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2012 (11) TMI 1321
Issues involved:
The issues involved in the judgment are the assessment of income from the sale of Carbon Credits under the head Business or Other Sources, eligibility for deduction u/s 80IA(4)(iv)(a) of the IT Act, and the treatment of windmill income as a separate business unit for claiming deductions.
Assessment of income from sale of Carbon Credits:
The assessee contended that the income from the sale of Carbon Credits should be assessed under the head Business and be eligible for deduction u/s 80IA(4)(iv)(a) of the IT Act. However, the authorities disagreed and assessed it under Other Sources. The Tribunal held that income from Carbon Credits is akin to gains earned in the course of carrying on business and not a capital receipt. Therefore, the income from the sale of Carbon Credits is considered as business income and forms part of eligible profits for the purpose of claiming deductions under sec.80IA.
Treatment of windmill income:
The lower authorities disallowed the deduction claimed by the assessee under sec.80IA, stating that the windmill operation cannot be treated as an independent unit from the main business of manufacturing and selling kraft paper. The Tribunal disagreed and ruled that the windmill operation is a separate and independent business unit. It clarified that an assessee can engage in multiple businesses and still claim deductions under sec.80IA. Therefore, the Tribunal directed the Assessing Officer to grant the benefit of deduction under sec.80IA, treating the windmill as a distinct business entity.
Decision:
The Tribunal partly allowed the appeal filed by the assessee, upholding the treatment of income from Carbon Credits as business income and granting the benefit of deduction under sec.80IA for the windmill operation. The judgment was pronounced on November 29, 2012, in Chennai.
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2012 (11) TMI 1320
Issues involved: Transfer of criminal proceedings, conflicting decisions, duplication of evidence, transfer to Special Court (Economic Offence)
In the present case, the petitioner sought to quash the proceedings in C.C.No.6906/2012 before the I Addl.Chief Metropolitan Magistrate, Bangalore city. The respondent had initiated proceedings against the petitioner for various offences under IPC and the Companies Act, based on the same set of evidence. Concerns were raised regarding the potential for conflicting decisions, duplication of evidence, and waste of time if two separate proceedings were to continue before different courts. The court noted that there was no legal impediment for the Special Court (Economic Offence) to try offences under IPC linked with those under the Companies Act. However, it was clarified that proceedings before the Special Court could not be transferred to a regular Magistrate. Therefore, in the interest of efficiency and fairness to both parties, the court ordered the transfer of the proceedings in C.C.No.6906/2012 to the Special Court (Economic Offence) to be tried jointly with C.C.No.28/2012.
The High Court of Karnataka, in its judgment, disposed of the petition and ordered the transfer of the proceedings in C.C.No.6906/2012 from the I Addl. Chief Metropolitan Magistrate, Bangalore to the Special Court (Economic Offence) in Bangalore. This transfer was directed to ensure that both sets of proceedings, involving offences under IPC and the Companies Act, could be tried together in accordance with the law. The court's decision aimed to prevent conflicting decisions, duplication of evidence, and streamline the legal process by consolidating related cases before the appropriate judicial forum.
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2012 (11) TMI 1319
Issues Involved:
1. Dismissal of application for discharge u/s 239 of the Code of Criminal Procedure.
2. Allegations of dowry harassment and physical and mental torture.
3. Ex parte decree of divorce obtained by fraudulent means.
4. Legal principles governing discharge of accused in a warrant case.
Summary:
1. Dismissal of application for discharge u/s 239 of the Code of Criminal Procedure:
The appeal challenges the High Court's judgment affirming the Additional Judicial Magistrate's dismissal of the Appellants' application for discharge u/s 239 of the Code of Criminal Procedure. The Magistrate held that the grounds for discharge could only be considered after evidence was adduced, and minor contradictions in depositions did not warrant discharge.
2. Allegations of dowry harassment and physical and mental torture:
Respondent No. 2 alleged continuous harassment for dowry by her husband (Appellant No. 3) and his parents (Appellants No. 1 and 2), even after a payment of four lakhs. She claimed physical and mental torture persisted, including an incident on 10th December 2006, where she was abandoned on a deserted road and threatened with death if she returned to her matrimonial home.
3. Ex parte decree of divorce obtained by fraudulent means:
During the investigation, Respondent No. 2 discovered that Appellant No. 3 had obtained an ex parte decree of divorce fraudulently. She successfully had the decree set aside. The Appellants argued that the delay in filing the complaint and contradictions in witness statements should lead to discharge, but the trial court found these arguments insufficient for discharge at this stage.
4. Legal principles governing discharge of accused in a warrant case:
The Supreme Court reiterated that u/s 239 of the Code of Criminal Procedure, discharge can only be directed if the charge is groundless. The Court emphasized that at the stage of framing charges, the material on record should be accepted as true, and even strong suspicion is sufficient to justify framing charges. The Court cited several precedents, including *Onkar Nath Mishra v. State (NCT of Delhi)*, *State of Orissa v. Debendra Nath Pandhi*, and *Union of India v. Prafulla Kumar Samal*, to support this view.
Conclusion:
The Supreme Court dismissed the appeal, holding that the allegations against the Appellants were specific and could not be ignored at the stage of framing charges. The Court directed that Appellants No. 1 and 2 be exempted from personal appearance before the trial court, provided they are duly represented by counsel and cooperate with the trial proceedings.
