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Showing 261 to 280 of 871 Records
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2012 (5) TMI 616
Issues involved:
1. Addition of unexplained investment u/s 68 of Income Tax Act.
2. Disallowance of exemption u/s 54 of the Act.
3. Addition of unexplained cash credit u/s 68 of the Act.
4. Disallowance of expenditure and creditors for expenses.
5. Addition of unexplained investment in purchase of land.
6. Addition of unexplained expenditure u/s 69C of the Act.
7. Addition of unexplained money u/s 69A of the Act.
8. Addition of unexplained investment in gold and diamonds u/s 69 of the Act.
9. Addition of unexplained cash credit in bank accounts.
10. Addition of profit on sale of plots.
11. Treatment of agricultural income as income from other sources.
12. Addition of unexplained cash credit in the form of gifts.
Summary:
1. Addition of unexplained investment u/s 68 of Income Tax Act:
- For Smt. G. Venkatalakshmi (ITA No. 1361/HYD/2010 & ITA No. 1362/HYD/2010), the additions of Rs. 4,81,009/- and Rs. 23,14,953/- were restored to the assessing officer for reconsideration. The appeals were allowed for statistical purposes.
- For Smt. G. Venkatalakshmi (ITA No. 759/HYD/2011 & ITA No. 899/HYD/2011), the addition of Rs. 2,99,52,000/- was allowed under section 54 of the Act. The appeal of the assessee was allowed and the appeal of the revenue was dismissed.
- For Smt. C. Swapna (ITA No. 1315/HYD/2010 & ITA No. 1316/HYD/2010), the additions of Rs. 8,17,140/- and Rs. 6,00,000/- were remitted back to the assessing officer for fresh consideration. The appeals were partly allowed.
- For Smt. C. Swapna (ITA No. 1317/HYD/2010 & ITA No. 1329/HYD/2010), the addition of Rs. 20,00,000/- was sustained and the appeal was dismissed.
- For Smt. C. Swapna (ITA No. 672/HYD/2011 & ITA No. 1015/HYD/2011), the addition of Rs. 5,32,48,000/- was allowed under section 54 of the Act. The appeal of the assessee was partly allowed for statistical purposes and the appeal of the revenue was dismissed.
- For Shri. G. Sanjay Chowdary (ITA No. 1318/HYD/2010), the additions of Rs. 45,79,691/- and Rs. 13,80,194/- were remitted back to the assessing officer for fresh consideration. The appeal was partly allowed for statistical purposes.
- For Shri. G. Sanjay Chowdary (ITA No. 463/HYD/2011 & ITA No. 761/HYD/2011), the addition of Rs. 17,50,00,000/- was deleted. The appeal of the revenue was dismissed.
- For Shri. G. Sanjay Chowdary (ITA No. 464/HYD/2011 & ITA No. 762/HYD/2011), the addition of Rs. 29,75,00,000/- was deleted. The appeal of the revenue was dismissed.
- For Shri. G. Sanjay Chowdary (ITA No. 1689/HYD/2011 & ITA No. 1777/HYD/2011), the addition of Rs. 32,81,40,000/- was deleted. The appeal of the revenue was dismissed.
- For Shri. G. Sanjay Chowdary (ITA No. 1690/HYD/2011), the addition of Rs. 1,26,60,000/- was remitted back to the CIT[A] for fresh consideration. The appeal was allowed for statistical purposes.
2. Disallowance of exemption u/s 54 of the Act:
- For Smt. G. Venkatalakshmi (ITA No. 759/HYD/2011 & ITA No. 899/HYD/2011), the exemption under section 54 of the Act was allowed. The appeal of the assessee was allowed and the appeal of the revenue was dismissed.
3. Addition of unexplained cash credit u/s 68 of the Act:
- For Smt. C. Swapna (ITA No. 672/HYD/2011 & ITA No. 1015/HYD/2011), the addition of Rs. 9,80,50,507/- was partly sustained by the CIT [A]. The appeal of the assessee was partly allowed for statistical purposes and the appeal of the revenue was dismissed.
4. Disallowance of expenditure and creditors for expenses:
- For M/s. Swapna Lahari Films P. Ltd (ITA No. 573/H/11 & ITA No. 574/H/11), the disallowance of expenditure was restricted to 10% and the disallowance of creditors for expenses was deleted. The appeals were partly allowed.
5. Addition of unexplained investment in purchase of land:
- For Shri. G. Sanjay Chowdary (ITA No. 463/HYD/2011 & ITA No. 761/HYD/2011), the addition of Rs. 17,50,00,000/- was deleted. The appeal of the revenue was dismissed.
