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2010 (12) TMI 1166
Issues Involved:
1. Classification of income from sale of shares as business income or capital gains.
Summary:
Issue 1: Classification of Income from Sale of Shares
The assessee, an individual, declared income from short-term capital gains of Rs. 60,84,494/- and long-term capital gains of Rs. 59,979/-, along with dividend income and interest on government bonds, claiming exemptions. The AO noted that the assessee had treated share dealings as business income in the assessment year 2004-05 and questioned why the gains from the sale of shares should not be taxed as business income instead of capital gains.
In response, the assessee, a senior citizen, argued that due to health issues, he relied on a broker for share transactions and had shown shares as investments in his books of account. The AO, however, treated the profits from the sale of shares as business income, citing the volume and periodicity of transactions.
On appeal, the CIT(A) upheld the AO's decision, emphasizing the lack of consistency in the assessee's accounting methods and suggesting that the change was motivated by tax benefits introduced by the government.
Before the Tribunal, the assessee's representative argued that except for the assessment year 2004-05, the assessee consistently treated share purchases as investments. The representative provided detailed transaction records, showing that the assessee made 38 purchases and 41 sales during the relevant period, with substantial dividend income and no speculative transactions.
The Tribunal considered the rival contentions and relevant records, noting that the number and frequency of transactions did not indicate trading activity. The intent of the assessee at the time of purchase and sale was crucial, and the transactions appeared to be for investment purposes rather than trading. The Tribunal also noted that the assessee did not book any expenditure against the capital gains and earned significant dividend income.
Applying the principle of consistency, the Tribunal observed that the assessee had shown shares as investments in earlier years and concluded that the transactions were in the nature of investments. Consequently, the Tribunal set aside the orders of the lower authorities and allowed the appeal, treating the income from the sale of shares as capital gains.
Conclusion:
The Tribunal ruled in favor of the assessee, classifying the income from the sale of shares as capital gains rather than business income, based on the intent, consistency in accounting treatment, and the nature of transactions.
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2010 (12) TMI 1165
The Gujarat High Court remitted the matter for de novo consideration after an appeal by the Revenue. The substantial question of law is whether a "contract carriage" manufactured according to specifications is a "tourist vehicle" and if services provided under it make the assessee a "tour operator" under Section 65(115) of the Finance Act, 1994.
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2010 (12) TMI 1164
Issues involved: Interpretation of provisions of Income Tax Act, 1961 regarding entitlement to benefit under sec.11 and sec.12 despite previous order; Validity of rejection of exemption under sec.11 for assessment years 1989-90 to 1995-96; Impact of registration under sec.12A on eligibility for exemption under sec.11 and sec.12.
Summary:
1. The High Court admitted appeals u/s 260A of the Income Tax Act, 1961 to address the question of whether the assessee Association is entitled to benefits u/s 11 and 12 despite a previous order by the Central Board of Direct Taxes. The appeals were consolidated for a common judgment.
2. The Trust, recognized as a Stock Exchange, applied for registration under sec.12A in 1973 and was granted registration in 1977. Subsequently, for assessment years 1989-90 to 1995-96, the claim for exemption u/s 11 was rejected by the Assessing Officer but allowed by the Tribunal.
3. The respondent argued that the rejection of exemption under sec.10(23C)(iv) does not affect eligibility for benefits under sec.11 and sec.12. The Assessing Officer's reasons for denial of sec.11 exemption were based on absence of profit distribution restriction in the trust deed, not the previous order.
4. The Tribunal held that registration under sec.12A is crucial for claiming exemption u/s 11, emphasizing that the Assessing Officer cannot reject exemption based on the nature of the association's objects once registration is granted.
5. Precedents were cited to support the importance of registration under sec.12A and the limitations on the Assessing Officer's discretion post-registration. The Tribunal's decision aligns with these principles, affirming the assessee's entitlement to benefits u/s 11 and 12.