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2012 (11) TMI 1318
Issues Involved:
1. Whether the suit is barred by limitation?
2. Whether this Court has territorial jurisdiction to try and decide the suit?
3. Whether the plaint discloses any cause of action?
4. Whether the plaintiff entered into a lease agreement dated 30.5.1984 with Mohta Industries Ltd., in pursuance of a request raised by the plaintiff under letter dated 23.5.1984 for leasing out one Hydraulic Bricketting Press?
5. Whether the Hydraulic Bricketting Press was delivered and supplied to the defendant Company by the plaintiff?
6. Whether the plaintiff is entitled to a decree for Rs. 23,04,199/- from the defendant and also for recovery of possession of Hydraulic Bricketting Press, as claimed in the suit?
7. Whether the plaintiff is entitled to interest and if so, at what rate?
8. Relief.
Summary of Judgment:
1. Whether the suit is barred by limitation?
The court held that the suit is not barred by limitation. The lease agreement dated May 31, 1984 was not determined but came to an end due to efflux of time. The suit was filed within 3 years of the expiry of the lease agreement, thus within the period of limitation. The court rejected the application of Section 22 of the Limitation Act, 1963, stating that the non-payment of lease rental is not a continuing wrong but a successive breach of contract. The suit pertaining to non-payment of lease rental for the period from October 1986 to April 1989 is barred by limitation, while the suit for the period from May 1989 to May 1992 is within limitation.
2. Whether this Court has territorial jurisdiction to try and decide the suit?
The court held that it has territorial jurisdiction to try the suit. Article 10.8 of the lease agreement dated May 31, 1984 stipulates that the civil courts at Delhi shall have exclusive jurisdiction. Additionally, the appellant company tendered cheques towards lease rental payment at Delhi, which were deposited by the respondent company in Delhi.
3. Whether the plaint discloses any cause of action?
The court found that the plaint discloses a cause of action. The respondent company's documents and evidence established that the equipment was leased to Mohta Industries Ltd. and that the appellant company was liable to pay the lease rental.
4. Whether the plaintiff entered into a lease agreement dated 30.5.1984 with Mohta Industries Ltd., in pursuance of a request raised by the plaintiff under letter dated 23.5.1984 for leasing out one Hydraulic Bricketting Press?
The court concluded that the lease agreement dated May 31, 1984 was indeed entered into between the respondent company and Mohta Industries Ltd. The documents and testimonies provided by the respondent company supported this fact.
5. Whether the Hydraulic Bricketting Press was delivered and supplied to the defendant Company by the plaintiff?
The court held that the Hydraulic Bricketting Press was delivered and installed at the premises of Mohta Industries Ltd. The respondent company's documents, including the certificate of installation, supported this claim. The appellant company failed to produce the register of plant and machinery to disprove the delivery.
6. Whether the plaintiff is entitled to a decree for Rs. 23,04,199/- from the defendant and also for recovery of possession of Hydraulic Bricketting Press, as claimed in the suit?
The court modified the decree, entitling the respondent company to lease rental for the month of May 1989 and for the period from June 1989 to May 1992, along with pre-suit simple interest at 18% per annum, pendente lite interest at 12% per annum, and future interest at 9% per annum. The total amount was to be computed accordingly.
7. Whether the plaintiff is entitled to interest and if so, at what rate?
The court awarded pre-suit simple interest at 18% per annum, pendente lite interest at 12% per annum, and future interest at 9% per annum, modifying the original decree which had awarded compound interest.
8. Relief.
The court modified the judgment and decree dated August 27, 2008, requiring the decree writer to compute the amounts due based on the modified terms. The respondent was entitled to proportionate costs in the suit, and the parties were to bear their own costs for the appeal. The amount deposited by the appellant pursuant to orders in the appeal was to be returned with interest, and the guarantee bond invoked for any amount to be refunded by the respondent to the appellant.
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2012 (11) TMI 1317
Writ petitions Challenging the liability of Nalco (Project) on non-compliance with the provisions of Employees' State Insurance Act, 1948 (ESI Act), 1948 and Regulations framed therein until the ESI Dispensary functions effectively and starts parallel service to such Contract Labourers - The petitioner (NALCO) manages some of its work in the Project establishment through Contractors by way of tender works and at present its project establishment has contract labourers. Such works are generally conducted through tender process to different Contractors and as per conditions the Contractors used to have their own E.S.I. Code as well as P.F. Code and under the terms of contract they are bound to follow the statutory provisions and responsibility of NALCO comes only when such contractors fail in undertaking such statutory obligations. NALCO has its own hospital at all its units. The hospitals of NALCO are providing the hospital benefits only to its regular employees and providing medical facility to the Contractors' workers as per the settlement, the Management of NALCO entered into a settlement with the Contractors Association representing the Contractors working and the Alumina Mazdoor Sangh representing such workmen on 26.02.2007. Under Clause-3 of the said settlement the NALCO Management has agreed to provide medical allowance @ 4.75% of the earned wages to the contract labourers w.e.f. 01.02.2007 and to continue such facilities till the workmen are covered under the E.S.I. Scheme. The said settlement even though was operative up to 25.02.2008, but the condition as narrated above is allowed to continue as on date and all the contractors workers are being paid by their employer the aforesaid benefits every month and their employer used to get the same reimbursed from NALCO.
