|
Advanced Search Options
Case Laws
Showing 361 to 380 of 495 Records
-
2006 (10) TMI 142
Cessation of liability - Amounts collected as sales tax and Central sales tax were later found to be in excess of the amounts payable - assessee transferred the said amounts to the suspense account but did not credit the same to the profit and loss account - hold that the amount collected towards sales tax which remained unpaid and unpayable to the Department, which was also not refunded to the customers, was liable to be treated as income in the hands of the assessee under section 41(1) of the Act. As and when the amount is refunded to the customers, the same may be claimed as deduction by the assessee
-
2006 (10) TMI 141
Depreciation of firm determined after assessment of partner – Whether Tribunal was correct in law in holding that the assessee was not entitled to set off depreciation allowed in the case of the firm by taking recourse to S. 155 - partner is entitled to set off his share of unabsorbed depreciation in A.Y. 1992-93 – for A.Y. 1993-94 to 1995-96, the assessee would not be entitled to claim any benefit for the reason that in the subsequent years, the firm ceased to exist. In case, the firm itself is not in existence and the unabsorbed depreciation is not carried forward in the hands of the firm, there was no question of apportionment thereof in the hands of the partners
-
2006 (10) TMI 140
Assessee claimed deduction of Rs. 31,433 paid as fine for belated payment of excise duty instalment – though termed as fine, the payment was not in the nature of punishment - the payment was in effect intended to compensate the loss on account of delay in making the payment and was not by way of penalty for breach of law - where the amount paid is in the nature of compensation, the same will be allowable
-
2006 (10) TMI 139
Assessee is a co-operative society engaged in the marketing of agricultural products - interest received on loans advanced to its members - held that the assessee is entitled to deduction in respect of interest income received on advances made to his customers for the purpose of deduction under Section 80P
-
2006 (10) TMI 138
Notice for re-opening assessment – reason given to issue notice was that that during the course of assessment proceedings for the A.Y. 2002-03, it came to light that claim of the assessee for deduction u/s 80P(2)(a)(i) was erroneous as the assessee was not registered under the Banking Regulation Act, 1949 & was not a member of clearing house & was providing facilities to non-members – notice is not based merely on change of opinion but also on the subsequent judgment of the SC – notice is valid
-
2006 (10) TMI 137
Addition towards investment in construction of Air Pollution Control Device (chimney) – even if availability of bricks with the assessee was taken into account investment in the construction of chimney was not proved – no basis for income surrendered by assessee - Assessing Officer found difference in the investment as estimated at the time of survey & at the time of assessment - Tribunal was right in taking into account the above difference & not considering surrendered amount
-
2006 (10) TMI 136
Assessee availed “development rebate” in respect of certain Plant and Machinery – withdrawal of development rebate within the meaning of section 155(5) – since assessee sold part of plant and machinery as scrap before the expiry of the eight year period, provision of section 34(3) read with section 155(5) will be attracted – rebate was rightly withdrawn - Tribunal was in error in holding that the “cops and bobbins” sold as scrap cannot be equated with the “plant and machinery”
-
2006 (10) TMI 135
Reference - Recall of order - Assessee, Airports Authority paid to DDA some amount, for removal and rehabilitation of squatters in village – Tribunal held those expenses as “capital expenses” as it gave the assessee an advantage of enduring nature – HC by an ex parte order upheld the view of Tribunal – since fresh evidence given by assessee to the contrary to facts, could not be permitted, said amount could not be treated as revenue expenditure – reference is answered against assessee
-
2006 (10) TMI 134
Allegation on assessee is that he is following cash system for interest and mercantile system for others – it cannot be said that it was impermissible for the assessee to have followed a mixed or a hybrid system of accounting – assessee could not be held to be disentitled to change the method of accounting on the ground that such a mixed system of accounting would result in loss to Revenue for that year - Tribunal was right in holding that interest should be taxed only on cash basis
-
2006 (10) TMI 133
Legal charges - Whether Tribunal was right in holding that the legal charges paid to M/s. A. F. Ferguson and Co., were not hit by section 80VV, and were not subject to the ceiling fixed u/s 80VV – since payments were not made only for representation before the authorities but also for advice (consultancy) hence they are not hit by provisions of section 80VV – order of tribunal is justified – such legal expenses are allowable for deduction
-
2006 (10) TMI 132
Issues Involved:
1. Validity of the auction sale due to the reserve price not being fixed in light of the objections raised by the petitioner.
2. Validity of the auction sale due to the lack of a fresh sale proclamation after the Income-tax Appellate Tribunal's order.