6. The Court upheld the Tribunal's decision, concluding that the assessee Association is indeed entitled to benefits u/s 11 and 12. The appeals were dismissed based on the consistent application of legal principles.
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2010 (12) TMI 1163
The Delhi High Court, with Justice Manmohan presiding, dismissed the appeal as the appellant sought to withdraw it to approach the licensing authority for license amendment. The appeal and pending applications were dismissed as withdrawn. (Citation: 2010 (12) TMI 1163 - DELHI HIGH COURT)
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2010 (12) TMI 1162
Issues involved: Challenge to respondent's refusal to grant refund claimed by petitioner for assessment years 2003-04 and 2004-05 under APGST Act, 1957.
Refund Claim for Excess Tax Paid:
The petitioner, a dealer under the respondent, sought refund of &8377; 9,69,261/- and &8377; 1,49,976/- for assessment years 2003-04 and 2004-05 respectively, through applications in Form XXIII. Despite acknowledgment of receipt by the respondent, no action was taken to refund the excess amount paid by the petitioner. The delay led to the filing of writ petitions challenging the respondent's inaction.
Court Proceedings and Decision:
After multiple adjournments, the Learned Special Standing Counsel for Commercial Taxes informed the court that the refund process had been initiated, awaiting approval from the Deputy Commissioner. The court, considering the prolonged delay and the submissions made, directed the respondent to refund the amounts due to the petitioner within four weeks from the date of the judgment. The writ petitions were disposed of without costs in light of the circumstances.
Conclusion:
The High Court of Andhra Pradesh, in a common order by Sri Justice Ramesh Ranganathan, upheld the petitioner's challenge against the respondent's refusal to grant the claimed refund for assessment years 2003-04 and 2004-05 under the APGST Act, 1957. The court ordered the respondent to refund the excess tax paid by the petitioner within four weeks, emphasizing compliance with the law and concluding the matter without imposing any costs on the parties involved.
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2010 (12) TMI 1161
Whether question of revival of the repealed clauses of L.R. Manual in case the substituted clauses are struck down by the court, would not arise?
Whether the interim order would amount to substituting the legal policy by the judicial order, and thus not sustainable?
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2010 (12) TMI 1160
Issues involved: Appeal by revenue and cross objection by assessee against the order of CIT(A) for A.Y. 2006-07.
Issue 1: Addition made by AO u/s 2(24)(x) read with sec. 36(1)(va) on account of PF & ESIC.
- Revenue's appeal dismissed as disallowance was made prior to filing return of income.
- Decision based on Hon'ble Delhi High Court and Supreme Court rulings.
Issue 2: Addition made by AO u/s 2(22)(e) on account of deemed dividend.
- Assessee only beneficial owner, not registered owner of shares.
- CIT(A) deleted addition, citing legal and beneficial ownership criteria.
- Decision supported by Mumbai Special Bench ruling.
Issue 3: Acceptance of additional evidences in violation of rule 46A of I.T. Rule.
- CIT(A) erred in accepting additional evidences.
- Ground dismissed without further discussion.
Issue 4: Addition made by AO on account of under valuation of closing stock.
- AO observed under valuation but no impact on income.
- Assessee followed Accounting Standard AS-2 for stock valuation.
- AO admitted no impact on profit and loss account.
- Addition rightly deleted by CIT(A) as per Accounting Standard AS-2.
Conclusion: Revenue's appeal dismissed on all grounds. Cross objection withdrawn by assessee. Departmental appeal and cross objection both dismissed.
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2010 (12) TMI 1159
Issues Involved:
1. Refusal/rejection of the petitioner's application under the Payment and Settlement Systems Act (PASSA) and issuance of a Full-fledged Money Changer License.
2. Consideration of criminal prosecution against the petitioner in his individual capacity by the Reserve Bank of India (RBI).
