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2012 (4) TMI 663
Issues Involved:
1. Violation of procedure under Section 50 of the NDPS Act.
2. Compliance with procedural safeguards during search and seizure.
3. Impact of non-compliance on the conviction and sentence.
Detailed Analysis:
Violation of Procedure under Section 50 of the NDPS Act:
The primary issue in this appeal is whether there was a violation of Section 50 of the NDPS Act during the search and seizure process. Section 50 mandates that the suspect must be informed of their right to be searched in the presence of a gazetted officer or a Magistrate. The appellant contends that this procedural safeguard was not followed, which should render the recovery of the illicit article suspect and vitiate the conviction.
Compliance with Procedural Safeguards During Search and Seizure:
The prosecution's case is based on the testimony of police officers who conducted the search and seizure. PW-1 and PW-2 testified that the appellant and co-accused were informed of their right to be searched in the presence of another gazetted officer, which they declined. However, the testimonies did not clearly communicate that the suspects were informed of their right to be searched before a Magistrate or a gazetted officer as required by Section 50(1) of the NDPS Act. PW-3's testimony further complicates the issue by suggesting that the accused voluntarily produced the Ganja packets, which contradicts the testimonies of PW-1 and PW-2.
Impact of Non-Compliance on the Conviction and Sentence:
The judgment references the Constitution Bench decisions in *State of Punjab v. Baldev Singh* and *Vijaysingh Chandubha Jadeja v. State of Gujarat*, which emphasize the mandatory nature of compliance with Section 50(1) of the NDPS Act. The failure to inform the suspect of their right to be searched before a gazetted officer or a Magistrate renders the recovery of the illicit article suspect and vitiates the conviction and sentence. The court found that there was a breach of Section 50(1) in this case, as the procedural safeguard was not strictly followed. Consequently, the conviction based solely on the possession of Ganja recovered from the appellant was set aside.
Conclusion:
The Supreme Court concluded that the procedural breach under Section 50(1) of the NDPS Act necessitates the setting aside of the conviction and sentence of the appellant. The court also extended this benefit to the co-accused (A1 and A2), who had not appealed, following the precedent set in *Ashok @ Dangra Jaiswal v. State of Madhya Pradesh*. Thus, the impugned judgment convicting and sentencing the appellant and co-accused was quashed and set aside, and they were acquitted of the charges under Section 8(c) read with Section 20(b)(i) of the NDPS Act.
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2012 (4) TMI 662
Issues Involved:
1. Cross-examination of the Clerk of Ramrao Adik Education Society.
2. Appreciation of the Settlement Petition filed by Ramrao Adik Education Society.
3. Deletion of addition of Rs. 18,27,500/- on account of unaccounted capitation fees.
4. Validity of reopening the assessment u/s 147 of the Act.
Summary:
Issue 1: Cross-examination of the Clerk of Ramrao Adik Education Society
The learned CIT(A)-I, Surat erred in holding that the A.O. had not afforded cross-examination of the Clerk of Ramrao Adik Education Society, despite the fact that the Clerk had admitted the receipt of capitation fees from the assessee before the authorized Officer during the course of search in his statement on oath. The AO issued summons to the Clerk, but he did not attend. The learned CIT(A) asked the AO to give cross-examination opportunity to the assessee, but the Clerk did not cooperate.
Issue 2: Appreciation of the Settlement Petition filed by Ramrao Adik Education Society
The learned CIT(A) did not appreciate that Ramrao Adik Education Society had filed a settlement petition before the Settlement Commission, Mumbai, wherein they surrendered the entire amount of capitation fees received, including those from the assessee. However, the Society did not provide a student-wise breakup of the surrendered amount.
Issue 3: Deletion of addition of Rs. 18,27,500/- on account of unaccounted capitation fees
The learned CIT(A) deleted the addition made by the AO of Rs. 18,27,500/- on account of unaccounted capitation fees paid by the assessee to Ramrao Adik Education Society for securing admission of his son in the M.B.B.S. course. The CIT(A) observed that the AO failed to provide cross-examination of Shri Shashikant Mandavkar, who had given a statement regarding the donation. The AO did not bring any other evidence on record for making the addition, and the statement of Shri Mandavkar could not be admitted as evidence. Therefore, the diary entry could not be relied upon for making the addition.
