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2011 (8) TMI 1370
Issues involved: Reassessment u/s 147/143(1) for assessment years 2006-07 and 2008-09, denial of exemption u/s 11, disallowance of expenses, confirmation of interest levy u/s 234-B, 234-D, and withdrawal of interest u/s 244-A.
For Assessment Year 2006-07:
The CIT (Appeals) erred in upholding the AO's reassessment of income u/s 147/143(1) at a specific amount, jurisdiction under section 147/148, denial of exemption u/s 11 due to unavailability of books of accounts, disallowance of administrative expenses, and confirmation of interest levy u/s 234-B, 234-D, and withdrawal of interest u/s 244-A.
The assessing officer's failure to consider the impounded books of accounts by DGIT [Exemption] led to the denial of exemption u/s 11. The Tribunal directed the AO to obtain the impounded books of accounts and verify the expenses incurred by the assessee trust to determine the eligibility for deduction under section 11.
For Assessment Year 2008-09:
Similar issues as in 2006-07, including reassessment u/s 147/143(1), denial of exemption u/s 11, disallowance of administrative expenses, disallowance of expenses incurred on support of other educational institutions/colleges, confirmation of interest levy u/s 234-B, 234-D, and withdrawal of interest u/s 244-A.
The CIT (Appeals) upheld the AO's denial of exemption u/s 11 based on unavailability of books of accounts, leading to the disallowance of expenses. The Tribunal directed the AO to obtain the impounded books of accounts from DGIT [Exemption] to verify the expenses incurred by the assessee trust for the purpose of the trust and ensure compliance with section 11 requirements.
Conclusion:
The Tribunal allowed both appeals, remanding the cases to the assessing officer for proper verification of expenses and eligibility for exemption u/s 11 based on the impounded books of accounts. The assessee agreed to cooperate in the assessment process, emphasizing the importance of verifying expenses for the trust's objectives.
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2011 (8) TMI 1369
The Supreme Court of India dismissed the Special Leave Petition after condoning the delay. Justices D.K. Jain and Asok Kumar Ganguly were presiding. Petitioner represented by Mr. Vivek Tankha, ASG, Mr. Krishan Kumar, Mr. Manish Pushkarna, and Mr. B. Krishna Prasad. (Citation: 2011 (8) TMI 1369 - SC Order)
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2011 (8) TMI 1368
Issues involved:
1. Allowability of Otters Club membership fee as business expenditure u/s 37(1) of the IT Act.
2. Entitlement to higher rate of depreciation on a vehicle registered as a personal vehicle under the Motor Vehicles Act, 1988.
Issue 1: Otters Club Membership Fee
The appellant, an actor, claimed Rs.15,00,000 as entrance fee to Otters Club as revenue expenditure for professional purposes. The assessing officer disallowed the claim stating it could be used for personal purposes. The C.I.T.(A) upheld the disallowance. However, the I.T.A.T. allowed the claim, noting the actor had memberships in two clubs for professional and personal use. Citing the OTIS Elevators Ltd. v. C.I.T. case, the I.T.A.T. held the expenditure for professional purposes was valid, thus dismissing the first question raised by the Revenue.
Issue 2: Higher Depreciation on BMW Car
The appellant claimed 50% depreciation on a BMW car, but the assessing officer allowed only 20%. The I.T.A.T. allowed the higher rate under rule III(2)(iid) of the Income Tax Rules, 1962. The Revenue argued the vehicle was not a commercial vehicle, hence not eligible for 50% depreciation. However, as per note-3A of Appendix-I, a "commercial vehicle" includes a light motor vehicle with an unladen weight not exceeding 7,500 kgs. Since the appellant met all conditions, the I.T.A.T.'s decision to allow 50% depreciation on the BMW car was upheld.
In conclusion, the High Court of Bombay dismissed the appeal, finding no merit in the Revenue's contentions on both issues.
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2011 (8) TMI 1367
Issues involved:
The judgment involves the treatment of foreign exchange gain by the Assessing Officer (AO) and the claim of deduction u/s.10A by the assessee.
Issue 1: Treatment of foreign exchange gain
The assessee, a private limited company engaged in software services export, claimed deduction u/s.10A on foreign exchange gain. The AO disallowed the claim and treated it as income from other sources. The CIT(A) allowed the claim for a portion of the gain but disallowed a specific amount related to the revaluation of bank balance. The ITAT noted that the issue was covered against the assessee by the decision of the Jurisdictional High Court and upheld the disallowance based on precedents related to foreign exchange gain being part of export turnover.
Issue 2: Claim of deduction u/s.10A
The assessee contested the disallowance of deduction u/s.10A on the foreign exchange gain arising from the revaluation of bank balance. The ITAT referred to the decision of the Jurisdictional High Court, which emphasized that the exchange fluctuation post-export transaction does not have a direct nexus with the export activity and cannot be considered as part of the profits derived from export. The interest income from deposits in the EEFC account was also deemed not to be business income but income from other sources. Consequently, the ITAT decided the issue against the assessee and in favor of the Revenue, dismissing the appeal.
