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2012 (8) TMI 1060
Issues Involved: Appeal by Department against CIT(A) order for assessment year 2008-09.
Depreciation and Interest Deduction:
The Department raised the issue of allowing depreciation and interest from 8% net profit rate without appreciating the application of net profit rate after considering all facts. The AO rejected the books of accounts u/s 145(3) due to lack of maintenance of stock register, consumption records, and supporting vouchers. The CIT(A) directed the AO to allow deduction of depreciation and interest at 8% on contract receipts based on ITAT Jaipur Bench's decision for the assessment year 2007-08. The Tribunal upheld the CIT(A) order, citing judgments of Jurisdictional High Court in support, and dismissed the Department's appeal.
Decision:
The Tribunal dismissed the Department's appeal, affirming the CIT(A) order to allow depreciation and interest deductions at 8% net profit rate based on previous decisions and High Court judgments.
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2012 (8) TMI 1059
Deduction under section 80P(2)(a)(i) - Held that:- The Tribunal in assessee's own case while deciding the issue gave a finding that the assessee has to be treated as a co-operative society in view of the provisions contained in Regional Rural Banks Act, 1976. If so, it would be eligible for deduction u/s 80P(2)(a)(i) of the Act. In view of the specific finding given by the Tribunal in the assessee’s own case, respectfully following the decision of the co-ordinate Bench of this Tribunal, the ground of appeal raised by the assessee is allowed.
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2012 (8) TMI 1058
Issues involved:
The judgment involves the denial of exemption u/s 10(23C)(vi) of the Income Tax Act, 1961 to a registered society running educational institutions. The appeals were filed against the order of the Income Tax Appellate Tribunal, Jaipur Bench 'A', which dismissed the appeals of the revenue.
Facts of the case:
The respondent assessee, a registered society running educational institutions, was denied exemption u/s 10(23C)(vi) by the Assessing Officer. The Commissioner of Income Tax (Appeals) allowed the exemption, which was challenged by the revenue in separate appeals before the Income Tax Appellate Tribunal. The Tribunal affirmed the order of the Commissioner of Income Tax (Appeals) granting the exemption to the assessee.
Arguments and Decision:
Initially, the appellant argued that the orders of the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal were incorrect. However, it was pointed out that the Central Board of Direct Taxes had granted exemption to the assessee, making the appellant agree that the assessee was entitled to the exemption. The order of the Central Board of Direct Taxes dated 16th March, 2007, specified conditions for the exemption u/s 10(23C)(vi) for the institution.
Conclusion:
Based on the order of the Central Board of Direct Taxes, the assessee was held entitled to the exemption u/s 10(23C)(vi) of the Income Tax Act, 1961. The Tribunal had already upheld the order of the Commissioner of Income Tax (Appeals) granting the exemption. Consequently, the appeals were dismissed, and no costs were awarded. The Registry was directed to place a copy of the order in the connected appeal.
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2012 (8) TMI 1057
Addition on account of deemed dividend - Held that:- The impugned amounts were received by the assessee through account payee cheques against sale of land owned by the assessee in the normal course of business, therefore, it cannot be branded as loan and advances. We have perused the agreement to sale. As per clause 2 of the said agreement, the amount of ₹ 2,53,60,000/- was agreed to be given to the assessee by the purchaser and part of the payment was received through cheque.
The assessee was also supposed to get conversion of the land within two months. As per clause 10 the purchaser was free to do the developmental work on the land and was also free to sell the same to any third party for which the assessee had no objection. It cannot be said that it was a loan or an advance to the assessee. The contents of the sale agreements are very much clear that it was a clearcut agreement of sale. No contrary facts or decision was brought to our notice by either side and more specifically the Revenue. In view of these facts, we are not in agreement with the conclusion drawn in the assessment order and affirm the stand of the ld. CIT(A) in accepting the claim of the assessee, resultantly, there is no merit in the appeal of the Revenue.
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2012 (8) TMI 1056
Issues involved:
The issues involved in the judgment are the limitation period for completing assessments under the Kerala General Sales Tax Act, 1963 and the Central Sales Tax Act, 1956 for the year 1993-94.