- For Shri. G. Sanjay Chowdary (ITA No. 464/HYD/2011 & ITA No. 762/HYD/2011), the addition of Rs. 29,75,00,000/- was deleted. The appeal of the revenue was dismissed.
- For Shri. G. Sanjay Chowdary (ITA No. 1689/HYD/2011 & ITA No. 1777/HYD/2011), the addition of Rs. 32,81,40,000/- was deleted. The appeal of the revenue was dismissed.
6. Addition of unexplained expenditure u/s 69C of the Act:
- For Shri. G. Sanjay Chowdary (ITA No. 1689/HYD/2011), the addition of Rs. 4,80,000/- was sustained by the CIT [A]. The appeal was partly allowed for statistical purposes.
7. Addition of unexplained money u/s 69A of the Act:
- For Smt. C. Swapna (ITA No. 672/HYD/2011 & ITA No. 1015/HYD/2011), the addition of Rs. 2,62,000/- was sustained by the CIT [A]. The appeal of the assessee was dismissed.
8. Addition of unexplained investment in gold and diamonds u/s 69 of the Act:
- For Smt. C. Swapna (ITA No. 1315/HYD/2010), the addition of Rs. 8,17,140/- was remitted back to the assessing officer for fresh consideration. The appeal was partly allowed.
9. Addition of unexplained cash credit in bank accounts:
- For Shri. G. Sanjay Chowdary (ITA No. 1318/HYD/2010), the additions of Rs. 45,79,691/- and Rs. 13,80,194/- were remitted back to the assessing officer for fresh consideration. The appeal was partly allowed for statistical purposes.
- For Shri. G. Sanjay Chowdary (ITA No. 463/HYD/2011 & ITA No. 761/HYD/2011), the addition of Rs. 6,13,025/- and Rs. 33,92,295/- were remitted back to the assessing officer for fresh consideration. The appeal was partly allowed for statistical purposes.
10. Addition of profit on sale of plots:
- For Shri. G. Sanjay Chowdary (ITA No. 1689/HYD/2011), the addition of Rs. 11,44,583/- was remitted back to the assessing officer for fresh consideration. The appeal was partly allowed for statistical purposes.
11. Treatment of agricultural income as income from other sources:
- For Shri. C. Harish (ITA No. 700/Hyd/2011, ITA No. 668/Hyd/2011, ITA No. 701/Hyd/2011, ITA No. 702/Hyd/2011, ITA No. 669/Hyd/2011, ITA No. 670/Hyd/2011), the agricultural income was allowed as such and not treated as income from other sources. The appeals were allowed.
12. Addition of unexplained cash credit in the form of gifts:
- For Shri. C. Harish (ITA No. 701/Hyd/2011), the addition of Rs. 1,35,000/- was deleted. The appeal was allowed.
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2012 (5) TMI 615
Issues involved: Challenge to deletion of penalty u/s.271(1)(c) for A.Y. 2000-01 based on deemed dividend u/s.2(22)(e).
Summary:
The Revenue challenged the deletion of penalty u/s.271(1)(c) by Ld. CIT(A) for the A.Y. 2000-01, arising from the assessment order finding a borrowal of Rs.2,27,43,654/- treated as deemed dividend u/s.2(22)(e). The penalty was imposed on the concealment of this deemed dividend, which the assessee contested by explaining the circumstances. Ld. CIT(A) held that the conditions u/s.271(1)(c) were not met, canceling the penalty. The Revenue argued for upholding the penalty, while the counsel supported Ld. CIT(A)'s decision. The Tribunal dismissed the appeal, citing a similar case where the penalty was canceled based on deeming provisions of sec.2(22)(e), concluding it was not a case for penalty u/s.271(1)(c) of the I.T. Act.
In conclusion, the appeal filed by the Revenue challenging the deletion of penalty u/s.271(1)(c) for A.Y. 2000-01 based on deemed dividend u/s.2(22)(e) was dismissed by the Tribunal on 30th May, 2012.
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2012 (5) TMI 614
Levying penalty u/s. 271(1)(c) - deemed dividend u/s. 2(22)(e) - Held that:- It is not in dispute that the fact of the loan taken by the assessee from the company came within the knowledge of AO from the balance sheet filed by the assessee which means that the assessee has disclosed the fact of borrowing in her balance sheet. We agree with the Counsel that assessee had no malafide intention to conceal the fact. So long as assessee has not concealed any material fact or any factual information given by her has not been found to be incorrect, she should not be liable to imposition of penalty u/s. 271(1)(c). Appeal filed by the assessee is allowed.
