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2012 (5) TMI 696
Detention of appellant vessel - Held that:- Having regard to the above, we dispose of the present Appeal by the following order :-
(1) Subject to the compliances by the appellants as noted below, the Government of Kerala and its authorities shall allow the first appellant vessel to commence her voyage :-
(a) The Master of the first appellant vessel, the Managing Director of the owner of the first appellant vessel and the Managing Director of the shipping agent, namely, James Mackintosh & Co. Pvt. Ltd shall furnish their undertakings to the satisfaction of the Registrar General of the Kerala High Court that six crew members, namely, Vitelli Umberto (Master), Noviello Carlo (Master SN), James Mandley Samson (Chief Officer), Sahil Gupta (2nd Officer), Fulbaria (Seaman) and Tirumala Rao (Ordinary Sea Man), on receipt of summons/notice from any court or by Investigating Officer or lawful authority shall present themselves within five weeks from the date of the receipt of such summons/notice and shall produce the first appellant vessel, if required by any court or the Investigating Officer or any other lawful authority, within seven weeks from the receipt of such summons/notice.
(b) The second appellant shall execute a bond in the sum of Rupees Three Crores before the Registrar General of the Kerala High Court for production of the first appellant vessel and securing the presence of the above six crew members as and when called upon by any court or the Investigating Officer or any other lawful authority.
(2) The assurance given by the Republic of Italy that if the presence of the four Marines, namely, Voglino Renato (Seargeant), Andronico Massimo (1st Corporal), Fontano Antonio (3rd Corporal) and Conte Alessandro (Corporal), is required by any court or lawful authority or Investigating Officer, the Republic of Italy shall ensure their presence before such court or lawful authority or Investigating Officer is accepted. Such assurance shall, however, not affect the right of the above four Marines to challenge such summons/notice issued by any court or Investigating Officer or any other lawful authority before a competent court in India.
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2012 (5) TMI 695
Issues involved: Appeals against orders of Commissioner of Wealth Tax (Appeals) for assessment years 2004-05 to 2006-07, common grounds raised by assessees regarding levy of Wealth Tax on agricultural lands.
Common Grounds of Appeal:
1. Challenge to the order of the Commissioner of Wealth Tax (Appeals) as against the law and facts of the case.
2. Dispute over whether 'agricultural lands' fall within the scope of the term 'Asset' u/s 2(ea)(v) of the Wealth Tax Act, 1957.
3. Argument that Wealth Tax on agricultural lands is excluded under specific provisions of the Constitution of India.
4. Allegation that the Commissioner erred in not considering established legal positions regarding 'Urban Land' and 'agricultural lands'.
5. Claim that agricultural land cannot be considered a 'non-productive asset' under the Wealth Tax Act, 1957.
6. Assertion that agricultural activities constitute a business, thus excluding agricultural land from the definition of 'asset'.
7. Highlighting restrictions on construction on agricultural lands under regional planning laws.
8. Request to quash Notice u/s 17 due to lack of valid reasons.
9. Disagreement with non-acceptance of wealth-tax return by the Assessing Officer.
The parties did not dispute the facts narrated by the Revenue Authorities. The issue in dispute had been previously decided against the assessee by the Supreme Court in a related case. The assessee challenged the vires of Wealth Tax on agricultural lands under section 2(ea)(v) of the Wealth Tax Act, 1957. The Department contended that the issue had been settled in favor of the Revenue by the Supreme Court's decision. The Tribunal noted the settled legal position and dismissed the appeals filed by the assessees based on the Supreme Court's order. The Tribunal clarified that it lacked jurisdiction to adjudicate on the vires of the levy of Wealth Tax on agricultural land.
In conclusion, the Tribunal found no reason to interfere with the first appellate authority's well-reasoned order on the issues raised by the assessees. Therefore, all fifteen appeals were dismissed.
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2012 (5) TMI 694
Issues Involved:
The judgment involves the confirmation of notional income under the head "Income from house property" for two properties located in Thane and Mahavir Market, Navi Mumbai for the assessment year 2006-07.
