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Showing 201 to 220 of 1004 Records
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2013 (4) TMI 811
Issues involved: Appeal against suspension of CHA licence u/s Regulation 20(3) of CHALR, 2004 for abetting wrongful claiming of drawback in exports.
Summary:
The appeal challenged the suspension of CHA licence under Regulation 20(3) of CHALR, 2004 for allegedly aiding in wrongful claiming of drawback in exports. The appellant, M/s. Deepak H Shah, had filed shipping bills for exports made by Leon Export Corporation in August 2008. The DRI issued a show cause notice in November 2012, leading to the suspension of the licence on 15/11/2012. The appellant argued that the delay of over four years between the events did not warrant immediate suspension as per Regulation 20(2). Citing precedents, the appellant sought revocation of the suspension.
The Revenue, represented by the Additional Commissioner (AR), defended the suspension, stating that it was justified as it was based on the investigating agency's report received in November 2012 within the stipulated 15-day period. After considering both sides' arguments, the Tribunal found that the considerable time lapse between the filing of shipping bills in August 2008 and the suspension order in November 2012 did not constitute an emergency warranting immediate suspension. Citing the decision of the Bombay High Court in a similar case, the Tribunal revoked the suspension order and directed Customs authorities to expedite the enquiry against the appellant-CHA in accordance with the law.
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2013 (4) TMI 810
Issues Involved:
The judgment involves issues related to the detention and clearance of imported Steam Coal, classification of coal as Steam Coal or Bituminous Coal, provisional assessment under Section 18 of the Customs Act, detention under Section 110 of the Customs Act, and the power of authorities to detain consignments after provisional assessment.
Detention and Clearance of Imported Coal:
The petitioners were aggrieved by the Customs Officials at Krishnapatnam Port for not permitting clearance of Steam Coal imported under different Bills of Entries. Some consignments were seized by the Superintendent of Customs, leading to a request for withdrawal or cancellation of detention orders.
Classification of Coal:
The dispute arose from the classification of the imported coal as either Steam Coal or Bituminous Coal. Steam coal falls under an exemption with a 1% Customs duty, while Bituminous coal attracts a higher duty rate. Authorities were cautious due to incidents of misclassification for duty evasion.
Provisional Assessment and Detention:
Petitioners argued that after provisional assessment under Section 18 of the Customs Act and payment of duties, authorities lacked the power to detain consignments. They cited legal precedents to support their position, emphasizing the overriding effect of Section 18.
Detention under Section 110:
Respondents justified detention under Section 110(1) of the Customs Act, citing reasonable belief of confiscation under Section 111(m). They argued that the bond under Section 18 was limited to document production and did not affect Sections 110 & 111.
Judgment:
The Court acknowledged the need for a detailed consideration of the authority to detain consignments post-provisional assessment. While interim relief was not granted due to ongoing detention and a change in duty rates, the petitioners were permitted to lift the detained stock upon payment of the differential duty, considering the circumstances of the case.
Disposition:
The Court directed the release of the detained consignments for lifting by the petitioners upon payment of the differential duty. The matters were disposed of accordingly.
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2013 (4) TMI 809
Issues involved: Appeal against order of CIT(A)-I, Ludhiana for assessment year 2007-08.
Ground No.1: The Assessing Officer questioned sales made to a sister concern at lower rates. Assessee justified the rates based on tax implications and differences in sale conditions. AO added amount to income, but CIT(A) deleted the addition. Tribunal upheld CIT(A)'s decision citing lack of provision to estimate fair market value for such sales.
Ground No.2: AO denied deduction u/s 80IB for various incomes not directly related to industrial undertaking. CIT(A) allowed deduction only for labor receipts. Tribunal confirmed CIT(A)'s decision based on precedent allowing deduction for job work under u/s 80IB.
Ground No.3: AO disallowed bonus and leave wages based on discrepancies in worker statements. CIT(A) deleted the addition after workers confirmed receipt of bonus and leave wages. Tribunal upheld CIT(A)'s decision, noting workers' confirmation and lack of strong basis for disallowance.
