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2010 (12) TMI 1187
Land grabber under Andhra Pradesh Land Grabbing (Prohibition) Act - nature of Property in question - building or land - Maintainability of application - building with its appurtenant land - the property in question is a building or land - Special Tribunal has jurisdiction to entertain an application in respect of a house property with its appurtenant open land or not? - HELD THAT:- The Andhra Pradesh Land Grabbing (Prohibition) Act, 1982 was enacted to prohibit the activity of land grabbing in the State of Andhra Pradesh and to provide for matters connected therewith. As per Section 1(3), the Act applies to all lands situated within the limits of urban agglomeration as defined in Clause (n) of Section 2 of the Urban Land (Ceiling and Regulation) Act, 1976 and a Municipality. As per Section 1(3-A), the Act applies also to any other lands situated in such areas as the Government may, by notification, specify.
In view of such inclusive definition of `land', grabbing a building attached to the earth amounts to land grabbing for the purposes of this Act. Hence, the High Court erred in holding that the Act applies to the land but not to the buildings. The High Court was clearly wrong in holding that "if an application is filed seeking possession of building along with its appurtenant land, because the building in question is in existence on the land and is surrounded by the vacant land, it cannot be said that it is a case of grabbing of land" - The distinction drawn by the High Court between "building with appurtenant land" and "land along with building" is artificial and hyper-technical and it defeats the very purpose of the legislation. In the light of the definition of `land' under Section 2(c) of the Act, both the above descriptions practically mean the same thing vis-`-vis `land grabbing' and there is no logic or justification for drawing a distinction between them. Hence, the High Court erred in holding that the application filed by the appellant was not maintainable before the Special Tribunal.
The High Court also erred in holding that only occupation of the open land and construction of a building thereon can be treated as land grabbing and that occupation of a building along with open land cannot be treated as land grabbing under the Act. When the land along with the building existing thereon is occupied, it will amount to land grabbing - the application filed by the appellant under Section 7-A of the Act before the Special Tribunal was maintainable and that the Special Tribunal had necessary jurisdiction to adjudicate the dispute raised therein.
The impugned order of the High Court is liable to be set aside and the order of the Special Tribunal and judgment of the Special Court are liable to be restored - Appeal allowed.
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2010 (12) TMI 1186
Summary of the legal judgment:
The Supreme Court allowed the civil appeal as there was no valid sanction under Section 151(1) proviso of the Income Tax Act, 1961. The impugned judgment of the High Court was set aside. No costs were awarded.
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2010 (12) TMI 1185
Issues involved: Appeal by revenue against CIT (A) orders allowing long-term capital loss at a higher amount than assessed by the Assessing Officer.
Details of the judgment:
1. The appeals were filed by the revenue against CIT (A) orders allowing long-term capital loss at a higher amount than assessed by the Assessing Officer. The revenue contended that the CIT (A) erred in allowing the benefit of long-term capital loss at a higher amount than originally assessed.
2. The assessees, sons of Shri J.K. Gupta, purchased shares of Mankind Pharma (P) Ltd. and later sold them at a loss. The Assessing Officer allowed a lower amount of long-term capital loss based on his assessment. The assessees explained that they sold the shares due to not receiving dividends, and the Assessing Officer doubted the transaction but allowed the loss based on the sale price.
3. The assessees appealed to the CIT (A) citing restrictions under the Companies Act for share transfers and explaining the computation of long-term capital gain/loss. They relied on legal interpretations and decisions to support their case, emphasizing their intention to acquire majority shares for control over the company.
4. The CIT (A) adjudicated the issue and allowed a higher long-term capital loss amount, stating that there was no evidence to substantiate collusive transactions. The CIT (A) considered the legal aspects and allowed the increased loss amount for the assessees.
5. The revenue contended that the shares were purchased and sold within a short period at a significant loss, questioning the basis of investment. The assessees defended their case, citing legal provisions and court decisions on the computation of capital gain/loss.
6. The Tribunal reviewed the contentions and records, noting the explanations provided by the assessees and the Assessing Officer's queries. The Tribunal found discrepancies in the CIT (A) orders, stating that the issue required re-examination for a comprehensive decision. The Tribunal set aside the orders and remanded the issue to the CIT (A) for re-adjudication.
