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Showing 221 to 240 of 1167 Records
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2012 (7) TMI 955
Revenue for services on unused prepaid cards - Revenue recognition relating to unused talk time remaining available as at the end of the year - Held that:- As long as assessee company is under obligation to provide talk time, it cannot be said that a debt has accrued in favour of assessee company against the subscriber. The assessee company cannot appropriate the charges relating to available talk time to the exclusion of subscribe as long as it is under obligation to provide said services. Therefore, we are of the opinion that learned CIT(A) in principle has rightly accepted the mode of revenue recognition by assessee. DR has submitted that from the system followed by the assessee, there is every likelihood of revenue leakage. In this regard learned counsel has submitted that the matter can be restored to the file of AO for verification of this aspect only. We, therefore, restore the matter to the file of AO for the limited purpose of verification whether in the subsequent year the assessee has declared the revenue in respect of expired prepaid cards or not. In case no discrepancy is found in this regard, no adjustment is called for with the assessee's mode of revenue recognition. In terms of aforementioned observation this ground is partly allowed for statistical purposes.
Addition on excess commission paid by the assessee - Held that:- It is true that AO cannot sit in the judgment of a businessman but at the same time he has to examine that assessee has claimed the expenditure in accordance with commercial considerations and not as per its whims and fancies. The terms of contract fix the reasonableness of amount payable by the assessee and, therefore, any amount paid over and above the same cannot be treated wholly and exclusively for business purposes. However, in the present case, we find that learned CIT(A) had duly referred the addendum for AO's comment and he has only disputed the admission of the said addendum but not the veracity of the addendum per se. We, therefore, do not find any reason to interfere with the order of learned CIT(A).
Addition on account of late payment of PF and ESI - Held that:- No reason to interfere with the order of learned CIT(A) because admittedly in respect of disallowance deleted by learned CIT(A) the payment was made before the due date of filing the return.
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2012 (7) TMI 954
Issues Involved:
1. Correction of Basic Tax Register (BTR) entry.
2. Applicability of the Kerala Conservation of Paddy Land and Wet Land Act, 2008.
3. Authority and procedure for rectification of land classification in revenue records.
Summary:
1. Correction of Basic Tax Register (BTR) Entry:
The petitioner sought a direction to respondents 1 to 3 to correct the Basic Tax Register (BTR) by deleting the words 'Wet Land' and reflecting the property as dry land based on Exts.P5 to P7 certificates. The property, initially described as wet land (nilam) in Ext.P1 title deed, was claimed to have been dry land since its purchase in 1972 and never used for agricultural purposes. Ext.P5, P6, and P7 certificates from the Village Officer and Agricultural Officer confirmed the property as dry land.
2. Applicability of the Kerala Conservation of Paddy Land and Wet Land Act, 2008:
The third respondent's inspection revealed the land was filled and not fit for paddy cultivation, with no paddy cultivation in nearby plots. The petitioner argued that the property was converted before the Act's enforcement in 2008, making the Act inapplicable. The court referenced several decisions, including Shahanaz Shukkoor v. Chelannur Grama Panchayat (2009 (3) KLT 899) and Jafarkhan v. Kochumarakkar (2012 (1) KLT 491), which held that the Act applies based on actual land conditions, not revenue record descriptions, and conversions before 2008 are not violations.
3. Authority and Procedure for Rectification of Land Classification in Revenue Records:
The court examined the Kerala Land Tax Act and relevant rules, noting that the prescribed authority (Tahsildar) has the power to rectify mistakes in land classification. Section 18 of the Act allows rectification of mistakes within four years. The court directed the Tahsildar to correct the BTR entry to reflect the property as 'reclaimed purayidam' (dry land) based on the factual situation and certificates provided.
Conclusion:
The court declared the property should be classified as 'reclaimed purayidam' in the BTR and directed respondents 2 and 3 to make the necessary corrections within two weeks. The writ petition was allowed with no costs.
