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2013 (2) TMI 927
Issues involved:
The issues involved in this judgment are the validity of initiation of reassessment proceedings u/s 148 and the challenge against the action of the Assessing Officer (AO) to reopen the proceedings under section 148.
Validity of initiation of reassessment proceedings:
The appellant challenged the initiation of reassessment proceedings, arguing that the AO's reasons for reopening the assessment were based on issues that had already been addressed during the original assessment. The appellant contended that the AO's actions amounted to a change of opinion rather than a valid reason to believe that income had escaped assessment. The appellant cited relevant case laws such as CIT vs Kelvinator of India Ltd. and ACIT vs ICICI Securities Primary Dealership Ltd. to support their argument. The appellant emphasized that the AO's attempt to reassess the issues without new material was unjustified and illegal. The Appellate Tribunal agreed with the appellant, quashing the reassessment proceedings initiated by the AO.
Challenge against the action of the AO:
The appellant further argued that even on the second issue regarding the differential of tax deducted at source, the AO's attempt to reopen the assessment was not valid. The appellant referenced the case of CIT vs Bombay Gas Co. Ltd. to support their contention that the reassessment based on TDS differentials was not justified. The Appellate Tribunal concurred with the appellant's arguments, holding that without a foundation of cogent material showing prima facie escapement of income, the reassessment proceedings could not be sustained. The Tribunal emphasized that issues already examined during the regular assessment could not be reopened without new material. Consequently, the reassessment proceedings were quashed, and the appeal filed by the assessee was allowed.
This judgment highlights the importance of having valid reasons to initiate reassessment proceedings and the limitations on the AO's ability to reopen assessments based on issues already addressed during the original assessment. The Tribunal's decision underscores the need for new material demonstrating income escapement to justify reassessment actions.
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2013 (2) TMI 926
Issues involved: Appeal against rejection of registration under section 12AA of the Income Tax Act, 1961.
Summary:
1. The appeal was filed against the order rejecting the application for registration under section 12AA. The delay in filing the appeal was condoned, and the appeal was admitted for hearing.
2. The assessee trust applied for registration under section 12AA, which was initially rejected due to missing documents. The subsequent application was rejected citing non-filing of income returns and amendment of trust objects. The AR argued that the trust's charitable activities since 1985 should qualify for registration, citing relevant case laws.
3. The Revenue contended that the trust had not filed the object clause initially and later violated trust amendment provisions. They referred to a Tribunal order to support their stance.
4. After reviewing submissions and trust deeds, it was found that the trust was originally formed for charitable activities. The subsequent amendment to include medical relief did not disqualify it from registration under section 12AA.
5. Relying on a High Court judgment, it was concluded that trust deed amendments do not affect registration if the trust's activities remain charitable. The rejection based on trust deed amendment was deemed incorrect.
6. The impugned order was set aside, and the case was remitted for a fresh decision considering the original trust deed and ongoing charitable activities. The appeal was allowed for statistical purposes.
Judgment delivered by: Shri Vikas Awasthy, Judicial Member.
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2013 (2) TMI 925
Issues Involved:
1. Eligibility for deduction u/s 80IB(10) for the Kumar Puram Project.
2. Correctness of profit computation eligible for deduction u/s 80IB(10).
3. Allocation of interest expenses for the purpose of deduction u/s 80IB(10).
4. Correct method for allocating interest expenses u/s 36(1)(iii).
5. Disallowance of interest expenses in computation of income.
6. Capitalization of legal and professional charges relating to Pashan Property.
Summary:
1. Eligibility for Deduction u/s 80IB(10):
The primary issue was whether the assessee was eligible for deduction u/s 80IB(10) for the Kumar Puram Project. The CIT(A) disallowed the claim on the grounds that the project had commenced before the stipulated date of 01.10.1998, citing the commencement certificate issued on 24.04.1998 and other related documents. The assessee argued that the Kumar Puram Project was an independent project that commenced on 18.04.1999, supported by statutory notices and revised plans. The Tribunal found that the construction started on 18.04.1999, as evidenced by the intimation to the Pune Municipal Corporation, and thus, the project was eligible for deduction u/s 80IB(10).