Issue 4: Validity of reopening the assessment u/s 147 of the Act
The learned CIT(A) held that the reopening of the assessment was valid as the AO had specific outside information along with prima facie evidence in the form of a diary noting and statement of the person who wrote the diary. The AO acted independently on the basis of this information and not on the directions of any higher authority. The assessee's argument that there was no objective satisfaction on the part of the AO for reopening the assessment and that the reopening was wrong because the name mentioned in the diary was that of the assessee's son and not the assessee was not accepted.
Conclusion:
The appeal by the Revenue and the cross-objection filed by the assessee were both dismissed. The order of the learned CIT(A) deleting the addition of Rs. 18,27,500/- was upheld, and the reopening of the assessment u/s 147 was confirmed as valid.
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2012 (4) TMI 661
Issues involved: Cross appeals filed by the revenue and the assessee against the order of the CIT(A)-II, Pune, relating to A.Y. 2004-05.
Revenue's Appeal:
The Revenue filed an appeal with a delay of 696 days, seeking condonation of the delay, which was granted. The issue revolved around disallowing deduction u/s 10A for certain sales amounts and the eligibility of the assessee's new unit for the deduction. The CIT(A) upheld the disallowance of deduction for certain sales but allowed it for the new unit. The Revenue contended that the new unit was formed by reconstructing an existing business, making it ineligible for deduction u/s 10A. However, the Tribunal, based on the provisions of Section 10A, held that the deduction should be allowed for the turnover of sales by the new unit, as the profit was a result of work executed by the new unit. The Tribunal dismissed the Revenue's grounds and allowed the assessee's appeal, in line with a previous decision for A.Y. 2003-04.
Assessee's Appeal:
The assessee challenged the denial of the claim under section 10A for revenues of a specific amount, arguing that the contracts were entered into prior to the commencement of the new unit but the actual work was executed from the new unit. The Tribunal, considering the provisions of Section 10A, allowed the deduction for the turnover of sales by the new unit, emphasizing that the profit was a result of work done by the new unit. The Tribunal dismissed the Revenue's grounds and allowed the assessee's appeal, citing a previous decision for A.Y. 2003-04.
Conclusion:
The Tribunal, following precedent and the provisions of Section 10A, dismissed the Revenue's appeal and allowed the assessee's appeal. The decision was based on the understanding that the deduction should be allowed for the turnover of sales by the new unit, where the profit was generated, even if contracts were initially received by the old unit.
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2012 (4) TMI 660
Income from sale of shares - capital gain or business income - STT - Held that:- The assessee has purchased shares which are delivery based and made the payment and vice versa is not under dispute. Whereas the trader normally makes the purchase and sale during the day without taking delivery and settling the transactions ultimately as at the end of the day without delivery, which is not the case of the assessee. The assessee has been declaring the shares as investment since assessment year 2001-02 is a matter of record and the department has not brought on record any different facts and in the absence of any material change justifying the department to take different view from that taken in earlier proceedings. The department cannot change the stand in the subsequent year. In the facts and circumstances of the present case and decisions of various courts of law relied upon by both the parties, we are of the view that the assessee is a investor and cannot be termed as a trader in shares. Therefore, the AO is directed to accept the claim of the assessee.
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2012 (4) TMI 659
Issues:
The judgment involves a substantial question of law u/s 35G of the Central Excise Act, 1944 regarding the direction to deposit a specific amount as a pre-condition for hearing the appeal on merits.
Summary:
Issue 1: Imposition of Penalty
The appellant was penalized for allegedly showing fictitious input credit and passing on credit without actual production and sales of certain products. The appellant contended that the penalty was imposed without considering relevant facts, especially since the appellant had closed the business and had limited income as a share broker and LIC agent.
Issue 2: Tribunal's Decision
The Tribunal directed the appellant to deposit a substantial amount for hearing the appeal on merits, citing specific findings in the order-in-original. The Revenue supported the Tribunal's decision based on the mentioned findings.