HELD THAT:- The petitioner-employer has not paid his own contribution and the employee's contribution. This is a clear case of violation of statutory provision. The plea of the management that the ESI authorities have not established the ESI Hospital providing facilities to the contractor labourers cannot exonerate the employer from discharging its statutory obligation of payment of the employer's contribution and employee's contribution which has no relation with the benefit to be provided by the Corporation to the employees under the Employees' State Insurance Act. all the pleas taken by the petitioners not to discharge its statutory obligation are not legally sustainable. Therefore, The petitioner-employer is bound to discharge its statutory obligation under the E.S.I. Act and cannot impose any condition which is not provided under the statute to discharge its statutory obligation.
To insist implementation of the provisions of ESI Act and scheme framed therein until the ESI Dispensary functions effectively and starts parallel service to such Contractor Labourers cannot be granted to the petitioner. It may be noted that the benefit provided under the ESI Act is not confined to hospital facility; the benefit covers to sickness, maternity, employment injury etc.
The notices challenged by the petitioners in the present writ petitions, are all show cause notices. It does not appear that show cause notices have been issued by opposite parties without having authority of law or without having jurisdiction.the petitioners have approached the Employees' State Insurance Court under Section 75 of the ESI Act, 1948. In the above premises, it is not a fit case where interference of this Court in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India is called for.
Thus, this Court is not inclined to entertain the writ petitions. Accordingly, both the writ petitions are dismissed.
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2012 (11) TMI 1316
Issues Involved: Appeal against penalty u/s. 271(1)(c) for A.Y. 2005-06.
Summary:
1. Background: The appellant, engaged in construction business, filed return declaring nil income for A.Y. 2005-06. Assessment u/s. 143(3) resulted in total income of Rs. 16,33,000 after additions. Penalty of Rs. 2,75,400 u/s. 271(1)(c) was imposed and upheld by CIT (A).
2. Appellant's Argument: Assessee, a builder, accepted booking advance for a row house but failed to produce evidence for a specific case. Assessee voluntarily offered the amount as income during assessment to avoid litigation. Assessee's explanation deemed bonafide, relying on relevant case laws.
3. Revenue's Argument: Assessee did not provide evidence as required, failing to discharge the onus. Citing precedent, Revenue supported the penalty imposition.
4. Judgment: Tribunal noted the assessee's construction business and acceptance of booking advances. Assessee's voluntary declaration of income due to inability to produce evidence was considered bonafide. No evidence of concealment by the Revenue. Citing relevant case law, the penalty was deemed not applicable, and the appeal was allowed.
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2012 (11) TMI 1315
Issues Involved:
1. Validity of the reassessment order u/s 147/143(3) of the IT Act.
2. Service of reasons for notice u/s 148 within six years.
3. Deletion of addition of Rs. 6,00,000/- due to non-confirmation of credit entry.
4. Deletion of balance credit entry of Rs. 4,00,650/-.
5. General request to set aside the CIT(A) order and restore the AO's order.
Summary:
1. Validity of the reassessment order u/s 147/143(3) of the IT Act:
The CIT(A) annulled the reassessment order because the AO failed to dispose of the objections raised by the assessee, which was a fatal error as per the Supreme Court's decision in GKN Driveshaft (India) Ltd. vs. CIT. The Tribunal found that the CIT(A)'s approach was not in accordance with law and remitted the matter back to the AO to dispose of the preliminary objections by passing a speaking order before proceeding with the reassessment.
2. Service of reasons for notice u/s 148 within six years:
The CIT(A) held that the reasons for the notice were served beyond the six-year period, which invalidated the notice. The Tribunal did not specifically address this issue separately but implied that the AO should follow the correct procedure as per the Supreme Court's guidelines.
3. Deletion of addition of Rs. 6,00,000/- due to non-confirmation of credit entry:
The CIT(A) deleted the addition, accepting the assessee's explanation that the amounts were received from Yadav & Company, a share broker, and were part of the receivables as of 31.03.2001. The Tribunal did not adjudicate this issue separately due to the remand of the case to the AO.
4. Deletion of balance credit entry of Rs. 4,00,650/-:
The CIT(A) found no merit in the addition of Rs. 4,00,650/- as there was no evidence of receipt from Kuldeep Textiles (P) Ltd. The Tribunal did not adjudicate this issue separately due to the remand of the case to the AO.
5. General request to set aside the CIT(A) order and restore the AO's order:
The Tribunal vacated the findings of the CIT(A) and set aside the reassessment order, remitting the matter to the AO to follow the procedure laid down by the Supreme Court and the jurisdictional High Court.
Conclusion:
The Tribunal allowed the appeal for statistical purposes, directing the AO to dispose of the preliminary objections by passing a speaking order and then proceed with the reassessment in accordance with law. The other grounds raised in the appeal were treated as infructuous.
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2012 (11) TMI 1314
Issues involved: Penalty u/s. 271(1)(c) for assessment year 2008-09 based on disallowances u/s. 43B and 40A(7) in the tax audit report.
Summary:
The Appellate Tribunal ITAT Ahmedabad heard an appeal against a penalty order u/s. 271(1)(c) for the assessment year 2008-09. The Assessing Officer (A.O.) had levied a penalty of Rs. 3,53,794/- on the assessee, a company engaged in manufacturing and trading activities, for furnishing inaccurate particulars of income. The additions were made u/s. 43B and 40A(7) based on discrepancies in bonus and gratuity payments reported in the tax audit report.