This judgment highlights the importance of legal precedents and interpretations in determining the tax treatment of foreign exchange gains and deductions u/s.10A in the context of export-oriented businesses.
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2011 (8) TMI 1366
Issues Involved:
1. Confiscation of gold and Maruti Van.
2. Imposition of penalties.
3. Validity of statements recorded under Section 108 of the Customs Act.
4. Burden of proof under Section 123 of the Customs Act.
5. Application of Section 125 of the Customs Act regarding the option to pay a fine in lieu of confiscation.
Issue-wise Detailed Analysis:
1. Confiscation of Gold and Maruti Van:
The appeal was against the order of confiscation of 559.700 grams of gold and a Maruti Van under Sections 111(d), 120, and 115(2) of the Customs Act. The gold was seized on the belief that it was smuggled from Nepal, evidenced by the erasure of foreign markings and the presence of Chinese markings on one piece. The Tribunal upheld the confiscation based on the initial statements of the appellants, which indicated the gold was acquired from a broker in Urdu Bazar, Gorakhpur, and was intended for sale in Balaharganj.
2. Imposition of Penalties:
Penalties were imposed under Section 112 of the Customs Act, with the Joint Commissioner ordering a penalty of Rs. 15,000/- on the appellant and Rs. 10,000/- on Sanjay Soni, which was later reduced to Rs. 5,000/- by the Tribunal. The penalties were based on the involvement in the smuggling and transportation of the gold.
3. Validity of Statements Recorded under Section 108 of the Customs Act:
The statements recorded under Section 108 were pivotal. Initially, the appellant admitted purchasing gold from a broker who claimed it was from Nepal. However, in subsequent statements, the appellant claimed to have purchased the gold from Dhancholia & Sons, Delhi, supported by a receipt. The Tribunal and customs authorities relied on the initial statements, considering the retractions as unconvincing without proper corroboration.
4. Burden of Proof under Section 123 of the Customs Act:
Section 123 places the burden of proof on the accused to prove that the gold was not smuggled. The Tribunal held that the appellant failed to establish the lawful acquisition of the gold, as discrepancies existed between the number of pieces and the weight of gold shown in the receipt from Delhi and the gold seized. The Tribunal emphasized that if the gold was lawfully acquired, there would be no need to hammer the gold to remove foreign markings.
5. Application of Section 125 of the Customs Act Regarding the Option to Pay Fine in Lieu of Confiscation:
The judgment pointed out that the customs authorities and the Tribunal did not consider the mandatory requirement of Section 125, which provides an option to pay a fine in lieu of confiscation. This option should have been given to the appellants, as they were the apparent owners of the gold.
Conclusion:
The High Court found that the customs authorities and the Tribunal did not adequately consider the principles of law regarding the burden of proof and the reliance on statements under Section 108. The discrepancies in the statements and the lack of corroborative evidence were insufficient to discard the appellant's explanation. The High Court also noted the failure to provide an option to pay a fine in lieu of confiscation as required under Section 125. Consequently, the appeal was allowed, and the matter was remanded back to the Tribunal for reconsideration in accordance with the law and the observations made in the judgment.
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2011 (8) TMI 1365
Issues involved:
The issues involved in the judgment are the denial of deduction u/s 80IA, determination of the initial assessment year for claiming deduction u/s 80IA, set off of past losses against current year's profit for claiming deduction u/s 80IA, applicability of provisions of section 80IA(5), and interpretation of case law regarding the initial assessment year.
Denial of deduction u/s 80IA:
The appeal was against the order of the Commissioner of Income-tax (Appeals) confirming the denial of deduction u/s 80IA of Rs.27,26,580 by applying the provisions of section 80IA(5). The assessee argued that the revenue cannot thrust the 'initial assessment year' on the assessee, citing a reported decision of the Bench in another case. The Tribunal held that the assessee has the option to select the 'initial assessment year' and upheld the assessee's claim for deduction u/s 80IA in respect of profits from the windmill activity.
Determination of initial assessment year for claiming deduction u/s 80IA:
The Tribunal examined the scope of provisions relating to the initial assessment year under section 80IA. It was noted that the assessee is granted the option to select the 'initial assessment year' for claiming deduction u/s 80IA for any ten consecutive assessment years out of fifteen years. The Tribunal held that the assessing officer erred in thrusting the initial assessment year on the assessee and that the initial assessment year should be the first year in which the assessee claimed the deduction u/s 80IA after exercising the option as per the provisions of section 80IA(2) of the Act.