3. Jurisdiction and maintainability of the writ petition.
4. Interim relief and appeal process under Section 9 of PASSA.
Detailed Analysis:
1. Refusal/Rejecting the Application under PASSA and Issuance of Full-fledged Money Changer License:
The petitioner, as Chairman of a foreign company, sought a writ of mandamus to prevent the RBI from rejecting its application under PASSA and the issuance of a Full-fledged Money Changer License due to pending criminal prosecution against him individually. The court noted that the RBI had granted interim authorization for setting up a payment system but later refused to extend it based on the petitioner's criminal case and the financial instability of the company.
2. Consideration of Criminal Prosecution Against the Petitioner:
The court observed that the RBI considered the criminal case against the petitioner, which was stayed by the Supreme Court, while evaluating the application. The petitioner argued that the criminal case should not affect the company's authorization since it was against him personally and not the company. The court found merit in the contention that the criminal case should not have influenced the RBI's decision, but also noted the company's financial instability as a significant factor.
3. Jurisdiction and Maintainability of the Writ Petition:
The RBI raised preliminary objections regarding the maintainability of the writ petition, arguing that the foreign company should file the petition through an authorized representative, and the cause of action did not arise within the jurisdiction of the Madurai Bench of the High Court. The court agreed, stating that the petitioner had no authorization from the company to file the writ petition and that the events leading to the RBI's decision occurred in Mumbai, not within the court's jurisdiction.
4. Interim Relief and Appeal Process under Section 9 of PASSA:
The petitioner had filed an appeal under Section 9 of PASSA with the Central Government but simultaneously sought interim relief from the court. The court criticized this approach, emphasizing that interim relief should not be granted when an appeal is pending unless the appellate authority has the power to do so. The court cited several precedents to support this view, stating that the petitioner's attempt to secure an interim order was an abuse of the process of law.
Conclusion:
The court dismissed the writ petition, highlighting that the petitioner lacked the locus standi to file it and had engaged in forum shopping. The petition was deemed an abuse of the process of law, and the petitioner was ordered to pay costs to the RBI. The interim relief previously granted was vacated, and the appeal pending before the Central Government was left to be decided on its merits.
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2010 (12) TMI 1158
Issues involved: Whether bagasse can be subjected to duty under the Central Excise Act, and the applicability of Rule 6 of the Cenvat Credit Rules, 2004.
Summary:
The issue in this case revolves around whether bagasse, a byproduct of sugar manufacturing, can be subjected to duty under the Central Excise Act. The Tribunal has previously held that bagasse is a waste product and not a final product, thus not attracting duty. The Department's appeal against this decision was dismissed by the Supreme Court. The petitioner argues that circulars issued by the Board and Chief Commissioner directing duty on bagasse conflict with the law. They rely on legal precedents to support their stance that duty cannot be imposed on marketable waste products.
Regarding the maintainability of the writ petition challenging the circulars, the court notes that the High Court could have rejected such objections, and the circulars could not have been challenged before departmental authorities. The petitioner cites a case where a similar circular was deemed binding on the assessing authority, supporting the validity of their challenge.
The court acknowledges the need to determine whether duty can be charged on bagasse and if Rule 6 applies in this scenario. Given the circulars issued by the Board and Chief Commissioner, the court stays further proceedings until the next listing date, indicating satisfaction with the binding nature of the circulars on the authorities.
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2010 (12) TMI 1157
The Appellate Tribunal CESTAT Mumbai upheld the lower appellate authority's decision based on previous Tribunal cases. The appeal filed by the department was dismissed, and miscellaneous applications were also disposed of.
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2010 (12) TMI 1156
Refund claim - Although the Tribunal has rejected the claim for refund, it appears that in compliance of the order passed by the Commissioner (Appeals) the refund was granted and thereafter proceedings were initiated for recovering the amount paid by way of refund - whether the order of the Tribunal deserves to be stayed during the pendency of the appeal? - Held that: - If the order impugned in the appeal is not stayed, then the petitioners would be required to return the amount already refunded to them. In that event, the cenvat credit deleted on account of refund granted, would have to be restored and the Appellants would be entitled to utilize the said credit on paying excise duty on domestic clearances, even during the pendency of the Appeal. Thus, it is a case of revenue neutral - it would be just and proper to stay the operation of the impugned order passed by the CESTAT dated 8th July 2010 and hear the Appeal on merits expeditiously - matter on remand.
