using the "product method," resulting in an excess payment of interest by the firm. The Ld. CIT held the assessment order as erroneous and prejudicial to revenue, directing the Assessing Officer to re-do the assessment accordingly.
3. The assessee argued that the "product method" used for interest calculation is scientific and widely accepted, considering the partner's frequent transactions. The Ld. CIT's method of calculating interest on average balances was deemed unscientific and not reflective of actual transactions, thus not prejudicial to revenue.
4. The Ld. DR supported the Ld. CIT's order, highlighting discrepancies in the partner's current account balances and endorsing the Ld. CIT's method of interest calculation.
5. The Ld. A.R. clarified that the apparent differences in balances were due to netting off multiple current accounts, which the Ld. CIT overlooked.
6. The Tribunal noted that for a revision u/s 263, the order must be both erroneous and prejudicial to revenue. Citing the Malabar Industrial Co. Ltd case, it emphasized that errors must be substantial and not every mistake warrants revision.
7. The dispute centered on the method of interest calculation, with the assessee using the "product method" based on actual transactions, while the Ld. CIT advocated for average balance calculation. The Tribunal upheld the scientific "product method" over the Ld. CIT's approach.
8. The Tribunal rejected the Ld. CIT's directive to adopt an unscientific interest calculation method, emphasizing that the Ld. CIT's view was legally unsustainable. Consequently, the impugned order was set aside, and the appeal was allowed.
Judgment: The Tribunal ruled in favor of the assessee, setting aside the Ld. CIT's order and allowing the appeal on 27-07-2012.
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9911796707
