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Case Laws
Showing 181 to 200 of 1254 Records
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2014 (8) TMI 1075
Non application of provisions of Section 40(a)(ia) - whether tribunal was justified in law to direct that once profit rate is estimated further disallowance on the same books of accounts cannot be made in the Light of the provisions under Section 40(a)(ia)? - Held that:- Whether the AO can disallow the expenses which are directly related to gross receipt of the assessee on which the AO has estimated net profit by applying the rate of 8%. It is a fact that the assessee has not produced books of account, it means that the AO has not relied on books of account for estimation of profits. This fact is accepted by assessee as well as by revenue.
We are of the view that once the net profit rate is estimated the AO cannot base his disallowance on the same books of account for the purpose of disallowance by invoking the provisions of section 40(a)(ia) of the Act or general disallowance u/s 37 of the Act. The estimation made by AO of net profit will take care of every addition related to business income or business receipts and no further disallowance can be made. We see force in the argument of the assessee that when the income of the assessee was computed applying gross profit rate and no deduction was allowed in regard to the expenses claimed by the assessee, there was no need to look into the provisions of section 40(a)(ia) of the Act or section 37 of the Act. Accordingly, no disallowance could have been made in view of the above facts that once the profit is estimated by applying net profit rate. Accordingly, we direct the AO to delete the other disallowances and restrict the addition by applying Net Profit rate @8% of gross receipts. We find valid reasons given by the Tribunal in support of this order
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2014 (8) TMI 1074
Representation by an Advocate in proceedings conducted to determine whether the petitioner is a wilful defaulter - Held that:- The idea of preventing adequate representation to the affected parties, for such disposal is unacceptable. The right to be represented by a legal advocate is not an integral part of natural justice and it is not necessary that in all cases before domestic forums, representation through a legal practitioner should be permitted. However, the courts have always leaned towards allowing representation through legal practitioners to obviate any handicap that the person may feel in representing his case. In cases where adverse decision would have serious civil and pecuniary consequences, denial of representation through a legal practitioner may in given facts be violative of natural justice. Indisputably, the consequences of holding the petitioner as a wilful defaulter would be serious for the petitioner and the petitioner ought to be afforded adequate opportunity to present its perspective on the issue.
In view, in the given facts of the case, the prayer for the petitioner to be represented by an Advocate is liable to be allowed.
The material that is relied upon by any authority in arriving at a decision must be made available to the affected party. This is an integral part of the principles of natural justice that are enshrined in Article 14 of the Constitution of India.There is no justifiable reason why the same should be departed from in the present case.
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2014 (8) TMI 1073
Refusing permission to engage advocate - Held that:- Here the proceeding is between a lender and a borrower, and a committee of the lender is to hear the borrower. The committee is not to decide any lis between the parties; nor is it to adjudicate any dispute; nor to inquire into any charge and record its findings. It is only to take a view on the appellant’s representation against proposal of the bank, based on its records related to the appellant’s loan account, to classify the appellant as a wilful defaulter.
The lender is under an obligation to detect its borrowers who are in default on loan it has sanctioned. Whether a borrower is a wilful defaulter is to be ascertained first by the bank internally through its high officials who are to scrutinise the related records for classifying the borrower concerned. A borrower when declared a wilful defaulter is bound to face the penal consequences mentioned in the MC itself.
The evident purpose of the hearing of the borrower is to ensure that the lender does not commit a mistake in identifying and classifying a borrower as a wilful defaulter. The appellant’s representation is that the bank has wrongly classified it as a wilful defaulter. The GRC of the bank supposed to examine the appellant’s case closely in the presence of the appellant that will be free to present its case over the course of hearing, is not, however, empowered to take down any evidence.
Hence in ordinary cases absence of an advocate for the hearing purpose is not likely to defeat the purpose of the hearing. In this case we do not find any reason to say that the grounds stated by the appellant for permission to engage advocate to appear before the GRC for the hearing purpose have constituted a case that absence of the service of an advocate for the hearing purpose is likely to defeat the purpose of the hearing.
We are therefore of the opinion that by refusing permission to engage advocate the bank did not commit any wrong, and that the single Judge has rightly dismissed the WP, though he has recorded a finding that the appellant is a defaulter on the loan, − not an issue in the WP, and made an assumption about the appellant’s representation ability, − an impermissible personal perception.