3. Adjustment of the seized amount of Rs. 16,55,000 against the outstanding dues.
Issue-Wise Detailed Analysis:
1. Validity of the Auction Sale Due to Reserve Price:
The petitioner argued that the reserve price of the shop was not fixed in accordance with his objections, which referenced the wealth-tax assessment order for the assessment year 1988-89. The court noted that the reserve price was fixed after deliberations with experts and higher officials of the Department. The petitioner's insistence on using the 1988-89 valuation was deemed uncalled for, as the asset's value could change over time. The court found no material evidence to suggest that the shop sold for less than its market value, and thus, the plea regarding the reserve price was dismissed as without substance.
2. Validity of the Auction Sale Due to Lack of Fresh Sale Proclamation:
The petitioner contended that the sale was void because no fresh sale proclamation was issued after the Tribunal annulled the assessments for the years 1980-81 to 1986-87. The court noted that the sale proclamation was correctly drawn based on the outstanding liability at the time. The Tribunal's order reduced the demand but did not eliminate it entirely. The Tax Recovery Officer had issued notices for the demands for the years 1990-91 to 1992-93, which were served on the petitioner. The court found that the auction sale was conducted legally for the recovery of the outstanding dues, which included the revised demands. The court also referenced legal precedents and statutory provisions to support its conclusion that no fresh notice was required after the Tribunal's order, and thus, the auction sale was valid.
3. Adjustment of the Seized Amount Against Outstanding Dues:
The petitioner claimed that the amount of Rs. 16,55,000 seized during a search should have been credited against his outstanding dues. The Commissioner of Income-tax (Appeals) noted that part of the seized amount was adjusted against the petitioner's and his family members' demands as per his request. The court found that this issue was raised as an afterthought and was not brought up during the attachment/recovery proceedings or prior to the auction sale. The court concluded that the adjustment of the seized cash was done appropriately and in accordance with the petitioner's requests and the statutory provisions.
Conclusion:
The court dismissed the writ petition, finding no merit in the arguments presented by the petitioner. The auction sale was upheld as valid, and the petitioner's objections regarding the reserve price, the need for a fresh sale proclamation, and the adjustment of the seized amount were all rejected. The court emphasized that no substantial injury was caused to the petitioner, and the sale was conducted in accordance with legal procedures.
-
2006 (10) TMI 131
Issues involved:
The judgment involves the following substantial questions of law:
1. Whether power subsidy received should be treated as a capital receipt?
2. Whether the 'front end fee' in respect of a loan borrowed for expansion of a unit is to be deducted as revenue expenditure?
Summary:
The High Court of Madras heard an appeal filed by the Revenue under section 260A of the Income-tax Act, 1961, against the order of the Income-tax Appellate Tribunal. The Tribunal had dismissed the appeal by the Revenue, which challenged the treatment of power subsidy and 'front end fee' in the assessment of the assessee.
In the case, the Assessing Officer treated the power subsidy received from the Government as a revenue receipt and disallowed the 'front end fee' expenditure as capital expenditure. The Commissioner of Income-tax (Appeals) later set aside the Assessing Officer's order, leading to the Revenue's appeal before the Tribunal.
Regarding the first issue, the court noted that the matter was akin to a Supreme Court judgment and ruled in favor of the Revenue, considering the power subsidy as a capital receipt.
On the second issue, the court analyzed the nature of the 'front end fee' incurred for obtaining a loan for setting up a new unit. The court emphasized that this fee was a condition precedent for obtaining the loan and did not create an enduring asset. Drawing on precedent, the court concluded that the fee was revenue expenditure, aligning with the Tribunal's decision and ruling in favor of the assessee.
In conclusion, the court disposed of the tax case, upholding the Tribunal's decision and ruling in favor of the assessee on the second issue. No costs were awarded in the matter.
-
2006 (10) TMI 130
Penalty levied u/s 271(1)(c) by Tribunal - concealment of particulars of its income - unexplained cash credits - satisfaction of the Income-tax Officer - HELD THAT:- The Tribunal while dealing with explanation has recorded a finding of fact that the applicant has not been able to substantiate the explanation to the effect that the depositors have received gifts in any of the previous years or had any independent source of income; the applicant has not been able to prove that this explanation was bona fide; there was no documentary evidence in support of the assessee's contention; even the name of the person from whom the alleged gifts were received, were not disclosed to the Department; the minor depositors were intimately related to the partners of the assessee-firm; the explanation was baseless and the provisions of section 271(1)(c) of the Act were attracted in the present case.