7. The Tribunal allowed the appeals for statistical purposes only, emphasizing the need for a thorough re-examination of the issue by the CIT (A) to ensure a fair and reasoned decision.
Conclusion: The Tribunal remanded the issue to the CIT (A) for re-adjudication, highlighting the need for a comprehensive review of the case to reach a fair decision.
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2010 (12) TMI 1184
Issues involved: Stay petition for waiver of pre-deposit of Service Tax amount, interest u/s 75, and penalty u/s 78 for the period February 2002 to February 2007.
Service Tax Liability: The demand arose as the applicant did not discharge the Service Tax liability on tax deducted at source paid by NHAI on their behalf. The appellant argued that the tax deducted at source by NHAI should not be considered as amount received for services rendered. The JCDR contended that the income tax paid by NHAI was part of the consideration for services rendered, citing contractual clauses and Service Tax FAQ. Various decisions were referred to in support of both arguments.
Decision: The Tribunal found the includability of income tax paid by NHAI in the gross amount to be a debatable issue. It was noted that the applicant had already paid Service Tax on the billed amount for services rendered. Considering the debatable nature of the issue, the Tribunal stayed the recovery of the amounts involved until the final disposal of the appeal, ruling in favor of the applicant for the waiver of pre-deposit.
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2010 (12) TMI 1183
Interest received from fixed deposits (FD) - chargeable to tax - under the head 'Income from other sources - the assessee is in the process of setting up of multi product SEZ project. For the purpose of setting up of the project the assessee borrowed ₹ 289 crores from banks. A part of the amount which was not required immediately was invested in FD with bank. Assessee claimed that that the interest paid on the borrowed funds has to be set off from the interest received on the FD.
HELD THAT:- In Case of Tuticorin Alkali Chemicals an Fertilizers Ltd.[1997 (7) TMI 4 - SUPREME COURT] held that In view of section 57(iii), interest paid on OD obtained for the purpose of business could not be deducted from the interest earned on monies kept in FD as such income derived by way of interest on FD was to be taxed under the head 'Income from other sources'. We, however, make it clear that though the assessee may not be entitled to have interest paid by it on OD to the bank, deducted from the interest received by it on the short-term FD, the assessee is entitled to deduction of the same from its business income. Therefore, we do not find any infirmity in the order of the lower authority. Accordingly, the same is confirmed. In the result, the appeal of the assessee stands dismissed.
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2010 (12) TMI 1182
Area based exemption - N/N. 11/2007-C.E., dated 1-3-2007 and No. 21/2007-C.E., dated 25-4-2007 - setting up of industrial unit in Northeastern Region - N/N. 32/99-C.E. and 33/99-C.E., dated 8-7-1999.
Held that: - By a legislative mandate, the N/Ns. 32/99-C.E. and 33/99-C.E., dated 8-7-1999 corresponding to G.S.R. 508(E) and G.S.R. 509(E) stood amended retrospectively in the manner as specified in the Ninth Schedule with the predication that notwithstanding anything contained in any judgment, decree, or order of any Court, tribunal or other authority, any action taken or anything done or purported to have been taken or done under the said notifications would be deemed to be and always to have been, for all purposes, as validly and effectively taken or done as if those notifications as amended had been in force at all material times. Sub-section (4) of that section also authorised recovery of all amounts of duty or interest or other charges which have not been collected or refunded but which ought to have been collected and ought not to have been refunded had the new section been enforced at all material times within a period as specified therein.
the challenge to the notifications dated 1-3-2007 and 25-4-2007 based on Policy 1997 cannot be sustained. A contrary intention being apparent from Section 154 of the Finance Act, 2003 read with Schedule 9 thereto as well as the notifications issued after the Policy 1997 curtailing/regulating from time to time the exemptions from payment of excise duty as contemplated by the said Policy, I am of the unhesitant opinion that the petitioner too is not entitled to any protection under Section 38A of the Act.
There is no discernible conflict in the approach of the Respondent authorities in promulgating the policy, 2007 or issuing the impugned notification. No mala fide or extraneous consideration is also decipherable.
Petition dismissed - decided against petitioner.
