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2010 (11) TMI 964
Issues Involved:
1. Deletion of addition allowing remuneration and interest to partners u/s 40(b) of the Act.
2. Deletion of addition of electricity expenses.
3. Disallowance of depreciation.
4. Addition on account of variation of closing stock.
5. Disallowance of 20% of other expenses.
Summary:
1. Deletion of Addition Allowing Remuneration and Interest to Partners u/s 40(b) of the Act:
The first issue pertains to the deletion of an addition of Rs. 34,88,675/- by the CIT(A), allowing remuneration and interest to partners u/s 40(b) of the Act. The assessee, a partnership firm engaged in the business of import-export and manufacturing of cut and polished diamonds, disclosed unaccounted income of Rs. 70 lakh during a survey u/s 133A. The AO treated this as "income from other sources" and disallowed the claim of interest and remuneration to partners. The CIT(A) held that the disclosed income forms part of the book profit and should be treated as business income, thus allowing the remuneration and interest to partners. The Tribunal upheld the CIT(A)'s order, stating that the income disclosed during the survey was business income and the assessee is eligible for deduction of remuneration and interest paid to partners u/s 40(b) of the Act.
2. Deletion of Addition of Electricity Expenses:
The second issue involves the deletion of an addition of Rs. 2,72,870/- on account of electricity expenses. The AO disallowed the expenses as the electricity bills were in the name of the partner and not the firm. The CIT(A) deleted the disallowance, noting that the business was conducted from the premises in question and the payments were made by the firm. The Tribunal confirmed the CIT(A)'s order, finding no infirmity in allowing the claim of the assessee.
3. Disallowance of Depreciation:
The third issue concerns the disallowance of Rs. 2,22,500/- on account of depreciation. The AO disallowed the depreciation due to the lack of proper bills for the purchase of machinery. The assessee claimed that it had submitted vouchers and bills backed by account payee cheques. The Tribunal set aside the issue to the AO for verification of the bills and allowed depreciation on the enhanced value of the respective assets disclosed during the survey.
4. Addition on Account of Variation of Closing Stock:
The fourth issue is the addition of Rs. 1,34,317/- due to variation in the closing stock of finished diamonds. The AO added the amount based on discrepancies found during the survey. The CIT(A) sustained the addition, and the Tribunal confirmed the findings, noting that the assessee could not provide evidence of process loss or rejection in respect of finished diamonds.
5. Disallowance of 20% of Other Expenses:
The fifth issue involves the disallowance of Rs. 32,910/-, being 20% of other expenses, on the grounds of personal nature. The assessee did not press this issue before the CIT(A) or the Tribunal. Consequently, the Tribunal dismissed this issue.
Conclusion:
The Tribunal dismissed the Revenue's appeal and partly allowed the assessee's appeal for statistical purposes. The order was pronounced in Open Court on 19/11/2010.
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2010 (11) TMI 963
Issues involved: Appeal against order of CIT(A)-10, Mumbai allowing interest u/s 244A for refund arising from self assessment tax.
Summary:
Issue 1: Interpretation of section 244A for interest on self assessment tax refund
The appeal was filed by the revenue against the order of CIT(A)-10, Mumbai allowing interest u/s 244A for a refund arising from self assessment tax. The assessee, a company from Mauritius engaged in broadcasting outside India, had filed a revised return declaring income. The Assessing Officer (AO) directed interest u/s 234A to be charged. The ITAT allowed the appeal in favor of the assessee, leading to a refund arising from self assessment tax payment. The AO, however, denied interest u/s 244A for this refund. The assessee contended that self assessment tax falls under section 244A(1)(b) for interest calculation. The CIT(A) agreed, citing relevant case laws and directed the AO to allow interest u/s 244A in accordance with the law.
Issue 2: Compliance with statutory provisions and case laws
On perusal of section 244A(1), it was found that self assessment tax payment is covered by clause (b) for interest calculation. Case laws and CBDT Circular No. 549 supported the assessee's entitlement to interest on such refunds. The CIT(A) considered all statutory requirements and directed the AO to allow interest u/s 244A. The Tribunal upheld the CIT(A)'s order, dismissing the revenue's appeal.
In conclusion, the Tribunal upheld the CIT(A)'s decision to allow interest u/s 244A for a refund arising from self assessment tax payment, based on statutory provisions and relevant case laws, thereby dismissing the revenue's appeal.