We find that under the provisions of the Act, the Income-tax Officer is not required to record his satisfaction in a particular manner or reduce it in writing. It can be gathered from the assessment order itself. In D. M. Manasvi [1972 (9) TMI 5 - SUPREME COURT], the apex court has clearly held that the Income-tax Officer should be satisfied during the course of the assessment proceedings that the assessee had concealed his particulars of income or has furnished inaccurate particulars of such income. The satisfaction can be gathered from the assessment order.
In the present case, we find that the Income-tax Officer had material before him for being satisfied that the applicant has concealed the particulars of his income and, therefore, penalty proceedings have rightly been initiated. We are, therefore, with great respect unable to persuade ourselves to follow the view taken by the Delhi High Court in case of Ram Commercial Enterprises Ltd. [1998 (10) TMI 13 - DELHI HIGH COURT] and Diwan Enterprises [1998 (11) TMI 27 - DELHI HIGH COURT].
Thus, we answer the question referred to us in the affirmative, i.e., in favour of the Revenue and against the assessee.
-
2006 (10) TMI 129
Refence u/s 256 - cash book seized during the search operation - Tribunal refused the assessee's right to cross-examine the persons whose statements were relied on for making the addition - HELD THAT:- We find that the copies of the rough cash book and the statements of the partners of M/s. Vishwakarma Oil Traders which were recorded, have been provided to the applicant and, in fact, the applicant had also submitted its reply. In the letter, an opportunity to cross-examine was asked for only in case the statements have not been recorded.
Further, we find that the applicant had proper opportunity to controvert the material gathered by the assessing authority and used against it, there has been compliance with the principles of natural justice. Thus, we are of the considered opinion that the Tribunal was fully justified in the view it had taken.
We accordingly answer the question referred to us in the affirmative, i.e., in favour of the Revenue and against the assessee. There shall be no order as to costs.
-
2006 (10) TMI 128
Challenged the Order passed by Tribunal - Royalty payment - technical know-how - capital expenditure for acquiring an asset or advantage of enduring nature, or expenditure properly attributable to revenue - HELD THAT:- When one is dealing with tangible assets, it is generally not very difficult to reach a decision. Things, which the trader uses in his business to produce what he has to sell are part of his fixed capital and their cost is a capital outlay although their useful life may be short. Things, which a trader turns over in the course of his trade, are circulating capital and their cost is a revenue expense. However, when one comes to intangible assets there is much more difficulty. To help the conduct of his business a trader may obtain a right to do something on someone else's property or an obligation by someone to do or refrain from doing something or makes a contract which affects the way in which he conducts his business; and the right or obligation or the effect of the contract may endure for a short or a long period of years. The question then arises whether the sum, which he has paid for that advantage, is a capital or revenue expense. If the asset, which is acquired, is in its intrinsic nature a capital asset, then any sum paid to acquire it must surely be capital outlay; and we do not see how it could matter that the payment was made by sums paid annually or periodically. It appears to us, however, that an asset, which is nothing more than a right to enjoy a certain advantage over a period, is intrinsically of a different character from a thing, which a person buys and can immediately use or consume in any way he chooses.
We are dealing with payments made to MMC to secure technical know-how and to sell LCVs under their brand name during the currency of the agreement subject to periodic payment of royalty for using the licence. The Supreme Court in CIT v. Ciba of India Ltd. [1968] 69 ITR 692; AIR 1968 SC 1131 has enunciated the principles applicable to such cases. In that case, the assessee a subsidiary of the Swiss company paid certain payment to Ciba Ltd., Basle (the Swiss company) pursuant to the agreement dated December 17, 1947, whereby the latter agreed for "technical and research contribution" in so far as they relate to pharmaceutical products which were manufactured, processed and sold by the assessee in India. It was held that the agreement merely give the right to the assessee, without any thing more, to draw upon the technical knowledge of the foreign collaborator for the purpose of carrying on its business and did not acquire an asset or advantage of enduring nature for the benefit of its business. Considering the effect of payment, it was held to be a revenue expenditure.
We think, it is more reasonable to regard the periodic royalty payment to MMC as an outlay for earning profits in the normal course of business than as expenditure with the object of acquiring an advantage or asset of enduring and/or lasting nature for the benefit of the trade. Thus, we have no hesitation to hold that the Tribunal rightly decided the issue relating to question No. 1 in favour of the assessee and against the Revenue.
Hence, we dismiss these appeals by holding that the affirmative answer to all the three questions must go in favour of the assessee and against the Revenue.