In conclusion, Revenue appeal was dismissed, and Cross Objections were withdrawn and dismissed. The Tribunal upheld CIT(A)'s decisions on all grounds, emphasizing adherence to legal provisions and worker statements.
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2013 (4) TMI 808
Issues Involved:
1. Classification of services provided by the appellant.
2. Valuation of the services for the purpose of Service Tax.
3. Appropriateness of penalties imposed.
Summary:
1. Classification of Services:
The appellant, part of the K. Raheja Group, was engaged in providing various services to its group companies. The department classified these services under "Business Auxiliary Service" u/s 65(105)(zzb) of the Finance Act, 1994, and raised a demand for Service Tax. The appellant contended that their activities were more appropriately classified under "Business Support Service" which came into effect from May 2006. The Tribunal noted that the Commissioner did not provide a clear rationale for classifying the services under "Business Auxiliary Service" instead of "Business Support Service," under which the appellant was already registered and paying taxes. The Tribunal remanded the matter back to the Commissioner to re-examine the classification as per the principles of classification.
2. Valuation of Services:
The appellant argued that the cost-sharing arrangement among the group companies did not constitute a taxable service and that the valuation rules should not apply prior to 19.4.2006. They contended that the actual cost allocated should not be considered as charges for services provided. The Tribunal found that the Commissioner did not address these submissions adequately and remanded the matter for a fresh decision on the valuation aspect after determining the correct classification.
3. Appropriateness of Penalties:
The Commissioner had imposed penalties u/s 76 and 78 of the Finance Act, 1994, and ordered the recovery of interest u/s 75. The Tribunal did not specifically address the appropriateness of these penalties but implied that the penalties would need to be reconsidered based on the reclassification and revaluation of the services.
Conclusion:
The Tribunal remanded the matter to the Commissioner to first decide the issue of classification of services as per the principles of classification and then address the valuation aspect. All issues were kept open, and the Commissioner was directed to provide a reasonable opportunity for a personal hearing to the appellant. The appeal was allowed by way of remand.
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2013 (4) TMI 807
The Supreme Court dismissed the Special Leave Petition. However, if the deposit is made within four weeks from the date of the order passed by CESTAT, the delay will be condoned, and the appeal will proceed. Failure to comply will result in the dismissal of the appeal before CESTAT.
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2013 (4) TMI 806
Issues Involved:
1. Levy of penalty u/s 271(1)(c) of the Income Tax Act.
2. Validity of the explanation and evidence provided by the assessee regarding the source of income.
3. Applicability of Section 68 of the Income Tax Act.
Summary:
Issue 1: Levy of penalty u/s 271(1)(c) of the Income Tax Act
The appeals challenged the levy of penalty u/s 271(1)(c) for A.Y. 2001-02 and A.Y. 2003-04. The Tribunal had earlier dismissed ITA No.195/Agra/2011 in default, but it was restored for hearing on merit. The Tribunal considered the identical issues in both appeals and primarily discussed the case of Sarv Prakash Kapoor.
Issue 2: Validity of the explanation and evidence provided by the assessee regarding the source of income
In ITA No. 107 of 2011, the assessee Sarv Prakash Kapoor had shown a loan of Rs. 9,80,000/- from his minor son, who received a gift of Rs. 10 lakhs from Shri Sanjeev Kumar Dagar. The A.O. held the gift to be bogus and levied a penalty of 300%. The CIT(A) confirmed the addition and penalty, stating that the assessee failed to prove the genuineness and creditworthiness of the donor. The Tribunal, however, found that the assessee provided all necessary documents and the donor confirmed the gift. The Tribunal cited various judgments, including National Textiles vs. Commissioner of Income Tax 249 ITR 125, to support that mere failure to prove the gift's genuineness does not justify penalty if the explanation is bona fide and supported by evidence.