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2010 (11) TMI 961
Issues Involved:
1. Deduction u/s 80IA of the Income Tax Act, 1961.
2. Disallowance of freight and octroi expenses.
3. Addition due to difference in conversion charges.
4. Addition due to suppressed conversion charges on account of excess burning loss.
Summary:
Issue 1: Deduction u/s 80IA of the Income Tax Act, 1961
The Tribunal addressed the issue of deduction u/s 80IA for Assessment Year 2002-03. The Assessing Officer (AO) disallowed the claim on several grounds, including non-payment of sales tax, lack of finished goods, and non-furnishing of the Audit Report in Form 10CCB. The CIT(A) reversed the AO's decision, citing various case laws and concluding that the job-work activity constituted manufacturing. The Tribunal upheld the CIT(A)'s decision, noting that the Audit Report was filed before the completion of the assessment, thus fulfilling the requisite condition.
Issue 2: Disallowance of Freight and Octroi Expenses
For Assessment Year 2002-03, the AO disallowed freight and octroi expenses, arguing that these should be borne by the holding company. The CIT(A) examined the nature of the expenses and found the disallowance unfounded. The Tribunal upheld the CIT(A)'s decision, referencing a similar ruling for Assessment Year 2003-04, where it was established that the expenses were incurred on consumables and stores materials.
Issue 3: Addition Due to Difference in Conversion Charges
The AO added Rs. 4,34,824/- due to a discrepancy between the conversion charges paid and those recorded in the Profit & Loss account. The CIT(A) found that the amount was included in the fitting and heat treatment charges and thus deleted the addition. The Tribunal, referencing a similar case for Assessment Year 2003-04, restored the issue to the AO for fresh adjudication, emphasizing the need for verification of connected accounts.
Issue 4: Addition Due to Suppressed Conversion Charges on Account of Excess Burning Loss
The AO added an amount due to a higher average burning loss of 10.92%, which he deemed excessive. The CIT(A) reversed this finding. The Tribunal, following a precedent set for Assessment Year 2003-04, restored the matter to the AO for re-examination, requiring comprehensive data on industry standards and historical loss rates.
Assessment Year 2004-05:
For this year, the Tribunal followed the decisions made for Assessment Year 2002-03. The issues of freight and octroi expenses and suppressed conversion charges were addressed similarly, with the former being dismissed and the latter restored for fresh adjudication.
Conclusion:
Both appeals of the Revenue were partly allowed, with specific issues restored to the AO for further examination. The order was signed, dated, and pronounced in the Court on 19/11/2010.
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2010 (11) TMI 960
Disallowance of bad debts/irrecoverable balance written off - allowable business expenditure or not? - As contended that these are expenses incurred in the normal course of business and the same is allowable as bad debts or alternatively, as business expenditure - suppliers did not refund the advance paid to them and the amount could not be recovered as they have failed in the business or have closed shutters - HELD THAT:- All the above payments are made in the ordinary course of its business. Normal business of the assessee involves many such risks and expenditure which are unavoidable and has to be incurred by all businessmen in their business. All such expenditure is allowable under section 28 (i) of the IT Act - From the reading of the provisions of Section 28, it is very clear that what law envisages to tax is only the profits or gains of the business. In arriving at the profits or gains of the business, all legitimate and normal expenditure of the business are to be deducted unless otherwise specifically provided in the IT Act - the order of the CIT (A) is in accordance with law and no interference is called for.
The Hon’ble Supreme Court in HASIMARA INDUSTRIES LTD.[1998 (5) TMI 7 - SUPREME COURT] held that assessee’s business was of manufacture and sale of tea and it was not engaged in cotton manufacturing business at all; that while it intended to enter into cotton manufacturing business it did not set up a cotton mill, but obtained operating rights from another company under the leave and licence agreement for the purpose of acquiring the profit making apparatus for a duration of 3 years or a little more; that the amount of advance in a sum of ₹ 20 lakhs was given not for its own purpose by way of business expenditure for modernizing the mill, but as capital to the lessor who in turn had to modernize the mill. In the resolutions made by the board of directors it was clear that the transaction entered into was not in the nature of a loan transaction or money-lending transaction and thus the loss suffered by the assessee was a capital loss and hence, the amount could not be deducted from the assessee’s income as business loss (decision thus relied on by the learned DR is distinguishable on the facts) - both the grounds dismissed.