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2010 (12) TMI 1155
Penalty u/s 11AC - whether the Tribunal is justified in reducing the penalty to 25% of the duty leviable on the respondent? - Held that: - The decision of the Tribunal is in consonance with the principles enunciated by this Court in the case of Commissioner of Central Excise and Customs, Surat-II v. Mahalaxmi Industries, [2010 (2) TMI 676 - GUJARAT HIGH COURT], wherein, the Court has inter-alia held that as far as statutory obligation of the Adjudicating Authority is concerned, the Central Excise Department itself has issued Circular on 22-5-2008 wherein it is clarified that in all cases wherein penalty under Section 11AC of the Act is imposed the provisions contained in the first and second proviso to Section 11AC should be mandatorily mentioned in the order-in-original itself by the adjudicating authority. It is, therefore, not open for the revenue to agitate this issue before the Court in contradiction of the Circular issued by the Central Excise Department - appeal dismissed - decided against Revenue.
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2010 (12) TMI 1154
Issues involved: Writ petition seeking mandamus on jurisdiction to demand interest on Service Tax for Goods Transport Operators Service for a specific period.
The judgment addresses the issue of liability for payment of service tax on Goods Transport Operator Services for a specific period. Initially, the liability was on Transport Service Providers, but later shifted to Transport Service Receivers by an amendment in the Finance Act, 2000. The petitioner, a Receiver of Transport Services, deposited the service tax amount as required. The Finance Act, 2000, validated certain actions under the Service Tax Rules, including revalidating the provisions for Service Tax on Goods Transport Operators for the mentioned period.
The judgment discusses the insertion of a proviso in Section 68 of the Finance Act, 2000, which deems certain persons always liable to pay service tax for specific services. Section 71A was also inserted with retrospective effect, exempting certain persons from filing returns under specific conditions. The respondents were claiming service tax payment from Goods Transport Operators Services Receivers and demanding interest on delayed payments.
The judgment refers to a Supreme Court decision regarding the liability to file returns and make service tax payments under specific sections of the Finance Act. It upholds the contention that once the liability to file a return is cast on the assessee under Section 71A, the petitioner is not liable for service tax payment. As the petitioner had already paid the service tax amount, no interest payment was deemed necessary.
The respondents relied on Section 117 of the Finance Act, 2000, which validates past actions taken under the Service Tax Rules. The judgment rejects this argument, citing previous Supreme Court decisions that support the petitioner's position regarding liability for service tax payment and interest.
Based on the above analysis, the judgment concludes that there was no liability for the petitioner to file returns under Section 70 for the mentioned period, as the service tax amount had already been deposited. Therefore, the order demanding interest on the service tax amount was quashed and set aside.
In the final decision, the writ petition was allowed and disposed of in favor of the petitioner.
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2010 (12) TMI 1153
Issues involved: Challenge to judgment under Section 84 of Rajasthan Value Added Tax Act, 2003 by Assistant Commercial Taxes Officer, Anti Evasion, Pali.
Summary:
Issue 1: Challenge to judgment by Assistant Commercial Taxes Officer
In the VAT revision petition, the Assistant Commercial Taxes Officer challenged the judgment passed by Rajasthan Tax Board, Ajmer in Appeal No.1151/2009/Ajmer under Section 84 of the Rajasthan Value Added Tax Act, 2003.
The High Court, after perusing the impugned order, noted that all relevant documents were presented during the checking of the vehicle, including Form No.47 and a reply to the notice. The Court observed that the Tax Board's decision to dismiss the appeal was in line with the precedent set in the case of D.P. Metals (reported in (2007) 7 SCC 269). The Court agreed with the findings of the Deputy Commissioner (Appeal)-IV, Commercial Taxes, Jaipur and the Tax Board that there was no evasion of tax as all necessary documents were provided during the inspection. The Court concluded that the concurrent findings of both authorities did not warrant any intervention. Additionally, the Court noted that the impugned judgment was consistent with the apex Court's decision in D.P. Metals' case. Consequently, the Court found no legal question requiring consideration and dismissed the revision petition.