In ITA No. 195/Agra/2011, the assessee Renu Agarwal showed gifts totaling Rs. 4 lakhs from two donors. One donor confirmed the gift at the appellate stage, but the other could not be produced due to injury. The Tribunal noted that the assessee provided all possible evidence, and the appeal on quantum was pending before the High Court. The Tribunal found that the penalty was not justified, especially since the quantum appeal was decided on a question of law regarding the applicability of Section 68 when no books of account were maintained.
Issue 3: Applicability of Section 68 of the Income Tax Act
The Tribunal emphasized that quantum and penalty proceedings are independent. In the case of Renu Agarwal, the Tribunal noted that the quantum appeal was decided based on the applicability of Section 68, as the assessee did not maintain books of account. This further supported the cancellation of the penalty.
Conclusion:
The Tribunal set aside the orders of the authorities below and canceled the penalties in both cases, emphasizing that the explanations provided by the assessees were bona fide and supported by evidence. The appeals of Sarv Prakash Kapoor and Renu Agarwal were allowed.
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2013 (4) TMI 805
Issues involved: Appeal against deletion of addition u/s 40(a)(ia) for non-deduction of TDS.
Summary:
The Appellate Tribunal ITAT Chennai heard the Revenue's appeal against the order of the Commissioner of Income Tax (Appeals)-IX, Chennai, related to assessment year 2005-06 u/s 147 r.w.s. 143(3) of the Income Tax Act 1961. The Revenue's grievance was the deletion of addition of Rs. 19,07,798/- for commission amount due to non-deduction of TDS u/s 40(a)(ia) by the Assessing Officer.
The DR for the Revenue argued that the deletion of the addition was improper, citing a case law overruling the Special Bench's decision. Despite no representation from the assessee, written arguments supporting the CIT(A)'s order were submitted. The Tribunal proceeded ex-parte against the assessee and considered the Revenue's argument regarding the non-deduction of TDS leading to the disallowance of the commission payments.
After reviewing the case file and arguments, the Tribunal found the Revenue's argument valid in light of the recent decision by the Calcutta High Court overruling the Special Bench. As there were no other issues, the Tribunal allowed the appeal and reinstated the addition made by the Assessing Officer. Consequently, the appeal of the Revenue was allowed, and the order was pronounced on April 18, 2013, in Chennai.
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2013 (4) TMI 804
Corporation is directed to produce the entire record including the bank deposit slips by which the Corporation has deposited the cheques in the Banks which bears the dates and also the dates on which the cheques were presented in the Bank and when it was received back by the Corporation and when the petitioner paid the amount - stay granted - petition allowed.
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2013 (4) TMI 803
Issues Involved:
1. Legality of the CIT(A) and AO orders.
2. Applicability of principles of mutuality.
3. Procedural fairness and natural justice.
4. Jurisdictional High Court applicability.
5. Remand to CIT(A) for fresh consideration.
Summary:
1. Legality of the CIT(A) and AO Orders:
The assessee challenged the orders dated 27.01.2011 by CIT(A), Muzaffarnagar, and 19.11.2008 by the Additional Commissioner, Ghaziabad, claiming they were "bad in law and against the facts of the case." The CIT(A) was accused of "wrongly and erroneously rejecting" the appeal without appreciating the principles of mutuality and the ex-parte order by the Additional Commissioner. The CIT(A) was also criticized for sustaining the income of the Appellant Society at Rs. 82,37,686/- without proper basis.
2. Applicability of Principles of Mutuality:
The Ld. AR argued that the issue should be decided based on the principles of mutuality as per the judgment in CIT vs Talagang Co-operative Housing Society Ltd., 339 ITR 518 (Delhi). The Ld. DR, while relying on the orders of the authorities below, agreed that the issue should be decided in light of the principles laid down by the Jurisdictional High Court. However, the Tribunal clarified that the Jurisdictional High Court for the present case would be the Hon'ble Allahabad High Court, not the Hon'ble Delhi High Court.
3. Procedural Fairness and Natural Justice:
The assessee claimed that relevant documents could not be produced earlier due to non-cooperation by the former Secretary, who held the documents. The Tribunal noted that the special audit was conducted without proper involvement of the assessee and relied on documents provided by the ex-Secretary without giving the assessee an opportunity to examine their authenticity. The Tribunal emphasized the need for procedural fairness and directed that the issue be remanded for fresh consideration.