Issue 3: Tribunal's Reference
The Tribunal referred to a similar case where a penalty was imposed and paid by another party. The Tribunal noted the reversal of credit by that party and questioned the fairness of directing the appellant to deposit the credit against them.
Issue 4: Judicial and Technical Members' Views
There was a dissent between the Member (Judicial) and Member (Technical) regarding the fairness of the Tribunal's decision. The matter required further examination by the Tribunal to determine the appellant's involvement in fictitious transactions and the extent of profit gained.
Judgment:
Considering the appellant's financial circumstances and the factual position, the High Court modified the Tribunal's order, reducing the deposit amount from Rs. 30 lacs to Rs. 15 lacs to be paid in three equal instalments. The Court acknowledged the appellant's income tax returns and reduced the financial burden for hearing the appeal. The appeal was partly allowed with no costs incurred.
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2012 (4) TMI 658
The Appellate Tribunal CESTAT KOLKATA dismissed the appeal filed by the Revenue against O/A No.8-10/B-I/06 dated 20.1.06 as it had already been decided in Tribunal's Final Order No.S-369-370/A-557-558/Kol/08 dated 13.5.2008. The appeal was deemed infructuous and was accordingly dismissed.
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2012 (4) TMI 657
Issues Involved:1. Whether the income from the contract receipts is assessable in the hands of the Joint Venture (JV). 2. Whether the provisions of section 40A(2) and section 145 of the Income Tax Act are applicable to the payments made by the JV to its members. 3. Whether the assessment of income in the hands of the JV is justified. Summary:Issue 1: Assessability of Income in the Hands of the Joint VentureThe CIT(A) held that no income on the said contract receipts is assessable in the hands of the Joint Venture for the assessment year 2005-06. Therefore, the addition made by the AO assessing the income at Rs. 5,41,60,960/- cannot be sustained and hence, the same was deleted by him. Issue 2: Applicability of Section 40A(2) and Section 145The AO viewed that the work was executed by each member and considered them as sub-contractors of the JV by the SJVA. He held that the contract receipts received from NHAI and subsequently passed on to individual members amounted to expenditure incurred by the assessee in the execution of the contract work and such expenditure appears to be excessive and unreasonable and hit by the provisions of section 40A(2). He further held that alternatively 2% of the receipts should be estimated as net income clear of all expenses of the assessee by invoking the provisions of section 145 of the Act. The Tribunal, following its earlier decision in the case of M/s Limak Soma Joint Venture, Hyderabad, held that no case for disallowance/addition could be made u/s 40A(2) by the Revenue. The assessing officer has not placed on record any basis for such observation made by him. The CIT(A) found that the assessee maintained regular books of account, which were audited, and the AO did not record any finding that the books of account were not correct and complete. The Tribunal upheld the CIT(A)'s decision that the question of estimating profit does not arise and deleted the addition made in the hands of the assessee. Issue 3: Justification of Income Assessment in the Hands of the JVIn ITA No.150/Hyd/2008, the AO estimated the profit at 2% of the contract receipts passed on to PCL and disallowed the amount claimed to have been paid to STICCO. The CIT(A) held that an amount of Rs. 9,94,877 only is assessable in the hands of the assessee for the assessment year 2005-06. The Tribunal upheld the CIT(A)'s decision but sustained the addition of Rs. 9,94,877 as the assessee could not produce evidence of the filing of the return by STICCO admitting the receipts from the Joint Venture. Conclusion:In ITA No.149/Hyd/2008, the appeal of Revenue is dismissed. In ITA No.150/Hyd/2008, the appeal is partly allowed, sustaining the addition of Rs. 9,94,877. Order pronounced in the Court on: 11.4.2012
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2012 (4) TMI 656
Validity of assessment u/s.143(3) r.w.s 158BC - notice u/s.143(2) was issued and served beyond the period of 12 months from the date of filing of return of income in pursuant to notice u/s.158BC - Held that:- From a perusal of para 4 of the assessment order, it is seen that the Assessing Officer has mentioned, that notice u/s.143(2) and 142(1) were issued to the assessee. During the course of the hearing, it was clarified before the Bench by the learned AR that it is a matter of record that the notice u/s.143(2) has been issued beyond the period of 12 months from the end of the month in which the return was filed. i.e. 19.05.2003. DR has also not disputed this fact and admitted that the notice u/s.143(2) has been issued beyond the period of 12 months. Accordingly, the appeal filed by the department stands dismissed on the preliminary issue raised by the respondent-assessee.