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2012 (7) TMI 953
Issues involved: Determination of the admissibility of a miscellaneous application filed by the assessee beyond the prescribed time limit u/s 254(2) of the Income Tax Act, 1961.
Summary:
The Appellate Tribunal, in a case involving a miscellaneous application filed by the assessee beyond the prescribed time limit u/s 254(2) of the Income Tax Act, 1961, considered the issue in light of previous decisions. The Tribunal noted that the statute does not authorize the entertainment of petitions filed beyond four years from the date of the order. The Tribunal compared the provisions of section 254(2) with other similar provisions in the Act and highlighted that the statute explicitly states that the time limit for rectification is four years from the date of the order. The Tribunal emphasized that the language of the statute is clear and does not provide for calculating the time limit based on the date of communication of the order. It was further noted that the appellant's lack of vigilance over an eight-year period cannot be considered reasonable, and seeking a favorable decision after such a long gap amounts to attempting to rewrite the statute. The Tribunal also highlighted that it does not have the power to admit appeals beyond the relevant period as provided in section 253(5) of the Act. The Tribunal concluded that the miscellaneous application of the assessee was not maintainable as it was filed after the expiry of four years from the date of the tribunal order.
In reference to a judgment of the Hon'ble Apex Court, the Tribunal found that the circumstances of the case did not align with the case cited before them, where the appeal was considered within time based on the availability of the order copy. The Tribunal emphasized that in the present case, the order of the tribunal was ready on the date of the tribunal order, and therefore, the judgment cited was not applicable. Consequently, the miscellaneous application of the assessee was dismissed.
Judgment: The miscellaneous application of the assessee was found to be not maintainable as it was filed after the prescribed time limit of four years from the date of the tribunal order, in accordance with section 254(2) of the Income Tax Act, 1961.
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2012 (7) TMI 952
Issues Involved:
The main dispute involves the assessment of lease rental income under the head 'business' or 'house property income' and the consideration of additional evidence by CIT(A) in violation of Rule 46A of the Act.
Assessment of Lease Rental Income:
The assessee, a group concern deriving income from manufacturing, received lease rent from a portion of business assets. The assessing officer treated the entire lease rent as income from other sources, contrary to the assessee's claim of it being business income. The CIT(A) accepted the assessee's contention based on case law and held that the lease rental should be assessed under the head 'business income'. The Revenue appealed against this decision.
Violation of Rule 46A:
The Revenue contended that the CIT(A) erred in admitting additional evidence without giving the assessing officer an opportunity to offer comments, thus violating Rule 46A of the Act. The Departmental Representative argued that the lease rental should be assessed under 'other sources', relying on TDS certificates, while the assessee's counsel maintained that the lease rental income was part of the business income.
Judgment:
The ITAT upheld the CIT(A)'s decision, stating that the assessing officer did not make sufficient effort to determine the appropriate head for assessing the lease rental income. The CIT(A) considered the factors presented by the assessee and concluded that the lease rental income should be taxed as business income. The ITAT found no violation of Rule 46A and dismissed the Revenue's appeals, affirming the CIT(A)'s orders.
Conclusion:
The ITAT dismissed all three appeals by the Revenue, upholding the assessment of lease rental income as business income and finding no fault in the CIT(A)'s decision.
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2012 (7) TMI 951
Issues: Appeal against CIT(A) order regarding deletion of addition of rent payment u/s.40A(2)(b) and reasonableness of the payment.
Issue 1: Deletion of addition of rent payment u/s.40A(2)(b)
The appellant, an individual conducting business, rented property from his father for conducting Mangal Karyalayas. The Assessing Officer disallowed 50% of the rent as excessive and unreasonable under section 40A(2)(b) of the Act. The CIT(A) ruled in favor of the assessee, stating that the rent paid was reasonable. The Departmental Representative contested this decision, arguing that the addition should not have been deleted. However, the Authorized Representative supported the CIT(A)'s decision.