During assessment, the A.O. disallowed Rs. 3,25,566/- claimed as bonus to employees as it was paid after the due date of filing the return, invoking u/s. 43B. Additionally, a provision for gratuity of Rs. 8,53,748/- was disallowed u/s. 40A(7) as it was not an actual payment. The A.O. initiated penalty proceedings u/s. 271(1)(c) based on these disallowances.
The assessee, a Sick Company with financial difficulties, argued that the disallowances were not deliberate attempts to conceal income but due to the company's financial crisis. However, the A.O. and CIT (A) upheld the penalty citing failure to disclose disallowances in the e-return and tax audit report.
On appeal, the Tribunal considered the assessee's status as a Sick Industrial Company with nil taxable income after adjustments. The disallowances were reported in the tax audit report, indicating no intention to conceal income. Citing the Price Waterhouse Coopers case, the Tribunal ruled in favor of the assessee, canceling the penalty under Sec. 271(1)(c).
In conclusion, the Tribunal allowed the assessee's appeal, canceling the penalty imposed by the A.O. The decision was based on the assessee's disclosure in the tax audit report and the absence of deliberate concealment of income.
Judges: Shri D.K. Tyagi, JM and Shri Anil Chaturvedi A.M.
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2012 (11) TMI 1313
Illegal gratification - Criminal misconduct - Commission of offences punishable u/s 13(2) r/w 13(1) (d) of the Prevention of Corruption Act, 1988 (Act) - Absence of sanction for prosecution - High Court rejected application filed for discharge in the criminal prosecution - HELD THAT:- Adverting to the facts of the present case it has already been noticed that the only allegation against the Appellant is that he had prevailed upon RITES and IRCON to take the four employees in question on "deputation" for the sole purpose of sending them to London in connection with the medical treatment of the Appellant. It is also alleged that neither RITES nor IRCON had any pending business in London and that none of the four persons had not performed any duty pertaining to RITES or IRCON while they were in London; yet the to and fro air fare of all the four persons was paid by the above two Public Sector Undertakings. On the said basis it has been alleged that the accused Appellant had abused his office and caused pecuniary loss to the two Public Sector Undertakings by arranging the visits of the four persons in question to London without any public interest. This, in essence, is the case against the accused-appellant.
It has already been noticed that the Appellant besides working as the Minister of Railways was the Head of the two Public Sector Undertakings in question at the relevant time. It also appears from the materials on record that the four persons while in London had assisted the Appellant in performing certain tasks connected with the discharge of duties as a Minister.
As a Minister it was for the Appellant to decide on the number and identity of the officials and supporting staff who should accompany him to London if it was anticipated that he would be required to perform his official duties while in London. If in the process, the Rules or Norms applicable were violated or the decision taken shows an extravagant display of redundance it is the conduct and action of the Appellant which may have been improper or contrary to departmental norms. But to say that the same was actuated by a dishonest intention to obtain an undue pecuniary advantage will not be correct. That dishonest intention is the gist of the offence under Section 13(1)(d) is implicit in the words used i.e. corrupt or illegal means and abuse of position as a public servant. A similar view has also been expressed by this Court in M. Narayanan Nambiar v. State of Kerala [1962 (12) TMI 96 - SUPREME COURT] while considering the provisions of Section 5 of Act of 1947. If the totality of the materials on record indicate the above position, we do not find any reason to allow the prosecution to continue against the Appellant. Such continuance, in our view, would be an abuse of the process of court and therefore it will be the plain duty of the court to interdict the same.
Thus, we allow this appeal, set aside the judgment and order dated 11.04.2012 of the High Court and the order dated 27.01.2010 of the learned trial court and quash the proceedings registered against the accused-appellant.
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2012 (11) TMI 1312
Issues Involved:
1. Cause of action for the suit.
2. Barred by limitation.
3. Suit maintainability in its present form.
4. Plaintiff's status as an SSI Unit.
5. Entitlement to decree for realization of the amount.
6. Entitlement to other reliefs.
Summary:
Issue 1: Cause of Action for the Suit
The High Court found that the plaintiffs had a valid cause of action based on the delayed payments by the Assam State Electricity Board (ASEB) for supplies made by M/s Shanti Conductors (P) Limited, an SSI unit, under two supply orders.
Issue 2: Barred by Limitation
The trial court concluded that the suit was not barred by limitation, referencing Section 10 of the 1993 Act, which has an overriding effect. The High Court upheld this view, noting that the last payment was made on 05-03-1994, and the suit was filed on 10-01-1997, within the three-year limitation period. Section 14(2) of the Limitation Act, 1963, was also considered relevant as it allows exclusion of the period during which the plaintiff was prosecuting another civil proceeding.
Issue 3: Suit Maintainability in its Present Form
The trial court and the High Court found the suit maintainable. The Full Bench of the High Court had previously ruled that a suit for mere interest under the 1993 Act is maintainable even if the contract was entered into before the Act's enforcement, provided the payment was delayed and made after the Act came into force.
Issue 4: Plaintiff's Status as an SSI Unit
The trial court confirmed that the plaintiff, M/s Shanti Conductors (P) Limited, was registered as an SSI Unit, making it eligible for the benefits under the 1993 Act.
Issue 5: Entitlement to Decree for Realization of the Amount
The trial court decreed in favor of the plaintiffs, awarding interest on delayed payments under the 1993 Act. However, the High Court, referencing the Supreme Court's decision in Purbanchal Cables and Conductors Private Limited v. Assam State Electricity Board, concluded that the 1993 Act does not apply to contracts entered into before the Act's enforcement on 23-09-1992, even if payments were made after the Act came into force. Consequently, the suit for interest was not maintainable, and the decree was set aside.