Thane Property - Notional Income Confirmation:
The assessee filed a return of income declaring &8377; 14,46,770/- for the year, but the Assessing Officer (A.O.) noticed that the assessee owns multiple house properties and had not offered income from house property. The A.O. calculated the income from house property for the period from September 2005 to the end of the financial year, making an addition of &8377; 1,43,325/-. The assessee contended that the property was effectively leased out from April 2006 and the A.O.'s calculation was erroneous. The Appellate Tribunal found that the property was let out in April 2006 after furnishing work, and thus deleted the addition of &8377; 1,43,325/-.
Mahavir Market Property - Notional Income Confirmation:
Regarding the property at Mahavir Market, Navi Mumbai, the A.O. concluded that the property was being utilized by a partnership firm in which the assessee was a partner, and added &8377; 1,68,000/- as "income from house property." The assessee argued that the income qualified for exemption u/s.22(2) based on a precedent. The Tribunal found the facts similar to the precedent and deleted the addition of &8377; 1,68,000/-, allowing the appeal filed by the assessee.
Conclusion:
The Appellate Tribunal ITAT Mumbai allowed the appeal filed by the assessee, deleting the additions of notional income under the head "Income from house property" for both the Thane and Mahavir Market properties for the assessment year 2006-07.
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2012 (5) TMI 693
Issues involved: Cross appeals by Revenue and Assessee against order of CIT(A)-Central-I, Kolkata for A.Yr. 2005-06.
Revenue's Grounds (ITA No.141/Kol/2012):
- Benefit of Peak credit allowed without explanation on fund recycling.
- Discrepancy in peak credit calculation by CIT(A) and AO.
- Request for altering grounds.
Assessee's Grounds (ITA No.27/Kol/2012):
- Challenge to CIT(A)'s order.
- Consolidated peak credit should be considered.
- Request for adding or amending grounds.
Facts:
- Cash seized led to scrutiny assessment.
- Six bank accounts investigated post seizure.
- Assessee claimed cash from clients for investments.
- AO treated total deposits in bank accounts as undisclosed income.
- CIT(A) directed treating peak credit of bank accounts as undisclosed income.
- Tribunal set aside orders for lack of investigation into debit side.
Tribunal's Decision:
- Neither AO nor CIT(A) followed Tribunal's direction.
- Proper method is to consolidate all bank accounts for peak credit determination.
- Orders set aside for recalculating peak credit of consolidated bank accounts.
- Appeal of Revenue and Assessee allowed for statistical purposes.
Judgment Date: 09.05.2012.
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2012 (5) TMI 692
Whether chargesheet cannot generally be a subject matter of challenge as it does not adversely affect the rights of the delinquent unless it is established that the same has been issued by an authority not competent to initiate the disciplinary proceedings?
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2012 (5) TMI 691
Deduction was claimed u/s 80-I - Held that:- There is an apparent mistake in the impugned Tribunal order because the same appears to be not in line with the subsequent judgment of Hon’ble Gujarat High Court which is the jurisdictional High Court in the present case, rendered in the case of Gujarat Alkalies & Chemicals Ltd. (2012 (3) TMI 267 - GUJARAT HIGH COURT). In our considered opinion, the tribunal order on this aspect should be recalled and the matter should be decided afresh after hearing both the sides.
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2012 (5) TMI 690
Disallowance of interest under section 36(1)(iii) - Held that:- Assessee during the year had own funds of ₹ 4.40 crores and interest from the borrowings ₹ 8.13 crores, in addition to current year profit of ₹ 75.00 lacs. In our view the payment of ₹ 27.91 lacs during the year is easily explained from own funds. Even the current year profit can easily explain source of such payment. We, therefore, see no reason of making addition. We therefore set aside the order of CIT(A) and delete the addition made.