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2012 (5) TMI 613
TPA - ALP determination - costs are incurred during normal business operations - assessee demonstrated as to the Comparable Companies did not have to incur any such expenses - Held that:- he Assessee ought to succeed on this Ground and we accordingly direct the AO/TPO to examine the claim of the assessee in the light of the directions contained in the order of the Tribunal in the case of Demag Cranes& components (India) Pvt. Ltd (2012 (1) TMI 60 - ITAT Pune )
Working capital adjustment - Held that:- The plea of the assessee has to be upheld in principle. So, however, as the issue has not been examined by the lower authorities, we therefore, deem it fit and proper to restore the issue back to the file of the AO/TPO with direction to examine the claim of the assessee relating to working capital adjustment and eliminate such difference, if any, as are likely to materially affect the profit margins,
Deduction under section 10B - Held that:- We set-aside the matter back to the file of the Assessing Officer to ascertain the appropriate amount of communication and insurance expenses that are attributable to export outside India so as to be excludible from the figure of ‘export turnover’ as well as total turnover, and thereafter rework the deduction under section 10B
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2012 (5) TMI 612
Whether any case is made out and, if so, the offence is triable by whom?
Whether a term “institution” contained in Section 7 of the Act 1990 means taking cognizance of the offence and not mere presentation of the chargesheet by the investigating agency?
Whether the competent Army Authority has to exercise his discretion to opt as to whether the trial would be by a courtmartial or criminal court after filing of the chargesheet and not after the cognizance of the offence is taken by the court?
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2012 (5) TMI 611
Issues involved: Appeal against deletion of penalty u/s 271(1)(c) of the I.T. Act for concealment of income and furnishing inaccurate particulars.
Summary:
Issue 1: Deletion of penalty u/s 271(1)(c) of the I.T. Act
The appeal arose from the order of CIT(A)-II, Ahmedabad, for assessment year 2007-08. The appellant, after a search and seizure operation, surrendered unaccounted income of Rs. 75,00,000/- but did not disclose the payment and transaction in the books of accounts. The Assessing Officer (A.O.) imposed a penalty of Rs. 24,85,623/- u/s 271(1)(c) of the I.T. Act for concealment of income. However, the CIT(A) allowed the appeal, stating that the appellant had disclosed the income during the search, paid the tax, and the returned income was accepted. Citing relevant case laws, the CIT(A) held that the appellant was entitled to exemption under Explanation 5 to Section 271(1)(c) of the I.T. Act. The revenue's appeal against the deletion of penalty was dismissed by the Tribunal.
The Tribunal noted that the return of income was accepted by the A.O., and no additions were made based on the incriminating documents found during the search. The appellant had disclosed Rs. 75,00,000/- u/s 132(4) of the I.T. Act. Considering tangible and intangible assets for disclosure, the Tribunal upheld the CIT(A)'s decision based on the Gujarat High Court's ruling in a similar case. Consequently, the Tribunal confirmed the CIT(A)'s order, dismissing the revenue's appeal.
In conclusion, the revenue's appeal against the deletion of penalty u/s 271(1)(c) of the I.T. Act was dismissed by the Tribunal, upholding the CIT(A)'s decision in favor of the appellant.
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2012 (5) TMI 610
Issues:
The judgment involves the deletion of penalty u/s 271(1)(c) of the Income Tax Act for concealment of income and furnishing inaccurate particulars.
Deletion of Penalty u/s 271(1)(c) of the Income Tax Act:
The appeal arose from the order of CIT(A)-II, Ahmedabad for assessment year 2007-08. The AO imposed a penalty of Rs. 13,82,732/- u/s 271(1)(c) as the assessee did not disclose the payment and transaction of surrendered income in the books of accounts. The AO considered the assessee an offender under explanation 5 to Section 271(1)(c) as there was no disclosure based on any valuable article found during the search u/s 132 of the Act. The CIT(A) allowed the appeal, noting that the appellant had surrendered undisclosed income during the search, offered it as income in the return, and paid tax. The CIT(A) referred to relevant case laws and held that the appellant was entitled to exemption under Explanation 5 to Section 271(1)(c). The Tribunal upheld the CIT(A)'s decision, emphasizing that the return of income was accepted by the AO, and no addition was made based on incriminating documents found during the search. The Tribunal confirmed the CIT(A)'s order, citing the disclosure of income u/s 132(4) and the decisions of the High Courts in similar cases.