2. Correctness of Profit Computation Eligible for Deduction u/s 80IB(10):
The CIT(A) questioned the correctness of the profit computation for deduction u/s 80IB(10), suggesting that certain expenses should be prorated and reduced from the profits. The assessee contended that the amount certified by the auditors was correct. However, this ground was not pressed by the assessee during the hearing and was dismissed.
3. Allocation of Interest Expenses for the Purpose of Deduction u/s 80IB(10):
The CIT(A) allocated Rs. 2,838,432 of the total interest expenses to the Kumar Puram Project, which the assessee disputed, claiming the project was cash surplus. The Tribunal found that the allocation of interest expenses should be based on the actual utilization of funds and not on a proportionate basis.
4. Correct Method for Allocating Interest Expenses u/s 36(1)(iii):
The assessee argued that the interest expense allocable to the Kumar Puram Project should be calculated on a daily product basis, amounting to Rs. 139,394, rather than Rs. 2,838,432 as held by the CIT(A). This ground was also not pressed by the assessee during the hearing and was dismissed.
5. Disallowance of Interest Expenses in Computation of Income:
The CIT(A) disallowed Rs. 1,718,724 and Rs. 567,724 of the interest expenses, stating they should be allocated and capitalized on immovable properties and the Kumar City Club House, respectively. The assessee contended that the full amount of Rs. 9,666,089 was allowable u/s 36(1)(iii). This ground was not pressed by the assessee during the hearing and was dismissed.
6. Capitalization of Legal and Professional Charges Relating to Pashan Property:
The CIT(A) held that Rs. 303,630 of the legal and professional charges should be capitalized as the property had not been acquired in the relevant year. The assessee argued that these expenses were revenue in nature and allowable u/s 37(1). This ground was not pressed by the assessee during the hearing and was dismissed.
Conclusion:
The Tribunal allowed the appeal of the assessee, holding that the Kumar Puram Project was eligible for deduction u/s 80IB(10) as the development and construction commenced after the stipulated date of 01.10.1998. The other grounds raised by the assessee were dismissed as not pressed.
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2013 (2) TMI 924
Issues involved: Appeal against judgment and order passed by High Court of Judicature for Rajasthan at Jaipur in a criminal case involving Sections 498-A and 406 of the Indian Penal Code.
Summary:
The appellant and the respondent no.1, who are husband and wife, were involved in a case where the respondent lodged a complaint against the appellant-accused for offenses u/s 498-A and 406 of the IPC. The Trial Court and the Revisional Court had dismissed the complaint, but the High Court set aside their orders and remanded the matter back to the Trial Court for fresh disposal. The appellant-accused appealed against this decision.
Upon review, the Supreme Court found that the High Court's order was a non-speaking order, lacking reasons, which is impermissible under the law. Therefore, the Supreme Court allowed the appeal, set aside the High Court's judgment and order, and remanded the matter back to the High Court for fresh disposal in accordance with the law, with an opportunity for both parties to be heard.
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2013 (2) TMI 923
No Permanent Establishment (PE) in India - Income Earned in India taxable or not? u/s 12(2) of the DTAA - The assessee company is tax residence of USA and has entered into an agreement with an Indian company for the distribution of the cinematographic films in India and has received royalty at specified rates. A.O. held that such receipt is business income of the assessee and taxable in India being the profit attributable to PE in India. - HELD THAT : - If income arises to the Non-Resident due to the business connection in India, the income accruing or arising out of such business connection can only be taxed to the extent of the activities attributed to PE. In this case, the assessee does not have any PE in India therefore the amount received under the agreement of distribution is not taxable in India.
Decision in the case of - ISHIKAWAJIMA-HARIMA HEAVY INDUSTRIES LTD. Versus DIRECTOR OF INCOME-TAX - 2007 (1) TMI 91 - Supreme Court, relied upon.
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2013 (2) TMI 922
Issues involved: Appeal by revenue for assessment year 2001-02 regarding disallowance u/s.43B for employee's contribution to provident fund and ESI, and computation of deduction u/s 80HHC as reduced by profits allowed under sections 80IA/80IB.