Issue 1: Limitation under KGST and CST Acts for 1993-94 assessments:
The Tribunal reiterated its findings against the Revenue regarding the completion of assessments under the KGST and CST Acts for the year 1993-94 being barred by limitation. The introduction of Section 17(6) of the KGST Act in 1993 imposed a time limit of four years for completing assessments, with a provision for assessments pending as of 1.4.1993 to be completed within four years from the publication of the Kerala Finance Act, 1993. Subsequent amendments extended the limitation period, but the assessments for 1993-94 were completed on 30.7.1999, beyond the prescribed deadline of 31.3.1999. The Court ruled in favor of the assessee, stating that the assessments were beyond the period of limitation.
Issue 2: Extension granted by Deputy Commissioner under Section 17(7) of KGST Act:
The Deputy Commissioner's alleged extension of the assessment period under Section 17(7) was done without notice to the assessee and lacked any pending enquiry or investigation against the assessee. The Court emphasized that the power to extend the limitation period for assessments is exclusively conferred on the Legislature and cannot be delegated. The Court concluded that the extension granted did not comply with the necessary requirements and ruled in favor of the assessee. Consequently, the revisions were rejected, answering both questions of law in favor of the assessee.
Separate Judgment:
The Court expressed distress over the Tribunal's failure to follow specific directions given in a previous judgment, highlighting the importance of adhering to judicial directives to avoid unnecessary remands. The Court emphasized the significance of respecting hierarchical judicial forums' decisions and communicated its concern over the potential impact of disregarding such directions on the judicial system.
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2012 (8) TMI 1055
Issues Involved:
1. Legality of penalty u/s 271(1)(c) on additional income declared in response to notice u/s 153A.
2. Applicability of Explanation 5 to section 271(1)(c) for the period from 01/06/03 to 31/03/2007.
3. Whether investments like KVPs, NSCs, LIPs, etc., fall under the phrase "money, bullion, jewellery or other valuable article or thing" in Explanation 5.
Summary:
Issue 1: Legality of Penalty u/s 271(1)(c)
The assessee argued that no penalty u/s 271(1)(c) can be levied on the income declared in returns filed in response to notices u/s 153A, as such income should be treated as duly disclosed. The AO rejected this, stating that the additional income was brought to tax due to the Department's search operation, not voluntarily, and referred to CBDT Circular dated 30th September 1969. The AO imposed a minimum penalty u/s 271(1)(c) being 100% of the tax sought to be evaded.
Issue 2: Applicability of Explanation 5 to Section 271(1)(c)
The assessee contended that Explanation 5 is not applicable for the period from 01/06/03 to 31/03/2007 after the insertion of the words "search initiated u/s 132 before first day of June, 2007." The Tribunal found no substance in this argument, stating that the amendments have no bearing on the issue at hand. The search took place on 22/11/06, and thus, the case is fully covered by Explanation 5 to sec. 271(1)(c).
Issue 3: Investments as "Other Valuable Article or Thing"
The assessee argued that investments like KVPs, NSCs, LIPs, etc., do not fall under the phrase "money, bullion, jewellery or other valuable article or thing" in Explanation 5. The Tribunal accepted this plea, referencing decisions such as CIT vs. Mohan Lal Sharma [2006] 281 ITR 384 and Bhagwandas Narayandas vs. CIT [1975] 98 ITR 194, which held that documents like FDRs and title deeds do not possess intrinsic market value and thus do not fall under the specified assets in Explanation 5. Explanation 5A, which includes such items, was inserted w.e.f. 01/06/07 and is not applicable to searches conducted before this date.
Conclusion:
The Tribunal set aside the order of ld. CIT(A) for all four assessment years under consideration, allowing the assessee's appeals. The other plea regarding no penalty due to no variation between income returned and assessed income was deemed academic and not adjudicated.
Order Pronounced:
The order was pronounced in the open court on 24/08/2012.