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2010 (12) TMI 1181
Depreciation on Toll Road developed by the appellant - HELD THAT:- In terms of BOT scheme and entrepreneur is required to build an infrastructure facility by arranging its own finances. Thereupon the operation and maintenance is also the responsibility of the entrepreneur. In consideration thereupon such entrepreneur is entitled to collect on from the motor vehicle passing through such road/bridges etc. In view of these facts, we are of the considered opinion that the assessee is entitled to depreciation. Our view is further supported by the decision of the Pune Bench in the case of Ashoka Info (P) Ltd. vs. ACIT [2008 (12) TMI 271 - ITAT PUNE-B]. Therefore, this ground of the assessee in both the appeals is allowed.
Disallowance of vehicle running and maintenance expenses - HELD THAT:- In the present appeals, the disallowance was made for want of log-book and other relevant record, meaning thereby, it was not explained by the assessee that the vehicles were exclusively used for business purposes. The personal use of vehicles is also not ruled out, therefore, keeping in view the totality of facts and circumstances, only 20% of the claimed expenses are disallowed, consequently, this ground of the assessee is party allowed.
adhoc disallowance - HELD THAT:- the disallowance is restricted to 50% of the claimed amounts, therefore, this ground of the assessee is partly allowed. Finally, the appeals of the assessee are partly allowed.
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2010 (12) TMI 1180
Issues Involved:
1. Classification of income from leasing out building and assets.
2. Allowability of expenses under Section 57(iii) of the IT Act.
3. Allowability of depreciation and unabsorbed depreciation.
4. Disallowance of interest on advances given.
5. Charging of interest under Section 234B.
Issue-wise Detailed Analysis:
1. Classification of Income from Leasing Out Building and Assets:
The primary issue was whether the income derived from leasing out the building along with furniture and other assets should be classified as 'business income' or 'income from other sources'. The CIT(A) held that the income was business income, citing the temporary nature of the lease and the intention to resume business. However, the Tribunal disagreed, stating that the assessee was not exploiting the commercial assets in the course of its business activity but merely earning rental income. The Tribunal emphasized that the income from leasing the property, without any further business activity, should be assessed under 'income from other sources' as per Section 56(2)(iii) of the IT Act.
2. Allowability of Expenses under Section 57(iii) of the IT Act:
The assessee claimed various expenses, including repairs and maintenance, under Section 57(iii). The Tribunal noted that for expenses to be deductible under Section 57(iii), they must be incurred 'wholly and exclusively' for the purpose of earning income. The Tribunal remanded the issue to the Assessing Officer to verify the nexus between the expenses and the income earned from leasing and to allow the expenses accordingly if the criteria are met.
3. Allowability of Depreciation and Unabsorbed Depreciation:
The Tribunal held that the assessee was entitled to depreciation on the leased assets under Section 32(1). However, regarding the set-off of unabsorbed depreciation, the Tribunal referred to the Supreme Court judgment in CIT vs. Viramani Industries (P) Ltd., stating that unabsorbed depreciation could not be set off against income assessed under 'income from other sources' if there was no business activity during the year.
4. Disallowance of Interest on Advances Given:
The Assessing Officer disallowed a proportionate interest of Rs. 3,10,200 on advances given to three individuals, as the assessee failed to prove that the advances were for business purposes. The Tribunal upheld this disallowance, noting the absence of any agreement or TDS on the advances, indicating that they were not for business purposes.
5. Charging of Interest under Section 234B:
The Tribunal addressed the assessee's contention that interest under Section 234B was not applicable due to the lack of current income. The Tribunal did not provide a specific ruling on this issue, as the primary focus was on the classification of income and the allowability of expenses and depreciation.
Conclusion:
The Tribunal allowed the Revenue's appeal, classifying the lease income under 'income from other sources' and remanded the issue of expense allowability to the Assessing Officer. The Tribunal also partially allowed the assessee's cross-objection, permitting depreciation on leased assets but disallowing the set-off of unabsorbed depreciation against 'income from other sources'. The decision emphasized the importance of the nature and intention behind income generation activities in determining the appropriate classification and allowable deductions.