Issue 6: Entitlement to Other Reliefs
Given the resolution of the primary issues, the question of other reliefs became moot. The High Court did not grant any additional reliefs beyond setting aside the decree.
Conclusion:
The High Court set aside the trial court's judgment and decree, concluding that the suit was not maintainable under the 1993 Act for contracts entered into before the Act's enforcement, despite delayed payments made after the Act came into force. The appeal was allowed, and the impugned judgment and decree were set aside with costs.
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2012 (11) TMI 1311
Issues involved: Appeal against order of Commissioner of Income-tax(Appeals) under section 143(3) and 147 of the Income-tax Act, 1961 regarding income-escaping assessment and validity of Section 50C.
The appeal was filed by the assessee against the order of the Commissioner of Income-tax(Appeals)-I at Coimbatore, dated 1-6-2012, pertaining to the assessment year 2005-06 under section 143(3), read with section 147 of the Income-tax Act, 1961.
Grounds raised by the assessee:
1. Challenge to the reason for income escaping assessment under section 147 and limitation period.
2. Dispute regarding disclosure of material facts for computation of capital gains.
3. Argument on the constitutional validity of Section 50C and valuation of property.
4. Allegation of the impugned proceedings being contrary to law and excessive.
The Assessing Officer reopened the assessment under section 147 after three years, contending that the assessee had underreported the sale consideration of a property under section 50C. The original assessment valued the property at Rs. 1,74,00,000, whereas the reassessment valued it at Rs. 1,83,89,000, leading to income-escaping assessment.
The original assessment under section 143(3) was thorough, with the assessee providing all necessary details, including photostat copies of the sale deed. The Tribunal noted that the original sale deed would typically be held by the buyer, and the assessee's submission of certified copies sufficed. The Tribunal found no failure on the part of the assessee in disclosing required details for assessment under section 143(3).
The Tribunal concluded that since there was no failure on the part of the assessee in disclosing necessary details, the income-escaping assessment under section 147, initiated after four years, was time-barred. Consequently, the impugned assessment was deemed invalid due to being beyond the statutory limitation period.
As a result, the Tribunal set aside the impugned assessment and vacated the order of the Commissioner of Income-tax(Appeals), ultimately allowing the appeal filed by the assessee.
Note: The judgment was pronounced on Monday, the 26th of November, 2012 at Chennai.
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2012 (11) TMI 1310
Issues Involved:
1. Reduction of expenses incurred in foreign currency from export turnover for computing relief u/s 10A.
2. Exclusion of 50% of telecommunication charges from export turnover for computing relief u/s 10A.
3. Set off of brought forward loss of earlier years against income of the current year after allowing deduction u/s 10A.
4. Computation of profits for deduction u/s 10A as per books of accounts versus regular computation of income.
5. Eligibility of miscellaneous income (recovery of bad debts and reversal of provision for consultancy charges) for deduction u/s 10A.
Summary:
1. Reduction of Expenses Incurred in Foreign Currency from Export Turnover:
The Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) directing the Assessing Officer not to reduce expenses incurred in foreign currency from the export turnover for computing relief u/s 10A. This decision was based on the Tribunal's earlier ruling in the assessee's own case for the Asst. Year 2003-04, which was followed by the Commissioner of Income Tax (Appeals) for the Asst. Years 2004-05 and 2005-06.
2. Exclusion of 50% of Telecommunication Charges from Export Turnover:
The Tribunal found no infirmity in the Commissioner of Income Tax (Appeals)'s decision to exclude 50% of telecommunication charges from export turnover. The Commissioner had justified this exclusion based on the definition of 'export turnover' in section 10A, which mandates the exclusion of telecommunication charges attributable to the delivery of computer software outside India.
3. Set Off of Brought Forward Loss of Earlier Years:
The Tribunal upheld the Commissioner of Income Tax (Appeals)'s direction to set off the brought forward loss of earlier years against the income of the current year only after allowing deduction u/s 10A. This decision was in line with the Tribunal's earlier rulings in the assessee's own case and the judgment of the Hon'ble Karnataka High Court in CIT v. Yokogawa India Ltd. and Others.
4. Computation of Profits for Deduction u/s 10A:
The Tribunal agreed with the Commissioner of Income Tax (Appeals) that for computing book profits u/s 115JB, the income and expenditure as per the books of accounts relating to income exempt u/s 10A should be considered, not the deduction as computed under normal provisions of the Act. This conclusion was based on the provisions of sec.10A and relevant case laws.
5. Eligibility of Miscellaneous Income for Deduction u/s 10A:
The Tribunal upheld the Commissioner of Income Tax (Appeals)'s decision that miscellaneous income comprising recovery of bad debts and reversal of provision for consultancy charges are part of business profits and eligible for deduction u/s 10A. This decision was supported by the Bangalore Bench of the ITAT and the Hon'ble Jurisdictional High Court.
Cross Objections by the Assessee:
The Tribunal partly allowed the cross objections by the assessee, agreeing that telecommunication charges should be excluded from both export turnover and total turnover for computing relief u/s 10A, in line with the Special Bench decision in the case of Sak Soft Ltd.
Conclusion:
The appeals filed by the Revenue were dismissed, and the cross objections filed by the assessee were partly allowed. The order was pronounced on 30th November 2012, at Chennai.