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2012 (8) TMI 1054
Issues involved: Disallowance of interest on loans and foreign exchange loss claimed u/s 37(1).
Disallowance of interest on loans:
The appellant claimed deduction of interest on loans, but the AO observed that the appellant had advanced interest-free loans to its subsidiary company. The AO made a proportionate disallowance of interest, which was reduced by the CIT(A) to &8377; 4,24,844. The Tribunal noted that the money was advanced for business purposes and that the subsidiary company utilized the funds for business. Citing the case of S.A. Builders vs. CIT, the Tribunal held that no disallowance of interest can be made if interest-free loans are used for business purposes. Consequently, the addition of &8377; 4.24 lakh was deleted.
Foreign exchange loss claimed u/s 37(1):
The appellant claimed a deduction of &8377; 1,24,520 as a foreign exchange loss on a loan given to its Singapore company. The AO disallowed this claim u/s 37(1), which was upheld in the first appeal. However, the Tribunal referred to the judgment in CIT v. Woodward Governor India (P) Ltd. and held that the loss on account of foreign exchange fluctuation is an allowable expenditure u/s 37(1) in the year of accrual. Since the Tribunal reversed the decision on the first ground, the appellant was entitled to the deduction for the foreign exchange loss as well.
In conclusion, the appeal was allowed, and the additions of both disallowance of interest on loans and foreign exchange loss were deleted.
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2012 (8) TMI 1053
Assessment u/s 153A/153B - Held that:- So far as the time limit for assessment is concerned, it is provided in Sec. 153B(1)(b). The Ld Counsel fairly admitted that the assessment is completed as per the time limit as povided in the said proviso i.e. within the period of 2 years from the end of F.Y. 2004-05 as admittedly, the assessment is completed on 29.12.2006. Hence, the A.O has made the compliance of the mandatory condition in completing the assessment as provided u/s. 153B(1)(b) of the Act.
Benefit of the peak credit - Held that:- We find that the Ld CIT(A) has considered the plea of the assessee on the issue of considering the addition on the peak. As per the statement of the assessee, the cash inwards were related to the sales but the cash outwards were in respect of the money given by the assessee's customers for deposing the same in their Bank Account. As per the own explanation of the assessee, the outward entries of the cash which have the different nature of the transactions. We find that the A.O issued summons to the persons and recorded their statements but the person whose names were appearing denied having either brought cash from MIDC office of the assessee to his city office or the persons who were allegedly given cash to the assessee for depositing the same in their bank account. The Ld CIT(A) has rightly held that nature of the transactions are totally different and having no nexus with each other, the benefit of the peak cannot be given. So far as the merits are concerned, the evidence is against the assessee. Nothing has been placed before us to show that there was no denial by those parties in respect of claim of the assesse. In our opinion, no interference is called for in the order of the Ld CIT(A). Accordingly, the addition is confirmed.
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2012 (8) TMI 1052
Issues Involved:
1. Deletion of addition of Rs. 3,85,39,213/- u/s 2(22)(e) of the IT Act.
2. Deletion of addition of Rs. 2,00,000/- u/s 2(22)(e) of the IT Act.
3. Deletion of addition of deemed dividend for payments by way of advance or loan by M/s New Era Exports (P) Ltd. and M/s Gee Key Real Estate (P) Ltd.
4. Reliance on judicial decisions and interpretation of section 2(22)(e) of the IT Act.
5. Erroneous order of CIT(A) and restoration of AO's order.
Summary:
1. Deletion of Addition of Rs. 3,85,39,213/- u/s 2(22)(e) of the IT Act:
The brief facts of the case are that the assessee, a partnership firm, had transactions with its sister concern M/s. New Era Exports Pvt. Ltd. The AO invoked provisions of section 2(22)(e) of the IT Act on the ground that one of the partners, Shri Ajay Kumar Agarwal, held substantial shares in both the assessee firm and M/s. New Era Exports Pvt. Ltd., resulting in an addition of Rs. 3,85,39,213/-. The CIT(A) deleted the addition, relying on the ITAT Agra Bench decision in M/s Nirmala Realtors Pvt. Ltd., which held that deemed dividend u/s 2(22)(e) can only be taxed in the hands of the registered shareholder, not the concern.