Disallowance of bonus paid to shareholders - Whether against the provisions of section 36 (1) (ii) of the Act? - HELD THAT:- One of the conditions mentioned in section 36 (1) (ii) is that the amount payable to employees as bonus or commission should not otherwise have been payable to them as profit or dividend. The plain reading of the clause means that the profits of a business will not be allowed to be dwindled by merely describing the payment as bonus or commission, if the payment is in lieu of dividend or profits. This is provided to check the employer from avoiding tax by distributing his/its profits by way of bonus among the member employees of his/its concern, instead of distributing the sum as dividend or profits. However, the sum paid as bonus or commission is not affected by this condition, if the same is not otherwise payable as profit or dividend - the bonus will not be allowed only if such sum paid to him or her is otherwise payable to him or her as profits or dividends. In the present case, the bonus is paid for the services of the working directors and the same cannot be disallowed just because they hold a few shares in the assessee company. They will not be entitled to such sum in entirety as dividends or profits in case such sum is not paid as bonus to them. Whatever dividend if any, payable to them will be only a fraction of such sum - this ground also dismissed.
Appeal filed by Revenue dismissed.
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2010 (11) TMI 959
Issues Involved:
1. Disallowance of depreciation on plant and machinery.
2. Addition due to non-deduction of tax at source u/s 40(a)(ia).
3. Rejection of claim of additional depreciation u/s 32(iia).
Summary:
1. Disallowance of Depreciation on Plant and Machinery:
The assessee claimed depreciation on plant and machinery amounting to Rs. 91,16,943/- for the Asst. Year 2004-05. The AO disallowed the claim on the grounds that the plant and machinery were not used during the year, as confirmed by the director's statement. The CIT(A) upheld this decision, emphasizing the director's statement over the Central Excise Officer's report, which indicated trial production. The Tribunal, however, allowed the claim, stating that even passive use of machinery qualifies for depreciation. The Tribunal cited multiple judgments, including CIT vs. Sharda Motor Industrial Ltd. and CIT vs. Panacea Biotech Ltd., supporting the view that machinery ready for use is entitled to depreciation.
2. Addition Due to Non-Deduction of Tax at Source u/s 40(a)(ia):
The assessee faced additions for non-deduction of tax at source on various payments, including Rs. 10,35,838/- for commission to agents, Rs. 83,589/- to C & F agents, and Rs. 47,744/- for clearance charges. The Tribunal held that since these amounts were not debited to the profit and loss account but capitalized, the provisions of section 40(a)(ia) were not applicable. The Tribunal emphasized that disallowance u/s 40(a)(ia) applies only to expenses claimed in the profit and loss account.
3. Rejection of Claim of Additional Depreciation u/s 32(iia):
The assessee claimed additional depreciation u/s 32(iia) amounting to Rs. 1,09,40,332/-. The Tribunal rejected this claim, stating that the provisions for additional depreciation came into effect from 1.4.2005. Since the plant and machinery were installed and put to use before this date, the assessee was not entitled to additional depreciation.
Conclusion:
The Tribunal allowed the appeal for Asst. Year 2004-05, granting depreciation on plant and machinery, and partly allowed the appeal for Asst. Year 2005-06, rejecting the claim for additional depreciation but deleting additions made u/s 40(a)(ia) and 40A(3). The order was pronounced in open Court on 12.11.10.
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2010 (11) TMI 958
Issues Involved:
1. Whether the transaction is a transfer of asset that attracts liability for capital gains.
2. Whether the consideration received by way of fully paid up shares amounts to receipt of consideration by the assessee, assessable at its hands.
3. Whether the consideration received is rent received for the whole period of the lease (99 years) in advance.
4. Whether the transaction is assessable to short term capital gains or long term capital gains.
Summary:
1. Transfer of Asset and Capital Gains:
The first issue raised is whether the transaction is a transfer of asset that attracts liability for capital gains. "Transfer" u/s 2(47)(vi) of the Act, takes in "any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property." Admittedly, the transaction herein is a long term lease leaving complete freedom to the lessee Company to enjoy the immovable property leased out for 99 years. So much so, in our view, the transaction is a transfer of capital asset within the meaning of Section 2(47)(vi) of the Act.
2. Consideration Received by Fully Paid Up Shares:
The next question to be considered is whether the consideration received by way of fully paid up shares of the lessee company issued to the partners of the assessee firm amounts to receipt of consideration by the assessee, assessable at its hands. We do not think the contention of the assessee or the findings of the lower authorities on this issue can be sustained because the consideration for the lease of the land and building executed by the firm was advance allotment and later issue of fully paid up shares by the Company to the partners of the respondent assessee in proportion to their shares in the firm. Therefore, consideration by way of fully paid up shares issued by the lessee Company to the partners of the lessor firm constitutes consideration for the lease executed by the firm. We, therefore, reverse the findings of the lower authorities, including the ITAT, by holding that the consideration received by the partners together constitutes consideration received by the assessee firm for executing lease deeds in favour of the lessee Company.