Disallowed u/s.43B - Employee's contribution to provident fund and ESI:
The High Court considered the issue of disallowance u/s.43B for employee's contribution to provident fund and ESI. The Court noted that the Tribunal had deleted the disallowance, citing the decision of the Supreme Court in CIT V/s. Alom Extrusions Ltd. The Court, in line with the precedent, held in favor of the respondent-assessee and against the revenue, dismissing the appeal on this issue.
Computation of deduction u/s 80HHC:
Regarding the computation of deduction u/s 80HHC as reduced by profits allowed under sections 80IA/80IB, the Court referred to the decision in the case of Associated Capsules Pvt. Ltd. V/s. DCIT. The Court found that the issue was covered in favor of the assessee and against the revenue. Consequently, the Court declined to entertain the question on this issue as well.
Conclusion:
In conclusion, the High Court dismissed the appeal with no order as to costs, based on the decisions and precedents cited for both issues raised in the appeal.
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2013 (2) TMI 921
Issues Involved:
Petitions filed for sanction of a Scheme of Arrangement for Amalgamation of five Transferor Companies with a Transferee Company u/s 391 and 394 of the Companies Act, 1956.
Details of the Judgment:
Issue 1: Amalgamation of Companies
The petitioner Companies sought sanction for the Amalgamation of five Transferor Companies with a Transferee Company to achieve synergic benefits due to their common management and investment activities. The proposed scheme outlined the benefits expected from the Amalgamation.
Issue 2: Meetings and Approval
Meetings of Equity Shareholders and Unsecured Creditors of the Transferor Companies were dispensed with based on written consent letters. Secured Creditors' meeting was held and unanimously approved the proposed scheme. Equity Shareholders of the Transferee Company also unanimously approved the scheme at a convened meeting.
Issue 3: Official Liquidator's Reports
The Official Liquidator reported that the affairs of four Transferor Companies were not prejudicial. However, they requested the companies to maintain records for 8 years post-sanction and not dispose of them without Central Govt. permission.
Issue 4: Compliance Issues
The Regional Director raised concerns regarding a struck-off company, the Appointed Date, and compliance with Accounting Standard 14 by the Transferee Company. The Court addressed these issues based on submissions and affidavits.
Issue 5: Court's Decision
After considering all contentions, the Court found no need to modify the Appointed Date. The Transferee Company was directed to disclose any deviation from Accounting Standard 14 in its financial statements. The Court approved the deletion of the struck-off company from the scheme.
Conclusion:
The Court granted prayers for the Amalgamation in most petitions, disposed of one as infructuous, and quantified costs to be paid to Central Government Standing Counsels and the Official Liquidator's office.
Separate Judgment:
No separate judgment was delivered by the Judge mentioned in the case.
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2013 (2) TMI 920
Issues Involved:
1. Disallowance u/s 14A r/w Rule 8D.
2. Classification of interest income from fixed deposits.
3. Rebate u/s 88E on speculative income and F&O income.
Issue 1: Disallowance u/s 14A r/w Rule 8D
The assessee challenged the disallowance under sec. 14A r/w Rule 8D, arguing that the rule was not applicable for the assessment year in question. The AO had disallowed Rs. 7,53,507 as per sec. 14A, which was upheld by the CIT(A) who also considered an interest expenditure of Rs. 18,64,977. The Tribunal noted that the borrowed money was used for IPO investments, which were treated as stock-in-trade. Citing the Karnataka High Court decision in CCL Ltd. v. Jt. CIT, the Tribunal held that disallowance of interest related to stock-in-trade cannot be made. However, it restricted the disallowance to 25% of the dividend income, amounting to Rs. 43,395.
Issue 2: Classification of Interest Income from Fixed Deposits
The assessee contested the CIT(A)'s decision to classify interest income from fixed deposits as "Income from other sources" instead of "Business income." The CIT(A) relied on several Supreme Court judgments, but the Tribunal found these cases irrelevant to the assessee's situation. The Tribunal observed that the fixed deposits were margin money for bank guarantees required for stock broking business. Given the consistent treatment of such income in previous and subsequent years, the Tribunal held that the interest income should be classified as "Business income" and set aside the CIT(A)'s order.