Conclusion:
The Tribunal confirmed the deletion of the penalty u/s 271(1)(c) of the Income Tax Act, as the appellant had disclosed the surrendered income during the search, offered it in the return, and the return of income was accepted by the AO. The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision based on the facts and legal interpretations presented during the proceedings.
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2012 (5) TMI 609
Issues Involved: 1. Disallowance of deduction u/s 80IB. 2. Classification of detergent as a prohibited article under the Eleventh Schedule. Issue 1: Disallowance of Deduction u/s 80IBThe assessee is aggrieved by the impugned order dated 9th December, 2011 on the ground that the learned CIT(A) erred in maintaining the disallowance of Rs. 6,63,956/- made u/s 80IB of the Act by holding that the assessee is manufacturing prohibited articles as per Eleventh Schedule. The crux of arguments on behalf of the assessee is that detergent and soap are two different commodities, their physical and chemical properties are different and the method of use is also different. The learned counsel further invited our attention to the relevant provisions of the Act and there is no mention of the detergent in the negative list. A plea was also raised that from the date of its inception, the assessee is a small scale industrial undertaking for which our attention was invited to various pages of the paper book. On the other hand, the learned Senior DR strongly defended the impugned order by submitting that the composition of soap and detergent is the same and the same has been mentioned in the negative list. The assessee declared total income of Rs. 15,49,230/-, after claiming deduction of Rs. 6,63,956/- u/s 80IB of the Act in its return filed on 25.2.2004. The return was selected for scrutiny, therefore, pursuant to notice u/s 147 vide order dated 27.2.2010 the income was determined at Rs. 2,91,61,870/- (including disallowance of deduction of Rs. 6,63,956/-). However, u/s 154 of the Act, necessary correction was made by the AO himself by restricting the disallowance to Rs. 6,63,956/- as claimed by the assessee. On appeal, the learned CIT(A) affirmed the disallowance which is under challenge before the Tribunal. Issue 2: Classification of Detergent as a Prohibited Article under the Eleventh ScheduleThe Tribunal analyzed the relevant portion from the impugned order which stated: "The chemical process for making soap has not gone through any metamorphic change. The soaps earlier were made by mixing chemicals like fatty acid, caustic soda, sodium silicate. The modern day detergent soaps are also made by mixing chemicals like LAB, sodium silicate and caustic soda. The only new material used in the detergent soap is LAB in place of fatty acid. This fact clearly show that the detergent soaps are one kind of soap." The Tribunal considered the list of prohibited articles in the Eleventh Schedule, which includes "Toothpaste, dental cream, tooth-powder and soap" but not detergent. The Tribunal noted that "Nothing prevented the legislature to specifically use the word 'detergent powder' if it wanted to do so." The Tribunal also detailed the manufacturing processes of soap and detergent, highlighting their differences. It was concluded that "Soap is the product of reaction between a fat and sodium hydroxide (Fat + 3NaOH - glycerine + 3 soap). The whole process of both the items is indicative of factor that both the products are altogether different and commercially also known differently." For claiming deduction u/s 80IB of the Act, the article manufactured should not be in the list of the Eleventh Schedule, and the product should be from a small scale industrial undertaking. The Tribunal found that the assessee was registered as a small scale industry from its inception and continued as such. The dictionary meanings of soaps and detergent were also found to be different, supporting the view that they are distinct items. The Tribunal concluded that "detergent is not included in Schedule 11, consequently, deduction should not have been denied to the assessee." The appeal of the assessee was allowed. This order was pronounced in the open Court on 11.5.2012.
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2012 (5) TMI 608
Issues Involved:
1. Deletion of addition on account of undisclosed closing stock.
2. Deletion of addition on account of unexplained creditors.
3. Enhancement of income by adding sales not included in P&L account.
4. Disallowance of gas cylinder expenses.
5. Addition of diesel expenses.
6. Addition for unaccounted khoya purchases.
Summary:
1. Deletion of addition on account of undisclosed closing stock:
The Assessing Officer (AO) added Rs. 11,84,861 to the taxable income, alleging the consignment transactions were actually the assessee's own trading and the resultant closing stock was not reflected in the books. The Ld. Commissioner of Income Tax (Appeals) [CIT(A)] deleted this addition, finding no material defect in the accounts and noting that the discrepancy was explained and accepted during the assessment stage. The ITAT upheld the CIT(A)'s order, finding no infirmity in the deletion.