Issue 2: Reasonableness of the payment u/s.40A(2)(b)
The Assessing Officer found the rent paid by the appellant to be excessive and unreasonable, leading to a disallowance of 50%. The appellant argued that the rent was paid at market rates and both parties were in the same tax bracket, negating any tax-saving motive. The ITAT noted that the appellant and his father were paying taxes at higher slabs, indicating no tax avoidance scheme. Citing a relevant case law, the ITAT upheld the CIT(A)'s decision to delete the addition of rent payment made u/s.40A(2)(b) by the Assessing Officer.
In conclusion, the ITAT dismissed the appeal filed by the Revenue, affirming the CIT(A)'s decision to delete the addition of rent payment u/s.40A(2)(b) as reasonable in the given circumstances.
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2012 (7) TMI 950
Issues:
1. Dispute over addition of capital gain to income returned under section 153A of the Income-tax Act, 1961.
2. Interpretation of provisions of section 153A regarding fresh claims in assessment proceedings.
3. Whether new claims for deduction or allowance can be entertained in completed assessments under section 153A.
4. Scope of assessment under section 153A based on incriminating material found during search.
Issue 1:
The dispute revolved around the addition of a capital gain of Rs. 6,00,069 to the income returned by the assessee under section 153A of the Income-tax Act, 1961. The assessee argued that the capital gain arose from the sale of agricultural land, which did not qualify as a 'capital asset' under section 2(14) of the Act. However, the Assessing Officer contended that the amount was liable to be taxed as it was offered for taxation in the original return filed under section 139(1) of the Act.
Issue 2:
The interpretation of the provisions of section 153A regarding fresh claims in assessment proceedings was a key point of contention. The Commissioner of Income-tax (Appeals) upheld the addition, stating that section 153A was introduced to make assessments/reassessments in cases where search actions were conducted. The Commissioner emphasized that the provisions of section 153A did not allow for new claims to be made in assessments that had achieved finality.
Issue 3:
The question of whether new claims for deduction or allowance could be entertained in completed assessments under section 153A was extensively discussed. The Tribunal cited precedents and held that new claims could not be made in assessments that had been completed, as the assessments under section 153A were related to undisclosed income. The Tribunal emphasized that such claims could not be entertained in reassessment proceedings under section 153A.
Issue 4:
The scope of assessment under section 153A based on incriminating material found during search was a crucial aspect of the judgment. The Special Bench clarified that assessments under section 153A would be made on the basis of incriminating material, including books of account and undisclosed income discovered during the search. The Tribunal emphasized that assessments under section 153A were to be based on such material and not on new claims or deductions.
In conclusion, the appeal of the assessee was dismissed, affirming the decision of the authorities below to reject the claim regarding the capital gains. The judgment highlighted the limitations on making fresh claims in assessments under section 153A, emphasizing the significance of incriminating material found during search in determining the scope of such assessments.
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2012 (7) TMI 949
The Supreme Court dismissed the special leave petitions after hearing counsel for the petitioner. Delay was condoned.
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2012 (7) TMI 948
Claiming of deduction by way of letter to the AO - Held that:- We find that in the case of Gotze (India) Ltd. (2006 (3) TMI 75 - SUPREME Court) made it clear that the decision was restricted to powers of the assessing authority to entertain a claim for deduction otherwise than by a revised return and did not impinge on the power of the Appellate Tribunal u/s 254 of the Act. Hence, exercising our power, we restore this matter back to the file of the AO with a direction to consider the claim of the assessee on merits after giving effective opportunity of hearing to the assessee. The assessee is also hereby directed to co-operate with the AO by producing details sought for in deciding the issue.
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2012 (7) TMI 947
Issues involved:
The issues involved in the judgment are the imposition of penalty under Rule 26(2) of the Central Excise Rules 2002 for irregularly availing CENVAT Credit and passing on the benefit to another entity, the applicability of Rule 26(2)(ii) inserted by notification no.8/2007-C.E. (N.T.) dated 1st March, 2007, and the requirement of pre-deposit for filing an appeal before the Central Excise & Service Tax Appellate Tribunal (CESTAT).
