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Showing 381 to 400 of 1287 Records
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2014 (11) TMI 909
Suspension of the CHA licence - Regulation 20 of the Customs Brokers Licensing Regulations, 2013 - Held that:- Last time when the case was listed, we had specifically directed Revenue to submit status report on the progress of inquiry. It is unfortunate that in spite of such direction, Revenue is unable to submit any progress report on the mater. It shows the callous and irresponsible approach on the part of the Customs department in dealing with the inquiry proceedings under the CBLR. Time-limits have been laid down statutorily so that the inquiry progresses in a time bound manner and the proceedings completed within the stipulated period. The Customs department does not seem to have any regard or respect for these time-limits. In these circumstances, we are constrained to set aside the order of suspension and direct the Commissioner of Customs (General) to allow the appellant to function as a CHA forthwith. - Decided in favour of appellant.
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2014 (11) TMI 908
Confiscation of goods - Redemption fine and penalty - RITC Code and the drawback serial number indicated is not correct - Held that:- Description of the goods was found to be correct and it is only the drawback serial number which was found to be incorrect and on being pointed by the Revenue during examination of the goods, the appellant accepted the new drawback serial number. Keeping in view of the above facts, we do not consider it to be a fit case for imposition of redemption fine and penalty. Accordingly, the redemption fine and penalty are set aside - Decided in favour of assessee.
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2014 (11) TMI 907
Applicability of section 8(1)(e) of RTI Act – fiduciary relationship - Whether the information provided by an individual in his income tax returns is exempt from disclosure u/s 8(1)(j) - Held that:- The contention cannot be accepted that a fiduciary relationship within the meaning of Section 8(1)(e) of the Act can be attributed to a relationship between an assessee and the income tax authority - the information provided by an assessee in its income tax return is in compliance of the provisions of the Income Tax Act, 1961 and thus, could not be stated to be information provided in course of a fiduciary relationship.
Whether the information provided by an individual in his income tax returns is exempt from disclosure u/s 8(1)(j) – Held that:- Following the decision in of the Act is no longer res integra in view of the decision of the Supreme Court in Girish Ramchandra Deshpande v. Central Information Commr. [2012 (10) TMI 218 - SUPREME COURT] - the details called for by the petitioner i.e. copies of all memos issued to the third respondent, show-cause notices and orders of censure/punishment, etc. are qualified to be personal information as defined in clause (j) of Section 8(1) of the RTI Act - the act of filing returns with the department cannot be construed as public activity - The expression “public activity” would mean activities of a public nature and not necessarily act done in compliance of a statute - The expression “public activity” would denote activity done for the public and/or in some manner available for participation by public or some section of public - There is no public activity involved in filing a return or an individual pursuing his assessment with the income tax authorities - the information relating to individual assesse could not be disclosed.
Validity of order passed by CIC to provided inspection of records - RTI filed by PIO seeking information and all the records available with the Income tax department in respect of nine assessees - Whether income tax returns and the information provided to the income tax authorities during the course of assessment and proceedings thereafter, are exempt under the provision Section 8(1) of the Act and further whether the CIC was correct in holding that such information was required to be disclosed in public interest – Held that:- The CIC has misdirected itself in concluding that this was in larger public interest - there was no material to indicate that there was any corruption on the part of the income tax authorities which led to a justifiable apprehension that the said authorities were not performing their function diligently - In any event, the CIC has not found that the proceedings relating to assessment were not being conducted in accordance with law and/or required the intervention of the respondent – relying upon Bihar Public Service Commission v. Saiyed Hussain Abbas Rizwi [2012 (12) TMI 577 - SUPREME COURT] - disclosure of information as directed has no discernable element of larger public interest – Decided in favour of petitioner.