4. Jurisdictional High Court Applicability:
The Tribunal clarified that the Jurisdictional High Court for the case would be the Hon'ble Allahabad High Court, as the society is registered and situated in Ghaziabad, Uttar Pradesh. The Tribunal noted that while the decision of one High Court is not binding on another, it is conducive to judicial discipline to accept precedents in the absence of contrary judgments by the Jurisdictional High Court.
5. Remand to CIT(A) for Fresh Consideration:
The Tribunal decided to restore the issue to the CIT(A) for fresh consideration, allowing the assessee to file fresh evidence. The CIT(A) is to provide an opportunity for a remand report from the AO and ensure a reasonable opportunity of hearing for the assessee. The Tribunal also requested the CBDT to consolidate the appeals before one CIT(A) to ensure cohesive adjudication.
Conclusion:
The appeals were allowed for statistical purposes, and the order was pronounced in the open court on 5th April 2013.
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2013 (4) TMI 802
Issues involved:
The issue involves the justification of penalty u/s 271(1)(c) in a case related to Assessment Year 1986-87 where the assessee claimed a payment for violation of FERA as business loss, leading to allegations of concealment of income.
Judgment Details:
Background:
The applicant, a registered firm engaged in the business of manufacturing and exporting carpets, filed a return for the Assessment Year 1986-87 showing a loss of Rs. 75,000. The Assessing Officer initially accepted the loss but later found that the firm was penalized for FERA violations, leading to a penalty of Rs. 1,95,000. The firm had not debited this penalty amount in the Profit and Loss account initially.
Assessment and Appeal:
The penalty was later reduced to Rs. 1,20,000 on appeal. The Assessing Officer initiated proceedings u/s 147(a) and called for a return, which was filed by the assessee maintaining the same income as in the original return. The Assessing Officer questioned the treatment of the penalty amount as business expenditure.
Assessee's Explanation:
The assessee explained that the penalty was a legitimate business expenditure incurred in the course of business due to difficulties in realizing dues from overseas partners and actions by FERA authorities.
Decision:
The Tribunal upheld the levy of penalty under Section 271(1)(c) despite the assessee's explanation. However, the High Court, citing relevant legal precedents, concluded that wrongly claiming an item as a business loss does not amount to concealment of income. Referring to specific court cases, the High Court ruled in favor of the assessee, stating that even a mistake by a knowledgeable entity like a leading firm of Chartered Accountants does not warrant a penalty under Section 271(1)(c) of the Income-tax Act, 1961.
Conclusion:
The High Court answered the question posed by the Income-tax Appellate Tribunal in the negative, favoring the assessee and ruling against the Revenue.
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2013 (4) TMI 801
Addition u/s 40(a)(ia) - Held that:- Provisions of Section 40(a) (ia) have been held to be not applicable. See ITO Versus Finian Estates Developers (P) Ltd. [2012 (6) TMI 705 - ITAT, Delhi ]- Assessee having appointed a consolidator to acquire land who, as per the terms of MOU, agreed to assign its right to purchase the land in favour of the assessee
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2013 (4) TMI 800
Issues involved:
1. Eligibility for deduction u/s 54F of the Act.
2. Assessment of agricultural income as income under the head "Income from other sources."
Issue 1: Eligibility for deduction u/s 54F of the Act:
The appeal questioned the denial of deduction u/s 54F of the Act by both the Assessing Officer and the Ld. CIT(A). The dispute arose from the construction of a residential building at "Kadavanthara" within three years from the date of transfer of the original asset. The proviso to section 54F imposes conditions on not purchasing or constructing another residential house within specified periods. The contention was whether the construction at Kadavanthara disqualified the assessee from claiming the deduction.
The assessee argued that the construction at Kadavanthara was commenced before the transfer of the original asset and should be considered an existing residential asset. However, the revenue contended that the construction violated the conditions of sec. 54F. The Tribunal held that the construction at Kadavanthara did not qualify as an existing residential house on the date of transfer, and completion of construction was necessary for it to be considered as such. As the construction was completed within three years from the transfer, the deduction u/s 54F was disallowed.