2. Deletion of Addition of Rs. 2,00,000/- u/s 2(22)(e) of the IT Act:
Similarly, an addition of Rs. 2,00,000/- was made by the AO for the loan received from M/s. Gee Kay Real Estate Pvt. Ltd., where another partner, G.K. Agarwal, held substantial shares. The CIT(A) deleted this addition as well, following the same rationale that deemed dividend should be taxed in the hands of the shareholder, not the concern.
3. Deletion of Addition of Deemed Dividend for Payments by Way of Advance or Loan:
The AO argued that the payments made by M/s New Era Exports (P) Ltd. and M/s Gee Key Real Estate (P) Ltd. to the assessee firm were for the individual benefit of the partners, who were substantial shareholders in these companies. The CIT(A) rejected this view, stating that the deemed dividend should be taxed in the hands of the shareholder, not the concern.
4. Reliance on Judicial Decisions and Interpretation of Section 2(22)(e) of the IT Act:
The CIT(A) relied on various judicial decisions, including the ITAT Agra Bench's decision in M/s Nirmala Realtors Pvt. Ltd., the Rajasthan High Court's decision in CIT vs. Hotel Hilltop, and the ITAT Special Bench Mumbai's decision in ACIT vs. Bhaumik Colour P. Ltd., which all held that deemed dividend should be taxed in the hands of the shareholder. The CIT(A) also noted that the term "concern" was added to section 2(22)(e) with effect from 01.04.1998, but this did not alter the position that deemed dividend should be taxed in the hands of the shareholder.
5. Erroneous Order of CIT(A) and Restoration of AO's Order:
The Revenue argued that the CIT(A)'s order was erroneous and should be quashed, with the AO's order being restored. However, the CIT(A) followed the judicial precedents favoring the assessee, leading to the dismissal of the Revenue's appeal.
Conclusion:
The ITAT Agra upheld the CIT(A)'s order, confirming that the deemed dividend u/s 2(22)(e) should be taxed in the hands of the shareholder, not the concern. The appeal of the Revenue was dismissed.
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2012 (8) TMI 1051
Issues Involved: Application for waiver of pre-deposit of dues u/s Rule 6 of CENVAT Credit Rules, 2004 regarding clearance of Bagasse without payment of duty.
Issue 1 - Waiver of pre-deposit of dues:
The applicant, engaged in sugar manufacturing, sought waiver of pre-deposit of dues for clearing Bagasse without duty payment. The demand was based on Rule 6 of CENVAT Credit Rules, 2004, alleging credit taken for common inputs and services. The Hon'ble High Court of Allahabad in Balrampur Chini Mills Ltd. vs. Union of India held Bagasse as waste, not subject to duty under Rule 6. The Tribunal in Indian Potash Ltd. case also supported this view, emphasizing Bagasse as a byproduct of sugarcane crushing, distinct from dutiable final products like sugar and molasses. The Tribunal found no need for separate accounts for Bagasse production, as it emerges during sugarcane crushing, separate from input-chemical usage for sugar and molasses. Consequently, the impugned order was set aside, waiving pre-deposit and allowing the appeal.
Issue 2 - Interpretation of Rule 6 of CENVAT Credit Rules, 2004:
The interpretation of Rule 6 of CENVAT Credit Rules, 2004 was crucial in this case. The Tribunal's analysis highlighted the distinction between Bagasse, a residue of sugarcane crushing, and manufactured goods like sugar and molasses. The decisions of the Hon'ble High Court of Allahabad and the Tribunal in Indian Potash Ltd. case clarified that Bagasse, being a waste product, does not fall under the purview of Rule 6 for duty payment. This interpretation was pivotal in setting aside the impugned order and allowing the appeal, emphasizing the specific nature of Bagasse as a byproduct in the sugar manufacturing process.