Therefore, the High Court dismissed the revision petition challenging the judgment under Section 84 of the Rajasthan Value Added Tax Act, 2003.
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2010 (12) TMI 1152
Revision- The Tribunal has set aside the order dated August 28, 2003, passed by the Commissioner of Income-tax, Jalandhar (1) by exercising jurisdiction under section 263 of the Act holding that on the basis of survey report conducted under section 133A of the Act the assessment completed under section 143(3) of the Act on November 14, 2005, by the Assessing Officer cannot be set aside by the Commissioner of Income-tax by exercising revisional jurisdiction.
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2010 (12) TMI 1151
Detention of machinery - EPCG Scheme - detention on the ground that respondent did not fulfil the export obligations and exported only 1.5 per cent - Whether in the circumstances of the case, the Tribunal is correct in holding that the order of confiscation of the goods and imposition of penalty' is not correct, since it was beyond the control of the importer to fulfil export and there is no deliberate attempt to avail of N/N. 169/1990 making any misdeclaration? - Held that: - the machinery was installed at the factory and production of goods was also started in March, 1994 and that they could only meet the export obligation to the extent of 1.5 per cent. only and that the Department did not allege the first respondent-company made deliberate attempt to avail of the benefits and concluded that there was no material to doubt about the first respondent's bona fides. Therefore, the Tribunal based on the aforesaid facts held that there was no mens rea and further held that the confiscation of goods and imposition of penalty is not sustainable. Hence, the finding of fact given by the Tribunal cannot be interfered with and therefore the first question of law is answered against the appellant.
Whether the Tribunal is right in holding that interest on duty foregone under N/N. 169/1990 cannot be demanded since there is no provision in the Customs Act, 1962? - Whether the duty foregone would be only a duty when there is a failure to fulfil the conditions stipulated in the exemption notification? - Held that: - The notification prescribed various conditions for availing of benefits. However it is seen that there was no provision in the notification to levy interest on the duty. Though the learned counsel for the appellant referred sub-section 18(3) of the Customs Act and contended that the importer is liable to pay interest as per the rate fixed under section 28AB of the Act, the same is liable to be rejected in view of the judgment of the hon'ble Supreme Court in Commissioner of Customs (Import) v. Jagdish Cancer Research Centre [2001 (8) TMI 113 - SUPREME COURT OF INDIA].
Circular No. 5/1997-Customs, dated March 14, 1997, which postulates interest at the rate of 24 per cent. as specified in relevant notification is not applicable to this case as the said circular would be applicable prospectively from March 14, 1997 only.
A perusal of section 143 would reveal that it speaks about the advance licences relating to import of input and raw materials for manufacture and export. Paragraph 197 in Chapter XIV of the Duty Exemption Scheme for the Import and Export Policy (April, 1990 to March, 1993) speaks about advance licences. Whereas the first respondent's licence is covered by the EPCG scheme. The import of capital goods at concession rate of the customs duty was done by the first respondent as per paragraph 197 of the Import and Export Policy 1990-93. Therefore, section 143A is not applicable to the present case.
Appeal dismissed - decided against appellant.
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2010 (12) TMI 1150
Levy of service tax - Training or coaching services - issuance of certificate or diploma or degree to the students recognized by law - Held that: - the service tax in respect of the training and coaching provided by the appellants which for an essential part of a course or curriculum of a university, leading to issuance of certificate or diploma or degree to the students recognized by law is not justified, even though the same is obtained by the students of the institution run by the appellants through Distance Education Programme - appeal allowed - decided in favor of appellant.