Set off of past losses against current year's profit for claiming deduction u/s 80IA:
The Tribunal considered the argument that past losses of the undertaking entitled to claim deduction u/s 80IA should have been set off against the profit of the current year. It was clarified that the provisions of section 80IA(5) are applicable only from the initial assessment year, and there was no reason to set off notional brought forward losses/depreciation while computing the deduction u/s 80IA for the present assessment year.
Applicability of provisions of section 80IA(5):
The Tribunal addressed the contention that the provisions of section 80IA(5) were applicable only from the initial assessment year in which deduction u/s 80IA was first claimed by the assessee. It was emphasized that the initial assessment year for the purposes of section 80IA(2) should be the first year in which the assessee claimed the deduction u/s 80IA(1) after exercising the option as per the provisions of section 80IA(2) of the Act.
Interpretation of case law regarding the initial assessment year:
The Tribunal referred to case law to support the assessee's argument regarding the initial assessment year. It highlighted that the assessee has the option to choose the initial assessment year, and the assessing officer cannot thrust the initial assessment year on the assessee. The Tribunal reversed the order of the Commissioner of Income-tax (Appeals) and allowed the appeal of the assessee based on the interpretation of the provisions of section 80IA and relevant case law.
Conclusion:
The Tribunal reversed the order of the Commissioner of Income-tax (Appeals) and allowed the appeal of the assessee, emphasizing the assessee's right to choose the initial assessment year for claiming deduction u/s 80IA and rejecting the denial of deduction based on the incorrect determination of the initial assessment year.
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2011 (8) TMI 1364
Issues Involved:
1. Whether the CIT(A) was correct in directing the AO to allow TDS credit of Rs. 31,47,636 instead of Rs. 16,67,367.
2. Whether the AO's rejection of the assessee's application u/s 154 was justified.
3. Whether the assessee was required to file a revised return to claim the excess TDS.
Summary:
1. TDS Credit Allowance:
The CIT(A) directed the AO to allow TDS credit of Rs. 31,47,636 as against Rs. 16,67,367 allowed by the AO. The assessee had filed TDS certificates totaling Rs. 31,47,636 along with the return, but due to inadvertence, only Rs. 16,67,134 was claimed. The AO allowed only the claimed amount, leading to a shortfall in TDS credit.
2. Application u/s 154:
The AO rejected the assessee's application u/s 154, stating no mistake apparent from the record. However, the CIT(A) found that the AO failed to consider the TDS certificates and audited P&L account filed with the return, which clearly showed the correct TDS amount. The Tribunal held that the AO should have adjusted the entire TDS of Rs. 31,47,636 as per the statutory requirement of s. 143(1).
3. Requirement of Revised Return:
The Department argued that the assessee should have filed a revised return to claim the excess TDS. The Tribunal, however, found no merit in this argument, stating that the TDS certificates and audited P&L account filed with the return were sufficient to establish the correct TDS amount. The Tribunal emphasized that the AO was duty-bound to amend the intimation under s. 155(14) if the TDS certificates were subsequently produced, which was not the case here as they were filed along with the return.
Conclusion:
The Tribunal confirmed the CIT(A)'s order, directing the AO to allow the full TDS credit of Rs. 31,47,636 and grant consequential refund. The Department's appeal was dismissed, finding no error in the CIT(A)'s decision.
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2011 (8) TMI 1363
Issues Involved:
1. Maintainability of Review Petition after dismissal of Special Leave Petition (SLP).
2. Validity of the counsel's statement about settlement without written consent.
3. Bar on availing remedies after withdrawal of SLP without leave.
Issue-wise Detailed Analysis:
1. Maintainability of Review Petition after dismissal of Special Leave Petition (SLP):
The primary issue was whether the Review Petition (C) No. D-5/2008 filed before the High Court was maintainable after the dismissal of SLP (C) No. 10939 of 2008. The court considered the principles laid down in *Kunhayammed and Others vs. State of Kerala and Another*, which clarified that the dismissal of an SLP does not bar the filing of a review petition. The court noted that the SLP was dismissed as withdrawn without any leave for further action. The decision in *Sarguja Transport Service vs. State Transport Appellate Tribunal, M.P., Gwalior, and Others* was also referenced, which extended the principle underlying Rule 1 of Order XXIII of CPC to writ petitions, emphasizing that withdrawal without permission to file afresh should be seen as abandonment of the remedy under Article 226/227. The court concluded that the review petition was maintainable.
2. Validity of the counsel's statement about settlement without written consent:
The court examined whether the statement made by the counsel about the settlement and modification of the decree without a written document or consent from the appellants was acceptable. The court referred to Order XXIII Rule 3 of CPC, which requires that a compromise must be in writing and signed by the parties. The court cited *Gurpreet Singh vs. Chatur Bhuj Goel*, which emphasized that compromises should be reduced to writing. The court also referenced *Byram Pestonji Gariwala vs. Union Bank of India and Others*, which recognized the traditional role of lawyers and their implied authority to act on behalf of their clients. The court observed that the counsel's authority to act on behalf of the appellants was not disputed until the review petition was filed. The court held that the counsel's statement was within his competence and valid under the circumstances.