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2012 (4) TMI 655
Non deduction of tds - amounts of expenditure which are payable - Held that:- Addition made by Assessing Officer and sustained by Ld. CIT(A) by invoking the provisions of Section 40(a)(ia) of the Act are hereby deleted as the provisions of section 40(a)(ia) of the Act are applicable only to the amounts of expenditure which are payable as on the date 31st March of every year and it cannot be invoked to disallow which had been actually paid during the previous year, without deduction of TDS.
Disallowance of telephone expenses, petrol expenses and depreciation of car - Held that:- We find that assessee has incurred small amount under the head of telephone, petrol expenses etc., and therefore Assessing Officer was not justified in making ad hoc disallowance at the rate of 20% of total expenses incurred by the assessee. The disallowance appears to be on higher side, therefore we restrict this addition to 10% of the total expenses and AO is directed to recalculate the disallowance accordingly. This ground of assessee is partly allowed.
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2012 (4) TMI 654
Issues involved: Determination of whether the income should be treated as "Business Income" or "Income from House Property" for assessment year 2005-2006.
ITA No.976/Ahd/2009 (Revenue's appeal):
The Revenue appealed against the deletion of an addition of Rs. 8,29,326 made by the AO on account of "Business Income" treated as "Income from House Property." The Revenue argued that the income should be assessed as "Business Income" based on the nature of the activities carried out by the assessee. The assessee, engaged in developing infrastructure for industries and providing services to parties, contended that the income should be assessed as "Income from Business" as per relevant legal precedents. The Tribunal examined the joint business agreement between the assessee and a party, which outlined the provision of infrastructure facilities by the assessee. It was observed that the assessee had organized and continuous business operations, indicating a commercial intent in exploiting its infrastructure facilities. The Tribunal upheld the CIT(A)'s decision to treat the income as business income, dismissing the Revenue's grounds.
CO. No.92/Ahd/2009 (Assessee's CO):
The assessee's Cross Objection (CO) challenged the Revenue's appeal on similar grounds related to the treatment of income as "Business Income" instead of "Income from House Property." The CO was dismissed by the Tribunal as the ground raised was considered merely supportive in nature. Consequently, both the Revenue's appeal and the assessee's CO were dismissed, affirming the treatment of income as business income.
In conclusion, the Tribunal upheld the CIT(A)'s decision to treat the income as "Business Income" rather than "Income from House Property" for the assessment year 2005-2006, based on the commercial intent and organized business operations of the assessee.
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2012 (4) TMI 653
Determine arm’s length price of the international transactions - information u/s 133(6) - violation of fundamental principle of natural justice - Held that:- Any information obtained in the course of assessment proceedings has to be supplied to the assessee for its objections, if any. The absence of doing so leads to violation of fundamental principle of natural justice. In view thereof, the matter is restored to the file of the AO with a direction to supply whatsoever information he wants to use against the assessee to it, grant it reasonable opportunity of being heard and thereafter pass a fresh assessment order as per law.
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2012 (4) TMI 652
Issues Involved:
The judgment involves the issue of confirming an addition on account of work-in-progress for the assessment year 2006-07.
Details of the Judgment:
Issue 1: Addition on Account of Work-in-Progress
- The assessee, engaged in job work of dyeing fabrics, challenged the disallowance of the claim for closing stock of work-in-progress.
- The assessee argued that the valuation method of work-in-progress at cost or market value, whichever is lower, was consistently followed.
- It was emphasized that until the job work was completed, no payment was received from the parties, and thus, no valuation could be attached to work-in-progress.
- The appellant provided confirmation letters from parties assigning job work and highlighted discrepancies in the valuation method used by the Assessing Officer.