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2010 (12) TMI 1179
Issues Involved:
1. Deletion of addition on account of excess claim of premium paid on plot.
2. Deletion of addition made by invoking the provisions of Deemed Dividend u/s 2(22)(e).
3. Challenge to the reopening of the assessment.
Summary:
1. Deletion of Addition on Account of Excess Claim of Premium Paid on Plot:
The first issue in the Revenue's appeal concerns the deletion of an addition of Rs. 16,79,850/- made by the Assessing Officer (AO) on account of excess claim of premium paid on a plot. The AO treated the premium paid on a leasehold plot as capital expenditure, allowing only 1/10th of the expenditure and disallowing the balance. The CIT(A) allowed the claim of the assessee, treating the expenditure as revenue in nature, following the ITAT decision in the case of Kapurchand Bansal. The Tribunal upheld the CIT(A)'s decision, confirming that the assessee rightly claimed the deduction of Rs. 18,66,460/- as revenue expenditure.
2. Deletion of Addition Made by Invoking the Provisions of Deemed Dividend u/s 2(22)(e):
The second issue involves the deletion of an addition of Rs. 1,94,54,869/- made by the AO as deemed dividend u/s 2(22)(e). The AO observed that the assessee received loans and advances from M/s. Mahavir Rolling Mills Ltd. (MMRML), a company in which public are not substantially interested, and one of the directors held more than 20% shares in both companies. The CIT(A) deleted the addition, citing that the assessee was not a shareholder of MMRML, and hence, the provisions of section 2(22)(e) were not applicable. The Tribunal upheld the CIT(A)'s decision, referencing the Special Bench decision in ACIT v. Bhaumik Colour (P.) Ltd. and the Rajasthan High Court decision in CIT v. Hotel Hilltop, which clarified that deemed dividend can only be assessed in the hands of a shareholder of the lender company.
3. Challenge to the Reopening of the Assessment:
The assessee's Cross Objection (CO) challenged the reopening of the assessment u/s 143(3) r.w.s. 147, claiming it was illegal and bad in law. However, the assessee's counsel did not press this issue, leading to its dismissal as not pressed.
Conclusion:
The Tribunal dismissed the Revenue's appeal on both issues, confirming the CIT(A)'s orders. The assessee's CO was also dismissed as not pressed.
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2010 (12) TMI 1177
Issues involved: Appeal by Revenue on grounds related to membership receipt, safety bonus claim, and insurance premium.
Membership Receipt Issue:
The Revenue raised concerns regarding the assessment of membership receipt. The CIT(A) allowed the appeal based on previous Tribunal orders. The Revenue argued that the claim was not made in the return of income. However, the Tribunal found no error in the CIT(A)'s decision and dismissed the grounds raised by the Revenue.
Safety Bonus Claim Issue:
The Revenue contested the allowance of the safety bonus claim by the CIT(A). The CIT(A) approved the claim based on actuarial valuation, citing previous Tribunal decisions. The Revenue's arguments were refuted, and the Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's grounds.
Insurance Premium Issue:
The Revenue challenged the allowance of insurance premium paid during the year. The Tribunal noted similarities with a previous assessment year and upheld the CIT(A)'s decision to allow the claim. The Tribunal emphasized that the claim was actually debited by the assessee and dismissed the Revenue's grounds, following the precedent set in the earlier assessment year.
The Tribunal, after considering the arguments and previous orders, dismissed the Revenue's appeal on all grounds related to membership receipt, safety bonus claim, and insurance premium. The Tribunal found no factual variations to warrant a different decision and upheld the CIT(A)'s rulings based on relevant legal precedents. The appeal was ultimately dismissed, and the order was pronounced on 16th December, 2010.
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2010 (12) TMI 1176
Issues involved: Delay in filing appeal due to financial constraints and turnover of employees; Disallowance of depreciation on plant and machinery for lack of manufacturing or trading activities.
Delay in filing appeal: The appeal was filed with a delay of 373 days due to financial constraints and turnover of employees. The delay was attributed to the failure of Mr. Teekaram, appointed to handle tax matters, to inform the management about the order. The Tribunal condoned the delay, considering it a reasonable cause in the interest of justice.