3. Rent Received in Advance:
The next question to be considered is whether the consideration received by way of issue of fully paid up shares to the partners of the assessee firm is the rent received for the whole period of the lease i.e. 99 years, in advance. The Supreme Court has in the decision in Commissioner of Income Tax, Assam, Tripura and Manipur v. Panbari Tea Company Ltd. reported in 1965 (LVII) ITR 422 held that the distinction between a price paid for a transfer of a right to enjoy the property and the rent to be paid periodically to the lessor. The former is a capital income and the latter a revenue receipt. In our view, in substance and reality the consideration received is not rent received in advance as claimed by the assessee but consideration for the lease of land and building for 99 years. The net result of the transfer is non-availability of the land and building to the assessee or to its partners for enjoyment for the next 99 years, during which period the lessee company will hold and enjoy the property. So much so, the consideration received is for the transfer of leasehold rights, which is assessable to capital gain.
4. Short Term vs. Long Term Capital Gains:
The next question to be considered is whether the Department's stand that the transaction is assessable to short term capital gains is correct. We do not find any justification for assessment of the transaction as short term capital gains. There is nothing to indicate that the land and building was held by the assessee for a short period of less than 3 years to treat it as short term capital assets. If the assets are held by the Firm for more than 3 years, then the assessment on capital gains also has to be as long term capital gains.
Conclusion:
We therefore, allow the appeal by setting aside the orders of the first appellate authority and also that of the Tribunal on this issue and remand the case back to the Assessing Officer for assessment of the consideration received by the partners of the assessee Firm in the form of fully paid up shares as long term capital gains received by the assessee Firm. The Assessing Officer should examine whether leases have taken effect based on the original lease deeds and if so, make assessment for 1993-94, and on the other hand, if subsequent lease deeds were the real transactions, then assess the same for the assessment year relevant for the previous year during which revised lease deeds were executed.
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2010 (11) TMI 957
Deduction u/s 80IC - Eco-Tourism - denial on the ground that hotel of the assessee being simple hotel is not covered by Item No.15 of Schedule XIV of the Act and therefore, not eligible for such deduction - HELD THAT:- From the Section 80IC, and Item No.15 of Part C of the Fourteenth Schedule, it can be observed that what is eligible for deduction is eco-tourism which include inter alia hotels. It has been the contention of the assessee that his hotel is approved by the Government. The hotel cannot be approved by the Government without obtaining No Objection from the Pollution Department. There is no material on record to show that Pollution Department of the Government has not given no Objection to the assessee. If it is so, then, it cannot be said that the assessee is running a hotel which is outside the norms prescribed by the Pollution Department.
If a plain reading is given to Item No.15 reproduced above, then, eco-tourism inter alia include hotels. No material has been brought on record to show that “eco-tourism” status has been granted to any other hotel and which status assessee does not have. If the logic applied by the AO and CIT (A) is made applicable, then, the hotels which are not having the alleged “eco-tourism” status cannot be held to be entitled to deduction u/s 80-IC. If none of the hotels can be granted deduction u/s 80-IC, then, the Item No.15 of Part C of the Fourteenth Schedule will be redundant.
In the absence of definition of “eco-tourism” the hotel as added into the Item No.15 of Part C is to be construed to be hotel situated in the State of Himachal Pradesh or the State of Uttaranchal having a valid licence on the basis of No Objection from Pollution Department which can be treated to be a hotel eligible for deduction u/s 80IC as per provisions of Section 80IC. Therefore, the claim of deduction u/s 80-IC to the assessee is allowed.
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2010 (11) TMI 956
Issues Involved: Appeal against order u/s 201(1) and 201(1A) of the I.T. Act, 1961 regarding non-deduction of tax at source on payments made to foreign holding company.
Summary:
Issue 1: Background and Initial Proceedings
The appeal was filed by the Revenue against the order of the C.I.T.(Appeals)-X1, Chennai for the assessment year 2003-04 u/s 201(1) and 201(1A) of the I.T. Act, 1961, concerning non-deduction of tax at source on payments to the holding company M/s. Alstom Holdings, France.