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2012 (5) TMI 689
Whether notice u/s 142(1) issued after end of one year from the relevant assessment year is barred by limitation or not? - Held that:- CIT (A) was not correct in holding the issuance of notice u/s 142(1) to be ab initio void. Since the CIT (A) has decided the appeal on technical issue without going into merits of the case, we think it proper to set aside the matter to the file of the CIT (A) and direct him to dispose of the appeal on merits in accordance with law after affording a reasonable opportunity of being heard to the assessee.
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2012 (5) TMI 688
Issues Involved:
1. Request for retesting of seized samples.
2. Validity of the orders passed by the Addl. Session Judge.
3. Fairness and impartiality of the investigation.
4. Applicability of Section 80 of NDPS Act and Section 25 of Drugs and Cosmetics Act, 1940.
Summary:
1. Request for Retesting of Seized Samples:
The petitioner sought directions for retesting the seized samples at Central Forensic Science Laboratory, Hyderabad or Central Revenue Control Laboratory, New Delhi, arguing the initial test by Directorate of Forensic Science, Gandhinagar (DFS) was inconclusive and incorrect. The petitioner claimed the seized material contained 'Mephedrone Hydrochloride' and not 'Methamphetamine Hydrochloride' as per the DFS report.
2. Validity of the Orders Passed by the Addl. Session Judge:
The petitioner challenged the orders dated 28.3.2012 and 20.4.2012 passed by the Addl. Session Judge, Ahmedabad, which rejected the request for retesting. The court found the investigation fair and impartial, with DFS confirming the substance as Methamphetamine Hydrochloride, attracting offenses under the NDPS Act.
3. Fairness and Impartiality of the Investigation:
The court noted the detailed and systematic investigation by DRI, Ahmedabad, and Central Excise, Sangli, which included scientific evidence and searches at the premises of M/s Kamud Drugs Pvt. Ltd. The DFS, Gandhinagar, a laboratory of national repute, confirmed the presence of Methamphetamine Hydrochloride, and no further testing was deemed necessary at this stage.
4. Applicability of Section 80 of NDPS Act and Section 25 of Drugs and Cosmetics Act, 1940:
The petitioner argued for the applicability of Section 25 of the Drugs and Cosmetics Act, 1940, which allows for retesting of samples. However, the court held that Section 80 of the NDPS Act does not bar the application of the Drugs and Cosmetics Act but operates independently. The NDPS Act provides a comprehensive procedure for dealing with narcotic drugs and psychotropic substances, and the court found no merit in the petitioner's request for retesting under the Drugs and Cosmetics Act.
Conclusion:
The court rejected the petition, finding no illegality in the investigation or the orders passed by the Addl. Session Judge. The prayer for retesting of the seized samples was deemed premature and misconceived, and the investigation carried out by DRI, Ahmedabad, was considered fair and impartial. The petition was dismissed with no costs.
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2012 (5) TMI 687
Estimation of profit by applying 8% of Net Profit rate - Held that:- No good reason for estimating profit by applying lower rate than 8% as small assessee having turnover not exceeding ₹ 40 lakhs are legally required under section 44AD to disclose profit by 8%. We confirm the order of Assessing Officer and CIT(A) where 8% profit rate has been applied for estimation of income. We find force in the submission of the assessee in the written submission that the interest income of ₹ 79,400/- is business income and the same need not be separately added in estimation by applying 8% profit rate. The interest income which is business income of the assessee is covered in the said estimation and separate addition is not required. Modify the order of the Assessing Officer and CIT(A) and direct the Assessing Officer not to include the interest income of ₹ 79,400//- in estimation of total income. The assessee gets relief of ₹ 79,400/-.
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2012 (5) TMI 686
Issues Involved:
1. Bogus Purchases from Fictitious Concerns
2. Payment of Commission Outside Books of Accounts
3. Gross Profit (GP) Rate Discrepancy
4. Unaccounted Transactions Reflected in Loose Papers
Summary:
1. Bogus Purchases from Fictitious Concerns:
The assessee firm, a member of the Kulkarni Group, was engaged in trading iron scrap. During a search and seizure operation, it was found that the firm had floated seven fictitious concerns to show purchases from them. The assessee contended that these concerns were created for accounting convenience due to the nature of their suppliers, who were petty hawkers. The Assessing Officer (AO) noted that a substantial part (63.18%) of the assessee's purchases was from these fictitious concerns and rejected the books of accounts, estimating the income. However, the CIT(A) held that the purchases were genuine and necessary for the sales made, thus no undisclosed income could be brought to tax on this account. The Tribunal upheld this view, emphasizing that without purchases, sales could not have been made.