Disallowance of depreciation: The Assessing Officer disallowed depreciation of Rs. 37,95,956 on plant and machinery, stating that no manufacturing or trading activities were carried out by the assessee. The company had changed its name and ceased manufacturing activity due to business reasons. The major portion of assets had been sold, indicating no intention to continue the business temporarily.
Decision of Ld. Commissioner of Income Tax (Appeals): The Commissioner upheld the disallowance of depreciation, noting that the appellant had sold a significant portion of fixed assets and had no intention to temporarily stop business activities. The Commissioner found no merit in the claim for depreciation on plant and machinery.
Tribunal's decision: The Tribunal considered whether the stoppage of manufacturing activity was temporary. It observed that the assessee had not initiated manufacturing business despite claiming depreciation on plant and machinery. The Tribunal found no basis to support the claim, as trading activity did not equate to manufacturing activity. Consequently, the Tribunal upheld the decision of the Ld. Commissioner of Income Tax (Appeals) to disallow the depreciation claim.
Conclusion: The appeal filed by the assessee was dismissed, and the decision of the Ld. Commissioner of Income Tax (Appeals) to disallow depreciation on plant and machinery was upheld by the Tribunal.
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2010 (12) TMI 1175
Issues involved: Transitional credit of capital goods u/s Cenvat Credit Rules
Transitional Credit of Capital Goods:
The High Court of Bombay, in a case involving the allowance of transitional credit of capital goods, admitted an appeal based on the substantial question of law regarding the legality of such allowance. The Court noted that the Tribunal had allowed the Assessee's claim by relying on a previous decision in the case of Ace Timez vs CCE, Bangalor, which was subsequently overruled by a larger bench in the case of Spenta International Ltd. vs Commissioner of Central Excise, Thane. Consequently, the High Court quashed and set aside the impugned order of the Tribunal and restored the appeal for a fresh decision in accordance with the law. The Appeal was disposed of with no order as to costs.
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2010 (12) TMI 1174
Demand u/s 201 (1) read with section 201(1A) in all assessment years - the facts of the case are that during the survey action u/s 133A , it was noticed by the ITO, that the assessee had engaged a UK based Non Resident as Advisor and had paid for AY 2001-02, AY 2002-03, or AY 2003-04, or AY 2004-05 for advisory services rendered by him. As the payment has been made to a non resident and it is covered under “any other sum chargeable under the provisions of the Act”, the two conditions are satisfied to attract the provisions of section 195. Further, the AO discussed the scope of total income as laid down in section 4(2) and section 9(1) (vii) which creates a deeming fiction and income by way of “fees for technical services” payable by resident person, such fees for technical services shall be deemed to accrue or arise in India. The AO accordingly passed orders u/s 201(1) r. w. s. 201(1A) and raised demand against the assessee.
HELD THAT:- Considering the facts of the case, it is clear that the issue is now covered in favour of the assessee by the order of the Tribunal in the case of the same assessee for AY 2004-05 dated 02-07-2010. We have, therefore, no option except to follow the order of the co-ordinate bench of the Tribunal in favour of the assessee. By following the order of the Tribunal dated 02-07-2010, we set aside the order of the learned CIT(A) on merit in all the Four assessment years and quash the impugned order and delete the resultant demand u/s 201 (1) read with section 201(1A) in all assessment years.
The learned CIT(A), was however, justified in holding that the impugned orders of the AO for AY 2001-02 and 2002- 2003 are time barred. The findings of the learned CIT(A) to that extent are confirmed.
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2010 (12) TMI 1173
Issues Involved:
The judgment involves issues related to the status of the assessee being adopted as AOP, chargeability of interest u/s 234B and 234C of the Act, and the penalty levied u/s 271(1)(c) of the Act.
Status of Assessee as AOP:
The issue raised by the assessee in ground No.1 in ITA No. 1228/Chd/2010 pertains to the status of the assessee being adopted as AOP. The Tribunal noted that the issue stands covered against the assessee based on previous orders and legal precedents. The Tribunal upheld the order of CIT(A) in assessing the assessee under the status of AOP, dismissing the ground raised by the assessee.
Chargeability of Interest u/s 234B and 234C:
The issue raised in ground No.2 in ITA No. 1228/Chd/2010 concerns the chargeability of interest u/s 234B and 234C of the Act. The Tribunal deemed this issue as consequential and subsequently dismissed the same.