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2014 (8) TMI 1072
Withdrawal of approval status of Institute - Position of the playground as well as no occupation certificate and faculty have been same till this date, which the Respondents failed to take note of and that resulted into the observation referring to the deficiencies. Thus, in the present facts and circumstances and in view This Order is modified/corrected by Speaking to Minutes Order dated 01/09/2014 of the above, we are inclined to observe that there were no major deficiencies when the impugned order was passed. As the deficiencies are clarified and explained and as averred removed, there is no reason to keep this Petition pending so also in view of the observation already made in order dated 14th July 2014.
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2014 (8) TMI 1071
NDPS - It is a moot question as to whether the search and seizure conducted in terms of the provisions contained in Chapter VII of the CrPC, which contains Sections 91 to 105 read with the provisions contained in Sections 165 and 166 of the CrPC, can be made basis for quashing the investigation or quashing the search and seizure made? The answer is in the negative.
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2014 (8) TMI 1070
Issues:
1. Justification of confirming the deletion of specific amount against the addition made by the Assessing Officer.
2. Validity of the Tribunal's decision in allowing further relief on credit entries without proper explanation.
3. Perversity of the Tribunal's finding in relation to the facts and circumstances of the case.
Issue 1:
The High Court considered the appeal arising from an order of the Income Tax Appellate Tribunal, Jaipur Bench 'B', which allowed the appeal of the assessee and dismissed the appeal of the Department for the assessment years 1997-98 to 2003-04. The Tribunal found that the Assessing Officer was not justified in deleting a specific amount from the total addition made in the account of the assessee. The Income Tax Department challenged this decision, questioning the Tribunal's justification in confirming the deletion of the amount despite the entries being recorded in the books of accounts of another entity, where the person associated was deemed a Benami of the assessee. The High Court held that the findings of the Tribunal were factual and did not raise any substantial questions of law for consideration, leading to the dismissal of the appeal under Section 260A of the Income Tax Act, 1961.
Issue 2:
The second issue raised in the appeal pertained to the Tribunal's decision to allow further relief on credit entries totaling a specific amount in the name of an individual, despite the failure of the assessee to provide a satisfactory explanation. The Department contested this decision, arguing that the Tribunal did not adequately discuss and decide on the grounds raised by the Department. However, the High Court observed that the findings of the Tribunal were factual in nature and did not warrant interference under Section 260A of the Income Tax Act, 1961. Consequently, the appeal was dismissed based on the lack of substantial questions of law arising from the Tribunal's decision.
Issue 3:
The final issue raised in the appeal questioned the perversity of the Tribunal's finding in light of the facts and circumstances of the case. The Department contended that the Tribunal's decision was contrary to the record and untenable in the eye of the law. However, the High Court examined the orders passed by the Assessing Officer and the Commissioner of Income Tax (Appeals) and concluded that the findings of the Tribunal were factual and did not give rise to any substantial questions of law requiring the Court's consideration. As a result, the appeal was dismissed, affirming the Tribunal's decision in the matter.
In summary, the High Court dismissed the Income Tax Department's appeal, as it found no substantial questions of law arising from the Tribunal's decision to warrant interference under Section 260A of the Income Tax Act, 1961. The issues regarding the deletion of a specific amount against the addition made by the Assessing Officer, the validity of allowing further relief on credit entries without proper explanation, and the alleged perversity of the Tribunal's finding were all addressed and resolved in favor of the assessee, leading to the dismissal of the appeal.
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2014 (8) TMI 1069
Reopening of assessment - non-deduction of TDS on payment made to the contractors for the labour contract work - Held that:- A mere production of the books of account or documents or other evidences is not sufficient for making assessment. If the Assessing officer is unable to examine those documents and to discover the understatement of income by relying on the same documents, the Assessing officer could re-open the assessment on the basis of fresh material which came to the knowledge of the Assessing officer that the income has escaped assessment. Therefore, merely because material lies embedded in the material or evidence produced by the assessee, which the Assessing officer could have uncovered but did not uncover is not a good ground to cancel the re-assessment proceedings. The Assessing officer could have found the truth, but he did not, does not preclude the Assessing officer from exercising the power of re- assessment to bring to tax the escaped income. In the present case, as seen from the reasons recorded, there is prima facie escapement of income. Hence, the Assessing officer after recording the reasons, issued notice to the assessee u/s. 148 of the Act.