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2012 (11) TMI 1308
Issues Involved:
1. Limitation
2. Validity and existence of a contract
3. Entitlement to DAVP rates
4. Payment for work done
5. Entitlement to interest
6. Damages
Summary:
Issue No. 1: Limitation
The suit is not barred by limitation as a part payment of Rs. 59,82,166.80/- was made on 30.1.1997, extending the limitation period u/s 19 of the Limitation Act, 1963. The suit filed on 25.1.2000 is within the extended limitation period.
Issue Nos. 2, 2(a), and 2(b): Validity and Existence of a Contract
The court held that the contract was with defendant No. 2 (TCIL) and not with defendant No. 1 (Union of India). The reasons include:
- Invoices and letters were addressed to defendant No. 2.
- Defendant No. 2 made part payments and issued TDS certificates.
- Internal notes and correspondence indicated defendant No. 2's liability.
- Defendant No. 2 admitted to being controlled by defendant No. 1 and acting on its directions.
Issue No. 3: Entitlement to DAVP Rates
The court concluded that defendant No. 2 was liable to pay commercial rates, not DAVP rates, as:
- Defendant No. 2 had previously issued advertisements through accredited agencies at commercial rates.
- The advertisements were published through INS accredited agencies, which provided discounted rates.
- No communication was made to the plaintiff before publication that only DAVP rates would be paid.
Issue No. 4: Payment for Work Done
The court held that the plaintiff was entitled to the balance principal amount of Rs. 1,36,01,743.20/- from defendant No. 2 for the work done.
Issue No. 5: Entitlement to Interest
The court granted pre-suit interest at 6% per annum simple from 1.2.1997 till the filing of the suit, and pendente lite and future interest at the same rate till payment.
Additional Issue: Damages
The court refused to grant any damages as the plaintiff failed to lead credible evidence on the aspect of damages.
Relief:
The suit is decreed for Rs. 1,36,01,743.20/- with interest at 6% per annum simple from 1.2.1997 till the filing of the suit, and pendente lite and future interest at the same rate till payment. The amount payable by defendant No. 2 will be deposited in the court and distributed by a Receiver to the respective publications. The suit is disposed of with these observations.
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2012 (11) TMI 1307
Issues Involved:1. Revised Value of Fringe Benefit not considered. 2. Taxability of value of expenditure on non-employees. 3. Duplication of Expenses liable for Fringe Benefit. 4. Reimbursement of Medical Expenses not liable for Fringe Benefit. Summary of Judgment:Issue 1: Revised Value of Fringe Benefit not consideredThe assessee-company argued that the revised value of expenditure liable for Fringe Benefit should be considered. The AO and FAA rejected this claim as the revised return was not filed within the stipulated time u/s 115WD(4) of the Income Tax Act, 1961. The Tribunal, referencing the decision in Pruthvi Brokers & Shareholders Pvt. Ltd., directed the FAA to decide the issue on merit, acknowledging that the FAA has the power to allow claims made during assessment proceedings even if a revised return was not filed. Issue 2: Taxability of value of expenditure on non-employeesThe assessee contended that expenses incurred on non-employees should not be included for computing Fringe Benefit Tax (FBT). The Tribunal agreed, citing settled law and previous judgments, including those of Kotak Mahindra Old Mutual Life Insurance Ltd. and Tata Asset Management Ltd., that expenditure incurred for non-employees is not liable for FBT. The Tribunal decided this issue in favor of the assessee for both AY 2006-07 and AY 2007-08. Issue 3: Duplication of Expenses liable for Fringe BenefitThe assessee claimed that certain expenses were considered twice in the original return. The Tribunal acknowledged the possibility of miscalculation during the initial period of FBT provisions and restored the matter to the FAA to decide on merits whether there was a duplication of expenses resulting in double taxation. The Tribunal emphasized that only 'due taxes' should be collected, and if duplication resulted in double taxation, the assessee is entitled to relief. Issue 4: Reimbursement of Medical Expenses not liable for Fringe BenefitThe assessee argued that reimbursement of medical expenses should not be liable for FBT as they are specifically exempted by Section 17(2) of the Income Tax Act. The Tribunal, referencing judgments in the cases of Godrej Properties Ltd. and Bosch Ltd., agreed that such reimbursements are not liable for FBT. The Tribunal decided this issue in favor of the assessee for AY 2007-08. Conclusion:The appeal for AY 2006-07 was partly allowed, and the appeal for AY 2007-08 was fully allowed. The Tribunal directed the FAA to re-examine certain issues on merit and provide relief where applicable.
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2012 (11) TMI 1306
Issues involved:
Interpretation of provisions of Section 80IA of Income Tax Act, 1961 for the assessment year 2000-01.
Summary:
Issue 1: Amendment in Section 80-IA
- The Finance Act, 1995, and Finance (No.2) Act, 1996, introduced amendments to Section 80-IA, extending tax benefits to scientific and industrial research and development.
- The amendments aimed to broaden the scope of eligible businesses for tax deductions under Section 80-IA.
Issue 2: Conditions for applicability of Section 80IA
- Section 80IA applies to industrial undertakings meeting specific conditions, including not being formed by splitting up existing businesses and engaging in manufacturing or operating specified facilities.
- The Finance Act, 1994, extended concessions to large-scale industries in backward areas, allowing for deductions from taxable profits.