Issue 3: Rebate u/s 88E on Speculative Income and F&O Income
The assessee claimed a rebate u/s 88E, which the AO reduced based on net income calculations. The CIT(A) directed the AO to recompute the rebate, excluding interest on FDs classified as "Income from other sources." The Tribunal noted that the CIT(A) did not provide specific findings and restored the issue to the CIT(A) for a fresh decision, considering the Tribunal's findings on the first two issues.
Conclusion:
The appeal was allowed in part, with specific directions to reclassify interest income and reassess the rebate u/s 88E.
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2013 (2) TMI 919
Issues Involved:
1. Disallowance of interest on loans given to sister concerns.
2. Revisionary powers u/s 263 regarding depreciation on trademarks and licenses.
Summary:
Issue 1: Disallowance of Interest on Loans Given to Sister Concerns
The assessee, engaged in manufacturing and selling liquor, filed its return for the assessment year declaring an income of Rs. 7,61,40,680/-, set off against brought forward losses. During assessment, the Assessing Officer (A.O.) noted that the assessee had given interest-free loans to its holding company, M/s MilleniumAlcobev Pvt. Ltd. (MAL), and its subsidiary, M/s United Millenium Breweries Ltd. (UMB), while borrowing funds from banks. The A.O. disallowed a pro rata interest of Rs. 1,21,88,701/- for MAL and Rs. 26,72,452/- for UMB, totaling Rs. 1,48,61,153/-.
The CIT(A) upheld the disallowance, stating that the assessee failed to prove commercial expediency. The Tribunal, however, found that the assessee had a quid pro quo arrangement with MAL, as no interest was charged by either party on mutual loans over several years. Thus, the disallowance of Rs. 1,21,88,701/- for MAL was deleted. However, the disallowance of Rs. 26,72,452/- for UMB was sustained as no commercial expediency was established.
Issue 2: Revisionary Powers u/s 263 Regarding Depreciation on Trademarks and Licenses
The CIT invoked revisionary powers u/s 263, questioning the depreciation claim of Rs. 1,75,13,601/- on trademarks and licenses, arguing that the valuation was incorrect and the A.O. had not examined the details properly. The assessee contended that the trademarks and licenses were acquired through an asset purchase agreement and had been allowed depreciation in previous assessments.
The Tribunal found that the CIT misunderstood the agreements, as the assessee had acquired the trademarks and licenses and later granted a limited right to use one trademark to the seller. The A.O. had verified these agreements in earlier assessments, and the depreciation claim was consistent with past allowances. Therefore, the Tribunal quashed the CIT's order, stating that the A.O.'s assessment did not suffer from any error prejudicial to the Revenue.
Conclusion:
The appeal regarding the disallowance of interest on loans was partly allowed, deleting the addition for MAL but sustaining it for UMB. The appeal against the revisionary order u/s 263 was fully allowed, quashing the CIT's order and upholding the depreciation claim on trademarks and licenses.
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2013 (2) TMI 918
The Delhi High Court appointed the Official Liquidator as the Provisional Liquidator for a company after the Respondent failed to appear despite being served. The Official Liquidator was directed to take over the company's assets, books of accounts, and records, prepare an inventory of assets, and publish a citation of the petition in official gazettes. A status report was to be filed before the next hearing on 8th July 2013.
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2013 (2) TMI 917
Issues Involved:
1. Non-compliance with procedural safeguards u/s 52A(2) and 55 of the N.D.P.S. Act.
2. Possibility of tampering with the seized contraband.
3. Bias in investigation due to the complainant also being the investigating officer.
4. Applicability of Sec. 50 of the N.D.P.S. Act to the search of a bag.
5. Adequacy of evidence to establish possession of contraband and prohibited items under the Prohibition Act.
Summary:
1. Non-compliance with procedural safeguards u/s 52A(2) and 55 of the N.D.P.S. Act:
The court noted significant lapses in the procedure followed by the Investigating Agency. The contraband articles were left unsealed and unattended for about five hours, which goes against the prescribed procedures meant to ensure the safety and integrity of the seized items. The failure to affix seals and maintain a proper chain of custody was seen as a fundamental flaw in the prosecution's case.