Issue 2: Assessment of agricultural income as income under the head "Income from other sources":
The dispute involved the reduction of agricultural income declared by the assessee, leading to the assessment of the difference as income from undisclosed sources. The Assessing Officer estimated expenses at 60% of gross receipts, differing from the 40% claimed by the assessee. The contention was whether the assessing officer's estimation was arbitrary and lacked basis.
The Tribunal noted that the AO did not provide the assessee with an opportunity to explain the claimed expenses, violating principles of natural justice. Consequently, the Tribunal set aside the Ld CIT(A)'s order and directed the assessing officer to re-examine the issue after affording the assessee a fair opportunity to present their case.
In conclusion, the appeal was partly allowed for statistical purposes, with the Tribunal providing directions for a fresh examination of the agricultural income assessment issue.
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2013 (4) TMI 799
Issues involved: Appeal against CIT (A) order for assessment year 2004-2005 regarding disallowance of business expenses and addition u/s 68 of Income Tax Act, 1961.
Business Income:
The assessee claimed business expenses of &8377; 2.14.27,876 for rehabilitation of a sick industry under lockout, but AO disallowed most expenses due to lack of business activity. CIT (A) upheld the disallowance, allowing only 5% expenses. Assessee argued for restart efforts and necessity of expenses citing relevant case laws. Tribunal found expenses to be revenue in nature, allowed claim due to temporary lockout for financial reasons, and need for production restart.
Addition u/s 68:
Assessee took loans from various parties, but failed to provide confirmation for a &8377; 1 lac loan from one party. AO added this amount u/s 68. Assessee later submitted loan confirmation to CIT (A), but it was rejected as additional evidence. Tribunal admitted the evidence, noting banking channel transaction and directed AO to verify and decide the issue accordingly.
In conclusion, the appeal was partly allowed by the Tribunal on 26th April, 2013.
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2013 (4) TMI 798
Depreciation claim by assessee trust - Held that:- Hon’ble Supreme Court in the case of CIT v. Vegetable Products Ltd. (1973 (1) TMI 1 - SUPREME Court ) where the Apex Court has held that when different views are available on the subject, the views favourable to the assessee should be adopted. It is in the light of the above legal pronouncement that the Tribunal has held that the assessee can claim depreciation even though capital expenditure have been treated as application of funds for charitable purposes.
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2013 (4) TMI 797
Issues Involved: The judgment deals with a Misc. Application filed by the assessee against the order of the Tribunal dated 28-09-2012 for the block period 01-04-1990 to 07-01-2000. The issues raised include the Tribunal considering technical issues as substantial legal issues, failure to verify the satisfaction note, consideration of inadmissible evidence, not taking note of judicial pronouncements cited, and not considering certain grounds with respect to merits.
Ground No.1 to 8 - Technical vs. Legal Issue: The assessee contended that Ground No.1 to 8 of the appeal were considered by the Tribunal as technical issues when they were substantial legal issues. This discrepancy was highlighted by the applicant.
Verification of Satisfaction Note: It was argued that the Tribunal decided the issue without verifying the satisfaction note, which is a crucial aspect in such cases involving jurisdiction.
Consideration of Evidence and Judicial Pronouncements: The Tribunal was criticized for considering inadmissible evidence and not taking note of the judicial pronouncements cited by the assessee, which could have influenced the decision.
Non-Consideration of Grounds 9 and 10: The Tribunal was faulted for not considering grounds No.9 and 10 of the appeal with respect to merits, indicating a failure to address all relevant aspects of the case.
Recall of Tribunal Order: The Tribunal acknowledged the mistake in its order and decided to recall it for fresh consideration due to the failure to address certain factual and legal issues discussed in the written submissions that were not argued before the bench during the hearing.