Imposition of Penalty under Rule 26(2):
The petitioner was alleged to have irregularly availed CENVAT Credit and passed on the benefit to Tata Steel Ltd., leading to the imposition of a penalty of &8377; 62,20,990/- under Rule 26(2) of the Central Excise Rules 2002. However, it was argued that Rule 26(2)(ii) inserted by a subsequent notification could not be invoked for benefits taken prior to its enactment. The High Court held that the penal provision of Rule 26(2) was not applicable to the petitioner and does not have retrospective operation. The Court set aside the penalty imposed on the petitioner.
Applicability of Rule 26(2)(ii):
Rule 26(2)(ii) inserted by notification no.8/2007-C.E. (N.T.) dated 1st March, 2007, provided for penalties related to ineligible benefits under the CENVAT Credit Rules. The Court clarified that this rule could not be invoked for benefits taken before its introduction, as in the case at hand. The judgment emphasized that an issue of law can be raised at any point in time, and failure to do so earlier cannot be a ground for penalizing the petitioner.
Pre-deposit Requirement for Appeal:
The petitioner had filed an appeal before CESTAT challenging the penalty and had been directed to make a pre-deposit of &8377; 10 lakhs. Subsequently, a miscellaneous application for variation of this order was rejected for failing to raise the issue of the applicability of penal provisions before the lower authority. The High Court held that even though the petitioner had the financial capacity to pay the disputed duty, blocking funds through pre-deposit would amount to hardship. The Court directed the CESTAT to hear the appeal on merits without insisting on pre-deposit, requiring the petitioner to deposit a nominal sum of &8377; 5,000 within a week.
In conclusion, the High Court set aside the penalty imposed on the petitioner under Rule 26(2), clarified the non-retrospective applicability of Rule 26(2)(ii), and directed CESTAT to hear the appeal without insisting on a substantial pre-deposit, ensuring a fair opportunity for the petitioner to present their case.
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2012 (7) TMI 946
Revision u/s 263 - Held that:- CIT has no jurisdiction as a precondition for exercising power under Section 263 viz., the order is erroneous and it is prejudicial to the interest of the revenue were not satisfied.
When the learned Tribunal found that it is neither erroneous nor prejudicial to the interest of the revenue this Court does not find any substantial question of law involved in this matter. If this matter is admitted for hearing this Court has to re-assess the fact finding of the order passed by the Assessing Officer which cannot be done by this Court in exercise of jurisdiction in this matter under Section 260A of the Income Tax Act.
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2012 (7) TMI 945
Issues involved:
The issues involved in the judgment are waiver of pre-deposit of service tax demand confirmed for testing, inspection, and certification services under reverse charge mechanism, and waiver of pre-deposit of service tax confirmed for exhibition services availed outside India.
Testing, Inspection, and Certification Services:
The applicants availed services from the Food and Drugs Administration of the United States of America (US FDA) under the category of Technical Inspection and Certification Service. They argued that since all the services were availed and performed outside India, they should not be liable to pay service tax as per the Taxation of Service Rules, 2006. The Tribunal found that all services were indeed provided outside India, leading to the prima facie case for a total waiver of pre-deposit of service tax, interest, and penalty. Consequently, the requirement of pre-deposit was waived, and recovery stayed during the appeal process.
Exhibition Services:
Regarding the exhibition services, the applicants sought waiver of pre-deposit based on Board Circular No.354/11/2011-TRU, which clarified that hiring premises and arranging installation of stalls outside India for exhibition services are exempt from service tax. The Tribunal considered this submission and observed that since the exhibition services were also availed outside India, the applicants had made out a case for a total waiver of pre-deposit of service tax, interest, and penalty. Consequently, the requirement of pre-deposit was waived, and recovery stayed during the pendency of the appeals.