-
2006 (10) TMI 127
Issues: Assessment based on net profit rate, additions on unexplained cash credit, application of estimate in best judgment assessment, relevance of section 44AD in determining profit rate.
The judgment pertains to an appeal where the respondent, a civil construction contractor, had their assessment order passed by the Assessing Officer based on a net profit rate of 12.5% on the turnover shown. The AO also made additions due to unexplained cash credit found in the books. The Commissioner of Income-tax (Appeals) provided relief by deleting the additions on the grounds that it was the first year of business for the assessee, and the cash credits were offset by the additions in the returned income. The Tribunal affirmed these findings. The court noted that in the first year of business, there may be guesswork in assessments, and exactitude cannot be expected. The application of a net profit rate of 8% under section 44AD for assessing minimum income from the business was considered, and the assessee's income was restricted to 8%. The court found no substantial question of law in these matters and dismissed the appeal.
The judgment emphasizes that while section 44AD was not mandatory for the assessment year in question, the rate required for businesses where the income returned was less than 8% of gross receipts could be relevant in estimating income from similar businesses in earlier years. The court held that this consideration was not irrelevant, and the findings regarding the investment through cash credit from the first year's income were also deemed relevant. Consequently, the court concluded that no substantial questions of law arose in the appeal, leading to the dismissal of the appeal.
-
2006 (10) TMI 126
Proceedings initiated u/s 147 - income escaping assessment - Notices issued u/s 148 - mere change of opinion - assessment sought to be reopened after four years - business of subscription agent of foreign technical and scientific journals and other information products - claim for deduction u/s 80-O - HELD THAT:- We find that in respect of the assessment years 1992-93, 1993-94 and 1994-95 the notices u/s 148 of the Act have been issued on October 25,2001, i.e., much after the expiry of the period of four years from the end of the relevant assessment year. It can be justified only if there has been failure on the part of the petitioner to disclose fully and truly all material facts necessary for that assessment year. It is not in dispute that the petitioner had in its letter dated October 7, 1993, filed during the course of the assessment proceedings for the assessment year 1992-93, had made a claim u/s 80-O of the Act by stating that it is also extending its service to several customers outside India and earning commission from foreign publishers in convertible foreign exchange for such service.
The assessing authority apart from finding that the petitioner had received commission from foreign enterprises for services rendered outside India, had also found that it had specialised in marketing scientific and technical knowledge and has developed several database with the help of advance computers concerning various research projects, activities, books, periodicals, corporate publications, technical reports, patents and standards for use by its foreign clients and has received commission in convertible foreign exchange in U. S. dollars and U. K. pounds.
The claim was accepted and the deduction u/s 80-O of the Act was accordingly allowed. In respect of the assessment years 1993-94 and 1994-95, the assessing authority did not dwell in the matter in detail but mentioned that the claim is in respect of commission earned for the services rendered outside India as in the past. Thus, it cannot be said that the petitioner had not made full and true disclosure of all material facts in the assessment years 1992-93, 1993-94 and 1994-95.
In the reasons recorded by the respondent for forming the belief that the petitioner was not entitled to get deduction, the respondent has not found that the basis on which the deduction has been allowed, viz., specialising in marketing scientific and technical knowledge and developing several database with the help of advance computers concerning various research projects, activities, books, periodicals, corporate publications, technical reports, patents and standards for use by its foreign clients was false.
In this view of the matter, the principles laid down in the case of Parikh Petrol Chemical Agencies P. Ltd. v. Asst. CIT [2003 (2) TMI 14 - BOMBAY HIGH COURT] is squarely applicable and, therefore, the notices dated October 25, 2000, issued u/s 148 in respect of the assessment years 1992-93 to 1994-95 appear to have been issued only on the basis of mere change of opinion and are wholly illegal and without jurisdiction. The principles laid down by the apex court in the case of Phool Chand Bajrang Lal [1993 (7) TMI 1 - SUPREME COURT] would, therefore, not apply in the present case as there is no information on record to show that the claim made by the petitioner was false.
So far as the notice dated September 4, 2000, issued under section 148 of the Act for the assessment year 1997-98 is concerned, it is within four years from the end of the relevant assessment year. In this case, the assessment has not been made u/s 143(3) of the Act and only an intimation u/s 143(1)(a) of the Act has been sent to the petitioner. The claim of deduction u/s 80-O of the Act had only been processed without there being any application of mind. The reasons recorded by the respondent, insofar as the assessment year 1997-98 is concerned, cannot be said to be based on mere change of opinion. The principles laid down by this court in the case of Pradeep Kumar Har Saran Lal [1997 (3) TMI 62 - ALLAHABAD HIGH COURT] is squarely applicable in the present case. They are based on relevant consideration and, therefore, it cannot be said that the notice dated September 4, 2000, is without jurisdiction.