Penalty u/s 271(1)(c) of the Act:
In ITA No. 1229/Chd/2010, the appeal of the assessee is against the penalty levied u/s 271(1)(c) of the Act. The Assessing Officer had imposed a penalty on the assessee for furnishing inaccurate particulars of income by claiming its status as a local authority, which was not accepted. The CIT(A) upheld the penalty imposed.
The Tribunal considered the arguments presented by both parties. The assessee contended that its claim, though incorrect, did not warrant the penalty as it was a bonafide claim. The Tribunal agreed with the assessee, stating that the mere rejection of a claim does not amount to furnishing inaccurate particulars of income. Citing legal precedents, the Tribunal held that the assessee was not liable for the penalty u/s 271(1)(c) of the Act. Consequently, the Tribunal directed the Assessing Officer to delete the penalty levied, allowing the grounds of appeal raised by the assessee.
In conclusion, the appeal of the assessee in ITA No. 1228/Chd/2010 was dismissed, while the appeal in ITA No. 1229/Chd/2010 was allowed.
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2010 (12) TMI 1172
The Appellate Tribunal CESTAT CHENNAI set aside the impugned order and remanded the matter to the lower appellate authority for decision. The issue is subjudice before the Hon'ble Karnataka High Court. The appeal of the department is allowed by way of remand.
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2010 (12) TMI 1171
Issues involved: The only issue involved in this appeal is the deletion of addition made on account of disallowance of sales commission u/s 40(a)(i) of the Act.
Summary:
1. The appellant, the Revenue, challenged the order of the ld. CIT(A) regarding the deletion of addition made on account of disallowance of sales commission u/s 40(a)(i) of the Act for the assessment year 2005-06.
2. The assessee, engaged in the manufacture of automobile wheels, claimed sales commission without deduction of tax at source. The Assessing Officer disallowed the amount, but the assessee argued that the payments were made to non-residents for export orders solicited outside India, and no income accrued in India. The ld. CIT(A) deleted the addition based on various decisions, which the Revenue now challenges.
3. The issue was found to be covered by the decision of the Hon'ble Supreme Court in GE India Technology Centre(P) Ltd vs CIT, [2010] 327 ITR 456. The Court emphasized that tax deduction is only required if the income is assessable in India, and payments not chargeable under the Act do not necessitate tax deduction. The Court clarified the obligations under section 195 regarding tax deduction at source for non-residents.
4. Respecting the Supreme Court's decision, the Tribunal dismissed the Revenue's appeal, as the payments for sales commission to non-residents were not chargeable under the Act, and therefore, tax deduction was not required.
5. Consequently, the appeal of the Revenue was dismissed, upholding the deletion of the addition made on account of disallowance of sales commission.
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2010 (12) TMI 1170
Issues involved: Refusal to register the assessee society u/s 12AA of the Income-tax Act, 1961 and denial of approval u/s 80G of the Act.
Summary:
The appeal was against the order refusing registration under section 12AA of the Income-tax Act, 1961. The society was formed for women welfare through micro-credits. The Commissioner found the society engaged in business activities by lending micro finance, thus not qualifying as charitable under section 2(15) of the Act, leading to the refusal of registration under section 12AA and denial of approval under section 80G.
The assessee contended that the society served the public irrespective of religion or caste and provided financial help to downtrodden women. The Commissioner's conclusion that the activity was commercial was disputed, emphasizing the benefits to the poor. The society collected various charges related to financial help, arguing that without their assistance, members would resort to private moneylenders charging high interest rates.
The Tribunal considered the society's various charitable activities and financial assistance to women self-help groups. Grants from government bodies and successful execution of projects for rural women were highlighted. The Tribunal concluded that the society's work in extending financial help to women through nationalized banks for poverty alleviation qualified as charitable under section 11 of the Act. Citing a similar case, the Tribunal held that the society's activities were charitable, and the interest charged was not exorbitant.
The Tribunal allowed the appeal, granting registration under section 12AA and approval under section 80G. Considering the available material, the Tribunal decided against remanding the issue to the CIT(Appeals) to avoid unnecessary burden and litigation, in the interest of justice.