- The Tribunal referred to a similar case where the addition on account of work-in-progress was deleted, supporting the appellant's argument.
- Following the precedent, the Tribunal allowed the appeal and directed the deletion of the addition made on account of work-in-progress.
Conclusion:
The Tribunal allowed the appeal of the assessee and directed the Assessing Officer to delete the addition on account of work-in-progress, in line with the consistent valuation method followed by the appellant.
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2012 (4) TMI 651
Issues involved: Appeal u/s 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal for the Assessment Year 1994-95.
First Issue - Capital Expenditure:
The Revenue challenged the Tribunal's decision to delete the addition of Rs. 3,15,85,310 made on account of capital expenditure. The Tribunal's decision was based on previous rulings in favor of the assessee. The senior advocate for the Revenue acknowledged that a previous appeal was withdrawn for correction of an alleged mistake by the Tribunal. The High Court upheld the Tribunal's decision, stating that the Revenue could file a miscellaneous application if needed.
Second Issue - Set-off of Loss and Depreciation:
The Revenue also contested the Tribunal's deletion of the disallowance of set-off of unabsorbed loss, depreciation, and investment allowance of Shriram Cement Limited. The Tribunal noted that the departmental representative did not dispute the lack of opportunity given to the assessee to furnish a required certificate. The Tribunal referred the matter back to the Assessing Officer for further consideration. The High Court found no substantial question of law involved and summarily dismissed the appeal, allowing the Revenue to file a miscellaneous application if necessary. The Court clarified that they did not address the issue of any inadvertent error apparent on the record.
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2012 (4) TMI 650
The High Court dismissed the appeals as the issue of tax deduction on bill discounting was already decided in a previous case involving Cargill Global Trading Pvt. Ltd. The court held that bill discounting cannot be treated as interest paid, so tax deduction was not required. The present appeals involving Cargill Financial Services Asia Pvt Ltd were dismissed as no substantial question of law arose.
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2012 (4) TMI 649
Assessment under section 153C - Held that:- The determination of undisclosed income consequent to search action and framing assessment under section 153C of the Act is different from regular assessment or it is not substitute for regular assessment. Being so, the AO shall frame assessment on the basis of incriminating material found during the course of search action under sec. 153C of the Act. The AO without bringing any incriminating material on record for the purpose of determination of undisclosed income on estimate basis is not possible in the present circumstances to frame the assessment under section 153C of the Act. Therefore,, after considering the totality of facts and the circumstances of the case and after going through the order of the CIT (A) in the instant case, we find the CIT (A) is perfectly justified in allowing the claims of the assessee.
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2012 (4) TMI 648
Applicability of the Right of Children to Free and Compulsory Education Act, 2009 to the unaided non-minority schools - Held that:- So far as unaided educational institutions both minority and non-minority are concerned the obligation cast under Section 12(1)(c) is only directory and the said provision is accordingly read down holding that it is open to the private unaided educational institutions, both minority and non-minority, at their volition to admit children who belong to the weaker sections and disadvantaged group in the neighbourhood in their educational institutions as well as in pre-schools.
1. Article 21A casts an obligation on the State to provide free and compulsory education to children of the age of 6 to 14 years and not on unaided non-minority and minority educational institutions.
2. Rights of children to free and compulsory education guaranteed under Article 21A and RTE Act can be enforced against the schools defined under Section 2(n) of the Act, except unaided minority and non-minority schools not receiving any kind of aid or grants to meet their expenses from the appropriate governments or local authorities.
3. Section 12(1)(c) is read down so far as unaided nonminority and minority educational institutions are concerned, holding that it can be given effect to only on the principles of voluntariness, autonomy and consensus and not on compulsion or threat of nonrecognition or non-affiliation.
4. No distinction or difference can be drawn between unaided minority and non-minority schools with regard to appropriation of quota by the State or its reservation policy under Section 12(1)(c) of the Act. Such an appropriation of seats can also not be held to be a regulatory measure in the interest of the minority within the meaning of Article 30(1) or a reasonable restriction within the meaning of Article 19(6) of the Constitution.