Issue 3 - Applicability of Precedent Decisions:
The application of precedent decisions played a significant role in this judgment. The decisions of the Hon'ble High Court of Allahabad and the Tribunal in Indian Potash Ltd. case provided a clear framework for understanding the treatment of Bagasse under Rule 6 of CENVAT Credit Rules, 2004. These decisions, based on the interpretation of Bagasse as a residue/waste product, guided the Tribunal in setting aside the impugned order and allowing the appeal. By relying on established precedents, the Tribunal ensured consistency in the application of legal principles regarding the duty liability of Bagasse in the context of sugar manufacturing.
This summary provides a detailed breakdown of the judgment, focusing on the issues involved and the Tribunal's analysis and decision-making process.
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2012 (8) TMI 1050
Issues Involved:
1. Deduction u/s 80IB(11) on gross profit from potato trading.
2. Set off of interest paid on loan for potato trading.
3. Addition u/s 56 treating loan as deemed dividend u/s 2(22)(e).
Summary:
Issue 1: Deduction u/s 80IB(11) on Gross Profit from Potato Trading
The assessee claimed deduction u/s 80IB(11) on profits from potato trading, arguing that their cold storage operations, which included trading of potatoes, qualified for this deduction. The AO and CIT(A) rejected this claim, stating that u/s 80IB(11) does not envisage deductions for trading activities. The Tribunal upheld this view, noting that the deduction is only for income derived from operating cold storage facilities, and trading of potatoes is not connected to this operation. Thus, the claim for deduction on potato trading profits was rightly rejected.
Issue 2: Set Off of Interest Paid on Loan for Potato Trading
The assessee alternatively claimed that if the deduction u/s 80IB(11) was not allowed, then the interest paid on a cash credit limit for potato trading should be set off against the gross profit. The Tribunal found that the matter required reconsideration by the AO, as the assessee provided a bank certificate indicating that the loan was for potato trading. The Tribunal set aside the orders of the authorities below and restored the issue to the AO for reconsideration, directing that reasonable opportunity be given to the assessee.
Issue 3: Addition u/s 56 Treating Loan as Deemed Dividend u/s 2(22)(e)
The AO added Rs. 5,27,446/- to the assessee's income u/s 56, treating it as deemed dividend u/s 2(22)(e), since the assessee had taken a loan from its sister concern, M/s. Balaji Preservers Pvt. Ltd. The assessee argued that it was not a shareholder in the lending company, citing precedents where such additions were not made in similar circumstances. The Tribunal agreed with the assessee, referencing the ITAT Agra Bench's decision in a similar case and judgments from higher courts, which held that deemed dividends should be taxed in the hands of the shareholder, not the recipient firm. Consequently, the Tribunal deleted the addition, setting aside the orders of the authorities below.
Conclusion:
The appeal was partly allowed. The Tribunal dismissed the claim for deduction u/s 80IB(11) on potato trading profits but remanded the issue of interest set off to the AO for reconsideration. The addition made u/s 56 treating the loan as deemed dividend u/s 2(22)(e) was deleted.
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2012 (8) TMI 1049
The Appellate Tribunal CESTAT Mumbai allowed the application for extension of stay of recovery based on previous decisions, including IPCL vs. CCE Vadodara and CCE vs. Kumar Cotton Mills Pvt. Ltd., as well as judgments from the Hon'ble High Courts. The appellant was not held responsible for the pendency of the appeal.
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2012 (8) TMI 1048
Issues involved: Application for waiver and stay of adjudged dues, interpretation of CENVAT Credit Rules 2004, limitation plea against demands.
Waiver and Stay of Adjudged Dues: The appellant sought waiver and stay of the adjudged dues, which included service tax not paid on reimbursed expenses, CENVAT credit availed on input services, and 8% of the value of services rendered to SEZ units. The Tribunal found a prima facie case in favor of the appellant against the demand related to services rendered to SEZ units, based on a precedent case. However, regarding the demand for CENVAT credit availed on input services, the Tribunal did not find a prima facie case for the appellant. The appellant's claim of not availing the credit was not substantiated, and the Tribunal upheld the findings of the adjudicating authority in this regard.