2. Deletion of addition on account of unexplained creditors:
The AO added Rs. 1,22,52,846 on account of unexplained creditors, alleging the consignment purchases were actually the assessee's own trading and the creditors were bogus. The CIT(A) deleted this addition, noting that the creditors' identities and creditworthiness were not doubted, and the transactions were confirmed by the creditors. The ITAT upheld the CIT(A)'s order, agreeing that the addition was unjustified.
3. Enhancement of income by adding sales not included in P&L account:
The CIT(A) enhanced the income by Rs. 11,97,312, noting that sales of milk worth Rs. 12,21,082 to Apollo Hospital were not credited to the P&L account, though the corresponding purchases were debited. The ITAT upheld this enhancement, agreeing with the CIT(A) that the entire sales amount, not just the profit, should be added.
4. Disallowance of gas cylinder expenses:
The AO disallowed 50% of the gas cylinder expenses amounting to Rs. 2,07,960, as the assessee failed to furnish supporting bills/vouchers. The CIT(A) upheld this disallowance, and the ITAT agreed, finding no need to interfere with the lower authorities' reasonable view.
5. Addition of diesel expenses:
The AO added Rs. 1,00,000 for diesel expenses, noting that the assessee did not reflect these expenses in the accounts, though the truck was used for business. The CIT(A) confirmed this addition, and the ITAT upheld the same, agreeing that the addition was justified.
6. Addition for unaccounted khoya purchases:
The AO added Rs. 3,17,550 for unaccounted khoya purchases based on the statement of a supplier, Shri Ashok Kumar, who stated that all supplies were without bills and payments were in cash. The CIT(A) confirmed this addition, noting that the assessee did not rebut the supplier's statement. The ITAT upheld the addition, agreeing with the CIT(A) that the addition was correct.
Conclusion:
Both the appeals filed by the Revenue and the Assessee were dismissed. The ITAT upheld the orders of the CIT(A) on all issues.
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2012 (5) TMI 607
Issues involved:
The appeal and stay application against order-in-original u/s 65/2011-12 dated 23/01/2012 for violation of Customs Act, 1962.
Details of the Judgment:
Issue 1: Confiscation under Section 113(g) of the Customs Act, 1962
The Commissioner held goods valued at &8377; 1,16,82,808/- liable to confiscation under Section 113(g) for loading goods on a vessel without proper permission. The penalty imposed on the appellant/exporter, CHA, and Shipping Line under Section 114(iii) was contested by the appellant.
Issue 2: Appellant's Argument
The appellant argued that the responsibility for loading goods onto the vessel lies with the person-in-charge of the conveyance, not the exporter. They cited relevant judgments to support their contention that they had no control over the goods after entering the Customs area.
Issue 3: Revenue's Contention
The Revenue argued that the appellant violated Sections 50 and 51 of the Customs Act by filing the shipping bill after the vessel had sailed. They contended that the exporter cannot shift all responsibilities to the shipping line and should have completed formalities before the vessel's departure.
Judgment Analysis:
The Tribunal noted that the goods were loaded and the vessel sailed before the shipping bill was filed, violating Section 113(g) of the Customs Act. The appellant's failure to file the shipping bill before the vessel's departure constituted an omission under Section 114(iii), leading to liability for penalty.
The Tribunal distinguished previous cases where shipping bills were filed before vessels sailed, emphasizing the importance of obtaining a let export order before goods are exported. The appellant's argument regarding lack of mens rea for penalty imposition was dismissed.
Referring to CBEC's Customs Manual, the Tribunal highlighted the exporter's responsibility to obtain a let export order before goods are exported. Citing precedents, the Tribunal held that exporting goods without a let export order renders them liable for confiscation.
Conclusion:
The Tribunal directed the appellant to make a pre-deposit of &8377; 2 lakhs within four weeks, with the balance of the penalty waived upon compliance. The recovery of the penalty was stayed during the appeal's pendency.
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2012 (5) TMI 606
The Delhi High Court dismissed the appeal as withdrawn with liberty to file the same before the Court of Competent Jurisdiction. The impugned order was passed by the Additional Commissioner in respect of an asset located in Ghaziabad.