Conclusion:
In both cases, the Tribunal granted the waiver of pre-deposit of service tax, interest, and penalty as the services were availed and performed outside India, aligning with the provisions of the Taxation of Service Rules, 2006 and relevant Board Circulars.
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2012 (7) TMI 944
Issues involved:
1. Validity of re-opening of the assessment.
2. Validity of the assessment of deemed dividend u/s. 2(22)(e) of the Act.
Validity of re-opening of the assessment:
The appeal challenged the re-opening of the assessment for the assessment year 2003-04 based on the deemed dividend u/s 2(22)(e) of the Act. The Assessing Officer (AO) reopened the assessment due to the loan advanced by the company to the assessee, which was to be assessed as deemed dividend. The assessee objected to the re-opening, claiming it was a 'change of opinion' as similar advances in earlier years were not treated as deemed dividend. The Tribunal noted the distinction between an intimation u/s 143(1) and an assessment order, emphasizing that the former does not constitute an assessment. As the original assessment completion u/s 143(3) was not shown, the Tribunal held that the question of 'change of opinion' did not arise. The Tribunal rejected the assessee's argument that past treatment of loans as non-dividend barred reassessment, citing that the principle of res judicata does not apply to income tax proceedings.
Validity of the assessment of deemed dividend u/s. 2(22)(e) of the Act:
The second issue pertained to the applicability of sec. 2(22)(e) to the loan received by the assessee from the company. The assessee argued that the loan was part of the ordinary money lending activity. However, the CIT(A) rejected this claim, stating that the loan did not align with ordinary business practices. The Board of Directors' minutes authorized the loan at a low-interest rate, which the AO deemed inconsistent with commercial money lending practices. The Tribunal concurred with the CIT(A), emphasizing that the loan was not in the ordinary course of business and upheld the assessment of the loan as deemed dividend u/s 2(22)(e) of the Act.
Conclusion:
The Tribunal dismissed the appeal, affirming the validity of the re-opening of the assessment and the assessment of the loan as deemed dividend u/s 2(22)(e) of the Act for the assessment year 2003-04.
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2012 (7) TMI 943
Non-deduction of tax - Held that:- As the amount already paid before 31st March of the relevant accounting period there cannot be any disallowance under s. 40(a)(ia) of the Act. Accordingly, the orders of authorities below are set aside and the addition made by the AO is deleted.
Disallowance of rent paid by the assessee - Held that:- As the rent claimed was already paid before 31st March. Therefore, in view of the decision of the Special Bench of this Tribunal at Visakhapatnam in Merilyn Shipping and Transports (2012 (4) TMI 290 - ITAT VISAKHAPATNAM ), there cannot be any disallowance.
Expenses disallowed by the AO towards penalty imposed by the police - Held that:- As the assessee has paid the penalty for violating provisions of law. The police authorities levied penalty in the course of regulating the traffic. Therefore, whatever may be the reason for paying penalty, it is paid for violation of traffic rules. Therefore it is against the public policy and hence such payment cannot be allowed as business expenditure. Accordingly, the order of the CIT(A) is confirmed on this ground.
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2012 (7) TMI 942
Issues involved: Appeal against order of Ld. CIT(A) XV, Ahmedabad dated 22.02.2012 for the assessment year 2008-09. Grounds include ex-parte decision by Ld. C.I.T. (Appeals), disallowance of interest expenses u/s 40(a)(ia), disallowance of freight and truck hire charges u/s 40(a)(ia), and disallowance of conveyance and salary expenses.
Ex-parte Decision Issue: The Ld. A.R. argued that no TDS was deducted on the amount paid by the assessee, and as per a Special bench decision, no disallowance u/s 40(a)(ia) is justified if the amount was paid by the year end. Requested restoration to A.O. for fresh decision. Ld. D.R. supported lower authorities. Tribunal found lack of evidence supporting full payment by year end, thus remanded the matter to A.O. for fresh decision, emphasizing burden of proof on assessee.