2. Possibility of tampering with the seized contraband:
The court observed that the seized articles were left open and unprotected, which could have led to tampering. The lack of evidence regarding the presence of the second panch witness during the critical period further weakened the prosecution's case. The court emphasized that the immediate sealing of seized articles is crucial to prevent tampering and ensure their integrity.
3. Bias in investigation due to the complainant also being the investigating officer:
The court discussed the principle that a police officer who is part of the raiding party should not investigate the case to ensure fairness and impartiality. However, in this case, the court found no evidence of bias or prejudice caused by the investigating officer being the complainant. The court referred to the Supreme Court's decision in S. Jeevanantham v. State, which held that such investigations are not inherently biased unless specific prejudice is shown.
4. Applicability of Sec. 50 of the N.D.P.S. Act to the search of a bag:
The court rejected the contention that non-compliance with Sec. 50 of the N.D.P.S. Act vitiated the trial. It referred to the Supreme Court's decision in Ajmer Singh v. State of Haryana, which clarified that Sec. 50 applies only to personal searches and not to searches of bags or containers.
5. Adequacy of evidence to establish possession of contraband and prohibited items under the Prohibition Act:
The court found that the prosecution failed to establish beyond a reasonable doubt that the accused was in possession of the contraband articles. The evidence regarding the safe custody and proper sealing of the seized items was insufficient. Additionally, there was no attempt to analyze the contents of the whisky bottle to confirm it was a prohibited item under the Prohibition Act.
Conclusion:
The court affirmed the acquittal of the accused, emphasizing that the prosecution failed to prove its case beyond a reasonable doubt. The procedural lapses, potential for tampering, and lack of evidence regarding safe custody of the seized items were critical factors in the decision. The appeal was dismissed, and the acquittal of the accused was upheld.
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2013 (2) TMI 916
Issues involved:
The judgment involves the interpretation of vicarious liability of directors in a case related to dishonoured cheques under Section 138 of the Negotiable Instruments Act, 1881.
Details of the Judgment:
Issue 1: Vicarious Liability of Directors
The Petitioners sought quashing of the order summoning them in a complaint case regarding dishonoured cheques. The challenge raised was that the complaint did not specify how the Petitioner was responsible for the conduct of the business of the accused company. The Petitioner argued that mere directorship was insufficient to establish vicarious liability.
Issue 2: Legal Precedents
The Petitioner relied on legal precedents such as National Small Industries Corporation Ltd. v. Harmeet Singh Paintal, Central Bank of India v. Asian Global Limited, and Anita Malhotra v. Apparel Export Promotion Council to support their argument that specific averments were necessary to establish vicarious liability of directors.
Issue 3: Interpretation of Complaint
The Complaint alleged that the accused directors were responsible for the day-to-day affairs of the company. The Court referred to the Supreme Court's analysis in various cases to emphasize the importance of clear and unambiguous averments in establishing vicarious liability.
Conclusion:
The Court quashed the complaint against the Petitioners, citing insufficient averments to establish vicarious liability as per the legal precedents discussed. The judgment highlighted the necessity of specific allegations to hold directors vicariously liable under Section 138 of the Negotiable Instruments Act, 1881.
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2013 (2) TMI 915
Issues involved: Appeal against rejection of renewal of exemption u/s 80G(5)(vi) of the Income-tax Act, 1961.
The Appellate Tribunal ITAT Chennai heard an appeal filed by the assessee against the order of the Commissioner of Income-tax-II at Tiruchirapalli, rejecting the application for renewal of exemption u/s 80G(5)(vi). The Commissioner observed that the trust, running a Tamil High School, had surplus income over the years, with expenses mainly related to school operations. The trust was registered u/s 12AA, confirming its charitable status. The Commissioner acknowledged the trust's charitable activities for the local population, with no misuse of income or assets. The Tribunal found no reason to deny the exemption u/s 80G(5)(vi) and directed the Assessing Officer to renew the exemption from the date of the earlier order. Consequently, the appeal was allowed, granting relief to the assessee.