Thus, the writ petition succeeds and is 4 allowed in part. The notices dated October 25, 2000, issued u/s 148 of the Act and consequential proceedings taken in pursuance thereof in respect of the assessment years 1992-93 to 1994-95 are hereby quashed. However, the notice dated September 4, 2000, issued for the assessment year 1997-98 is upheld.
-
2006 (10) TMI 125
Application u/s 254(2) - mistake apparent in the order passed by the Tribunal - Not adjudicated particular ground - HELD THAT:- Where it is shown to this court in appeal that a ground that has been specifically raised in the memo of appeal before the Tribunal has not been considered by it, that can persuade this court, if the circumstances so justify, to remand the case to the Tribunal for consideration of that ground. What clearly appears to have happened here is that having failed to urge this ground in the appeal before this court, the assessee took a chance by filing a rectification application on that very ground before the Tribunal after the dismissal of the appeal by this court and nearly two years after the Tribunal's first order. This, to our mind, was an attempt at doing indirectly what could not be done directly, i.e., seeking a review of an order of the Tribunal that had already attained finality.
Since on the facts of the present case we are of the view that there was no mistake apparent from the record in respect of its earlier order dated July 12, 2002, warranting the exercise by the Tribunal of its power of rectification u/s 254(2) of the Act, we do not consider it necessary to discuss in detail the cases cited by the counsel for the assessee. We may nevertheless refer to the decision rendered by us today in CIT v. Honda Siel Power Products Ltd.[2006 (10) TMI 67 - HIGH COURT, DELHI] where we have given detailed reasons explaining the narrow scope of the power of rectification u/s 254(2).
Thus, we are of the view that the impugned order of the Tribunal dated September 13, 2004, cannot be sustained in law and it is accordingly set aside. The appeal is allowed with no order as to costs.
-
2006 (10) TMI 124
Addition on the closing stock - difference between the value of closing stock declared to the bank and to the income-tax authorities - maintaining books of account on day-to-day production - derives income from manufacture of tape back up units for personal computers and computers - HELD THAT:- We find there is evidence to show that stock declared to the Income-tax Department was supported by books of account. No detailed inventory was also available in the statement made to the bank. Except a mere value declared for overdraft purposes to the bank, there were no detailed items of stocks in support of the declared value. It was also pointed out that there was no physical verification of stock, either by the assessee or the bank at the time of furnishing the stock statement.
The Tribunal as well as the CIT(A) have given a concurrent finding that the assessee declared closing stock for assessment purpose which is based on actual physical verification. There are enough materials available on record and the conclusion reached by the Tribunal is based on valid materials and evidence. In view of the same, there is no basis to treat the difference in value as the assessee's under-valuation of stock or undisclosed income. The Tribunal also rightly followed the principles enunciated by this court judgment reported in CIT v. Sri Padmavathi Cotton Mills [1997 (3) TMI 26 - MADRAS HIGH COURT].
Thus, we are of the view that there is no error or legal infirmity in the order of the Tribunal so as to warrant interference. Hence, we answer the questions of law in favour of the assessee and against the Revenue and the tax case is dismissed.
-
2006 (10) TMI 123
Capital gain - co-owners sold the land - Valuation of the property - CIT(A) deleted the addition made to the capital gains by the AO and substituted the value taken by the assessee on the basis of value estimated by the registered valuer - HELD THAT:- It is trite that if during the same assessment year the same quantity of wealth in the possession of one co-sharer is subjected to a lower rate of taxation, it would be highly improper to burden a similarly situated co-sharer with a higher rate of tax. If such an action on the part of the assessing authorities is sanctioned, it would militate against the principle of equality of laws enshrined in article 14 of the Constitution, vide Jaswant Rai v. CWT [1977 (2) TMI 22 - PUNJAB AND HARYANA HIGH COURT].
Applying the ratio laid down in Jaswant Rai v. CWT, to the facts of the case on hand would lead to the firm conclusion that the assessee, who is also a co-owner of the property, is entitled to the benefit enjoyed by the other co-owner, whose valuation of the same property, at the same rate as that of the assessee, was accepted by the CIT and recorded in the order under appeal by the Tribunal.
Finding no reason to interfere with the order of the Tribunal, this appeal is dismissed.
............
|
9911796707