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2014 (11) TMI 906
Liability for interest u/s 139(8)/217 and 234A, 234B, 234C - Whether the Tribunal was justified in holding that the assessee was liable for interest u/s 139(8)/217 for the AY 1988-89 and interest u/s 234A & 234B for the AY 1989-90 upto 26.3.91 the due date when the return was filed without giving credit of the amount retained by the department u/s 132(5) for meeting future tax liability which was seized on 7.7.1989 – Held that:- The scheme of the Act clearly suggests that the money seized during the course of the search is retained by the Revenue for the liability of the assessee which may be determined finally by the assessment or re-assessment or by final order of assessment or re-assessment, the existing liability of a previous time is only quantified and not a creation of liability on the date of passing of the assessment order - the retained amount also required to be given adjustment against the then liability of the assessee, which has been quantified subsequently by the order of assessment and re-assessment - This fact finds support of sub-section (4) of Section 132B, which for excess amount retained by the revenue, the Central Government shall pay the interest – thus, the Tribunal was not justified in holding that the assessee was liable for interest u/s 139(8)/217 for the AY 1988-1989 and interest u/s 234A & 234B for the AY 1989-1990 up-to 26.3.91 – Decided in favour of assessee.
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2014 (11) TMI 905
Validity of reassessment proceedings made in absence of any notice issued u/s 143(2) - Whether the Tribunal was right in holding that the assessment proceedings passed u/s 143 (3) r/w 147 is time barred on the ground that the notice u/s 143(2) was issued beyond six months from the end of the financial year in which the return was furnished by relying on the proviso u/s 143(2)(ii) – Held that:- In Sapthagiri Finance & Investments Vs Income Tax Officer [2012 (8) TMI 523 - MADRAS HIGH COURT] it has been rightly held that the notice u/s 143 (2) is mandatory and it should have been served on the assessee before the expiry of six months - in completing the assessment u/s 148 of the Act, compliance of the procedure laid down u/s 142 and 143(2) is mandatory - beyond notice u/s 142(1), there was no notice issued u/s 143(2), and the reassessment was the failure on the part of the assessee in not disclosing the capital gains arising on the transfer of property for assessment and that admittedly the assessee had requested the officer to accept the original return as a return filed in response to Section 148 of the Act, there was total failure on the part of the Revenue from complying with the procedure laid down under Section 143(2) of the Act, which is mandatory one – thus, the order of the Tribunal is upheld – Decided against revenue.
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2014 (11) TMI 904
Selection of comparables - Goldiam Jewellery Limited – Whether the amount of loan taken can be construed as a related party transaction in determining the percentage of RPL to total sales - Held that:- The term `Related party transactions’ refers to any transaction between related parties - It will encompass only such transactions between the related profits which directly affect the overall profitability in one way or the other - the transaction of accepting or advancing loan per se has no effect on the profitability - the mere fact that no interest was, in fact, paid on this loan is sufficient enough for not inflating the amount of related party transactions with any hypothetical interest amount - the loan taken cannot be considered as part of related party transactions and no hypothetical interest can be calculated for the purposes of inclusion in the total RPTs - If, however, in a case some amount of actual interest is paid or received on the loans accepted or given, that would form part and parcel of the RPTs for the purposes of computing the percentage of RPTs to the Total revenue - there is no actual payment of interest on the loan taken - as such, no hypothetical interest can be included in the RPTs - if the amount of loan taken from GIL at ₹ 13.30 crore is reduced from total RPTs of Goldiam Jewellery Limited at ₹ 19.32 crore, the percentage of RPTs to the total revenue would obviously fall within 25% filter – the company is to be taken as comparable.
Su- Raj Diamond Industries Limited – Held that:- Su-Raj Diamond Industries Limited cannot be taken as comparable to the assessee because it is operating in the retail segment, whereas the assessee is operating in wholesale business of diamond studded jewellery - There can be no comparison of the volume and profit rate in respect of whole sellers and retailers - Su-Raj Diamond Industries Limited is liable to be excluded from the final list of comparables.
Forever Precious Jewellery & Diamonds Limited – Held that:- As the revenue has embarked upon PLI of RoCE and the details relating to segmental operating profit and segmental amount of capital employed of Forever Precious Jewellery & Diamonds Limited are not ascertainable - apart from dealing in diamond studded jewellery, is also dealing in other products such as silver jewellery etc. - The figure of sales as per quantitative details also does not match with the total sales as per Trading account - Since the segmental operating profit and segmental capital employed in respect of diamond jewellery of this case are not available, this case cannot be considered as comparable.
Change of PLI from OP / TC or OP / Sales to RoCE – Whether the RoCE is a correct PLI - Held that:- When there is no identifiable capital employed and separate amount of profit in respect of transactions with the AEs in the situation like the one which is prevailing, then how the assessee’s RoCE can be precisely worked out, is anybody’s guess - computation of separate capital employed or profitability in respect of transactions with AEs is not practical due to commonality of both the sets of transactions with the AEs and non-AEs, the correctness of the applicability of RoCE as PLI under the TNMM cannot be countenanced - the adoption of RoCE cannot be approved.