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2012 (5) TMI 605
Issues Involved:
1. Use of intemperate language by a superior court judge.
2. Impact of such language on the reputation and career of a subordinate judicial officer.
3. Judicial decorum and propriety in passing remarks against subordinate judiciary.
4. Expunging of unwarranted remarks and directions by superior courts.
Detailed Analysis:
1. Use of Intemperate Language by a Superior Court Judge:
The Supreme Court addressed the issue of the language used by the learned Single Judge of the High Court of Judicature at Allahabad, who had made severe remarks against the Chief Judicial Magistrate (CJM). The High Court had described the CJM's conduct as "deplorable and wholly malafide and illegal," labeling the order as "vexatiously illegal" and accusing the CJM of a "blatant error of law" and "unpardonable injustice." The Supreme Court emphasized that such intemperate language was unwarranted and not in consonance with judicial decorum and propriety.
2. Impact of Such Language on the Reputation and Career of a Subordinate Judicial Officer:
The Supreme Court recognized that the remarks and directions by the High Court could indubitably affect the self-esteem and career of the judicial officer. It was noted that a judicial officer enjoys a status in the eyes of the public, and his reputation stabilizes the inherent faith of a litigant in the judicial system. The Court stressed that unwarranted comments could create a dent in the credibility of the judicial officer and the institution as a whole.
3. Judicial Decorum and Propriety in Passing Remarks Against Subordinate Judiciary:
The judgment highlighted several precedents emphasizing the need for judicial restraint and decorum. It referred to cases like Ishwari Prasad Mishra v. Mohammad Isa, Alok Kumar Roy v. Dr. S. N. Sarma and Anr., and K. P. Tiwari v. State of Madhya Pradesh, which underscored the importance of using temperate language and maintaining judicial poise and balance. The Supreme Court reiterated that criticisms and observations should be judicial in nature, moderate, and reserved, ensuring that the dignity of the judicial officer is maintained.
4. Expunging of Unwarranted Remarks and Directions by Superior Courts:
The Supreme Court unhesitatingly expunged the remarks and directions made by the High Court against the CJM. It was noted that the CJM had dismissed the application under Section 156(3) of the Code of Criminal Procedure based on his perception of delay and other factors. The Supreme Court found that the High Court's different perception did not warrant such severe observations and directions. The Court ordered that if the remarks had been entered into the annual confidential roll of the judicial officer, they should be expunged, and a copy of the order should be sent to the Registrar General of the High Court of Allahabad to be placed on the personal file of the concerned judicial officer.
Conclusion:
The Supreme Court allowed the appeal, emphasizing the importance of judicial restraint and the need to avoid intemperate language that could harm the reputation and career of subordinate judicial officers. The Court expunged the unwarranted remarks and directions made by the High Court, reinforcing the principles of judicial decorum and propriety.
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2012 (5) TMI 604
The Delhi High Court heard arguments on substantial questions of law regarding Income Tax Act provisions and expenses incurred by the assessee. The court reserved judgment on the matter, including the applicability of Section 40(ia) and the nature of various expenditures. The issue of whether a payment to M/s. CSA International, Chicago qualifies as "fee for included services" under the DTAA between India and the USA was also discussed.
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2012 (5) TMI 603
Whether there was demand of bribe and acceptance of the same?
Whether it would not be at all appropriate to exercise jurisdiction under Article 142 of the Constitution of India to reduce the sentence on the ground of the so-called mitigating factors as that would tantamount to supplanting statutory mandate and further it would amount to ignoring the substantive statutory provision that prescribes minimum sentence for a criminal act relating to demand and acceptance of bribe?
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2012 (5) TMI 602
Issues Involved:
1. Classification of management and advisory fee as business income or income from other sources.
2. Classification of establishment charges as business income or income from other sources.
3. Set-off of carry forward speculation losses against speculation profit before setting off business losses.
Summary:
Issue 1: Classification of Management and Advisory Fee
The Revenue challenged the Ld. Commissioner of Income Tax (Appeals) decision to assess the management and advisory fee of Rs. 31,50,000/- as business income instead of income from other sources. The assessee argued that the fee was received from M/s Far East Investment Corporation Ltd. and European Investment Ltd. for investment management services, which had been consistently treated as business income in previous years. The Ld. Commissioner of Income Tax (Appeals) found that the Assessing Officer did not independently examine the nature of the receipts and failed to prove that the assessee did not perform the stated investment management activities. The principle of consistency was also considered, as the income had been assessed as business income in earlier years. The Tribunal upheld the Ld. Commissioner of Income Tax (Appeals) decision, agreeing that the income should be classified as business income.