In the detailed order, the Tribunal considered the trust's activities, noting its operation of a Tamil High School for the benefit of the local community. The trust's financial records showed surplus income, primarily utilized for school development and administrative expenses. The Commissioner recognized the trust's adherence to its charitable objectives, without any misappropriation of funds. Given the trust's registration u/s 12AA and its continued charitable operations, the Tribunal concluded that the exemption u/s 80G(5)(vi) should be renewed, as there was no basis to withhold the benefit from the assessee. The Tribunal's decision aimed to uphold the trust's eligibility for tax exemption under the specified section, ensuring continuity of support for its charitable endeavors.
The Tribunal's ruling emphasized the importance of maintaining tax benefits for genuine charitable trusts like the assessee, which operated a Tamil High School for the welfare of the local populace. By analyzing the trust's financial statements and the Commissioner's observations, the Tribunal affirmed the trust's compliance with the prescribed regulations and its commitment to charitable activities. The decision to grant renewal of exemption u/s 80G(5)(vi) reflected the Tribunal's recognition of the trust's valuable contributions to society and its entitlement to tax relief in furtherance of its philanthropic objectives. The judgment underscored the significance of supporting legitimate charitable endeavors through appropriate tax incentives, thereby encouraging continued social welfare initiatives by deserving organizations.
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2013 (2) TMI 914
Issues involved:
The judgment deals with the disallowance of interest u/s. 40A(2)(b) of the Income-tax Act.
Ground I: Disallowance of interest u/s. 40A(2)(b) of the Act
The appellant challenged the disallowance of interest by the Deputy Commissioner of Income Tax, arguing that the interest paid was not excessive or unreasonable. The Assessing Officer found discrepancies in the interest debited by the assessee and made an addition to the income. The First Appellate Authority upheld the disallowance, stating that the excess interest paid could not be considered wholly and exclusively for business purposes. The appellant contended that similar interest payments were not disallowed in previous assessments. The Tribunal noted the lack of factual findings on the excessive/unreasonableness of the expenditure and reversed the FAA's decision based on precedents.
Ground II: General
The appellant sought the flexibility to add, amend, or delete any grounds of appeal.
The Tribunal found that the interest paid to Directors and relatives was higher than the interest received from Fixed Deposits, but the Assessing Officer failed to establish the unreasonableness or excessiveness of the payments. Citing previous cases, the Tribunal emphasized the need for factual evidence to support disallowance u/s. 40A(2)(b). Comparing the case with similar precedents, the Tribunal ruled in favor of the appellant, reversing the FAA's decision and allowing the appeal.
The judgment was delivered by Shri Rajendra, Accountant Member, and Shri I.P. Bansal, Judicial Member, on 22nd February 2013.
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2013 (2) TMI 913
Issues involved:
The judgment involves the interpretation of Section 22 of the Trade Union Act, 1926, specifically regarding the status of laid-off employees in relation to the requirement of office-bearers in a registered Trade Union in the unorganized sector.
Details of the Judgment:
Issue 1: Quashing of Registration Certificate
The appeals were filed against a judgment quashing the Registration Certificate issued to a trade union. The appellants argued that laid-off employees should be considered as actually engaged or employed in the establishment/industry.
Issue 2: Interpretation of Section 22 of the Trade Union Act, 1926
The core consideration was Section 22 of the Trade Union Act, 1926, which mandates that office-bearers of a registered Trade Union in the unorganized sector must be persons actually engaged or employed in the relevant industry. The Act sets out the proportion of office-bearers connected with the industry and provides exceptions for certain situations.
Issue 3: Status of Laid-Off Employees
The question arose whether laid-off employees should be considered as actually employed or engaged in the industry for the purpose of holding office in a Trade Union. The court referred to previous judgments and observed that being laid off implies temporary unemployment, which does not qualify as being engaged or employed.
Conclusion:
The court dismissed the appeals, upholding the judgment that laid-off employees cannot be considered as actually engaged or employed in the industry for the purpose of office-bearers in a Trade Union. The decision was based on the interpretation of Section 22 of the Trade Union Act, 1926, and relevant case law.
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2013 (2) TMI 912
Issues Involved:
The judgment involves issues related to territorial jurisdiction in a criminal case, recall of summons by a Magistrate, and the appropriate remedy under the Code of Criminal Procedure.