TDS u/s 194C - non deduction of tds - nature of contract - Held that:- Chapter V of the Indian Contract Act treats certain relations resembling those created by a contract as contracts enforceable in law. The Indian Contract Act thus envisages four types of contracts, namely, (1) contracts made in writing, (2) contracts made orally, (3) contracts by implication or implied contracts and (4) quasi contracts. Thus, the contracts envisaged by section 194C are not limited to written contracts alone; they include oral contracts and implied contracts also. All payments made in pursuance of a contract irrespective of whether it is a written contract, oral contract, implied contract and quasi contract are well covered by section 194C of the Income Tax Act. The case of the assessee falls within the aforesaid parameters.
Provisions of sub-section (2) of section 194C also apply to an individual whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the relevant financial year. Total sales, gross receipts or turnover from the business or profession carried on by the assessee in the year under appeal exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the relevant financial year. Total sales, gross receipts or turnover from the business or profession carried on by the assessee in the year under appeal exceed the monetary limits specified under clause (a)or clause (b) of section 44AB. It is for this reason that the assessee has filed tax audit report as required by section 44AB. In this view of the matter, the provisions of section 194C(2) apply with equal force to him and the assessee is liable to deduct TDS on the impugned payment - Decided against assessee
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2014 (8) TMI 1068
Entitlement for deduction of deferred interest liability - Held that:- It is clear that the assessee in order to purchase food grains was getting government aid. However, they were claiming deductions of the interest proportionate to the food grains sold and in respect of the interest relatable to the food grains unsold was carried forward to next year and after the sale of food grains, deductions was claimed. This is the practice which was followed by the assessee. However, from 1985-86, they switched on to mercantile system of accounting. In that year, they claimed deductions of interest in respect of food grains which were sold and unsold and also the interest proportionate to the food grains sold which were of the previous year. There was no double claim. The authorities proceeded with an assumption that there is a double benefit claim. They also proceeded on the assumption that once mercantile system is adopted, the assessee looses the benefit of claiming deductions of interest which should have been claimed in the previous year.
The denial of the appellant’s claim by the authorities is not justifiable. The assessee is entitled to the benefit of claiming the said deductions relatable to the previous year i.e., for the assessment year 1985-86 - Decided in favour of the assessee
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2014 (8) TMI 1067
Condonation of delay in filing an appeal - prejudice that may be caused to other party - Held that:- We are unable to agree with the reasoning of the learned Judge that no litigant ordinarily stands to benefit by instituting a proceeding beyond time. It is common knowledge that by delaying a matter, evidence relating to the matter in dispute may disappear and very often the concerned party may think that preserving the relevant records would be unnecessary in view of the fact that there was no further proceeding. If a litigant chooses to approach the Court long after the time prescribed under the relevant provisions of the law, he cannot say that no prejudice would be caused to the other side by the delay being condoned.
Length of the delay is a relevant matter to be taken into account while considering whether the delay should be condoned or not. It is not open to any litigant to fix his own period of limitation for instituting proceedings for which law has prescribed periods of limitation.
The Respondents had filed the suit for specific performance and when the trial Court found that the claim for specific performance based on the agreement was correct but exercised its discretion not to grant the relief for specific performance but grant only a payment of damages and the Respondents were really keen to get the decree for specific performance by filing the appeals, they should have shown utmost diligence and come forward with justifiable reasons when an enormous delay of five years was involved in getting its appeals registered. We, therefore, find total lack of bona -fides in its approach and the impugned order of the High Court in having condoned the delay in filing as well as refilling, of 9 days and 1727 days respectively, in a casual manner without giving any reason, much less acceptable reasons, cannot therefore be sustained. - Decided in favor of appellant.
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2014 (8) TMI 1066
Deemed dividend u/s. 2(22)(e) - Held that:- The assessee is holding registered shares to the tune of 10,99,300 in Mega Resources Ltd. and not 13,99,100 as alleged by the revenue. No doubt the total shareholding of the assessee in Mega Resources Ltd. is to the tune of 13,99,100 but registered shareholders are to the extent of 10,99,300. We have to see only the registered shareholding and not the beneficial shareholder. For this, the assessee has filed evidence before the lower authorities and even before us now. In such circumstances, this issue being covered by the Special Bench of this Tribunal, Mumbai Bench in the case of Bhaumik Colour P. Ltd.,[2008 (11) TMI 273 - ITAT BOMBAY-E ]. Respectfully following the same, we delete the addition and reverse the orders of the lower authorities. - Decided in favour of assessee.