3. Bar on availing remedies after withdrawal of SLP without leave:
The court addressed whether the dismissal of the SLP as withdrawn without leave of the Court to challenge the impugned order barred the appellants from availing further remedies. The court cited *Kunhayammed and Others vs. State of Kerala and Another*, which stated that the dismissal of an SLP does not preclude the filing of a review petition. The court noted that the appellants had not raised any objection to their counsel's conduct until filing the review petition, and there was no material to substantiate that the counsel acted without instructions. The court concluded that the review petition was not barred and was maintainable.
Conclusion:
The court found no merit in the appeals and dismissed them. The review petition was maintainable, the counsel's statement about the settlement was valid, and the dismissal of the SLP did not bar the appellants from filing a review petition. The court emphasized the importance of written instructions for compromises to safeguard the reputation of counsel and uphold the dignity of the legal profession.
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2011 (8) TMI 1362
Issues Involved:
1. Legality of the assessment order.
2. Disallowance of deduction u/s 80-IA.
3. Re-computation of income from the power plant.
4. Disallowance of peripheral development expenditure u/s 37(1).
5. Disallowance of garden expenditure u/s 37(1).
6. Computation and allowance of depreciation.
7. Consideration of revised computation of income.
8. Computation of income u/s 143(3) vs. u/s 143(1)(a).
9. Proper computation of income and deduction u/s 80-IA.
Summary:
1. Legality of the Assessment Order:
The Assessee contended that the assessment was completed in an arbitrary manner, violating principles of natural justice and ignoring the books of account and documents produced. The Tribunal found no merit in this contention.
2. Disallowance of Deduction u/s 80-IA:
The Assessee claimed a deduction of Rs. 7,59,17,674 u/s 80-IA for income from its power plant. The CIT(A) sustained the disallowance, holding that the Assessee did not comply with the requirements of Section 80-IA(7). The Tribunal upheld this decision, noting that the Assessee did not show the income from the power plant in the gross total income, which is mandatory for claiming the deduction.
3. Re-computation of Income from Power Plant:
The CIT(A) directed the Assessing Officer to recompute the income from the power plant by examining indirect expenses and the rate at which electricity was charged. The Tribunal found this direction justified but ultimately upheld the disallowance of the deduction u/s 80-IA.
4. Disallowance of Peripheral Development Expenditure u/s 37(1):
The Assessee claimed Rs. 10,57,792 as peripheral development expenditure. The CIT(A) disallowed this amount, stating it was not supported by any project approved by the National Committee for Promotion of Social & Economic Welfare. The Tribunal upheld this disallowance, agreeing that the expenses were not connected to any approved project.
5. Disallowance of Garden Expenditure u/s 37(1):
The Assessee claimed Rs. 11,19,048 for garden, park, lake, and vegetable garden expenses. The CIT(A) disallowed Rs. 5,06,276 of this amount. The Tribunal upheld the disallowance, noting that the Assessee did not account for the income from the vegetables grown.
6. Computation and Allowance of Depreciation:
The Assessee argued for the proper computation of depreciation amounting to Rs. 16,92,39,751 and an additional Rs. 36,21,510 for the power plant. The Tribunal found no merit in the Assessee's contentions and upheld the CIT(A)'s decision.
7. Consideration of Revised Computation of Income:
The Assessee's plea for considering the revised computation of income was ignored by the CIT(A). The Tribunal upheld this decision, finding no error in the CIT(A)'s approach.
8. Computation of Income u/s 143(3) vs. u/s 143(1)(a):
The Assessee contended that the CIT(A) erred in computing income based on intimation u/s 143(1) instead of the returned income. The Tribunal upheld the CIT(A)'s method, finding it justified.
9. Proper Computation of Income and Deduction u/s 80-IA:
The Assessee argued that the income from the power plant and other income should be properly computed, and then the deduction u/s 80-IA should be allowed. The Tribunal found no merit in this argument and upheld the CIT(A)'s decision.
Conclusion:
The Tribunal dismissed the appeal of the Assessee, upholding the order of the CIT(A) and finding the issues raised by the Assessee to be devoid of merits.
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2011 (8) TMI 1361
The Supreme Court of India dismissed the appeals due to similarity with a previously dismissed case involving Commissioner of Central Excise, Jaipur v. Ginni International Ltd. (2011).