Issue 3: Assessment of Deductions
- The case involved an assessee manufacturing water filters using imported and indigenous parts, claiming deductions for income from spare parts sales.
- Disputes arose regarding the allocation of expenses and the bifurcation of income from trading and manufacturing activities for assessing deductions under Section 80IA.
Issue 4: Disallowance of Deductions
- The Assessing Officer disallowed deductions for the assessment year 1999-2000 and sought to reassess previous years due to discrepancies in accounting practices.
- The Commissioner of Income Tax (Appeals) and the Appellate Tribunal reviewed the case, focusing on the accurate allocation of expenses and income for determining allowable deductions.
Issue 5: Reopening of Assessment
- The contention was raised regarding the permissibility of reopening assessments based on a change of opinion.
- The Income Tax Department argued that the assessee's failure to maintain separate accounts for trading and manufacturing activities justified the reassessment.
Conclusion:
- The Tribunal upheld the order for detailed assessment to allocate expenses accurately between trading and manufacturing activities.
- The Assessing Officer was directed to consider observations made and ensure proper assessment and grant of deductions in accordance with Section 80IA of the Act.
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2012 (11) TMI 1305
Issues involved: Revenue's appeal against CIT(A)'s order deleting disallowance u/s 40A(3) for cash payments made without verification.
Summary:
The revenue appealed against CIT(A)'s decision to delete the disallowance made u/s 40A(3) for cash payments exceeding Rs. 20,000 without verification. The AO observed multiple cash payments made by the assessee, proposing a 20% disallowance. The assessee claimed the cash was directly deposited into suppliers' bank accounts without violating Sec.40A(3). The CIT(A) relied on a previous ITAT decision and allowed the appeal, stating that direct cash deposits enable transaction verification and prevent unaccounted money use. The revenue contended that the facts differed from the previous case and employees cannot be considered as agents. The assessee argued that direct bank deposits do not violate Sec.40A(3) and submitted additional evidence for verification. The Tribunal referred to the legal position established in a previous case, concluding that direct bank deposits do not attract Sec.40A(3). However, as verification of additional evidence was crucial, the case was remanded to the AO for further examination. Ultimately, the revenue's appeal was allowed for statistical purposes.
The Tribunal emphasized that direct cash deposits into suppliers' bank accounts, as opposed to issuing cheques, do not violate Sec.40A(3) as they ensure payment traceability and prevent misuse of unaccounted funds. The decision was based on the principle that such transactions fulfill the objective of Sec.40A(3) by routing payments through banking channels. Despite differing facts, the legal principle remained consistent with the previous case, leading to the upholding of CIT(A)'s decision. The case was remanded to the AO for verification of additional evidence regarding direct bank deposits, with the outcome determining the necessity of disallowance.
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2012 (11) TMI 1304
Issues involved:
The judgment involves the following Issues:
1. Revision of assessment order u/s 263 of the Income Tax Act.
2. Eligibility for deduction u/s 80IB(10) for developing and building housing projects.
Issue 1: Revision of assessment order u/s 263:
The Revenue appealed against the order of the Income Tax Appellate Tribunal regarding the revision of the assessment order u/s 263. The Commissioner of Income Tax (Appeals) sought to revise the order granting deduction u/s 80 IB of the Income Tax Act, stating that the assessee was not the owner of the property but acted as a builder. The Tribunal held that the Commissioner's order was without jurisdiction, as the Assessing Officer's view was valid based on precedent. The Tribunal disagreed with the Commissioner's revision and directed the Assessing Officer to revise the order accordingly.
Issue 2: Eligibility for deduction u/s 80IB(10):
The Tribunal considered the eligibility of the assessee for deduction u/s 80IB(10) for developing and building housing projects. The Tribunal concluded that the assessee, though not the owner of the property, was entitled to the deduction as it was engaged in developing and building housing projects approved by the local authority. The Tribunal allowed the assessee's appeal, stating that ownership of the property was not a prerequisite for claiming the deduction u/s 80IB(10). The High Court confirmed the Tribunal's decision, rejecting the Revenue's appeal and upholding the assessee's entitlement to relief under Section 80 IB of the Act.
Separate Judgement:
The judgment was delivered by Honourable Mrs. Justice Chitra Venkataraman and Honourable Mr. Justice K. Ravichandrabaabu, JJ.
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2012 (11) TMI 1303
Issues Involved:
1. Conviction and sentence under S.138 of the Negotiable Instruments Act, 1881.
2. Service of statutory notice u/s 138(b) of the Act.
3. Presumption under S.118 and S.139 of the Act.
4. Rebuttal of statutory presumption by the accused.
5. Interpretation of service of notice under S.27 of the General Clauses Act.
Summary:
1. Conviction and Sentence under S.138 of the Negotiable Instruments Act, 1881:
The respondent-complainant filed a case (C.C. No. 286/2004) against the petitioner-accused for a bounced cheque of Rs. 12,00,000/-. The accused was convicted and sentenced to pay a fine of Rs. 24,00,000/-. The accused appealed (Crl.A. No. 20/2007) and during the appeal, a compromise was reached where the accused agreed to pay Rs. 12,00,000/-. The accused issued four post-dated cheques, one of which was dishonored with the endorsement 'payment stopped by the drawer'. The trial court convicted the accused under S.138 of the Act, sentencing him to six months imprisonment and a fine of Rs. 5,000/-, with additional imprisonment in default of payment.