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2014 (8) TMI 1065
Omission to include the fact in the order that Matter remanded to original adjudicating authority - Commissioner (A) directed the claimant to file a request for extending the period of time for filing refund claim beyond six months and thereafter the matter should be decided - Held that:- it is appropriate that the matter should be remanded to original adjudicating authority by us at this stage itself. In our opinion, it is not necessary for the appellant to file separate request for extension of time for filing the refund claim and if the refund claim is being filed late, in the claim itself they can seek extension of time also and this can be considered by the original adjudicating authority. In any case, since the matter is being remanded, the claimant can file a separate request for extension of time and the original adjudicating authority shall proceed to decide the matter in accordance with the directions of the Commissioner (A).
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2014 (8) TMI 1064
Penalty u/s 271(1)(c) - period of limitation - Held that:- Time limit stipulated for passing the penalty order is 6 months from the financial year in which the order of the CIT(A) or ITAT is received on the appeal against the assessment proceedings. In this case the order of the ITAT was passed on 25.1.2012 and as such time was available to the AO for passing the penalty order up to 30.9.2012. Hence, we do not find any infirmity in the order of the CIT(A) holding that the order passed u/s. 271(1)(c) is within time u/s. 275.
Unaccounted receipts - Held that:- We find that the assessee has offered explanation stating that the total amount received was only ₹ 4.9 crores and not ₹ 5.9 crores and had explained that the amount of ₹ 1 crore had been taken twice by the Assessing Officer while computing the advances given. It is also a fact that the ld. CIT(A) has deleted the addition whereas ITAT restored it. All that happened in the present case was that through a bona fide and inadvertent error the assessee failed to add the provision for gratuity to its total income. This could only be described as a human error which we are all prone to make. The calibre and expertise of the assessee had little or nothing to do with the inadvertent error. That the assessee should have been careful could not be doubted, but the absence of due care, would not mean that the assessee was guilty of either furnishing inaccurate particulars or was attempting to conceal its income. Consequently, given the peculiar facts of this case, the imposition of penalty on the assessee was not justified. - Decided in favour of assessee
Unexplained investments - Held that:- As merely because the explanation furnished by the assessee was considered as un-satisfactory or unreasonable it would not ipso facto justify the invocation of clause (a) to levy penalty u/s. 271(1)(c). Hence we find no infirmity in the order of the CIT(A) in holding that penalty is not leviable on the addition of ₹ 1,17,50,000 representing unexplained investment in the hands of the assessee since no concealment is shown to have been established and additions have been made by merely disbelieving the submissions of the assessee. We confirm the order of the CIT(A) and dismiss the appeal of the Revenue. - Decided in favour of assessee
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2014 (8) TMI 1063
Revision u/s 263 - non-taxability of capital gain on transfer of the property - conclusion of the CIT that the clauses in the Agreement are only to mask the transaction which in substance was transfer as defined in Sec.2(47)(v) - Held that:- CIT’s conclusion regarding substance of the transaction prevailing over the form of the transaction are without any basis and therefore to be disregarded. It was submitted that there was no loss to the revenue as capital gain payable on transfer was duly paid by the Assessees albeit in different assessment years. There was therefore no prejudice to the interest of the revenue. It was pointed out that execution of a general power of attorney by the Assessees in favour of M/S.Glory Estates Pvt.Ltd. was only for convenience and does not convey any right, title or interest over the property. The Assessees actually received sale consideration only as and when registered sale deeds were executed by the power agent. It was submitted that invoking the provisions of Sec.2(47)(v) of the Act by the CIT was erroneous.
"Transfer" in section 2(47) also envisaged execution of registered deed in such circumstances. Capital gains become liable to be charged to tax only if they arise as a result of "transfer" of capital asset and the date on which they arise is date of "transfer". If as a result of mutual arrangement by parties or otherwise, no registered deed is executed even after transaction is completed by delivery of possession and receipt of consideration, capital gains tax would escape assessment altogether or if such execution of registered sale-deed is postponed, the capital gains tax would also be postponed. In several cases it suited the parties to complete such transactions without execution of registered deed and thereby evade payment of tax on capital gains.