Conclusion: The Misc. Application filed by the assessee was allowed, and the Tribunal recalled its order dated 28-09-2012 for the limited issue of jurisdiction of the Assessing Officer u/s 158BD of the Act. The decision was made to rectify the mistake and ensure a more comprehensive consideration of the case.
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2013 (4) TMI 796
Issues involved:
The judgment involves issues related to the disallowance of depreciation on intangible assets, entitlement to depreciation on the cost of a road, reliance on previous decisions, disallowance of supervision charges, and the method of accounting.
Issue 1: Disallowance of Depreciation on Intangible Assets:
The Revenue appealed against the deletion of disallowance of depreciation on intangible assets in the form of License Fee under BOT Scheme. The CIT(A) held that the right to collect toll was a valuable right with commercial value, making it an intangible asset eligible for depreciation. The ITAT found that the right to collect toll was acquired as per law and had commercial value, thus upholding the CIT(A)'s decision based on relevant precedents.
Issue 2: Entitlement to Depreciation on the Cost of Road:
The Revenue contested the CIT(A)'s decision to allow depreciation on the cost of the road, arguing that the assessee did not fulfill the conditions prescribed u/s. 32(1)(ii) as they were neither the owner of the road nor had put it for business purposes. However, the ITAT upheld the CIT(A)'s decision, stating that the right to collect toll was an intangible asset eligible for depreciation, supported by relevant case laws.
Issue 3: Reliance on Previous Decisions:
The Revenue challenged the CIT(A)'s reliance on previous decisions by the ITAT, D-Bench, Mumbai, arguing that they were distinguishable from the present case. The ITAT found that the CIT(A) was justified in relying on the precedents, as they supported the classification of the right to collect toll as an intangible asset eligible for depreciation.
Issue 4: Disallowance of Supervision Charges:
The dispute involved the disallowance of supervision charges paid on a cash basis, with the Assessing Officer claiming that the liability had not crystallized during the year. The CIT(A) overturned this decision, stating that the liability for supervision charges had crystallized in the relevant year, based on documentary evidence. The ITAT upheld the CIT(A)'s decision, emphasizing that the liability had indeed accrued during the assessment year.
Issue 5: Method of Accounting:
The Assessing Officer disallowed supervision charges on the basis that they were not accrued in the previous year, despite the assessee following the mercantile system of accounting. The CIT(A) allowed the claim, stating that the liability had crystallized during the relevant year. The ITAT upheld this decision, noting that the liability for supervision charges had indeed accrued in the assessment year.
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2013 (4) TMI 795
Depreciation - 'License/right to collect Toll' is an Intangible Asset u/s Section 32(1)(ii) or not - Assessee was a consortium of two companies, with the object of developing the infrastructure project of construction of Takli-Kasegaon-Anawali Road on Build, Operate and Transfer (BOT) basis for the Government of Maharasthra. He capitalised the cost incurred in the development and construction of the said project under the head ‘License to collect toll’. Further, in the return of income, assessee claimed depreciation @ 25% following section 32(1)(ii). - CIT(A) allowed the claim of depreciation - HELD THAT: - 'Right to collect the Toll’ is emerging as a result of the costs incurred by the assessee on development, construction and maintenance of the infrastructure facility. Such a right falls within the purview of section 32(1)(ii) .i.e 'License/right to collect Toll' is an Intangible Asset, thus, found eligible to claim depreciation.
Decision in the case of Ashoka Info (P) ltd. v. Assistant Commissioner of Income Tax. [2008 (12) TMI 271 - ITAT PUNE-B] relied upon.
Revenue appeal dismissed.
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2013 (4) TMI 794
Issues Involved: Appeal against disallowance of depreciation claim on a bridge constructed under BOT Scheme for assessment year 2009-10.
Summary:
The appeal by the Revenue was directed against the order of the Commissioner of Income-tax(Appeals)-I, Hyderabad for the assessment year 2009-10. The assessee, engaged in civil construction, filed its return of income declaring an income. The case was selected for scrutiny, and the Assessing Officer disallowed the assessee's claim for depreciation on a bridge constructed under BOT Scheme. The Assessing Officer observed that depreciation was allowable only on assets owned by the assessee, while the ownership of the land and the bridge rested with the Government of Andhra Pradesh. On appeal, the CIT(A) accepted the claim of the assessee based on previous Tribunal decisions for earlier years. The Revenue appealed against the CIT(A)'s order.