Interpretation of CENVAT Credit Rules 2004: The Tribunal noted that during the material period, the appellant paid service tax on Construction Service but claimed abatement without fulfilling a crucial condition of not availing CENVAT credit on inputs and input services. The appellant had availed CENVAT credit on input services related to Construction Service, which was contrary to the conditions of the abatement notification. The Tribunal held that the appellant did not make out a prima facie case on merits regarding this demand.
Limitation Plea Against Demands: The appellant pleaded limitation against the demands, arguing that they had disclosed relevant facts to the department through letters. However, the Tribunal found that the letters did not convey the material facts regarding the CENVAT credit-related condition attached to the notification. The documents produced by the appellant were not referred to in their reply to the show-cause notice, and hence, the plea of limitation was not prima facie acceptable. The Tribunal also noted that the plea of financial hardships was not raised in the present application.
Decision: The Tribunal directed the appellant to pre-deposit a specified amount within six weeks and report compliance. Subject to compliance, there would be a waiver of pre-deposit and stay of recovery concerning penalties imposed on the appellant and the demands mentioned in the case.
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2012 (8) TMI 1047
Issues Involved:
1. Assessment of DEPB benefits.
2. Addition on account of sales made to sister concerns.
3. Addition made in respect of Carton business.
4. Disallowance of claim of deduction u/s 80IB of the Act.
5. Rejection of additional claim of deduction u/s 80HHC of the Act.
6. Validity of charging of interest u/s 234D of the Act.
7. Set off of loss from manufacturing section against profits from trading section for deduction u/s 80HHC.
8. Computation of indirect costs attributable to the export of trading goods.
Summary:
1. Assessment of DEPB benefits:
The issue of assessment of DEPB benefits was settled by the Hon'ble Supreme Court in the case of Topman Exports Vs. CIT. The Tribunal set aside the order of Ld CIT(A) and restored the issue to the AO for fresh consideration in line with the Supreme Court's decision.
2. Addition on account of sales made to sister concerns:
The AO added the difference to the total income of the assessee, observing that the sales to sister concerns were underpriced. The Ld CIT(A) confirmed the addition. The Tribunal upheld the decision, noting that the assessee failed to provide convincing explanations for the underpricing, suggesting a device to shift profits to sister concerns.
3. Addition made in respect of Carton business:
The AO added the difference in income from the carton business, observing that sales to sister concerns were below the cost of production. The Ld CIT(A) confirmed the addition, and the Tribunal upheld the decision, noting the absence of convincing explanations from the assessee.
4. Disallowance of claim of deduction u/s 80IB of the Act:
The issue was set aside to the AO for fresh examination in light of the principles given in the case of T.C. Usha Vs. ACIT by the co-ordinate bench of Cochin ITAT.
5. Rejection of additional claim of deduction u/s 80HHC of the Act:
The assessee's claim for enhancement of deduction u/s 80HHC was rejected by the AO and confirmed by the Ld CIT(A), citing the Supreme Court's decision in Commissioner of Income tax Vs. Sun Engineering Works Pvt Ltd. The Tribunal upheld the decision.
6. Validity of charging of interest u/s 234D of the Act:
The issue was settled by the Hon'ble Jurisdictional Kerala High Court in the case of CIT Vs. Kerala Chemicals and Proteins Ltd. The Tribunal directed the AO to charge interest u/s 234D in accordance with this decision.
7. Set off of loss from manufacturing section against profits from trading section for deduction u/s 80HHC:
The Ld CIT(A) followed the Supreme Court's decision in IPCA Laboratory Vs. DCIT. The Tribunal upheld the decision, noting the absence of any record to support the assessee's contention.
8. Computation of indirect costs attributable to the export of trading goods:
The Tribunal set aside the order of Ld CIT(A) and restored the issue to the AO for re-examination, directing the AO to determine the quantum of indirect costs as per the decisions relied upon by the assessee and the discussions made by the Tribunal.