Disallowance of Interest Expenses Issue: Ld. C.I.T. (Appeals) upheld disallowance u/s 40(a)(ia) of a portion of interest expenses. Assessee argued for full allowance based on non-deduction of TDS. Tribunal referred to Special bench decision, remanding the issue to A.O. for fresh decision on whether the entire expenditure was paid by year end.
Disallowance of Freight and Truck Hire Charges Issue: Ld. C.I.T. (Appeals) upheld disallowance u/s 40(a)(ia) of a portion of freight and truck hire charges. Assessee sought restoration to A.O. for fresh decision based on Special bench decision. Tribunal remanded the issue to A.O. for verifying full payment by year end, emphasizing the burden of proof on the assessee.
Disallowance of Conveyance and Salary Expenses Issue: A.O. disallowed a percentage of conveyance and salary expenses, which Ld. CIT(A) reduced further. Assessee argued for complete allowance, but Tribunal upheld Ld. CIT(A)'s decision due to lack of verifiable accounts. Tribunal rejected the appeal on this issue.
In conclusion, the Tribunal partially allowed the appeal for statistical purposes, remanding the issues of interest expenses and freight/truck hire charges disallowance back to the A.O. for fresh decisions based on the burden of proof on the assessee regarding full payment by the year end. The disallowance of conveyance and salary expenses was upheld by the Tribunal.
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2012 (7) TMI 941
Levy of penalty u/s. 271(1)(c) - provision for bad and doubtful debts adjustment under MAT computation - Held that:- As decided in assessee own case for previous AY no adjustment was required to be made for provision for bad and doubtful debts under clause (c) of the Explanation to Section 115JB. In these circumstances, we feel the Tribunal was justified in accepting and holding that the case is covered by Explanation 1 Clause (B) to Section 271(1) and had correctly dismissed the appeal of the Revenue deleting the penalty - Decided against revenue
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2012 (7) TMI 940
Levy of penalty under Section 271D - Held that:- There is hardly any material available on record to show any justification for receipt of cash over and above ₹ 20,000/- during the course of the year. The assessee admits that they are in the line of business of construction where day in and day out cash payments are made to labourers and to suppliers. Even herein, the justification for making payment in cash must necessarily satisfy Rule 6 DD of the Income Tax Rules, as it existed then. The assessee had not shown any acceptable or unavoidable circumstances or impracticability or difficulty in receiving money otherwise than in cash. Even accepting the reasoning of the assessee that the reasonable cause that the assessee may show could be appreciated on the lines shown in Rule 6 DD, we fail to find any reasonable cause shown in the letter, which was in a very general form.
Except for mere statement that the work undertaken by the assessee at outside the State was for the first time and there was necessity for meeting the requirements to labour and other suppliers demanding cash, we do not find any details placed before the Authorities concerned to accept the case of the assessee that there was a reasonable cause shown in receiving an amount of ₹ 6,51,000/- in cash from Mr. M.T. Nair. Thus the Assessing Authority rightly pointed out that the explanation was not convincing, hence, the case of the assessee was rejected. As the Commissioner of Income Tax (Appeals) as well as the Tribunal confirming such a finding, we do not think that there are grounds in the appeal which persuade us to take a different view. In the circumstances, we have no hesitation in rejecting the tax case.
It is stated in the letter that the assessee received ₹ 6,51,000/- from Mr. M.T. Nair during the year and a sum of ₹ 91,389/- was repaid to him. There was an opening balance of ₹ 45,475/- due to him in his account. Thus the conduct of the assessee treating the transaction as loan transaction and so too the letter dated 24.9.1997 belies the claim of the assessee made through the affidavit of Mr. M.T. Nair that the transaction be treated as a gift, we agree with the Tribunal that the changed stand is only an after thought and does not merit any consideration including the remand.