2. Service of Statutory Notice u/s 138(b) of the Act:
The accused contended that the complaint was not maintainable due to non-service of notice as required u/s 138(b). The notice sent by RPAD was returned with the endorsement 'an initial of the addressee differs', but the notice sent by certificate of posting was not returned. The court held that the notice was evaded by the accused and deemed to have been served.
3. Presumption under S.118 and S.139 of the Act:
The court inferred the presumption under S.118 that the cheque was made for consideration and under S.139 that the cheque was received for discharge of debt or liability. The accused failed to rebut these presumptions.
4. Rebuttal of Statutory Presumption by the Accused:
The accused did not provide proof of sufficient funds in his account at the time of cheque presentation and did not state a valid reason for stopping the payment. The court concluded that the stop-payment instruction was due to insufficient funds, not any valid cause, thus failing to rebut the statutory presumption.
5. Interpretation of Service of Notice under S.27 of the General Clauses Act:
The court referred to precedents (Madan & Co. and C.C. Alavi Haji) to conclude that service of notice is deemed effective when sent to the correct address by registered post. The accused's act of avoiding the notice by pointing out the difference in initials was considered a scheming act to evade service. The statutory presumption under S.27 of the General Clauses Act was applied, deeming the notice served.
Conclusion:
The petition was dismissed, and the accused was granted time till 31st December 2012 to deposit the balance compensation amount. In default, the bail bond and surety would be canceled, and the accused would have to surrender to serve the sentence.
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2012 (11) TMI 1302
The High Court of Karnataka allowed the appeal and remanded the case to the Assessing Officer for fresh consideration in accordance with law. The order of the Tribunal was set aside.
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2012 (11) TMI 1301
Issues Involved:
1. Disallowance of expenses related to 'Info & tracking of delivery schedules' and 'termination fees' paid to South Elegant Limited (SEL).
2. Disallowance/restriction of various claims under different heads such as Staff Welfare expenses, Administration expenses, Travel & conveyance, Water charges, Sample expenses, Business promotion expenses, and Repairs & maintenance.
3. Remuneration paid to the Managing Director.
4. Rent received from a sister concern.
5. Applicability of Section 201 related to failure to deduct TDS.
Summary:
I. Disallowance of Expenses Related to SEL:
- Info & Tracking of Delivery Schedules & Termination Fees:
The assessee claimed expenses of Rs. 10.68 crores for 'Info & tracking of delivery schedules' and Rs. 18.35 crores for 'termination fees' paid to SEL. The AO disallowed these expenses, questioning the genuineness of the transactions and the business necessity. The CIT(A) upheld the disallowance, noting the absence of original agreements and the non-existence of SEL. The Tribunal remanded the issues back to the AO for fresh consideration, directing verification of the additional evidence provided by the assessee.
II. Disallowance/Restriction of Various Claims:
- Staff Welfare & Administration Expenses:
For A.Y 2006-07, the AO disallowed Rs. 16.80 lakhs and Rs. 16.64 lakhs under Staff Welfare and Administration expenses, respectively, due to unverifiable claims. The CIT(A) restricted these disallowances to Rs. 10 lakhs and Rs. 9 lakhs. For A.Y 2007-08, similar disallowances were made and restricted to 15%. The Tribunal remanded these issues back to the AO for fresh consideration, emphasizing the need for verification of the provided details.
- Travel & Conveyance:
The AO disallowed Rs. 22.98 lakhs out of Rs. 76.62 lakhs claimed, citing unsupported expenses. The CIT(A) restricted this to Rs. 11.49 lakhs. The Tribunal allowed the full claim, noting the necessity of the expenses for providing transportation services to employees.
- Water Charges:
The AO disallowed 30% of the claimed Rs. 20.67 lakhs, which was restricted to 15% by the CIT(A). The Tribunal remanded the issue back to the AO for verification of the details.
- Sample & Business Promotion Expenses:
The AO disallowed Rs. 10 lakhs, attributing the expenses to the MD's credit card without business justification. The CIT(A) upheld this disallowance, and the Tribunal found no reason to interfere.
- Repairs & Maintenance:
The AO disallowed Rs. 2.20 lakhs towards customs duty on machinery, treating it as capital expenditure. The CIT(A) restricted this to Rs. 1 lakh. The Tribunal upheld the AO's decision, confirming the capital nature of the expenditure.
III. Remuneration Paid to the Managing Director:
- The AO disallowed Rs. 8.14 crores paid to the MD, questioning his limited presence in India. The CIT(A) allowed the claim, noting the MD's role in securing business and the TDS deducted on the salary. The Tribunal upheld the CIT(A)'s decision.
IV. Rent Received from Sister Concern:
- The AO added Rs. 33.02 lakhs to income, citing undercharged rent to a sister concern. The CIT(A) directed the AO to adopt the municipal value if it exceeds the rent received. The Tribunal remanded the issue back to the AO for fresh verification of the facts.
V. Applicability of Section 201:
- The AO initiated proceedings u/s 201 for non-deduction of TDS on payments to SEL. The CIT(A) held there was no violation of Section 195, noting the absence of a Permanent Establishment. The Tribunal remanded the issue back to the AO, linking it to the determination of the genuineness of the expenses under Section 37.
Conclusion:
The appeals for A.Y 2006-07 and 2007-08 are partly allowed for statistical purposes, with several issues remanded back to the AO for fresh consideration and verification.
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