Conclusion:
The appeals of the assessee were partly allowed, and the appeals of the revenue were allowed for statistical purposes. The judgment was pronounced on 10-08-2012.
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2012 (8) TMI 1046
Issues Involved:
1. Taxability of DEPB entitlement/Duty drawbacks.
2. Inclusion of sale of used packing material and scrap in turnover of 10-B Unit.
3. Deduction u/s 80IA for captive power plant.
4. Disallowance of ESI contribution.
5. Disallowance u/s 14A.
Summary:
1. Taxability of DEPB entitlement/Duty drawbacks:
The Revenue challenged the CIT(A)'s decision to tax DEPB entitlement/Duty drawbacks on an accrual basis, citing the reversal of the Topman Exports decision by the Bombay High Court in CIT vs. Kalpataru Colours & Chemicals Ltd. However, the ITAT upheld the CIT(A)'s decision, noting that the Supreme Court had ultimately upheld the Topman Exports decision. Consequently, the Revenue's appeals were dismissed.
2. Inclusion of sale of used packing material and scrap in turnover of 10-B Unit:
The AO included the sale of scraps and raw material in the turnover of the 10-B Unit, which the CIT(A) upheld. However, the ITAT referred to its earlier decision in the assessee's case for AY 2004-05, which held that such sales should not be included in the turnover for the purpose of deduction u/s 10B. Therefore, the ITAT directed the AO to exclude these sales from the turnover, allowing the assessee's grounds on this issue.
3. Deduction u/s 80IA for captive power plant:
The assessee claimed deduction u/s 80IA for a gas-based Genset installed in AY 2003-04, which the AO and CIT(A) denied, arguing it was not an independent undertaking. The ITAT noted the need for further examination of whether the Genset could be considered an independent undertaking eligible for deduction u/s 80IA. The issue was restored to the AO for fresh determination, considering legal principles and facts.
4. Disallowance of ESI contribution:
In AY 2006-07, the AO disallowed ESI contributions made beyond the due date. The ITAT referenced the Supreme Court's decision in CIT vs. Alom Extrusions Ltd and the Delhi High Court's decision in AIMIL Ltd, which allowed such contributions if paid before filing the return. The ITAT directed the AO to allow the claimed amounts.
5. Disallowance u/s 14A:
The AO disallowed amounts u/s 14A for AY 2006-07. The ITAT noted that Rule 8D was not applicable for the year under consideration and directed the AO to re-examine the issue in light of the principles laid down in Godrej & Boyce Mfg. Co. Ltd. vs. DCIT. The issue was restored to the AO for fresh examination and determination.
Conclusion:
The assessee's appeals for AY 2005-06 and 2006-07 were allowed for statistical purposes, while the Revenue's appeals were dismissed. The order was pronounced in the open court on 10th August, 2012.
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2012 (8) TMI 1045
Issues involved:
The issues involved in the judgment include the classification of income received from renting a part of hotel premises as "Income from House Property" instead of "Income from Business or Profession," application of Rule of Consistency, treatment of rental receipt as "Income from House Property," and part disallowance of deduction out of Director's Remuneration.
Issue 1: Classification of income
The appellant contested the classification of income from renting hotel premises as "Income from House Property" instead of "Income from Business or Profession." The appellant argued that the income had consistently been assessed as "Business Income" in previous assessment years, including the immediate previous year relevant to the assessment year in question u/s 143(3) of the Act.
Issue 2: Rule of Consistency
The appellant raised concerns regarding the failure to follow the Rule of Consistency, emphasizing that there had been no material change in the nature of income during the assessment year under appeal. The appellant highlighted the identical facts and circumstances compared to earlier years.
Issue 3: Treatment of rental receipt
The appellant argued that the property in question was being commercially exploited as a business asset for hotel operations since 1982, with a valid license for hotel operations renewed annually. The appellant contended that assessing the rental income as "Income from House Property" disregarded the historical assessment of the case.
Issue 4: Disallowance of Director's Remuneration
The appellant challenged the part disallowance of the deduction out of Director's Remuneration, asserting that the Commissioner erred in sustaining the findings of the Assessing Officer without considering the past assessed history on this matter.