Transfer pricing adjustment of total transaction instead of international transaction – Held that:- It is only income arising from international transactions, being a transaction between associated enterprises, which is required to be computed having regard to arm’s length price - In other words, transfer pricing adjustment is warranted only qua the transactions with associated enterprises and not non-AEs - the transfer pricing adjustment has been made in relation to the total transactions of the assessee breaching the limit of transactions with the AEs - as the matter of computation of ALP in the present case has been restored to the file of AO / TPO for a fresh decision, the authorities are directed to restrict the TP adjustment in the fresh proceedings only to the transactions with the AEs – Decided in favour of assessee.
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2014 (11) TMI 903
Addition of undisclosed stock deleted – Held that:- The assessee’s own concern, M/s Chandra Kishore Ashok Kumar & Sons and other sister concern, M/s Devi & Company, which was owned by her son, were running their business at the same premises i.e. 48/226, General Ganuj, Kanpur. During the course of survey on 10.3.2006, the statement of Shri. Suresh Chandra Agarwal, the Manager of M/s Devi & Company and of the assessee was recorded - It is not a case of mere surrender, rather the assessee has also made payment of income-tax accrued on the surrendered amount - had there been any truth in the allegation, the assessee could have stopped the payment from the bankers, but nothing was done and the cheque was duly encashed - where the assessee has made a detailed explanation with regard to the reconciliation of the stock with the books of account and failed to reconcile the same, she made a voluntary surrender of ₹ 35 lakhs in the hands of the assessee on account of undisclosed stock - She not only surrendered, but has also paid tax by issuing cheque of the income-tax of ₹ 10,71,000/- which was duly encashed - the contention of the assessee cannot be accepted that the surrender was procured by exercising undue force upon the assessee.
Whether on the basis of the surrendered statement and the payment of tax accrued, the addition can be made when the assessee failed to incorporate the surrendered amount in its return of income – Held that:- The assessee has not allowed the survey team to value the stock and to compare with the books of account maintained by the assessee - during the course of survey operation, the assessee herself has admitted that stock was spread over different floors of the property and godowns, which could not be valued; more so in the absence of sufficient staff - Having realized that the stock could not be valued or reconciled with the books of account, she made a voluntary surrender - She did not stop there, but she further issued a cheque to the Income-tax Department on the surrendered amount and allowed it to be encashed even after conclusion of the survey - addition was made on account of undisclosed stock with regard to which the assessee herself has made a statement that it cannot be valued on account of shortage of staff and the stock was spread over in five floors of the building and godowns - on the basis of the surrendered statement and issuance of cheque of income-tax, addition can be made on the basis of the surrendered statement, as the assessee has not made any effort to reconcile the stock available with the books of account – thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO.
Addition of ₹ 20 lakhs of less profit shown by the assessee – Held that:- The AO has noted that both the concerns are doing similar type of business with very slight variation in the case of M/s Devi & Company at the same address - the assessee was engaged in wholesale business and in the wholesale business the gross profit is always less compared to retail business - Moreover, while estimating the gross profit rate while making the addition in the hands of the assessee on account of less gross profit rate, the AO has not rejected the books of account - the gross profit rate declared by the sister concern which is engaged in different nature of business, cannot be accepted - the assessee herself has declared gross profit rate at 4.74% which is also higher than the gross profit rates declared in other years - the gross profit rate declared by the assessee should have been accepted by the AO – the order of the CIT(A) is upheld – Decided partly in favour of revenue.
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2014 (11) TMI 902
Denial of deduction u/s 80P by invoking section 80A(5) – Taxpayers have not filed the returns of income within the time limit provided u/s 139(1) or 139(4) or within the time specified in the notice u/s 142(1) - Whether such taxpayers are entitled for deduction u/s 80P - Held that:- Following the decision in Kadachira Service Co-op. Bank Ltd. Versus Income-tax Officer, Ward-1, Kannur [2013 (2) TMI 208 - ITAT COCHIN] - Section 139(1) make it mandatory for every taxpayer whose total income exceeds the maximum amount which is not chargeable to income-tax before grant of deductions u/s 10A, 10B and deduction under Chapter VIA of the Act to file the return of income - all the taxpayers' income exceeded the maximum amount which is not chargeable to income-tax before grant of deduction under Chapter VIA therefore, it is not only mandatory but also statutory requirement that all the taxpayers have to file the return of income before the due date prescribed u/s 139(1).