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2011 (8) TMI 1360
Issues Involved:
1. Disallowance of loss on sale of shares.
2. Non-admission of additional evidence u/s Rule 46A of Income Tax Rules.
Summary:
1. Disallowance of Loss on Sale of Shares:
The assessee, a non-banking finance and investment company, appealed against the disallowance of a Rs. 28 lacs loss on the sale of shares by the Assessing Officer (AO). The AO disallowed the loss, suspecting it to be bogus, as the shares were sold at a significant loss without sufficient justification. The AO noted that the shares were of a closely held and unquoted company, and the transactions were potentially for tax evasion. The assessee argued that the sale was necessitated by business exigencies and was conducted through proper banking channels. The Tribunal observed that the AO did not conduct a thorough inquiry and relied on probabilities rather than concrete evidence. The Tribunal emphasized that the AO failed to provide specific reasons for disallowing the loss and did not consider the detailed explanations and evidence provided by the assessee. The Tribunal concluded that the transactions were genuine, supported by proper documentation, and the loss was a result of business necessity. Therefore, the disallowance of the loss was unjustified.
2. Non-admission of Additional Evidence u/s Rule 46A:
The assessee also contested the non-admission of additional evidence by the Commissioner of Income Tax (Appeals) [CIT(A)] under Rule 46A. The Tribunal noted that the CIT(A) had forwarded the additional evidence to the AO for comments, and the AO had the opportunity to respond. The Tribunal found that the additional evidence was merely supportive and did not constitute new information that was not previously available. Given that the appeal on the primary issue was allowed, the Tribunal deemed it unnecessary to delve into the matter of non-admission of additional evidence.
Conclusion:
The Tribunal allowed the appeal of the assessee, concluding that the disallowance of the loss on the sale of shares was not justified and the transactions were genuine. The issue of non-admission of additional evidence was rendered moot by the decision on the primary issue. The order was pronounced in the open Court on 18.8.2011.
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2011 (8) TMI 1359
Issues involved: Assessment u/s 143(3) for AY 2006-07, merger of companies, treatment of machinery replacement as revenue expenditure.
Assessment u/s 143(3) for AY 2006-07: The assessee, a company engaged in manufacturing and sale of various products, filed its return of income for the year declaring total income under normal computation and as per section 115JB. The Assessing Officer completed the assessment u/s 143(3) determining the income under normal computation. The assessee disputed the assessment framed in the name of a non-existing company, as it had already been merged with the assessee-company as per the order of the Hon'ble Madras High Court. The main issue was the treatment of replacement of machinery parts as revenue expenditure.
Merger of companies: The assessee contended that the assessment was framed in the name of a non-existing company as it had been merged with the assessee-company as per the order of the Hon'ble Madras High Court. The transferor company was dissolved being wound up. This issue was crucial in the appeal process.
Treatment of machinery replacement: The main issue revolved around the claim of replacement of machinery parts as revenue expenditure. The ld.AR submitted that similar issues were being restored to the file of the Assessing Officer in line with the direction of the Hon'ble Supreme Court. The Tribunal restored the appeal to the Assessing Officer with directions to decide the issue considering various judicial pronouncements.
Cross objection: The cross objection by the assessee was deemed premature due to the setting aside of the findings of the ld. CIT(A) and the Assessing Officer. However, the assessee was allowed to raise the issue at a later stage. The Tribunal dismissed the cross objection as premature but kept the issues raised open for future consideration.
Conclusion: The appeal of the Revenue and the cross objection of the assessee were both dismissed. The Tribunal pronounced the order on 30-08-2011, emphasizing the dismissal of both appeals.
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2011 (8) TMI 1358
Issues Involved:
1. Claim of deduction under Section 80IB of the Income Tax Act.
2. Claim of additional depreciation under Section 32(1)(iia).
3. Status of the assessee as a Small Scale Industry (SSI).
4. Set off of losses of amalgamated companies under Section 72A.
Issue-wise Detailed Analysis:
1. Claim of Deduction under Section 80IB:
The main controversy revolves around the denial of the deduction under Section 80IB. The assessing officer disallowed the deduction on two grounds: (a) the assessee was not a small scale industrial unit as its plant and machinery value exceeded Rs. 1 crore, and (b) the assessee was engaged in processing and trading of milk and milk products, not in manufacturing or producing any article or thing. The CIT(A) upheld this view, stating that the doctrine of res judicata does not apply in income tax proceedings, and each year is distinct and independent. The CIT(A) relied on the special bench order in B.G. Chitale Vs. DCIT, which held that pasteurization of milk does not amount to manufacturing or production. However, the Tribunal found that the assessee was allowed the deduction in initial years after detailed examination, and there is no provision to withdraw this deduction in subsequent years if initially allowed. The Tribunal cited various judgments, including India Cine Agencies Vs. CIT and CIT Vs. Emptee Poly-Yarn Pvt. Ltd., to support the view that processing activities like pasteurization can be considered manufacturing or production. Consequently, the Tribunal directed the A.O. to allow the deduction under Section 80IB.