2. Payment of Commission Outside Books of Accounts:
The AO added an amount of Rs. 7,39,273/- as unaccounted expenditure on commission, based on statements from suppliers who mentioned receiving commissions. The CIT(A) disagreed, stating that any presumed commission payment would be neutralized by an equivalent allowable amount u/s 37(1). The Tribunal agreed with the CIT(A), noting that the AO's addition was based on presumption without concrete evidence.
3. Gross Profit (GP) Rate Discrepancy:
The AO compared the GP rate of the assessee with that of M/s. Oberoi Traders and found it lower, leading to an addition for suppressed GP. The CIT(A) found this comparison inappropriate due to differences in business nature and market conditions. The Tribunal supported this view, noting that the assessee's GP rates were reasonable and consistent with market prices, thus no adverse inference could be drawn.
4. Unaccounted Transactions Reflected in Loose Papers:
The AO identified unaccounted transactions from loose papers seized, leading to an addition of Rs. 11,93,729/- as unexplained transactions. The CIT(A) accepted this amount as representing unexplained transactions. The Tribunal concurred, noting that the entries in the seized papers indicated amounts due from the assessee and that the peak amount of Rs. 11,93,729/- was reasonable for addition.
Final Judgment:
The Tribunal determined the undisclosed income of the assessee at Rs. 12.50 lakhs, reducing the CIT(A)'s determination of Rs. 15 lakhs and the AO's estimation of Rs. 1 crore. The appeals by both the assessee and the Revenue were partly allowed.
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2012 (5) TMI 685
Reopening of assessment - taxability of income - DTAA - Held that:- The question of taxability of the income and the rate of tax was specifically examined and gone into in the original assessment proceedings. The assessee may not have disclosed the said receipt in the original return but the receipt was disclosed in the revised return and the aspect/ question of taxability/ exemption specifically considered. During the course of the original reassessment proceedings the entire transaction itself and the consideration paid under the said transaction were examined in depth. In the assessment order dated 30.03.2006, it was held that the fee for licensing the software to the Indian customers was taxable as royalty/ fee for technical services under Article 13 of DTAA and Section 9(i)(vi) and (vii) of the Act. The income was subjected to tax @ 10%. Article 7 and Section 44D was not invoked.
No new fact had come to the knowledge of the Assessing Officer after completion of the original reassessment proceedings. It is not shown or alleged that new facts which were concealed had come the notice of the Assessing Officer. The Assessing Officer, on reconsideration of the same material facts, has drawn a legal inference/ conclusion on the basis of his interpretation of the Act and DTAA. This cannot be a valid ground to initiate re- assessment proceedings. - Decided in favour of assessee.
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2012 (5) TMI 684
The Delhi High Court issued an order for final hearing and disposal on 24.08.2012 in a case where Mr. Sanjeev Rajpal represented the Appellant and Mr. Somnath Shukla represented the Respondent.
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2012 (5) TMI 683
Disallowance u/s 14A - Held that:- The Tribunal in assessee’s own case from a regular assessment completed u/s 143(3) of the IT Act, 1961 had considered the identical issue and remanded the matter back to the file of the AO for fresh consideration. The Tribunal directed the AO to follow the ratio laid down in the judgment of the Hon’ble Bombay High Court in the case of M/s Godrej and Boyce Mfg. Co.,Ltd. [2010 (8) TMI 77 - BOMBAY HIGH COURT ]
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2012 (5) TMI 682
Issues involved: Cross appeals by the assessee and department against the order of CIT(A)-XXXIII, Mumbai, regarding assessment year 2004-05.