Issue 2: Classification of Establishment Charges
The Revenue contested the Ld. Commissioner of Income Tax (Appeals) decision to assess establishment charges of Rs. 4,20,000/- as business income instead of income from other sources. The assessee claimed that the charges were for the use of office premises, furniture, fixtures, and related services. The Ld. Commissioner of Income Tax (Appeals) noted that the charges were composite and included expenses for electricity, telephone, and manpower, which could not be entirely classified under the head of hiring furniture and building. The principle of consistency was applied, as the income had been treated as business income in previous years. The Tribunal upheld the Ld. Commissioner of Income Tax (Appeals) decision, agreeing that the income should be classified as business income.
Issue 3: Set-off of Carry Forward Speculation Losses
The Revenue appealed against the Ld. Commissioner of Income Tax (Appeals) decision to direct the Assessing Officer to recompute the income by first setting off carry forward speculation losses of Rs. 1,01,39,840/- against the speculation profit and then setting off the business losses. The Ld. Commissioner of Income Tax (Appeals) referred to the CBDT Circular No. 23D of 1960 and relevant High Court judgments, which supported the priority of setting off carried forward speculation losses against current year's speculation profit before adjusting other business losses. The Tribunal upheld the Ld. Commissioner of Income Tax (Appeals) decision, agreeing that the carried forward speculation losses should be adjusted first as per the Board Circular and judicial precedents.
Conclusion:
The Tribunal dismissed both appeals filed by the Revenue, upholding the Ld. Commissioner of Income Tax (Appeals) decisions on all issues. The management and advisory fee and establishment charges were correctly classified as business income, and the set-off of carry forward speculation losses was appropriately prioritized.
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2012 (5) TMI 601
Issues involved:
The issues involved in the judgment are the taxation of different contracts related to maintenance, supply of goods, and commercial construction activities u/s service tax laws.
Issue 1: Taxation of maintenance work on immovable property
The appellant argued that the maintenance work related to immovable property should not have been taxed before 16.6.2005. The work on the underground drainage and manholes in the railway colony was considered as repair and maintenance, falling under the scope of service tax.
Issue 2: Taxation of supply of goods
Regarding the contracts for making and provisioning of work bench, store rack, conference table, and chairs, the appellant contended that these activities were not repair and maintenance but rather supply and sale of goods. Therefore, the supply and sale of goods should not be subject to taxation.
Issue 3: Classification of commercial and industrial construction activities
The appellant argued that the extension of platform No. 1, providing circulating area and toilet blocks at the station, fell under the category of commercial and industrial construction activities, which were taxable w.e.f. 10.9.04. The Revenue wrongly classified the activity as repair and maintenance, leading to erroneous taxation.
Issue 4: Levy on pure supply of goods
For the contracts involving the supply of fish bolts and improvement of the triangulated area in the platform, the appellant claimed that there was pure supply of goods without any service element involved. Therefore, no levy was warranted on these transactions.
Judgment Summary:
The Appellate Tribunal considered the arguments presented by the appellant regarding the different contracts subject to taxation. It was observed that the maintenance work on immovable property, supply of goods, and commercial construction activities were wrongly taxed or classified by the Revenue.
Upon analysis, the Tribunal found that the balance of convenience tilted in favor of the appellant. The authorities had failed to consider all aspects of the receipts, and it was clarified that service tax is applicable only on taxable services provided, not on the sale of goods. As a result, the requirement of pre-deposit during the pendency of the appeal was waived.
In a separate Stay Petition, the Tribunal granted the same order of waiver of pre-deposit as in the main appeal, emphasizing the importance of considering each aspect of the transactions before levying service tax.
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2012 (5) TMI 600
The petitioner filed objections against a reassessment notice under Section 148 of the Income Tax Act, 1961. The Assessing Officer must dispose of the objections before proceeding with the assessment, following the procedure from G.K.N Driveshafts India Limited versus ITO. The writ petition is disposed of with liberty for parties to approach the Court if needed.
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2012 (5) TMI 599
Addition u/s 68 - proof of gifts received - Held that:- Behavior of Smt. Swaran Kanta clearly shows that she has been investing her money prudently and keeping the same in the bank. When no cash has been withdrawn how she could have made a gift of ₹ 2.00 lakhs. In any case, an educated person like a Lecturer having a bank account would not have made gift in the form of cash. Applying the test of human probabilities as enunciated in the case of Hon'ble Supreme Court in the case of Sumati Dayal V. CIT, (1995 (3) TMI 3 - SUPREME Court) it is difficult to accept this gift. Considering the overall circumstances, we are of the opinion that the ld. CIT(A) has correctly held that gifts are not genuine and according we confirm his order.