Upon hearing both sides and reviewing the orders and material on record, the Tribunal noted that the issue of depreciation on the bridge had been considered in the assessee's own cases for earlier years. The Tribunal found no infirmity in the CIT(A)'s order as it followed the previous Tribunal decisions. Therefore, the Tribunal upheld the CIT(A)'s order and dismissed the Revenue's appeal.
In conclusion, the Tribunal upheld the CIT(A)'s decision to allow depreciation on the bridge constructed under BOT Scheme, based on consistent Tribunal decisions in the assessee's own cases for earlier years. The Revenue's appeal was dismissed on 5th April 2013.
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2013 (4) TMI 793
Disallowance of expenditure - expenditure subject to FBT - Held that:- As in the case of Hansraj Mathuradas [2012 (10) TMI 300 - ITAT, MUMBAI] relying upon CBDT Circular No.8/2005 dated 29/8/2005 it was held that once FBT is levied on expenses incurred, it follows that the same are treated as fringe benefit provided by the assessee as employer to its employees and the same have to be appropriately allowed as expenditure incurred wholly and exclusively by the assessee for the purpose of its business. No contrary decision has been brought to our notice in this regard. Therefore, respectfully following the aforementioned decision we hold that if the aforementioned expenditure were subjected to FBT, then disallowance cannot be made. However, to verify that whether or not these expenditure were subjected to FBT, we restore the issues raised in these appeals to the file of AO with a direction to verify the contention of the assessee that whether or not impugned expenditure were subjected to FBT. If those expenditure were subjected to FBT then no disallowance can be made and the claim of the assessee should be accepted in its entirety.
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2013 (4) TMI 792
Issues Involved:1. Deletion of addition made on account of deemed dividend u/s 2(22)(e) of the Income Tax Act. 2. Whether the Tribunal's order is perverse due to the assessee's failure to disclose the existence of a trust during the search action. Summary:Issue 1: Deletion of Addition Made on Account of Deemed Dividend u/s 2(22)(e)The Revenue appealed against the Tribunal's decision to delete the addition of Rs. 1,06,66,471 made as deemed dividend u/s 2(22)(e) of the Income Tax Act. The Assessing Officer had taxed certain income as deemed dividend based on the assessee's shareholding in M/s. Amod Stampings Pvt. Ltd. During a search operation, it was found that the company had given loans to shareholders with more than 10% voting power, including the assessee. The assessee initially agreed to pay taxes on the deemed dividend but later claimed that a trust was created in 2005, transferring the shares to the trust, thus negating the application of Section 2(22)(e). The Assessing Officer rejected this claim, stating that the trust was not genuine as it had no bank account, income, or registration, and the shares were still in the names of the trustees. The CIT(A) upheld this view. However, the Tribunal allowed the appeal, noting that the trust deed was executed on a stamp paper and notarized, and the Board of Directors had acknowledged the settlement of shares in favor of the trust. The Tribunal emphasized that a deeming provision should be applied strictly and concluded that the deemed dividend should not be taxed in the hands of the assessee. Issue 2: Whether the Tribunal's Order is PerverseThe Revenue argued that the Tribunal's decision was perverse as the assessee failed to disclose the trust during the search and initially agreed to pay taxes on the deemed dividend. The Tribunal, however, found that the trust deed was created years before the search, was duly notarized, and the Companies Act did not permit the transfer of shares in the name of the trust. The Tribunal also noted that the trust had no income or bank account due to the company's non-declaration of dividends. The Tribunal concluded that the trust was genuine and the assessee did not retain beneficial ownership of the shares, thus Section 2(22)(e) did not apply. The High Court upheld the Tribunal's findings, stating that the issue was based on the appreciation of materials on record and the Tribunal's conclusions were not perverse. The appeal was dismissed.
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