2. Claim of Additional Depreciation under Section 32(1)(iia):
The assessee's claim for additional depreciation was disallowed by the A.O. due to the non-filing of the audit report in Form 3AA along with the return of income. The CIT(A) confirmed this disallowance. However, the Tribunal noted that the audit report was filed subsequently and held that the non-filing of the report along with the return was merely a procedural lapse. The Tribunal set aside the CIT(A)'s order and directed the A.O. to re-examine the claim of additional depreciation as per the law.
3. Status of the Assessee as a Small Scale Industry (SSI):
The A.O. and CIT(A) held that the assessee was not a small scale industry because its investment in plant and machinery exceeded Rs. 1 crore. The Tribunal found that the assessee was registered as a SSI with the concerned authorities, and this registration was never withdrawn. The Tribunal emphasized that as long as the registration as a SSI is not withdrawn, the assessee should be treated as a small scale industrial undertaking. Therefore, the Tribunal found no merit in the CIT(A)'s findings and held that the assessee should be considered a small scale industrial undertaking.
4. Set Off of Losses of Amalgamated Companies under Section 72A:
The assessee claimed the set off of losses of amalgamated companies, which the A.O. disallowed on the grounds that the amalgamated companies were not industrial undertakings as defined in Section 72A. The CIT(A) confirmed this disallowance, noting that the amalgamated companies were not engaged in manufacturing or processing activities. The Tribunal, after examining the facts and circumstances, upheld the CIT(A)'s decision, finding no infirmity in the order.
Conclusion:
The Tribunal allowed the appeals regarding the deduction under Section 80IB and the additional depreciation for statistical purposes, directing the A.O. to re-examine these claims. The Tribunal also held that the assessee should be treated as a small scale industrial undertaking. However, the Tribunal confirmed the CIT(A)'s decision on the disallowance of set off of losses of amalgamated companies. The appeals were thus partly allowed for statistical purposes.
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2011 (8) TMI 1357
Issues involved: Insider trading, penalties imposed, adequacy of penalties, Securities and Exchange Board of India's role in adjudication proceedings.
Insider Trading: The judgment pertains to three connected Appeals involving insider trading. The appellants, including a director of a company and his relatives, were found to have engaged in insider trading by purchasing shares based on unpublished price sensitive information. The information was passed on by the director to his wife, and another appellant was in possession of the information. The Tribunal found the charge of insider trading to be established against the appellants.
Penalties Imposed: The Tribunal noted that while the insider trading charge was established, the penalties imposed on the appellants were considered too low and not serving as a deterrent. The adjudicating officer had imposed penalties of &8377; 3.5 lakhs, &8377; 4 lakhs, and &8377; 2 lakhs on the respective appellants, which the Tribunal deemed inadequate considering the seriousness of insider trading.
Adequacy of Penalties: Section 15G of the Securities and Exchange Board of India Act, 1992, allows for penalties to be imposed for insider trading. The Tribunal highlighted that the maximum penalty had been increased to &8377; 25 crores or three times the profits made by the delinquent, whichever is higher, to serve as an effective deterrent. However, the adjudicating officer failed to impose adequate penalties in line with the amended provisions of the Act.
SEBI's Role in Adjudication Proceedings: The Tribunal expressed dissatisfaction with SEBI's handling of the adjudication proceedings, as it only initiated proceedings and imposed small penalties on the delinquents. The appellants were noted to still be benefiting from their ill-gotten gains, despite the small penalties imposed. The Tribunal suggested that SEBI should have taken further action under sections 11 and 11B of the Act to ensure that the appellants do not profit from their wrongdoing and to disgorge their gains.
In conclusion, the appeals were dismissed, and no costs were awarded. The Tribunal emphasized the seriousness of insider trading and the need for adequate penalties to serve as effective deterrents in the securities market.
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2011 (8) TMI 1356
Issues Involved:
The judgment involves issues related to adoption, ownership of land, fraudulent sale deeds, applicability of legal provisions, res judicata principle, and interpretation of evidence.
Adoption and Ownership of Land:
The plaintiff claimed to be the adopted son of late Chhaya and Chhote Samaru, asserting ownership of the suit land. The defendant attempted to cultivate the land with ill intentions, leading to fraudulent sale deeds executed in favor of his sons. Both lower Courts found in favor of the plaintiff, establishing his adoption and rightful ownership of the land. The suit land was deemed as service land granted to Samaru, requiring permission from the Collector for any sale.
Applicability of Legal Provisions:
The appellant argued against the reliance on Section 33 of the Evidence Act and Section 165(7)(b) of the Chhattisgarh Land Revenue Code, 1959. The Court clarified that Section 33 allows the use of earlier statements in subsequent proceedings if the parties are representatives of each other and the issues are substantially the same. Regarding Section 165(7)(b), the Court held that it prescribes a procedure and is retrospective, thus justifying the declaration of the sale deeds as illegal.