The order was pronounced on 03.12.2010.
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2010 (12) TMI 1169
Issues involved: Appeal against order of Commissioner of Income Tax (Appeals)-I, Surat u/s 143(3) of the I.T. Act, 1961 - Addition of unexplained unsecured loans u/s 68 - Partial confirmation of addition on account of low gross profit - Disallowance of depreciation on computers.
Issue 1 - Unexplained unsecured loans u/s 68:
The Assessing Officer made an addition of Rs. 67,45,000 under section 68 for unexplained unsecured loans. The creditors were sister concern/associated concern of the assessee and confirmation with PAN was provided. Due to loss of books of accounts in flood, detailed account information was unavailable. The assessee obtained bank statements to verify transactions, which were not submitted to the Assessing Officer. The ITAT set aside the lower authorities' decision, directing the Assessing Officer to consider the new evidence and decide the issue afresh, citing the need for natural justice. The ITAT also referred to relevant case laws supporting the assessee's position.
Issue 2 - Low gross profit addition:
The assessee disclosed turnover with a GP rate of 8.27%, which was lower than the previous year's 10.55%. The Assessing Officer rejected the books of accounts and applied a GP rate of 11%, later reduced to 10.55% by the CIT(A). The ITAT noted a significant increase in turnover and directed application of a GP rate of 9% instead of the declared 8.27%, considering the circumstances and the lack of produced books of accounts.
Issue 3 - Disallowance of depreciation on computers:
The assessee claimed depreciation on computers at 60% but failed to provide evidence of purchase. The Assessing Officer disallowed the claim, which was upheld by the ITAT due to lack of evidence supporting the purchase of computers.
In conclusion, the ITAT partly allowed the assessee's appeals, emphasizing the importance of providing necessary evidence and following due process in tax assessments.
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2010 (12) TMI 1168
Issues involved:
The judgment involves the issue of whether the compensation received by the assessee for allowing the laying of an underground gas pipeline on their agricultural land should be treated as a capital receipt liable to capital gain tax.
Summary:
The appeal was filed by the Assessee against the order of the Learned CIT(Appeals)-II, Surat directing the computation of capital gain arising from the treatment of the received amount as a capital receipt not liable to tax. The Assessing Officer assessed the compensation received from Gujarat Gas Co. as income, while the assessee considered it a capital receipt. The Learned CIT(Appeals) accepted it as a capital receipt subject to capital gain tax.
Upon hearing both sides, it was noted that a Co-ordinate Bench had previously held that the compensation received did not arise from the transfer of a capital asset and was not chargeable to capital gain tax since there was no transfer of the agricultural land. Therefore, the directions of the Learned CIT(Appeals) were modified, and the appeal of the Assessee was allowed.
The judgment emphasized that since no asset was transferred, and the assessee remained the owner of the agricultural land, the compensation received was deemed a capital receipt not chargeable to tax. Following the precedent set by the Co-ordinate Bench, the directions of the Learned CIT(Appeals) were modified accordingly, leading to the allowance of the Assessee's appeal.
The order was signed, dated, and pronounced in the Court on 16/12/2010.
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2010 (12) TMI 1167
Issues involved: Appeal against the order of CIT(A) regarding re-opening of assessment and claim of set off of depreciation against salary income.
Re-opening of assessment:
The appeal was filed challenging the re-opening of assessment without fresh material, contending it was bad in law. The Departmental Representative cited a Supreme Court decision, leading to the Tribunal finding the re-opening valid as the assessment was not completed, only processed u/s 143(1).
Claim of set off of depreciation against salary income:
The assessee claimed set off of depreciation from salary income, arguing it was not u/s 71(2A) but u/s 32 itself. The Departmental Representative supported the denial of benefit u/s 71(2A), stating sec. 32(2) only allowed carry forward of depreciation. The Tribunal referred to a Supreme Court decision distinguishing business loss from unabsorbed depreciation, allowing set off against salary income u/s 32(2) despite the introduction of sec. 71(2A), emphasizing the wording of sec. 32(2) and granting partial relief to the assessee.
The Tribunal pronounced the order on 10/12/2010.
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