5. The Appropriate Government and local authority have to establish neighbourhood schools as provided in Section 6 read with Sections 8 and 9, within the time limit prescribed in the Statute.
6. Duty imposed on parents or guardians under Section 10 is directory in nature and it is open to them to admit their children in the schools of their choice, not invariably in the neighbourhood schools, subject to availability of seats and meeting their own expenses.
7. Sections 4, 10, 14, 15 and 16 are held to be directory in their content and application. The concerned authorities shall exercise such powers in consonance with the directions/guidelines laid down by the Central Government in that behalf.
8. The provisions of Section 21 of the Act, as provided, would not be applicable to the schools covered under sub-Section (iv) of clause (n) of Section 2. They shall also not be applicable to minority institutions, whether aided or unaided.
9. In exercise of the powers conferred upon the appropriate Government under Section 38 of the RTE Act, the Government shall frame rules for carrying out the purposes of this Act and in particular, the matters stated under sub-Section (2) of Section 38 of the RTE Act.
10. The directions, guidelines and rules shall be framed by the Central Government, appropriate Government and/or such other competent authority under the provisions of the RTE Act, as expeditiously as possible and, in any case, not later than six months from the date of pronouncement of this judgment.
11. All the State Governments which have not constituted the State Advisory Council in terms of Section 34 of the RTE Act shall so constitute the Council within three months from today. The Council so constituted shall undertake its requisite functions in accordance with the provisions of Section 34 of the Act and advise the Government in terms of clauses (6), (7) and (8) of this order immediately thereafter.
12. Central Government and State Governments may set up a proper Regulatory Authority for supervision and effective functioning of the Act and its implementation.
13. Madrasas, Vedic Pathshalas etc. which predominantly provide religious instructions and do not provide for secular education stand outside the purview of the Act.
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2012 (4) TMI 647
Issues involved: The judgment involves issues related to addition qua reimbursement of expenditure and levy of interest under section 234B of the Income-tax Act, 1961.
Addition qua reimbursement of expenditure:
The appeal was filed against the order of the Addl. DIT(International Taxation) and the Dispute Resolution Panel-II. The Assessing Officer added a sum to the gross receipts of the appellant to be taxed u/s 44BB, considering it as reimbursement of actual expenses incurred by the appellant. The appellant contended that their income should be determined under section 44BB. The DRP confirmed the inclusion of reimbursements towards fuel recharges in the taxable income u/s 44BB. The AO finalized the assessment based on these directions. The appellant appealed against these findings, which were found to be covered by the decision of the Jurisdictional High Court in a similar case.
Levy of Interest:
The AO levied interest u/s 234B of the Act, which the appellant disputed. However, the appellant did not challenge the levy of interest u/s 234D. The Tribunal dismissed the ground related to the levy of interest u/s 234B as it was not disputed before the DRP or the Tribunal.
The Tribunal upheld the findings of the AO and the DRP regarding the inclusion of reimbursements in the taxable income u/s 44BB. The Tribunal also dismissed the ground related to the levy of interest u/s 234B as it was not challenged effectively. No additional grounds were raised, leading to the dismissal of the appeal.
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2012 (4) TMI 646
Issues involved: Interpretation of Section 40(a)(ia) u/s 194J for failure to deduct tax at source on payments to Stock Exchange; Allowability of VSAT and lease line charges as deduction from taxable income.
Interpretation of Section 40(a)(ia) u/s 194J:
The High Court, in reference to the case of Commissioner of Income Tax v. Kotak Securities Limited, held that transaction charges paid to a Stock Exchange constitute fees for technical services under Section 194J. Despite this, the Court noted that both the Revenue and the assessee operated under the belief that tax was not deductible at source on these payments. Therefore, the Court concluded that no fault could be found with the assessee for not deducting tax at source, and disallowance under Section 40(a)(ia) was not justified for Assessment Year 2005-06. The Court emphasized that this conclusion was reached based on the specific circumstances of the case.