The conditions necessary for application of the provisions of Sec.53A of the Act cannot be presumed to exist and the Tax authorities cannot blindly apply those provisions by merely relying on the fact that there was an agreement for sale and delivery of possession by the transferor/seller to the transferee/purchaser. If such a course is permitted to be adopted and the tax authorities are allowed to levy and collect tax on capital gain and later it turns out that the transaction is rescinded, there is no mechanism under the Act by which the Assessee can claim refund of such taxes levied and collected. Therefore invocation of the provisions of Sec.2(47)(v) in the facts and circumstances of the present case, in our view was not proper. Thus the order passed by the AO was neither erroneous nor prejudicial to the interest of the revenue and therefore the CIT was not right in invoking jurisdiction u/s.263 of the Act. - Decided in favour of assessee.
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2014 (8) TMI 1062
Allowability of deduction u/s 80IB (10) - project cleared after approval of the Slum Rehabilitation Authority - time limit for calming the deduction - Held that:- After hearing both the parties and on perusal of the CIT (A)’s order, we find the CIT (A) has given the finding categorically by holding that the project in question is a Slump Rehabilitation Project and the time limit provided in the statute will not be applicable to the assessee in view of the proviso to section 80IB(10). - Decided in favour of assessee
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2014 (8) TMI 1061
Laboratory at Ghaziabad be not shut down - respondents stated that the Food Research and Standardisation Laboratory at Ghaziabad is not being shut down. It is only the administration which has been transferred to the Department of Health Services. Also further that the laboratory at Ghaziabad would be further upgraded - Held that:- it has been contended by the petitioner that there is a great disparity between the number of samples being sent to the four FRSL laboratories at Kolkata, Ghaziabad, Mysore and Pune on the one hand and private laboratories on the other hand. In this context, the respondents shall file an affidavit indicating which are the private laboratories which have been authorized to conduct testing of food samples under the Food Safety and Standards Act, 2006 and/ or Rules and / or Regulations made thereunder. The respondents shall also file the connected notifications in this respect, if any.
Seeking quashing of guidelines dated 24.01.2013 - Held hat:- what is prohibited under the said Act, Rules and Regulations, but which is permitted under CODEX Alimentarius, will still be regarded as prohibited in terms of the law applicable in India. It is made clear that we have not expressed any opinion as to whether Allura Red is permitted or prohibited under the said Act, Rules or Regulations. It shall be pointed out by respondents in the affidavit which he shall file.
Seeking a writ of quo warranto - Held that:- the petitioner has drawn our attention to Section 5 of the said Act and in particular to sub-sections (2) and (3) thereof, which give an indication with regard to the eligibility of the Chairperson of the Food Safety and Standard Authority of India. According to petitioner, the respondent No. 4, who is the Chairperson of the Food Safety and Standard Authority of India, does not have the requisite eligibility inasmuch as he does not have a broad range of relevant expertise and is not a person who has been associated with the subject, as indicated in sub-sections (2) and (3) of Section 5. In this connection also, the respondents may file an additional affidavit setting out their stand with regard to the respondent No. 4 being eligible for the said position as Chairperson of the Food Safety and Standard Authority of India.