Territorial Jurisdiction:
The appellant filed a complaint under Section 138 of the Negotiable Instruments Act. The Magistrate took cognizance of the offence and issued summons to the respondents. However, the respondents challenged the complaint's maintainability due to lack of territorial jurisdiction. The Magistrate recalled the summons and returned the complaint to the appellant. The High Court upheld this decision, leading to the appellant's appeal to the Supreme Court.
Recall of Summons:
The main issue before the Supreme Court was whether the Magistrate was justified in recalling the summons based on an application by the respondents under Sections 202, 203, and 245 of the Code of Criminal Procedure. The Supreme Court referred to previous judgments, including the Adalat Prasad case, which emphasized that the accused cannot interfere at the interlocutory stage under Section 203. The Court held that the appropriate remedy for the accused in such situations is to file a petition under Section 482 of the Code, rather than seeking a review under Section 203.
Appropriate Remedy:
The Supreme Court reiterated that the scheme of the Code does not allow for a review of the order of issuance of process and prohibits interference by the accused at the interlocutory stage under Section 203. Citing previous cases, the Court emphasized that the remedy for the accused in case of an erroneous order lies in invoking Section 482 of the Code. The Court set aside the High Court's decision and directed the Magistrate to proceed with the matter in accordance with law, granting the respondents the liberty to challenge the jurisdiction by filing a petition under Section 482 if desired.
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2013 (2) TMI 911
Issues involved: Dismissal of writ petitions challenging penalty under s. 271FA of the IT Act, 1961 and availability of alternative remedy through appeal before CIT(A).
The judgment by the Rajasthan High Court pertains to a batch of 3 writ petitions challenging the imposition of penalty under s. 271FA of the IT Act, 1961. The petitioner, a Sub-Registrar, filed the writ petition against the IT Department for imposing a penalty of &8377; 66,400 for delay in furnishing returns as required under s. 285BA(i) of the IT Act, 1961. The petitioner had also previously filed an appeal before the Tribunal, which was dismissed as not maintainable. The respondent, representing the IT Department, argued that as per a Co-ordinate Bench's decision, an appeal against the penalty order under s. 271FA lies before the CIT(A) and not the Tribunal. The Court noted that since an alternative remedy through appeal is available to the petitioner before the CIT(A), it refrained from delving into the merits of the penalty imposition and directed the petitioner to file appeals within one month from the judgment date. The Court emphasized that filing appeals within the specified time frame would not be limited by any objections of limitation, and the CIT(A) was directed to expedite the decision on the appeals.
In the judgment, it was highlighted that the question of appealability of an order passed under s. 271FA of the IT Act, 1961 by an officer holding the rank of CIT was discussed. The Court referred to relevant provisions under Chapter XXI of the Act and noted that appeals against orders of penalty under this chapter are maintainable before the CIT(A). The Court emphasized that the specific provision under s. 253(1)(c) of the Act excludes appeals against penalty orders under ss. 271 and 272A before the CIT(A). Therefore, the Court concluded that an order under s. 271FA is appealable under s. 246A(1)(q) of the Act, and the law as enacted cannot be displaced by interpretative exercises. Additionally, it was noted that the demand notice under s. 156 of the Act informed the assessee about the appealability of the penalty order before the jurisdictional CIT(A).
In conclusion, the Rajasthan High Court dismissed the writ petitions challenging the penalty under s. 271FA of the IT Act, 1961, directing the petitioner, a Sub-Registrar, to avail the alternative remedy of filing appeals before the CIT(A) within one month from the judgment date. The Court stressed that objections of limitation would not hinder the filing of appeals, and the CIT(A) was instructed to promptly decide on the appeals in accordance with the law.