The Tribunal considered the arguments presented by both parties. The appellant highlighted their consistent assessment of rental income as business income in preceding and subsequent years, supported by the decision in Radha Soami Satsang Vs. CIT - 193 ITR 321. The Departmental Representative relied on the lower authorities' orders.
The Tribunal referred to the decision of the Hon'ble Apex Court in Radha Soami Satsang, emphasizing that in the absence of material changes justifying a different view, the exemption of the appellant should not have been reopened. The Tribunal noted that the rental income had been consistently assessed as business income in previous and subsequent years, including the immediate preceding year.
Based on the principles outlined in the Radha Soami Satsang case, the Tribunal directed the Assessing Officer to assess the rental income as business income and allow deductions for related expenditures, including Director's Remuneration. Consequently, the appeal of the assessee was allowed.
The decision was pronounced in open court on 9th August 2012.
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2012 (8) TMI 1044
Issues involved: Appeal against the order of the Director of Income-tax(Exemption) rejecting registration under S.12A of the Income-tax Act, 1961.
Summary:
The appeal was filed by the assessee against the order of the Director of Income-tax(Exemption) rejecting the application for registration under S.12A of the Act. The assessee argued that the Director did not consider the amended regulations and the list of newly elected body of the Society, which had been submitted to another Government Authority. After hearing both sides, the Appellate Tribunal found merit in the assessee's argument and set aside the impugned order. The matter was restored to the Director of Income-tax(Exemption) to redecide the issue considering the amended regulations and the newly elected body of the society. The Tribunal directed the Director to pass a speaking order after giving a reasonable opportunity of hearing to the assessee.
Furthermore, the Tribunal noted that the assessee was willing to provide further information to verify unsecured loan creditors and other liabilities. The assessee also agreed to demonstrate that the expenditure incurred by the society was wholly for charitable activities. Taking into account these statements, the Tribunal directed the Director to allow the assessee to furnish all necessary information and evidence to support its case for registration under S.12A of the Act.
In conclusion, the appeal of the assessee was allowed for statistical purposes, and the order was pronounced in court on 10.08.2012.
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2012 (8) TMI 1043
The Appellate Tribunal CESTAT KOLKATA dismissed the Revenue's appeal due to a delay of 279 days, which could not be condoned as sufficient cause was not shown. The Miscellaneous Application and Stay Petition were also dismissed.
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2012 (8) TMI 1042
Deduction u/s 80IB - disallowance as Service Income, Interest on Bank Deposits, Interest income on loan to employees, Commission received, Compensation received from sundry debtors for delayed payments have no nexus with industrial undertaking - Held That:- SLP dismissed. HC order confirmed [2011 (11) TMI 466 - MADRAS HIGH COURT]
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2012 (8) TMI 1041
Additions based on the statement recorded at the time of survey u/s. 133A - Held that:- In the present case, the additions are based on the statement recorded at the time of survey u/s. 133A which have been later on retracted by the assessee. The A.O. has not brought any corroborative evidence and material on record to justify the addition. The A.O. has not brought any independent evidence or given any finding to substantiate the declaration made at the time of survey. In view of these facts we are of the view that no addition can be made only on the basis of admission during the course of survey. We thus direct the deletion of the addition made. Thus this ground of the assessee is allowed.
Violation of conditions laid down under section 80IB (2)(ii) - Held that:- Carrying on the same business in the new unit or stoppage of business in the old unit cannot be a criteria to hold that it is a case of reconstruction of a business already in existence
Creditors from unexplained sources - Held that:- A.O. made addition on the basis of the ledger account of the assessee as appearing in the books of the supplier. Before us the Ld. A.R. has urged that the addition has been made on the basis of assumption and presumption. However, no documentary evidence has been furnished before us in its support. Thus in the absence of any material to the contrary, we do not find any reason to interfere in the order of CIT (A). We thus uphold the order of CIT (A) and dismiss this ground of assessee.
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