Whether filing of return of income and making a claim in respect of deduction u/s 80P is mandatory or discretionary – Held that:- If the contention of the assessee is accepted, then the person, who files the return of income and fails to make a claim of deduction in the return of income either by ignorance or otherwise may not get the benefit, but a person who has not filed the return of income may be in a better position to claim the benefit - in order to avail benefits under the beneficial provision, the conditions provided by the legislature has to be complied with - the mandatory provisions contained in section 139(1) r.w.s. 80A(5) it is mandatory for every cooperative society for claiming deduction u/s 80P to file the return of income and to make a claim of deduction in the return itself – Decided against assessee.
Whether the return could be treated as return of income or not – Held that:-No loss which has not been determined in pursuance of a return filed within the time provided u/s 139(1) shall be carried forward and set off but before amendment of section 80 by Taxation Laws Amendment Act, 1984 with effect from 01-04-1985 there was no requirement for filing the return of income within the time limit provided u/s 139(1) - the legislature made it mandatory for filing the return of income within the due date prescribed in section 139(1) as far as carry forward of loss u/s 80 is concerned - the return of income filed within the time limit provided in section 139(1) or 139(4) or time specified in the notice u/s 142(1) or 148 can be considered as return of income - However, the belated return filed beyond the time limit provided u/s 139(1) or 139(4) or time specified in notice u/s 142(1) or 148 of the Act cannot be considered as return of income for deduction u/s 80P of the Act.
Whether the taxpayer is entitled for deduction u/s 80P – Held that:- All the taxpayers’ income exceeded the maximum amount which is not chargeable to income-tax before grant of deduction under Chapter VIA of the Act - Therefore, it is not only mandatory but also statutory requirement that all the taxpayers have to file the return of income before the due date prescribed u/s 139(1) of the Act - in order to avail benefits under the beneficial provision, the conditions provided by the legislature has to be complied with - in view of the mandatory provisions contained in section 139(1) r.w.s. 80A(5) of the Act it is mandatory for every cooperative society for claiming deduction u/s 80P to file the return of income and to make a claim of deduction u/s 80P of the Act in the return itself - if the return was not filed either u/s 139(1) or 139(4) or in pursuance of notice issued u/s 142(1) or u/s 148, the taxpayer is not entitled for any deduction u/s 80P – decided against assessee.
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2014 (11) TMI 901
Exemption u/s 10(1) - Whether the income was agricultural income as defined in section 2(1A) and therefore exempt u/s 10(1) – Held that:- Sale proceeds of the land belonging to the assessee constitute income from agriculture, hence exempt from tax under the Income-tax Act - the language of section 2(1)(b)(ii) does not appear to justify the contention of the revenue that for claiming the benefit of section 2(1)(b)(ii) the process employed by the assessee must be of such character as just to make the produce marketable - The true test is what is the process ordinarily employed by the cultivators of any particular locality to render the produce raised by them fit for market - The process adopted in one locality may not necessarily be adopted in another locality – in Commissioner of Income-tax, Central Circle, Bangalore Versus Namdhari Seeds (P.) Ltd. [2011 (10) TMI 488 - KARNATAKA HIGH COURT] – it has been held that the assessee neither had derivative interest in the land nor did it actually cultivate the land and that the entire reading of the terms of agreement would only indicate that the assessee was interested only to have healthy foundation seeds grown for the process of converting them to certified seeds and the entire income amounted to business income of the assessee.
Unless the assessee has carried out the basic operations upon the land i.e., tilling of the land, sowing of the seeds planting, etc. requiring the expenditure of human skill and labour upon the land, it cannot be said that the income earned by the assessee is agricultural income - subsequent operations would also be agricultural operations if taken in conjunction with basic operations - if any income is earned by carrying out the subsequent operations without carrying out the basic operations then such income would not be considered as agricultural income - the plants have been grown on land owned by the assessee - The assessee during the course of growing and nurturing the plants on the land carried out certain functions such as tilling the soil, weeding, watering, manuring etc. and finally the plants are made ready for sale - It goes without saying that all this involves human skill and effort - When plants are established in the soil only then they are shifted in suitable containers or appropriate place in land – thus, the sale proceeds from the business of nursery carried on by the assessee constitute income from agriculture – Decided in favour of assessee.