Res Judicata Principle:
The appellant contended that the present suit was barred by the principle of res judicata since the plaintiff was a party in an earlier suit where no decree was passed in his favor. However, the Court found that the earlier suit did not address the ownership issue of the present plaintiff, and his rights accrued only after the death of Chhaya. As a result, the present suit was not barred by res judicata.
Conclusion:
The Court dismissed the appeal, affirming the lower Courts' decisions on the adoption, ownership of land, fraudulent sale deeds, and the inapplicability of res judicata. No substantial question of law was found for consideration, leading to the dismissal of the appeal.
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2011 (8) TMI 1355
Issues involved:
The judgment involves the appeal against the acquittal of the accused-respondents u/s 138 of the Negotiable Instruments Act, 1881.
Details of the judgment:
1. The petitioner accused respondent No. 1 of issuing a dishonored cheque in discharge of a financial liability. The cheque was returned uncashed with the remark "accounts closed." Despite a legal notice, respondent No. 1 failed to make the payment, leading to the complaint.
2. The trial court convicted respondent No. 1, but the Appellate Court acquitted him due to lack of evidence. The Appellate Court noted the absence of proof regarding the advancement of the loan, return of the loan, and issuance of the cheque, emphasizing the insufficiency of the testimony of the special power of attorney.
3. The petitioner did not testify in court but appointed a special power of attorney after filing the complaint. The attorney's lack of personal knowledge and the absence of details in the complaint raised doubts about the credibility of the evidence presented.
4. The Appellate Court correctly highlighted the necessity for the complainant to testify and prove the allegations against the accused. The court emphasized that the power of attorney's testimony is limited to facts within their personal knowledge.
5. The judgment referenced legal precedents to support the requirement of the complainant's testimony and the limited admissibility of the power of attorney's evidence. Failure of the complainant to testify may lead to adverse inferences regarding the credibility of the case.
6. Ultimately, the High Court upheld the Appellate Court's decision, emphasizing the lack of evidence and the consistency with the legal principles outlined in the judgment.
In conclusion, the petition was dismissed for lack of merit based on the insufficiency of evidence and failure to establish the necessary facts u/s 138 of the Negotiable Instruments Act, 1881.
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2011 (8) TMI 1354
Challenging the HC order - Direction for summon and examine court witness u/s 311 of the CrPC - HELD THAT:- The case of the prosecution is simple that in order to settle the matter relating to construction of boundaries on the disputed property, which is being supervised by the Appellant who is father of Smt. Ruchi Saxena, the Respondent No. 2 and another accused had demanded a sum of ₹ 2 lacs as bribe amount from the Appellant as a result of which the Appellant had filed complaint pursuant to which a trap was laid and accused were arrested while receiving an amount of ₹ 50,000/- as part payment of the bribe amount of ₹ 2 lacs. As is evident from the facts of the case after success of the trap, FIR in the case was lodged. After framing of charge and commencement of trial several witnesses were examined by the prosecution, who had been cross-examined by the accused. The record nowhere shows that any complaint was filed by Smt. Ruchi Saxena against any of the accused making grievance that they had demanded any bribe amount from her. Smt. Ruchi Saxena had nothing to do with the bribe case either as a complainant or as a witness to the trap arranged by the police. Her name did not figure as one of the witnesses to be examined by the prosecution when charge-sheet was submitted in the court of learned Special Judge. The HC without specifying as to how Smt. Ruchi Saxena is a material witness or how her evidence is essential for just decision of the case, has directed the learned Special Judge to summon Smt. Ruchi Saxena as a court witness u/s 311 of the CrPC and to examine her.
There is no manner of doubt that the power u/s 311 of the CrPC is exercised arbitrarily and, therefore, the impugned judgment is liable to be set aside.
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2011 (8) TMI 1353
Issues Involved:
1. Reopening of assessment by issuance of notice u/s 148.
2. Denial of benefit u/s 11 & 12 of the I.T. Act.
Summary:
1. Reopening of Assessment by Issuance of Notice u/s 148:
The first common issue in all the assessment years relates to the reopening of assessment by issuance of notice u/s 148 of the Income-tax Act. The assessee filed its return of income on 31.10.2005, declaring total income nil, which was accepted u/s 143(1) on 25.07.2006. The Assessing Officer received an order dated 31.12.2009 from the Director of Income-tax (Exemption) [DIT(E)], Delhi, cancelling the registration granted to the assessee u/s 12A w.e.f. assessment year 2005-06, on the grounds that the assessee was engaged in commercial ventures and not charitable activities as defined u/s 2(15). Based on this order, the Assessing Officer issued a notice u/s 148 on 25.01.2010, believing that income chargeable to tax had escaped assessment.