Assessee's Appeal (ITA No.3832/Mum/2008):
- Issue 1: Whether the assessee had a permanent establishment in India.
- The Tribunal held that the assessee has no permanent establishment in India, in line with the view taken in the assessment year 2001-02.
- Issue 2: Applicability of sec. 40(a)(i).
- Ground on this issue was dismissed as not pressed.
- Issue 3: Disallowance u/s. 40(a)(i) on payment to Advanced Satellite International Ltd. for pay out charges.
- The Tribunal allowed this ground of the assessee, consistent with the view taken in the assessment year 2002-03.
- Issue 4: Disallowance u/s. 40(a)(i) on purchase of programmes from LMB Holdings (Mauritius) Ltd.
- The Tribunal allowed this ground of the assessee, in line with the view taken in the assessment year 2002-03.
- Issue 5: Disallowance u/s. 40(a)(i) on payment made to LMB Holdings Ltd. (Isle of Man) for purchase of films.
- The Tribunal allowed this ground of the assessee, consistent with the view taken in the assessment year 2002-03.
- The appeal of the assessee was allowed.
Departmental Appeal (ITA No.3843/Mum/2008):
- Sole Issue: Deletion of disallowance u/s. 40(a)(i) for payment made to PanAmSat towards transponder hire charges.
- The Tribunal dismissed the Revenue's appeal, as the issue was the same as ground no. 3 for assessment year 2002-03.
- The appeal of the assessee was allowed, while the appeal of the Revenue was dismissed.
Order: Pronounced on the 28th day of May, 2012.
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2012 (5) TMI 681
Issues Involved: Cross appeals for the assessment year 2003-04 regarding permanent establishment in India, applicability of sec. 40(a)(ia), disallowance u/s.40(a)(i) for payments made to various entities.
Assessee's Appeal (ITA No.3866/Mum/2008):
- Ground nos.1 & 2: Whether the assessee has a permanent establishment in India.
- Held that the assessee has no permanent establishment in India, consistent with previous assessment years.
- Ground no.3: Applicability of sec. 40(a)(ia).
- Not pressed by the counsel and hence dismissed.
- Ground no. 4: Disallowance u/s.40(a)(i) for payment to Advanced Satellite (UK).
- Allowed in favor of the assessee based on previous decision.
- Ground no.5: Disallowance u/s.40(a)(i) for payment to LMB Holdings (Mauritius) Ltd.
- Disallowance deemed bad in law, consistent with previous decision. Assessee's ground allowed.
- Ground no. 6: Disallowance u/s. 40(a)(i) for payment to LMB Holdings Ltd. (Isle of Man) for films.
- No liability to deduct tax at source u/s.195, hence no disallowance u/s. 40(a)(i). Assessee's ground partially allowed.
Departmental Appeal (ITA No.4098/Mum/208):
- Issue: Disallowance u/s. 40(a)(i) for payment to PanAmSat Ltd.
- Upheld the order of CIT(A) based on previous decision. Revenue's ground dismissed.
Conclusion:
- Assessee's appeal allowed in part, while the Revenue's appeal is dismissed. Order pronounced on May 28, 2012.
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2012 (5) TMI 680
Issues involved:
1. Whether the assessee has a permanent establishment in India.
2. Disallowance made u/s.40(a)(i) on various payments.
3. Carry forward and set off of losses.
4. Disallowance on payments made to advertising and collecting agents.
Issue 1: Permanent Establishment in India
The appeal by the assessee challenges the order of CIT(A)- XXXIII, Mumbai, for the assessment year 2005-06 regarding the existence of a permanent establishment in India. The Tribunal, consistent with a previous decision, ruled in favor of the assessee, allowing ground nos. 1 & 2.
Issue 2: Disallowance u/s.40(a)(i) on Various Payments
Ground nos. 3(a), 3(b), 3(e), 3(c), 3(d), and an additional ground relate to disallowances under u/s.40(a)(i) on payments to different entities. The Tribunal decided in favor of the assessee for each of these grounds, following previous rulings and allowing the respective grounds of appeal.