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2014 (8) TMI 1060
Prima facie error in the order - Admissibility of 'C' forms - non-mentioning of date of issue - Held that:- the finding of the Board that the two ‘C’ forms are inadmissible because they did not mention any date of issue, is not correct. Another finding of the Board that it did not find in those provisions that the forms had to be accompanied by consignment notes is also erroneous. However, the petitioner has to satisfy the Board with regard to some discrepancies appearing at internal page 3 of its order. Therefore, the impugned order of the Board is set aside and remanded back to the Board for consideration and passing of a fresh order within three months from the date of communication of this order by a reasoned decision taking into account the above observations. - Petition disposed of
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2014 (8) TMI 1059
Addition of unexplained credits in the bank account - Held that:- We have considered the rival submissions on either side and also perused the material available on record. It is not in dispute that the assessee deposited ₹ 3,33,815 in the bank account. Though the assessee claims that this was a trading receipt from garment business, the income from trading of garment is only ₹ 58,250. The assessee could not explain the source from where the deposits were made. Even before this Tribunal, the assessee could not explain the source and means for deposit of ₹ 3,33,815. In the absence of any material and explanation from the assessee, this Tribunal is of the considered opinion that the assessing officer has rightly treated the deposit in the bank as unexplained investment. Therefore, the order of the lower authority on this issue is confirmed. - Decided against assessee
Addition on investment in property - Held that:- The fact that the assessee purchased property by investing an amount of ₹ 7,10,000 is not disputed. Therefore, it is for the assessee to explain from where the assessee got the funds for making investment and why the same should not be treated as income of the assessee. The assessee has no explanation to offer. Therefore, this Tribunal is of the considered opinion that the assessing officer has rightly taken the entire amount as income of the assessee. This Tribunal do not find any infirmity in the order of the lower authority. Accordingly the same is confirmed. - Decided against assessee
Addition towards unexplained investment in the bank account and profit from sale of land - Held that:- The assessee has to explain the source for making investment in the landed property. The assessee is engaged in the real estate business, therefore, the profit arising out of purchase and sale of real estate has to be treated as unexplained income. In the absence of any details, this Tribunal is of the considered opinion that the CIT(A) has rightly confirmed the addition. It is for the assessee to explain the source for making the deposit in the bank and the source for making the investment in the landed property. It is also the responsibility of the assessee why such investment should not be treated as income of the assessee. In the absence of any explanation from the assessee, this Tribunal is of the considered opinion that the CIT(A) has rightly confirmed the addition. Accordingly, the order of the CIT(A) on this issue is confirmed. - Decided against assessee
Ingenuity of gift - Held that:- To accept the gift, the assessee has to definitely establish the creditworthiness of her father. The contention of the ld.counsel for the assessee is that if the assessee could not explain the creditworthiness, the addition could be made only in the hands of the assessee’s father. The case of the department as it appears from the assessment order clearly shows that Shri George Philip acted as an agent for transfer of funds from unknown person to Smt. Asha Sunil. The assessing officer has also found that the assessee’s father’s bank account is only a conduit for transfer of funds from unidentified person. In the absence of any material to suggest that the assessee’s father has sufficient creditworthiness to credit such a huge money to the assessee, this Tribunal is of the considered opinion that the CIT(A) has rightly confirmed the addition. The onus is on the assessee to prove the creditworthiness of her father, genuineness of the transaction and identity of the parties. In this case, though the assessee claims that the funds were transferred from her father’s account, the creditworthiness is not proved. Merely because the funds were transferred from banking channel, it will not prove the genuineness of the transaction as held by the Apex Court in the case of P Mohanakala ( 2007 (5) TMI 192 - SUPREME Court ) - Decided against assessee
Undisclosed deposits - Held that:- The assessee has withdrawn an amount of ₹ 2,91,600 from the bank. Since the amount was withdrawn from bank out of the deposit made in the bank, this Tribunal is of the considered opinion that ₹ 2,91,600 which was withdrawn from bank cannot be treated as income of the assessee. In other words, the amount of ₹ 2,91,600 was part of ₹ 15,04,891 which was already added by the assessing officer and addition of ₹ 2,91,600 once again would amount to double addition. Therefore, this Tribunal is unable to uphold the addition made by the assessing officer to the extent of ₹ 2,91,600 on the basis of the cash withdrawals made by the assessee from the bank account. Accordingly, the order of the lower authority is set aside and the assessing officer is directed to delete the addition of ₹ 2,91,600 with regard to cash withdrawal from the bank as shown in the cash flow statement. - Decided against assessee in part
Addition of foreign travel expenses - Held that:- It is an admitted fact that the assessee undertook foreign travel during the year under consideration. The source for the expenditure was not disclosed before the assessing officer. It is also not disclosed in the cash flow statement. The assessee is also not maintaining any books. In those circumstances, the CIT(A) has rightly made addition to the extent of ₹ 5 lakhs. In total the unexplained investment and expenditure to the tune of ₹ 33,75,410 is confirmed out of the addition of ₹ 36,67,010. The assessing officer is directed to delete the addition of ₹ 2,91,600. - Decided against revenue
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2014 (8) TMI 1058
Whether the impugned Advisories which have been issued by Respondent No.2 have the force of law and are within the ambit and scope of the power conferred on Respondent No.2 – Food Authority under the provisions of the said Act and Rules and Regulations framed thereunder - Held that:- this is answered in terms of the views taken by one of us viz. V.M. Kanade, J. and the learned third Judge Ranjit More, J. who have held in their orders that the impugned Advisory viz. Product Approval Advisory dated 11/05/2013 issued by Respondent No.2 does not have force of law and is not within the ambit and scope of the power conferred on the Food Authority under the FSS Act and the Rules and Regulations framed thereunder.