Issue 2: Tribunal's Initial Decision
The Tribunal initially ruled in favor of the Revenue, stating that the assessee failed to apply u/s 195(2) for deduction of tax at source on payments to the foreign holding company, reversing the C.I.T.(Appeals) decision.
Issue 3: High Court's Intervention
The assessee appealed to the Hon'ble High Court of Madras under sec. 260-A of the I.T. Act, which set aside the Tribunal's order and remitted the matter back for reconsideration based on the relevant contract terms.
Issue 4: Reconsideration by Tribunal
Upon rehearing, it was established that the payments made by the assessee to its holding company were for networking services provided by a third party, M/s. Equant, UK, and were not subject to TDS as they did not constitute royalty or fees for technical services.
Issue 5: Legal Interpretation
The Tribunal considered the scope of sec. 195(2) in light of the Hon'ble Supreme Court's decision, emphasizing that if the payment does not involve income, there is no obligation to deduct tax at source. The Tribunal analyzed the contract extracts provided by the holding company and concluded that the payments were not for technical services, affirming the C.I.T.(Appeals) decision.
Conclusion:
The Tribunal confirmed the C.I.T.(Appeals) order regarding TDS, dismissing the Revenue's appeal.
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2010 (11) TMI 955
Issues involved: Appeal against deletion of addition made on account of penalty paid to Stock Exchange.
Summary:
Issue 1: Deletion of addition made on account of penalty paid to Stock Exchange
The appeal was filed by the Revenue against the order of the Commissioner of Income-tax (Appeals) regarding the assessment year 2007-2008. The only issue in this appeal was the deletion of the addition of penalty paid to Stock Exchange amounting to Rs. 6,83,507. The Assessing Officer disallowed the amount under Explanation to section 37(1), but it was deleted in the first appeal. The penalty was imposed on the assessee for various irregularities in trading activities. The Tribunal noted that the penalty was for certain irregularities and not a violation of the law as per Explanation to sec. 37(1). Previous tribunal decisions supported the assessee's position. The deletion of the addition was upheld, and the appeal was dismissed. (Citation: 2010 (11) TMI 955 - ITAT MUMBAI)
Order pronounced on 4th November, 2010.
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2010 (11) TMI 954
The Appellate Tribunal CESTAT CHENNAI upheld a penalty of Rs. 100 per day for delay in payment under Section 76 of the Finance Act, 1994, limiting the tax liability to Rs. 3,42,389. The appeal was dismissed due to financial hardship not justifying the delayed payment of service tax over almost three years.
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2010 (11) TMI 953
Issues Involved:
1. Consideration of revised return.
2. Disallowance u/s 43B.
3. Deduction for scientific research expenditure.
4. Premium paid on leasehold land as revenue expenditure.
5. Expenditure on right of way as revenue expenditure.
6. Deduction u/s 80IB for AU-V Gujarat refinery.
7. Deduction u/s 80IB for marketing division of GHP unit.
8. Exclusion of provisions for doubtful debts and investments while computing book profit u/s 115JB.
9. Carry forward of capital losses.
10. Deduction u/s 80HHC for export of ATF and petroleum products.
11. Disallowance of prior period expenses.
12. Disallowance of exchange loss on foreign currency loan.
13. Levy of interest u/s 234D.
Summary:
1. Consideration of Revised Return:
The Ld. CIT(A) erred in not specifically directing the Additional Commissioner to consider the revised return filed by the assessee on March 31, 2004. This ground was dismissed due to lack of approval from the Committee on Dispute (COD).
2. Disallowance u/s 43B:
The Ld. CIT(A) confirmed the disallowance of Rs. 1,24,28,956 u/s 43B for sales tax collected but not paid by the due date. This ground was dismissed as it was not permitted by COD.
3. Deduction for Scientific Research Expenditure:
The Ld. CIT(A) did not direct the Additional Commissioner to allow deduction of Rs. 14,79,82,217 for expenditure on capital work-in-progress capitalized during the year. This ground was dismissed due to lack of COD approval.
4. Premium Paid on Leasehold Land:
The Ld. CIT(A) did not direct the Additional Commissioner to allow deduction of Rs. 9,16,30,000 as revenue expenditure. This ground was dismissed as it was not permitted by COD.
5. Expenditure on Right of Way:
The Ld. CIT(A) did not direct the Additional Commissioner to allow deduction of Rs. 2,29,98,000 as revenue expenditure. This ground was dismissed due to lack of COD approval.