Unexplained capital introduced CIT(A) has correctly disbelieved the story of accumulation of cash which has been made by the assessee just to explain the introduction of cash. If the assessee was really rendering tuition the money would have been deposited in the bank or at least some expenses on account of personal expenses have been shown. Therefore, we confirm the order of the ld. CIT(A).
Addition u/s 40A(3) - Held that:- The payments made by the franchisee-distributor to the principal are only on his (the latter's behalf); it being only entitled to a commission for the services rendered. The question of no separate payment being made by the payee-principal to the payer-agent, i.e., toward the remuneration or commission. Thus the provision of s. 40A(3) was found as not applicable in the facts and circumstances of the case. See Koottummal Groups V. ITO [2011 (6) TMI 502 - ITAT COCHIN] - Decided in favor of the assessee
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2012 (5) TMI 598
Issues Involved:
1. Validity of jurisdiction of reassessment proceedings u/s 147/148.
2. Validity of transfer of jurisdiction u/s 127.
3. Merits of additions challenged.
Summary:
1. Validity of Jurisdiction of Reassessment Proceedings u/s 147/148:
The appeals challenge the reassessment proceedings initiated by ACIT, Noida u/s 147/148. The primary contention is that the assessee was already assessed by ITO Ward-32(2), New Delhi, and ACIT Noida had no jurisdiction to issue notices u/s 147/148 before the transfer of jurisdiction dated 9-3-2004. The Tribunal held that the notices issued by ACIT Noida on 27-3-2003 and 31-3-2003 were invalid as they were issued before the lawful transfer of jurisdiction. It was observed that the statutory opportunity of hearing prescribed by Sec. 127(2) was not given while transferring the assessee's jurisdiction from Delhi to Noida. Consequently, the notices issued without lawful authority were deemed ab initio void, and all subsequent proceedings were also bad in law.
2. Validity of Transfer of Jurisdiction u/s 127:
The Tribunal examined the transfer order u/s 127(2) dated 9-3-2004 and found it invalid due to the lack of opportunity of hearing given to the assessee. The Tribunal emphasized that statutory requirements are mandatory, and any transfer order passed without complying with the requirement of giving an opportunity of being heard is invalid. The Tribunal cited the Hon'ble Delhi High Court's judgment in the case of Melco India Pvt. Ltd. & others, which mandates the necessity of an opportunity of hearing before transferring jurisdiction. Therefore, the transfer order u/s 127 dated 9-3-2004 was quashed.
3. Merits of Additions Challenged:
Since the Tribunal held that the notices u/s 148, consequential reassessments, and transfer order u/s 127(2) were bad in law, there was no need to decide the merits of the additions. The appeals filed by the assessees were allowed, quashing the 148 notices, reassessments, and the 127(2) order.
Conclusion:
The Tribunal allowed all the appeals filed by the assessees, quashing the 148 notices, reassessments, and the 127(2) order, emphasizing the mandatory nature of statutory requirements and the necessity of lawful jurisdiction in reassessment proceedings.
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2012 (5) TMI 597
Issues involved:
The issues involved in the judgment are the disallowance of wrongly availed credit, imposition of penalty, and the interpretation of Notification No. 30/2004 regarding CENVAT credit lapse.
Disallowed Credit and Penalty:
The adjudicating authority disallowed the wrongly availed credit of Rs. 1,41,226 with interest and imposed an equivalent amount of penalty. The appellants, manufacturers of man-made fabrics, had availed excess CENVAT credit in August 2003 and December 2003 without proper documentation. They reversed the amounts in 2007 as per the conditions of the Notification. The Revenue contended that since the appellants admitted to taking the credit wrongly, they were liable to pay back the amount with interest and penalty. The Commissioner (Appeals) upheld this decision. However, the appellants argued that the wrongly taken amount should be adjusted from their CENVAT credit balance, which was sufficient prior to the lapse date mentioned in the Notification. The appellate tribunal found that the closing balance on the lapse date was more than the wrongly availed credit, leading to the conclusion that no payment was required, and no penalty was imposable. Consequently, the impugned order was set aside, and the appeal was allowed.
Interpretation of Notification No. 30/2004:
The appellants relied on Notification No. 30/2004, claiming that their CENVAT credit balance lapsed as per the Notification. They argued that since they had a significant balance in their CENVAT account before the lapse date, the wrongly taken amount should be adjusted from this balance. This argument was crucial in determining whether the appellants were required to pay the amount as per the impugned order. The tribunal's analysis of the CENVAT account balance and the impact of wrongly availed credit on the closing balance on the lapse date led to the decision that no payment was necessary post the lapse date mentioned in the Notification.
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