Issue 3: Carry Forward and Set Off of Losses
The assessee raised a ground seeking carry forward and set off of losses, which was dismissed as infructuous since other grounds were allowed in favor of the assessee.
Issue 4: Disallowance on Payments to Advertising and Collecting Agents
Ground no. 3(f) concerns disallowance on payments to advertising and collecting agents, with the contention that these were trade discounts, not commissions. The matter was remanded to the CIT(A) for further consideration.
In conclusion, the Tribunal partially allowed the appeal of the assessee, with various grounds decided in favor of the assessee concerning permanent establishment, disallowances on payments, and an additional ground. The issue of carry forward and set off of losses was deemed infructuous, and the matter of payments to advertising and collecting agents was remanded for review.
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2012 (5) TMI 679
Issues involved: Determination of whether the income from the purchase and sale of shares should be classified as short term capital gain and long term capital gain or as business income.
Summary:
1. The Revenue appealed against the CIT(A)'s order directing the acceptance of short term and long term capital gains on profit from shares as opposed to treating it as business income.
2. The AO observed that all receipts were from shares transactions, but the appellant classified profits as capital gains. The AO considered the volume, turnover, and holding period of shares, concluding that short term gains should be assessed as business income due to profit motive and organized activity.
3. The CIT(A) noted that the appellant distinguished between delivery and non-delivery based transactions, holding that income from sale of shares held as investment should not be taxed as business income. The appellant's actions, including transferring shares to their name before sale, indicated investment intent.
4. The Tribunal previously ruled in favor of the appellant, emphasizing the investment nature of the transactions and consistency in accounting treatment. The High Court upheld the Tribunal's decision.
5. Following the High Court's decision, the appeal by the Revenue was dismissed.
Judgment: The Tribunal upheld the classification of income from share transactions as capital gains, emphasizing the investment nature of the transactions and consistency in accounting treatment.
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2012 (5) TMI 678
Waiver of pre-deposit - Intellectual property right services for the technology transfer - Held that: - the applicant were under bonafide belief that the service of technical transfer/technical know-how is a secret of their trade activity and is not registered as a patent and therefore they are not liable to service tax under Intellectual property right service and the same was brought in the knowledge of the department by filing the Service Tax Returns - even, if the applicant had paid the service tax, the same was entitled to credit, there is a revenue neutral situation - the applicant has made out a strong prima facie for waiver of pre-deposit - appeal allowed - decided in favor of appellant.
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2012 (5) TMI 677
Issues Involved: Appeal against the order of CIT(A) for assessment years 2003-04 and 2004-05 regarding disallowance of interest on borrowed funds and write off of advances given to subsidiaries.
Assessment Year 2003-04:
The assessee, engaged in manufacturing and marketing, declared Nil income, but AO assessed total loss. CIT(A) partly allowed the appeal, including disallowance of interest on borrowed funds and write off of advances to subsidiaries in favor of the assessee. Department appealed, arguing interest not wholly for business purpose and advances not in regular course of business. Assessee contended loans to subsidiaries were for business support due to commercial expediency. Tribunal held loans were utilized for business needs, not personal, and upheld CIT(A)'s decision based on the Supreme Court judgment.
Assessment Year 2004-05:
AO assessed long term capital gain and raised demand, which CIT(A) partly allowed, including disallowance of write off of advances to subsidiaries. Department appealed, claiming advances not for business purpose. Assessee argued advances were for subsidiary support due to commercial reasons. Tribunal found subsidiaries under liquidation, loans not recoverable, and upheld CIT(A)'s decision based on commercial expediency and business loss grounds.
Conclusion:
Tribunal dismissed both appeals of the Revenue for assessment years 2003-04 and 2004-05, upholding CIT(A)'s decision regarding disallowance of interest on borrowed funds and write off of advances to subsidiaries, as loans were utilized for business needs and were justifiable deductions.
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9911796707