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2013 (2) TMI 910
Issues Involved:1. Whether the CIT(A) erred in allowing the claim of depreciation as "application of income on stated charitable objects." Summary:Issue 1: Allowing Depreciation as Application of Income on Charitable ObjectsThe sole issue in the present appeal of the Revenue is that the CIT(A) erred in allowing the claim of depreciation to the assessee by holding it to be as application of income on stated charitable objects. The brief facts of the case are that the assessee-trust is running various educational institutions. The assessee filed return of income for assessment year 2009-10 and claimed depreciation of Rs. 1,43,50,288/- out of the gross receipts received by the Trust of Rs. 8,62,75,057/-. The Assessing Officer disallowed the claim of depreciation by observing that for the purpose of computing the income of the Trust and its application to the extent of 85%, any deduction/allowances falling u/s 14 to 80VVA cannot be considered. Under the provisions of section 11, even the capital expenditure in entirety incurred by the trust is allowable as deduction. Hence, any further allowance by way of depreciation will result in double deduction. The Assessing Officer relied on the decision of the Hon'ble Supreme Court in the case of Escorts Ltd. vs Union of India, 199 ITR 43 and the decision of the Hon'ble Madras High Court in the case of CIT vs Rao Bahadur Calavala Cunnan Chetty Charities, 135 ITR 485. On appeal, the CIT(A) allowed the claim of depreciation to the assessee and while doing so, he has held that the Escorts case cited by the department is distinguishable and not applicable in relation to the trust and there is no double deduction of depreciation and capital expenditure on fixed assets in respect of trust. The CIT(A) relied on various judicial decisions including the Punjab and Haryana High Court in the case of CIT Vs Market Committee, Pipli (2011) 330 ITR 16 (P & H) and the ITAT 'C' Bench, Chennai in the case of GKR Charities Vs DDIT (Exemptions)-1, Chennai. The Tribunal, after hearing the rival submissions and perusing the orders of the lower authorities and materials available on record, found that the issue is squarely covered in favour of the assessee by various judicial decisions. The Tribunal referred to the decisions of the Hon'ble P&H High Court in the case of Market Committee, Pipli and the Hon'ble Delhi High Court in the case of Director of Income Tax vs Vishwa Jagriti Mission, 2012-TIOL-271-HC-DEL-IT, which held that allowing depreciation to the assessee trust would not amount to double deduction. Further, the Tribunal noted that the Hon'ble Supreme Court's decision in Escorts Ltd. vs Union of India is not applicable to the present case as it was concerned with a business entity and not a charitable trust. The Tribunal concluded that there is no double deduction claimed by the assessee as canvassed by the Revenue. Respectfully following the above quoted decisions of the High Courts and the Tribunal, the Tribunal upheld the order of the CIT(A) and dismissed the appeal of the Revenue being devoid of any merits. In the result, the appeal of the Revenue is dismissed. Order pronounced on Friday, the 22nd of February, 2013, at Chennai.
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2013 (2) TMI 909
The Punjab and Haryana High Court suggested mediation for a dispute under the Income Tax Act. The court recommended the Finance Secretary to facilitate discussion between the parties for a possible solution. The appellant has already deposited Rs. 278 crores in the treasury, to be considered as payment to the Income Tax Department. Next hearing scheduled for 09.04.2013.
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2013 (2) TMI 908
Issues involved: Appeal against penalty under section 271D and 271E for breach of sections 269SS and 269T.
Summary:
1. The Revenue appealed against the Income Tax Appellate Tribunal's order imposing penalties under section 271D and 271E on the respondent assessee for breaching provisions of section 269SS and section 269T. The main question was whether the Tribunal was correct in confirming the deletion of the penalty under section 271D. The Assessing Officer found that the assessee breached section 269SS by receiving cash advances exceeding Rs. 20,000. However, the Commissioner (Appeals) held that the deposits were treated as income for taxation purposes, and thus, there was no case for penalty under section 271D.
2. The Revenue appealed to the Income Tax Appellate Tribunal, which agreed with the CIT (Appeals) that the booking advances were treated as 'Deemed Sales' and considered as income. The Tribunal concluded that once the amount was treated as income, it could not be considered as a deposit for penalty under sections 271D and 271E. Therefore, the penalty was deleted by the Tribunal.
3. The High Court, after hearing the Revenue's counsel, upheld the decisions of the CIT (Appeals) and the Tribunal. The Court noted that the amounts in question were treated as booking advances and assessed as undisclosed income under section 68 during the assessment proceedings. As such, the Court agreed that there was no basis for invoking penalties under sections 269SS or 269T, and consequently, no penalty under section 271D or 271E. The Court dismissed the Tax Appeals.
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