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2014 (11) TMI 900
Amount received by Non-resident to be treated as Royalty or not u/s 9(i)(vi) - Drawing and designs and technical know-how – Transaction to be treated as outright sale of plant and profits to be treated business profit or not – Held that:- A comparison of the definitions or descriptions of the word royalty under Explanation 2 of Section 9(1)(vi) of the Income Tax Act, on the one hand, and the one, under Clause 13(3) of the DTA Convention, on the other hand, discloses that the amount, even if called as royalty, paid by the respondent, to the foreign company gets attracted by the DTA Convention - the know-how is intellectual property and excluded clauses referred to above pertained to the know-how of secret formula or process and the imparting of any information concerning the working thereof - the amount paid by the respondent to the foreign company is part of lump sum consideration for supply of technical know-how, machinery installation and erection and the same cannot be treated as royalty and even if the amount is to be treated as royalty, it stands covered by the DTA convention dated 16-04-1981 and thereby the amount is not liable to taxation in India – Decided against revenue.
Liability to pay interest u/s 139(8) - Whether the Tribunal is justified in holding that the agent of non-resident is not responsible for discharge of statutory obligation anterior to grant of recognition of such agency – Held that:- It is only on 19.11.1990, that an order came to be passed under Section 163(2) of the Act treating the respondent as an agent of non- resident - The time for filing returns for assessment year 1988-89 was to expire by November, 1987 and for assessment year 1989-90, in November, 1989 - Since it is only after 19.11.1990, the respondent was treated as the agent of a non-resident, there was no obligation on the respondent to file a return for 1988-89 and 1989-90 for which the time for filing return had expired in November, 1987 and November, 1989 itself - there was no obligation on the part of the respondent to discharge the statutory obligation prior to 19.11.1990 - as there was no obligation on the part of the respondent to file a return prior to the date of its being treated as a representative of the foreign company, there was no obligation to file returns prior to that date - the liability to pay interest under Section 139(8) of the Act, cannot be fastened on the respondent - definition of tax does not include component of interest – Decided against revenue.
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2014 (11) TMI 899
Interest payable u/s 244A(1)(b) on refund of excess amount – Excess amount paid on self-assessment u/s 10A – Held that:- Amount paid by the petitioner as tax on self-assessment would not stand covered by Section 244A(1)(a) - the payment of tax made by resident/ depositor is in excess and the department chooses to refund the excess payment of tax to the depositor - the interest requires to be paid on such refunds - In the absence of an express provision as contained in clause (a), it cannot be said that the interest is payable from the 1st of April of the assessment year - the requirement to pay interest arises whenever an amount is refunded to an assessee as it is a kind of compensation for use and retention of money collected by the revenue.
The payment has not been made pursuant to any notice of demand but prior to the filing of the return of income in accordance with Section 140A of the Act - Secondly, the provisions of Section 244A(1) (b) very clearly mandate that the revenue would pay interest on the amount refunded for the period commencing from the date the payment of tax is made to the revenue upto the date when refund is granted to the revenue – relying upon Karnataka High Court in Commissioner of Income Tax v/s Vijaya Bank [2011 (7) TMI 582 - KARNATAKA HIGH COURT] - interest is payable from the date of payment of the tax on self-assessment to the date of refund of the amounts u/s 244A – thus, the order is set aside and the AO is directed to compute the interest payable from the date of payment on self-assessment tax i.e. 31 August 1994 till the date of refund i.e. 24 October 1998 – Decided in favour of assessee.
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2014 (11) TMI 898
Allowability of expenses u/s 37 - Amount paid to Municipal Corporation for legalizing the construction of building – Held that:- Following the decision in JAMNA AUTO INDUSTRIES Versus COMMISSONER OF INCOME -TAX [2008 (1) TMI 62 - PUNJAB & HARYANA HIGH COURT] and considering Explanation to Section 37(1) inserted retrospectively w.e.f 1.4.1962 it has been held that any payment made by an assessee on account of infraction of law would not be admissible deduction u/s 37 of the Act - However, any damages paid by the assessee for breach of contract on its part were deductible - the assessee had paid the compounding fee as compensation for condoning deviations from original sanctioned plan - In substance, the payment was in the nature of the amount paid on account of infraction of law as there was violation in the building plan of the assessee – Decided against assessee.