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2012 (7) TMI 939
Reopening of assessment - whether the lapse of issuing notice under section 143 (2) of the Act beyond prescribed time limit can be cured by the provisions of section 292BB? - Held that:- Notice under section 143(2) was issued beyond the prescribed limit, hence, it was not a valid notice. As the assessment year under consideration is prior to AY 2008-09, so, provisions of section 292BB of the Act are also not applicable. In our opinion assessment proceedings completed in pursuance of a time barred notice were bad in law and invalid.
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2012 (7) TMI 938
Issues involved: Disallowance of claim u/s.10(10C) of IT Act.
Summary:
Issue 1: Disallowance of claim u/s.10(10C) of IT Act
The appeal was filed by the Assessee against the order of the ld.CIT(A)-IV, Baroda regarding the disallowance of claim u/s.10(10C) of the IT Act. The Assessing Officer (AO) initiated proceedings to verify the exemption claim u/s.10(10C) in relation to the "Exit Option Scheme" of the State Bank of India. The AO disallowed the claimed amount of &8377; 5 lacs, stating that the ex-gratia payment under the scheme did not comply with Rule 2BA guidelines, thus not eligible for exemption u/s.10(10C). The ld.CIT(A) upheld the disallowance, noting that the scheme was not for right-sizing but for providing an exit route for demotivated employees, and did not meet the requirements of section 10(10C) r.w.rule 2AB. The appellant relied on certain decisions to support their case.
Issue 2: Interpretation of legal precedents
During the hearing, reference was made to a decision by a Coordinate Bench in a similar case involving the State Bank of India's scheme, where the exemption u/s.10(10C) was allowed. The appellant's case was supported by legal precedents, and it was argued that if a decision of a High Court exists on an issue and there is no contrary decision, then the decision of other High Courts should be followed. Based on this, the Tribunal held that the appellant was entitled to the exemption under the law, similar to the decision in the referenced case.
Conclusion:
Considering the legal precedents and the decision of the Coordinate Bench in a similar case, the Tribunal allowed the Assessee's appeal, holding that the Assessee was entitled to the exemption u/s.10(10C) of the IT Act. The disallowance of the claimed amount was overturned, emphasizing the applicability of legal principles and precedents in determining the eligibility for exemption under the law.
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2012 (7) TMI 937
Addition u/s 14A - computation of book profits under section 115JB - Held that:- We direct the Assessing Officer to adopt the book profits as per the Profit & Loss Account and do not make addition on account of disallowance worked out under section 14A of the Act, as such disallowance is computed under the normal provision of the Act, which are not applicable for determining book profits under section 115JB of the Act. - Decided in favour of assessee.
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2012 (7) TMI 936
Issues involved: Interpretation of provisions u/s 13(1)(d) and 11(5) of the Income Tax Act, 1961 for eligibility of exemption u/s 11 for an educational organization providing interest-free loans to sister concerns.
Summary:
The appeal by the Revenue challenged the denial of exemption u/s 11 of the Act for the assessment year 2008-09 due to alleged violation of sections 13(1)(d) and 11(5) by the assessee, an educational organization registered u/s 12AA. The AO contended that interest-free loans to sister concerns infringed the mentioned sections. The CIT(A) ruled in favor of the assessee, stating that loans to registered charitable organizations did not breach the provisions. The Revenue appealed to the Tribunal, arguing against the exemption eligibility based on the alleged violation. The Tribunal considered the facts, emphasizing that the loans were not investments or deposits, thus not falling under the sections in question. Citing the decision in ACME Educational Society case, the Tribunal upheld the CIT(A)'s order, dismissing the Revenue's appeal.
In conclusion, the Tribunal upheld the eligibility of the assessee for exemption u/s 11 of the Act, as the interest-free loans to sister concerns did not violate the relevant provisions. The appeal by the Revenue was dismissed, affirming the CIT(A)'s decision.
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