The assessee objected to the reopening, arguing that the order of DIT(E) was under appeal before ITAT and that the Assessing Officer should not have reopened the assessment until the appeal was decided. The CIT(A) upheld the reopening, stating that the cancellation of registration u/s 12A was sufficient information for the Assessing Officer to form an opinion that income chargeable to tax had escaped assessment.
2. Denial of Benefit u/s 11 & 12 of the I.T. Act:
The substantial grounds of appeal also relate to the denial of benefit u/s 11 & 12 of the I.T. Act. The assessee contended that the Tribunal had restored the registration granted u/s 12A, and therefore, the information possessed by the Assessing Officer enabling him to form the belief that income chargeable to tax had escaped would extinguish. The Tribunal's order dated 08.07.2011 set aside the order of DIT(E), stating that the DIT(E) was not competent to cancel the registration u/s 12A before 01.06.2010.
The Tribunal concluded that since the order of DIT(E) was set aside, there was no information available to the Assessing Officer to form the belief that income chargeable to tax had escaped assessment. The reopening of assessment was, therefore, not sustainable. Consequently, the reassessment orders were quashed, and the appeals of the assessee were allowed.
Conclusion:
The Tribunal allowed the appeals of the assessee, quashing the reassessment orders on the grounds that the reopening of assessment was not sustainable due to the setting aside of the DIT(E)'s order cancelling the registration u/s 12A. The Tribunal did not address the merits of the additions, as the primary issue of reopening was resolved in favor of the assessee.
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2011 (8) TMI 1352
Issues involved: Appeal filed by Revenue against deletion of interest u/s 234D for assessment year 2001-2002.
Summary:
The Revenue appealed against the deletion of interest levied u/s 234D of the Income-tax Act, 1961 for the assessment year 2001-2002. The ld. CIT(A) had deleted the interest based on the decision of the Delhi Special Tribunal in a previous case. The Revenue argued that interest u/s 234D was chargeable from 1.6.2003 based on a decision of the Hon'ble Kerala High Court. On the other hand, the assessee cited a decision of the Hon'ble Delhi High Court to support that interest u/s 234D was applicable only from Assessment Year 2004-05 onwards. Since there were conflicting decisions from different High Courts, the Tribunal followed the principle that when there are two views from different High Courts and no decision from the Jurisdictional High Court, the view favoring the assessee should be adopted. Therefore, the Tribunal held that interest u/s 234D is chargeable from Assessment Year 2004-05 onwards and dismissed the appeal of the Revenue.
In conclusion, the appeal of the Revenue was dismissed by the Tribunal based on the interpretation of the applicability of interest u/s 234D as per different High Court decisions and the principle favoring the assessee in the absence of a decision from the Jurisdictional High Court.
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2011 (8) TMI 1351
Issues involved: Assessment under section 144 of the Income Tax Act, 1961 for the assessment years 2002-03, 2004-05, and 2006-07.
Issue 1: Addition on account of transfer fees
The Assessing Officer challenged the correctness of CIT(A)'s orders regarding the addition on account of transfer fees in the mentioned assessment years. The issue revolved around whether the transfer fees received by the Co-operative Housing Society are exempt under the principle of mutuality. The Tribunal upheld the CIT(A)'s decision, citing the judgment of the Hon'ble Bombay High Court in similar cases and previous decisions. The Tribunal dismissed Ground No.1 in all the appeals.
Issue 2: Deletion of addition of various charges
The Assessing Officer disputed the deletion of additions related to general maintenance, miscellaneous income, change of user charge, lift charges, advertisement, and car parking charges, arguing that these amounts were exempt under the principle of mutuality. The Tribunal agreed with the CIT(A) that these contributions were for the maintenance and upkeep of the building, falling under the principle of mutuality. Ground No.2 in all the appeals was dismissed.
Issue 3: Deletion of addition on non-occupancy charges
The Assessing Officer contested the CIT(A)'s decision to delete the addition on account of non-occupancy charges. The Tribunal referred to the judgment of the Hon'ble Bombay High Court and various Tribunal decisions, concluding that non-occupancy charges were not taxable. Upholding the CIT(A)'s decision, Ground No.3 in all the assessment years was dismissed.
Issue 4: Treatment of interest received from Co-operative Banks
The Assessing Officer raised concerns about the deletion of additions on interest received from Co-operative Banks, claiming it was exempt under section 80P(2)(c) of the Income Tax Act, 1961. The Tribunal found that all interest income was from co-operative banks, making it eligible for exemption under the mentioned section. The CIT(A) had directed verification of the investments, and the Tribunal upheld the decision, dismissing Ground No.4 for the relevant assessment years.
In conclusion, all the appeals were dismissed by the Tribunal based on the detailed analysis and application of relevant legal principles and precedents.
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