Claim u/s 80G deleted – Donation made towards Prime Ministers Relief Fund for Gujarat Earth Quake Relief Fund – Held that:- The assessee was unable to show in the light of Explanation 5 to section 80G which was inserted by Finance Act 1976 effective from 1.4.1976 that the deduction was admissible - the assessee could not claim deduction u/s 80G of the Act in respect of donations by way of clothes sent to Prime Minister Relief Fund for Gujarat Earthquake relief the same being in kind and not in cash, cheque or draft - The Tribunal rightly declined the benefit u/s 80G - Decided against assessee.
Eligibility for deduction u/s 37 - goods sent to the Prime Ministers Relief Fund for Gujarat Earth quake relief – Held that:- The Tribunal rightly observed that the contribution which was made by the assessee in kind to the Prime Minister's Relief Fund for Gujarat Earthquake relief was not on account of any business compulsion which could be termed to be falling within the expression “wholly and exclusively” - the expenditure incurred in the form of relief for earthquake victims although was for public good but would not have any impact on the business of the assessee - there being no commercial expediency in incurring such expenditure, it was not deductible u/s 37 - the assessee had given the donations in the form of clothes and claimed deduction u/s 37(1) by quantifying the same in monetary terms - it could not be said that it was essential for the assessee to have contributed towards the Prime Minister's Relief Fund for carrying on business activities – the order of the Tribunal is upheld – Decided against assessee.
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2014 (11) TMI 897
Jurisdiction of the revenue to bring to tax amounts received on capital account namely issue of equity shares to its non-resident Associated Enterprises – Held that:- Following the decision in Vodafone Services Pvt. Ltd. v. Union of India [2014 (11) TMI 881 - BOMBAY HIGH COURT] wherein it has been held that the sine-qua-non to apply Chapter X of the Act would be arising of Income under the Act out of an International Transaction -This income should be chargeable under the Act, before Chapter X can be applied - the definition of income does not include within its scope capital receipts arising out of capital account transaction unless so specified in Section 2(24) of the Act as income - there is no charge in the Act to tax amounts received and/or arising on account of issue of shares by an Indian entity to a nonresident entity in Sections 4,5,15,22,28,45 and 56 of the Act - This is as it arises out of Capital Accounts transaction and, therefore, is not income - Chapter X of the Act does not contain any charging provision but is a machinery provision to arrive at ALP of a transaction between Associated Enterprises; and Chapter X of the Act does not change the character of the receipts but only permits re-quantification of income uninfluenced by the relationship between the Associated Enterprises.
Revenue does not dispute the fact that the issue with regard to chargeability to tax in respect of amounts not received on issue of shares to non-resident AE's being on capital account - the distinction sought to be made on the ground of alternative remedy is not such as to warrant not entertaining the petition - The fact that the assessee chose not to declare issue of shares to its non-resident AE's in Form 3CEB as in its understanding it fell outside the scope of Chapter X of the Act - If the assessee did not file a particular transaction in Form 3CEB when so required to be filed, the consequences of the same as provided in the Act would follow - the mere not filing of Form 3CEB on the part of the assessee would not give jurisdiction to the revenue to tax an amount which it does not have jurisdiction to tax.
Even if it is assumed that it is an International Transaction, the jurisdictional requirement for Chapter X of the Act to be applicable is that Income must arise - the jurisdictional requirement for application of Chapter X of the Act is not satisfied – thus, the order of the TPO is set aside to the extent it holds that ALP of issue of equity shares is ₹ 183.44 per share as against ₹ 10 per share and deemed interest brought to tax on the amount not received when benchmarked to the ALP – Decided partly in favour of assessee.