6. Deduction u/s 80IB for AU-V Gujarat Refinery:
The Ld. CIT(A) did not specifically direct the Additional Commissioner to allow deduction of Rs. 5,70,91,700 u/s 80IB. This ground was dismissed as it was not permitted by COD.
7. Deduction u/s 80IB for Marketing Division of GHP Unit:
The Ld. CIT(A) did not specifically direct the Additional Commissioner to allow deduction of Rs. 68,71,26,000 u/s 80IB. This ground was dismissed due to lack of COD approval.
8. Exclusion of Provisions for Doubtful Debts and Investments u/s 115JB:
The Ld. CIT(A) did not direct the Additional Commissioner to exclude Rs. 14,85,00,000 for doubtful debts and Rs. 2,00,00,00,000 for investments while computing book profit u/s 115JB. This ground was dismissed as it was not permitted by COD.
9. Carry Forward of Capital Losses:
The Ld. CIT(A) did not specifically direct the Additional Commissioner to allow the carry forward of capital losses for set-off in subsequent years. This ground was dismissed due to lack of COD approval.
10. Deduction u/s 80HHC for Export of ATF and Petroleum Products:
The Ld. CIT(A) erred in confirming the disallowance of Rs. 3,94,01,265 u/s 80HHC for exports. The Tribunal followed earlier decisions against the assessee, holding that sales of ATF and bunker oil to foreign airlines and ships are not exports and fall under the prohibitory ambit of Sec. 80HHC(2)(b).
11. Disallowance of Prior Period Expenses:
The Ld. CIT(A) confirmed the disallowance of various prior period expenses. The Tribunal set aside the issue to the AO to consider item-wise whether the liability crystallized during the year, following the principles laid down in various judicial decisions.
12. Disallowance of Exchange Loss on Foreign Currency Loan:
The Ld. CIT(A) confirmed the disallowance of Rs. 29,00,000 for exchange loss on foreign currency loan. The Tribunal remanded the matter to the AO to decide in light of the Supreme Court decision in CIT Vs Woodward Governor India P. Ltd.
13. Levy of Interest u/s 234D:
The Ld. CIT(A) confirmed the levy of interest u/s 234D. The Tribunal allowed the assessee's ground, following the Bombay High
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2010 (11) TMI 952
The Bombay High Court allowed the appeal regarding service tax paid on canteen services, citing a previous judgment. The impugned order was quashed and set aside, and the matter was restored to the file of CESTAT for further consideration in line with the previous decision. No costs were awarded.
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2010 (11) TMI 951
Issues Involved:
1. Disallowance of loss claimed for the assessment year 2003-04.
2. Addition of on-money for all plots and estimation of the same.
3. Assessment of income from unrecorded receipts in the hands of the firm versus individual partners.
4. Allowability of ad-hoc unrecorded expenses.
5. Disallowance of consultancy charges paid to Shri Sridev Sharma.
Issue-wise Detailed Analysis:
1. Disallowance of Loss Claimed for the Assessment Year 2003-04:
The assessee firm, engaged in real estate, claimed a loss of Rs. 1,73,191/- for the assessment year 2003-04. A search operation revealed that the firm commenced its business in the financial year 2003-04, relevant to the assessment year 2004-05. The assessing officer disallowed the loss, treating it as prior period expenditure. The CIT(A) confirmed this, and the Tribunal upheld the disallowance, stating that the business had not commenced during the year under consideration.
2. Addition of On-Money for All Plots and Estimation:
The firm admitted a total income of Rs. 2,11,91,490/- for the assessment year 2004-05. During the search, it was found that the firm received on-money for plot sales, which was not recorded. The assessing officer made additions based on seized documents and statements, estimating unrecorded receipts. The CIT(A) provided partial relief by estimating unaccounted receipts for layout plots at Rs. 2,48,48,523/- and open plots at Rs. 2,47,55,874/-. The Tribunal confirmed the CIT(A)'s estimation method and upheld the additions based on seized documents and statements, rejecting the assessee's contention that the entire on-money should not be considered as income.
3. Assessment of Income from Unrecorded Receipts in the Hands of the Firm vs. Individual Partners:
The CIT(A) directed to assess the income from unrecorded receipts in the hands of the firm, M/s. Ahura Holdings, instead of the individual partners. The Tribunal upheld this decision, stating that the on-money receipts were related to the firm's business transactions and should be assessed in the firm's hands. The appeals by the individual partners were dismissed as the income was rightly assessed in the firm's hands.