Allowability of VSAT and lease line charges:
Referring to the judgment in The Income Tax Commissioner v. Angel Capital & Debit Market Ltd., the Court determined that VSAT and lease line charges paid to the Stock Exchange were reimbursement of charges paid to the Department of Telecommunications and did not constitute income. As a result, withholding tax on these payments was deemed unnecessary. Following the precedent set in Angel Capital, the Court found no substantial question of law to be raised in this regard and dismissed the Appeal accordingly.
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2012 (4) TMI 645
Issues involved: Disallowance of interest u/s. 14A and disallowance of brokerage and commission paid for lease and sale of space.
Disallowance of interest u/s. 14A: The appeal concerned the disallowance of interest amounting to `.19,61,446/- u/s. 14A of the Act. The Tribunal set aside the issue for reconsideration by the Assessing Officer in light of the decision in the case of Godrej & Boyce Manufacturing Company Ltd. vs. DCIT.
Disallowance of brokerage and commission: The issue revolved around the disallowance of `.33,80,328/- being brokerage and commission paid for lease and sale of space. The Assessing Officer denied the deduction, stating that section 24 of the Act does not permit such payments as deductions. The CIT(A) upheld the disallowance, rejecting the plea to reduce the amount from the annual letting value computed u/s. 23 of the Income Tax Act.
Judicial reasoning: The Tribunal considered precedents and legal provisions to decide the matter. Referring to the decision in the case of Township Real Estate Developers (India) Pvt. Ltd., the Tribunal held that deductions can only be allowed as provided under a particular head of income. It was noted that sec. 24 specifies deductions allowable for income from house property, and expenses like brokerage and commission are not covered. Rulings from the Hon'ble Delhi High Court and the Hon'ble Punjab and Haryana High Court were cited to support the decision against allowing such expenses as deductions.
Conclusion: The Tribunal decided the issue against the assessee and in favor of the Revenue, following the decisions of the Hon'ble Delhi High Court and the Hon'ble Punjab and Haryana High Court. The appeal was partly allowed for statistical purposes.
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2012 (4) TMI 644
Issues Involved:
1. Deletion of addition towards receipts not shown.
2. Deduction u/s 80IB(10) concerning flats exceeding 1500 sq.ft.
3. Deduction u/s 80IB(10) concerning combined residential and commercial projects.
Summary:
Issue 1: Deletion of Addition towards Receipts Not Shown
The revenue contended that the CIT(A) erred in directing the Assessing Officer to delete the addition of Rs. 4,43,366/- towards receipts not shown. However, the Tribunal upheld the CIT(A)'s order, noting that the issue became infructuous and revenue neutral due to the assessee's entitlement to deduction u/s 80IB(10).
Issue 2: Deduction u/s 80IB(10) Concerning Flats Exceeding 1500 sq.ft
The revenue argued that some flats exceeded 1500 sq.ft, violating sec. 80IB(10). The Tribunal found no dispute regarding the built-up area being less than 1500 sq.ft as per the sanctioned plan. The CIT(A) detailed the area of each flat, confirming compliance with the built-up area requirement. The Tribunal concluded that receiving consideration for more than 1500 sq.ft, including common areas, did not constitute a violation of sec. 80IB(10)(c), as the built-up area remained within limits.
Issue 3: Deduction u/s 80IB(10) Concerning Combined Residential and Commercial Projects
The revenue contended that the combined residential and commercial project exceeded the commercial area limit prescribed u/s 80IB(10)(d). The Tribunal noted that the layout plan was approved by the Pune Municipal Corporation (PMC) as one project, but subsequently, two separate projects were sanctioned. The Tribunal held that as per pre-amended provisions of sec. 80IB(10), there was no condition regarding commercial area. The Tribunal cited the decision in Saroj Sales Organisation vs ITO and the Hon'ble Jurisdictional High Court's ruling in Commissioner of Income-tax v. Brahma Associates, affirming that the amendment effective from 1.4.2005 could not be applied retrospectively. Therefore, the Tribunal upheld the CIT(A)'s order, allowing the deduction.
Conclusion:
The appeal filed by the revenue was dismissed, and the Tribunal upheld the CIT(A)'s order on all issues. The order was pronounced on 25th April 2012.
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