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2014 (11) TMI 896
Computation of MAT - Additional depreciation debited – Retrospective effect in change in the method of providing depreciation - Whether the Tribunal was right in deleting the addition made by the AO to the book profit on account of additional depreciation debited in the accounts for the earlier years because of change in the method of providing depreciation retrospectively – Held that:- Following the decision in DCIT Versus Farmson Pharmaceuticals Guj Ltd. [2011 (4) TMI 1037 - Gujarat High Court] - the short fall in the depreciation, was charged to the Profit & Loss Account, which was computed in accordance with the provisions of the Companies Act – in Apollo Tyres Ltd. vs. Commissioner of Income Tax [2002 (5) TMI 5 - SUPREME Court] it has been held that the AO, while computing the income u/s 115J, has only the power of examining whether the books of account are certified by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act - The AO has the limited power to make increases and reductions as provided for in the Explanation to the section - the AO does not have the jurisdiction to go behind the net profits shown in the Profit & Loss account except to the extent provided in the Explanation to section 115J - subsection (1A) of section 115J does not empower the AO to embark upon a fresh enquiry in regard to the entries made in the books of account of the company – the Tribunal was right in law in upholding the deletion of addition made by the AO to the book profit on account of additional depreciation debited in the books for the earlier years because of change in the method of providing depreciation retrospectively – Decided against revenue.
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2014 (11) TMI 895
Rental income from letting out of warehouses – Business income or income from house property - Whether the Tribunal was justified in holding that the rental income from letting out of warehouses/godowns together with various services rendered to the occupant did not constitute a business activity of the appellant - Held that:- The Tribunal was rightly of the view that the income derived by the assessee by way of rent of such godowns from M/s. IPL is therefore cleraly liable to be taxed as “income from property” and not as “income from business” - the company had rendered certain incidental services for earning such rental income would not alter the nature of such income as being assessable under the head “income from house property” - whether any income falls under one head or the other has to be decided according to the common notions of practical and reasonable man for the act does not provide any guidance in the matter and that no general principle could be laid down which is applicable to all cases and each case has to be decided on its own facts and circumstances - assessee has not let out the constructed building but is providing complex service oriented activities - The return received by the assessee is not the income derived from the exercise of property rights only but is derived from carrying on an adventure in the nature of trade - If the entire conduct and series of activities undertaken by the assessee firm is examined right from the inception of firm, it is borne out that the assessee carried out the activities with a view to earn profit or gain rather than to earn income as an owner of the asset – thus, the Tribunal was justified in holding that the rental income from letting out of warehouses/godowns together with various services rendered to the occupant did not constitute a business activity and the income was not assessable u/s 28 as business income – Decided against assessee.
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2014 (11) TMI 894
Maintainability of petition – Violation of order issued by CBDT by petitioner – Remedy as provided in the law to be availed first before reaching the HC - Held that:- In L. Chandra Kumar Versus Union Of India And Others [1997 (3) TMI 90 - SUPREME Court] it has been held that in the first instance, their remedy lies before the Tribunal, since respondent/CBDT, being a part of the Central Government, comes under its jurisdiction - when inherent jurisdiction is lacking in a court, mere issuance of a notice to show cause in the writ petition, cannot be treated as a waiver - no decision has been taken either on merits or on the issue of maintainability of the present petition on the ground of lack of jurisdiction.
The petitioners are working on different posts with the respondent/CBDT and they have raised a grievance with regard to their promotions - they cannot be permitted to bypass the forum of the Tribunal and approach a Single Judge of the High Court directly for relief. It is for the petitioners to follow the route charted out by the Supreme Court in the case of L. Chandra Kumar Versus Union Of India And Others [1997 (3) TMI 90 - SUPREME Court] - only after they exhaust their remedy before the Tribunal, can the petitioners approach the High Court in appeal, and in that eventuality, their petition would have to be placed before the Division Bench for appropriate orders – thus, the petition is not maintainable before the HC – Decided against petitioner.
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2014 (11) TMI 893
Validity of notice for reopening of assessment u/s 148 – Proper examination made by AO – Change of opinion - Held that:- The notice was issued beyond the period of 4 years from the end of the relevant AY i.e. A.Y. 2000-01 - in the computation of income the petitioner had specifically put in a note that the claim of exemption u/s 10(33) of the Act on the dividend income of ₹ 2.28 crores is made – assessee had fully and truly disclosed all the facts relevant to assessment viz. that it was in business of trading in shares and securities as well as the fact that the dividend received by them is claimed as exempted u/s 10(33) – there was no reason which indicates any failure on the part of the petitioner to disclose fully and truly all material facts necessary for assessment - there was a clear examination done by the AO of the nature of the dividend being claimed to be exempt u/s 10(33) of the Act. Therefore, the impugned notice is bad as it proceeds on a clear change of opinion - non disposal of rectification application u/s 154 of the Act is inexplicable for over 10 years and no explanation is forth coming – thus, the Revenue has given up/withdrawn its claim for rectification in view of the proceedings for reopening of assessment – thus, the notice uis set aside – Decided in favour of assessee.