4. Allowability of Ad-Hoc Unrecorded Expenses:
The assessee claimed ad-hoc unrecorded expenses, arguing that only the profit portion of unrecorded receipts should be considered. The Tribunal rejected this, stating that ad-hoc deductions cannot be allowed without evidence. The assessing officer was directed to re-examine the records and decide on the allowability of such expenses based on available evidence.
5. Disallowance of Consultancy Charges Paid to Shri Sridev Sharma:
The assessee claimed consultancy charges of Rs. 1,02,67,250/- paid to Shri Sridev Sharma. The assessing officer disallowed this due to lack of documentary evidence. The Tribunal remanded the issue back to the assessing officer, directing the assessee to prove the genuineness and reasonableness of the expenditure.
Conclusion:
- The appeal regarding the disallowance of loss for the assessment year 2003-04 was dismissed.
- The additions based on on-money receipts for various plots were largely upheld, with minor modifications.
- The income from unrecorded receipts was directed to be assessed in the hands of the firm, not the individual partners.
- The claim for ad-hoc unrecorded expenses was rejected, but the assessing officer was directed to re-examine the evidence.
- The disallowance of consultancy charges was remanded for further examination.
The Tribunal's decision was pronounced on 26.11.2010.
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2010 (11) TMI 950
The application filed by M/s. Canara Communications (India) Pvt. Ltd. for condoning a delay of 551 days in filing an appeal was dismissed for non-prosecution by the Appellate Tribunal CESTAT Bangalore. The appellant was not represented during the hearing, and the Tribunal found the appellant not apparently interested in pursuing the application. Consequently, the stay petition and appeal were also dismissed.
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2010 (11) TMI 949
Issues Involved:
1. Whether the Tribunal was correct in deleting the addition of Rs. 6,01,414/- as undisclosed salary income u/s 158BB(1)(c) of the Income Tax Act, 1961.
2. Whether the Tribunal was correct in restricting the addition on account of unexplained cash to Rs. 1,19,210/- against Rs. 6,34,210/- worked out by the Assessing Officer.
Summary:
Issue 1: Undisclosed Salary Income
The appellant revenue challenged the Tribunal's order deleting the addition of Rs. 6,01,414/- as undisclosed salary income. The Assessing Officer argued that since the assessee had not filed returns for the block period, the entire income should be treated as undisclosed u/s 158BB(1)(c). The assessee contended that tax had been deducted at source (TDS) from his salary, and hence, the income was disclosed. The Tribunal found that the salary income, subject to TDS, could not be considered undisclosed. The Tribunal relied on various High Court decisions, including Surendra Kumar Lahoti vs. Assistant Commissioner of Income-Tax and Commissioner of Income-Tax vs. Ashok Taksali, which held that income with TDS deducted falls outside the purview of undisclosed income. The High Court upheld the Tribunal's decision, stating that salary income with TDS cannot be treated as undisclosed income u/s 158B(b).
Issue 2: Unexplained Cash
The Assessing Officer estimated household expenses at Rs. 7,20,000/- for the block period and found a shortage of Rs. 6,34,210/-, treating it as undisclosed income. The Commissioner (Appeals) revised the estimate, considering the lifestyle and agricultural income, and reduced the unexplained cash to Rs. 1,19,210/-. The Tribunal found the revised estimate reasonable and upheld it. The High Court agreed, noting that the addition was based on estimates and did not raise a question of law.
Conclusion
The High Court dismissed the appeal, finding no legal error in the Tribunal's order and no substantial question of law arising from it.
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2010 (11) TMI 948
The Supreme Court dismissed the appeals as the compounded levy scheme was not in force during the relevant period. The decision of the Central Excise & Gold (Control) Appellate Tribunal was upheld.
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2010 (11) TMI 947
Issues Involved:
1. Reversal of acquittal by the High Court.
2. Demand of dowry and ill-treatment.
3. Medical evidence regarding the mental health of the deceased.
4. Credibility and contradictions in witness statements.
5. Legal principles regarding appeal against acquittal.
Issue-Wise Detailed Analysis:
1. Reversal of Acquittal by the High Court:
The High Court of Bombay reversed the Trial Court's acquittal of the appellants, convicting them under Sections 306/34 and 498A/34 of the IPC. The Supreme Court examined whether the High Court's interference with the acquittal was justified. It emphasized that an appellate court must consider the entire evidence to determine if the Trial Court's views were perverse or unsustainable. The appellate court should not set aside an acquittal judgment unless there are compelling reasons or the judgment is perverse, ignoring relevant material or considering inadmissible material.