Whether Respondent No.2 – Food Authority had the power and authority to issue these Advisories under section 16(1) read with section 16(5) read with sections 18 and 22 of the said Act without following the procedure laid down under Sections 92 and 93 of the Act of placing the Advisories/Regulations before both the Houses of Parliament - Held that:- view taken by majority prevails and accordingly it is held that the Food Authority did not have power and authority to issue these Advisories under sections 16(1) read with section 16(5) read with sections 18 and 22 of the said Act without following the procedure laid down under Sections 92 and 93 of the Act of placing the Advisories/Regulations before both the Houses of Parliament. - Petition allowed and disposed of by virtue of majority view taken
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2014 (8) TMI 1057
Disallowance u/s 14A - Held that:- CIT(A) examined the investment if any made during the year and whether the same was out of borrowed funds and has to exempt income or taxable income earned by the assessee on those investments. It was found that total investment during the year was ₹ 18.09 crores. It was further found that investment of ₹ 18 crores was out of borrowed funds but was only for a short period of two days.
Whatever income was yielded through these investments, was offered as taxable income by the assessee in its return of income. It was also found by the CIT(A) that balance investment of ₹ 9,500/- was made in a company incorporated in Abu Dhabi, dividend income was also taxable. Accordingly, though disallowance was warranted u/s.14A, the CIT(A) also examined investment made after 31-3-2006, which had yielded only taxable income and recorded a finding to the effect that no direct or indirect expenditure was incurred by the assessee during the year for earning exempt income. Accordingly, he deleted the disallowance of interest expenditure of ₹ 77,82,750/- made by the AO. In respect of disallowance of administrative expenses to the tune of ₹ 21,27,075/-, the CIT(A) after following the order of the Tribunal for A.Y.2005-06 held that administrative and managerial expenditure of ₹ 7,12,177/- being 2% of total exempt income was attributable to earning of exempt income. Accordingly, disallowance was restricted to ₹ 7,12,177/-. No reason to interfere in the order of CIT(A) for deleting the interest expenditure and restricting the disallowance of other expenses to the tune of ₹ 7,12,177/-.- Decided against revenue
Disallowance of interest claimed u/s.36(1)(iii) - Held that:- Advance of ₹ 3.30 crores was made by the assessee to M/s Al Rahba International Trading LLC, Abu Dhabi, which is an entity operating in breeding and processing of poultry based in Abu Dhabi. Under Abu Dhabi law, any entity operating in Abu Dhabi needs to necessarily have a majority shareholding by a resident domiciled in Abu Dhabi. This, however, does not prohibit the profit sharing ratio and funding ratio to be different.
However, share of the assessee company in the capital of M/s Al Rahba International Trading LLC was restricted to 45% because of the shareholding restriction in Abu Dhabi. In respect of profit and loss, it was decided by the partners that share of assessee would be 70%.
Accordingly, part of the funding was required to be attributed towards share capital in the ratio of shareholding while the balance funding was required to be structured as loan. Thus, the assessee had satisfactorily explained the business expediency of investment of ₹ 3.30 crores in the said company for the purpose of business only i.e. for getting more share of profit in that company. The detailed finding recorded by the CIT(A) at para 2.3 with regard to application of funds for the purpose of business has not been controverted by the department by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the findings of the CIT(A) for deleting the disallowance of interest made by the AO - Decided against revenue
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2014 (8) TMI 1056
Conversion of partnership firm into public limited company - Applicability of provisions of Section 45(1) or Section 45(4) of the Income Tax Act - - transfer of movable and immovable assets of the firm to company - Held that:- In the instant case, the partnership firm, which came into existence on 31.08.1995 having seven partners. Later, it became a joint stock company within the meaning of Section 566 of the Companies Act and the same was registered on 08.04.1996. The share holding of the erstwhile firm remained with the same seven persons who became Directors. Thus, There was no transfer of assets of the firm to the company. It was only that the business was taken over by the company. It cannot be valued at market price, it had the value at a cost price.
In view of above, no condition of Section 45 of the Act is applicable in the instant case, hence, no capital gain tax attracted in the instant case. Therefore, we find no reason to interfere with the impugned order passed by the Tribunal. - Decided in favour of assessee.
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