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2010 (12) TMI 1149
Issues:
1. Quashment of show cause notice for non-application of mind.
2. Vulnerability of show cause notice due to reference to exemption certificate.
3. Vitiation of show cause notice based on advice from Comptroller and Auditor General.
4. Challenge to best judgment assessment and appeal under Article 226.
5. Demand for exemption certificate contrary to law.
6. Interpretation of Section 72 of the Act and best judgment assessment.
7. Consideration of alternative remedy under Article 226.
Analysis:
1. The petitioner sought a writ of Certiorari to quash a show cause notice dated 22nd October, 2010, alleging non-application of mind by the Commissioner of Service Tax. The petitioner contended that the notice lacked reference to legal provisions, making it vulnerable to challenge.
2. The show cause notice was challenged for referencing the need for an exemption certificate under Section 93 of the Finance Act, 1994, despite no legal requirement for such certification. The petitioner argued that demanding an exemption certificate was erroneous and contrary to law.
3. The petitioner argued that the show cause notice was tainted as it was based on advice from the Comptroller and Auditor General of India, suggesting a lack of impartiality in the proceedings. The petitioner sought intervention under Article 226 of the Constitution.
4. The challenge to the best judgment assessment under Section 72 of the Act was raised, contending that it was not appealable and the only recourse was through Article 226. The petitioner relied on a Division Bench decision to support their position.
5. The demand for an exemption certificate by the department was disputed by the petitioner, citing Rule 2(e) of the Cenvat Credit Rules, 2004, which defines exempted services and negates the necessity of an exemption certificate under certain circumstances.
6. The Court analyzed the show cause notice and Section 72 of the Act to determine that a best judgment assessment had not been finalized, rejecting the department's contention that the assessment was completed. The Court clarified the legal position regarding the demand for an exemption certificate.
7. The Court considered the existence of an alternative remedy under Article 226 and emphasized the need for a total lack of jurisdiction or non-application of mind to warrant relief under Article 226. The Court found that the present case did not meet these criteria and directed the petitioner to respond to the show cause notice within a specified period.
In conclusion, the Court dismissed the contentions raised by the petitioner but allowed for a response to the show cause notice within a stipulated timeframe. The Court also directed that no coercive steps be taken against the petitioner until adjudication is completed.
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2010 (12) TMI 1148
The Supreme Court dismissed the appeal in the case with citation 2010 (12) TMI 1148 - SC. The delay was condoned. The judges were Dr. Mukundakam Sharma and Anil R. Dave.
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2010 (12) TMI 1147
Issues involved: Appeal filed by Revenue against order of C.I.T.(Appeals) u/s 154 of the I.T. Act, 1961 regarding depreciation on Vapour Absorption Machine.
Summary:
1. The appeal and cross-objection were filed against the order of the C.I.T.(Appeals)-V at Chennai u/s 154 of the I.T. Act, 1961 for the assessment year 2000-01.
2. The assessing authority initially allowed depreciation at 100% on Vapour Absorption Machine, later modified it to 25% u/s 154.
3. Grounds taken by the assessee in appeal were lack of jurisdiction u/s 154 and entitlement for 100% depreciation on the machine as an energy saving device.
4. C.I.T.(Appeals) upheld the jurisdiction of the Assessing Officer u/s 154 and allowed 100% depreciation on the machine as an energy saving device.
5. Revenue appealed against the decision on depreciation, while the assessee cross-objected on the jurisdiction issue.
6. After hearing both parties, the delay in filing cross-objection was condoned, and it was admitted for hearing.
7. The machine's classification as an energy saving device was deemed debatable, requiring detailed examination not suitable for rectification u/s 154.
8. It was concluded that the assessing authority lacked jurisdiction to modify the depreciation allowance u/s 154, and the order was not sustainable in law.
9. The cross-objection filed by the assessee was allowed, leading to the dismissal of the Revenue's appeal.
10. The appeal by the Revenue was dismissed, and the cross-objection by the assessee was allowed.
Judgment delivered by: DR. O.K. NARAYANAN ; VP
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