2. Demand of Dowry and Ill-Treatment:
The prosecution alleged that the appellants demanded dowry and ill-treated the deceased, leading her to commit suicide. The Trial Court found no evidence of dowry demands or ill-treatment, noting contradictions and improvements in witness statements. The High Court, however, relied on specific witness testimonies and letters suggesting a demand for a gold chain and ill-treatment. The Supreme Court found that the prosecution witnesses made significant contradictions and improvements in their statements, undermining their credibility. It also noted that the letters did not conclusively prove dowry demands or ill-treatment.
3. Medical Evidence Regarding the Mental Health of the Deceased:
The deceased was suffering from epilepsy, psychosis, and depression, as evidenced by medical testimonies. Dr. Daulatram Nekumal Gurubani (PW.10) and other doctors provided evidence that the deceased had serious mental health issues, including prescriptions for major epilepsy and psychosis. The Supreme Court found that the medical evidence supported the Trial Court's conclusion that the deceased's suicide resulted from her mental health issues rather than dowry demands or ill-treatment.
4. Credibility and Contradictions in Witness Statements:
The Supreme Court scrutinized the credibility of witness statements, noting significant contradictions and improvements. Witnesses, including the deceased's family members, made new allegations during the trial that were not mentioned in their initial statements to the police. The Court emphasized that such material contradictions and improvements rendered their testimonies unreliable. It highlighted the importance of consistency in witness statements to establish the prosecution's case beyond reasonable doubt.
5. Legal Principles Regarding Appeal Against Acquittal:
The Supreme Court reiterated the principle that an appellate court should not interfere with an acquittal unless the Trial Court's judgment is perverse or unsustainable. It emphasized the presumption of innocence and the need for compelling reasons to overturn an acquittal. The Court found that the High Court failed to provide cogent reasons for reversing the Trial Court's acquittal, noting that the Trial Court had given detailed reasons based on the evidence on record.
Conclusion:
The Supreme Court allowed the appeal, setting aside the High Court's judgment and restoring the Trial Court's acquittal of the appellants. It concluded that the High Court erred in reversing the acquittal without adequately addressing the Trial Court's findings and the contradictions in the prosecution's evidence. The appellants' bail bonds were discharged.
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2010 (11) TMI 946
Whether the goods were actually sold in Delhi or only transported through Delhi to reach another destination? - Held that: - The said inquiry cannot be carried out while dealing with a petition under Article 226 of the Constitution of India - we direct that the Value Added Tax officer under the Act shall conduct an inquiry on production of documents before him (which has been filed before this Court) and after affording an opportunity of hearing. The amount that has already been deposited before this Court be transferred to the Value Added Tax Authority - matter on remand.
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2010 (11) TMI 945
Issues Involved: Penalty under Section 78(10-A) of the Rajasthan Sales Tax Act, 1994 set aside by Deputy Commissioner (Appeals) and Rajasthan Tax Board, challenge in revision petition.
Summary:
The assessing officer levied a penalty under Section 78(10-A) of the Rajasthan Sales Tax Act, 1994, which was later set aside by the Deputy Commissioner (Appeals) and the Rajasthan Tax Board. The petitioner challenged this decision through a revision petition.
The petitioner argued that although all relevant documents were produced during the checking of the vehicle/goods, the absence of the seal of the check post of the Commercial Taxes Department of Rajasthan led to the penalty imposition. The petitioner sought to set aside the orders of the appellate authorities and reinstate the assessing officer's order.
Upon review, it was found that all required documents were indeed available and produced during the checking, and the necessary tax had been paid by the assessee. The presence of the seal of the check post was not a mandatory requirement as per the Act.
Referring to a previous case, the Court established that the provisions regarding the seal were directory and not mandatory. It was emphasized that the absence of mens-rea on the part of the assessee, coupled with the availability of all required documents and payment of tax, indicated no intention to evade tax.
Consequently, the Court found no illegality in the concurrent findings of the appellate authorities and dismissed the revision petition, stating that no question of law was involved in the matter.
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2010 (11) TMI 944
Whether the existing Chairman and Members of the Commission ought to be removed from the office on the alleged grounds of misbehaviour?
Whether there exist justifiable grounds for removal of the private respondents from their respective offices in terms of Article 317 (1) of the Constitution?
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