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2014 (11) TMI 892
Validity of notice for reopening of assessment u/s 148 – Notice issued beyond the period of 4 years – Failure on the part of assessee to fully and truly disclose all material facts necessary for assessment - Held that:- Even according to the AO the assessee had furnished the details in support of its claim u/s 80IA of the Act and the same were subject of examination before passing assessment order dated 31 January 2003 u/s 143(3) of the Act - according to the AO himself there was due application of mind on the part of the AO while passing an order u/s 143(3) of the Act and seeking to reopen the assessment on the same facts would amount to change of opinion - the other condition precedent as found in the first proviso to Section 147 of the Act viz. failure to disclose truly and fully all material facts necessary for assessment is not satisfied as it is clear by virtue of letter dated 6 August 2007 in which the reasons which were communicated specifically refer to the material having been furnished and examined by the AO while passing the assessment order in regular proceedings – it could not be understood as to on what basis the AO states that whenever a notice beyond the period of 4 years from the end of the relevant AY is issued, it is implicit in such a notice that there was failure on the part of the assessee to fully and truly disclose all material facts necessary for assessment - it requires application of mind by the AO before he issues notice for reopening the assessment which is done after recording his reasons.
It is the reasons which indicate not only the application of mind but also the basis for issuing the notice - It is on the basis of recorded reasons that the objections to the same are filed and in the absence of it being recorded it would be impossible for the assessee to object to it - Besides not furnishing explicit reasons would enable addition to reasons recorded on the ground that it is implicit in the reasons recorded - Revenue officers would do well to always remember that reopening of an assessment cannot be done in such casual manner - A reopening notice carries grave consequence for the assessee of subjecting him to reassessment proceeding and also leading to uncertainty in respect of the completed assessments – thus, the notice issued u/s 148 is to be set aside – Decided in favour of assessee.
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2014 (11) TMI 891
Validity of constitution of Special bench - Power of president of ITAT – Procedure of Appellate Tribunal - Held that:- The entire proceeding has been conducted for the purposes of the constitution of the Special Bench of the Tribunal appears to have been unfair to the petitioner - In the petitioner's appeal which was siezed of by the Division Bench of the Tribunal at Hyderabad, the CBDT chooses not to file an application to the Division Bench to refer the appeal to the President for constitution of a Larger Bench of the Tribunal but adopts a back door method of approaching the President of the Tribunal to constitute the Special Bench and that too in the interest of the Revenue - the President does have the power to constitute a Special Bench but at what point and how is this power to be exercised is a debatable question - Prima facie this power cannot be exercised, when a Division Bench is siezed of the appeal and the Revenue has been seeking time before it.
The practice of the President entertaining and acting upon letters of CBDT and the Vice President entertaining the Counsel ( likely to appear for Revenue) exparte in respect of an appeal already siezed of by a Division Bench of the Tribunal to be wanting in propriety - the recommendations made by the Vice President are not in consonance with the recommendations made by the Division Bench to the extent that the Vice President in his communication to the President indicates that the matter involves complex questions and therefore a Special Bench needs to be constituted, while the Division Bench has specifically negatived the constitution of Special Bench on account of complexity of issues - all these are matters which would require consideration at the stage of final hearing - as the petitioner has made out a strong prima facie case, interim relief in terms of prayer clause 'E' must follow - Decided in favour of assessee.
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2014 (11) TMI 890
Validity to grant registration u/s 12AA – Whether the assessee who is carrying on business activity or indulging in developing the properties is entitled for registration u/s 12AA - Held that:- CIT(A) rightly held that there is no doubt that the objectives are charitable in nature and are covered u/s 2(15) - The tribunal also held that the trust is engaged in various charitable activities like feeding poor children in schools etc. and about 5,00,000 children are provided midday meals and food by the trust - They are also running Ayurveda Wellness Center and similar institutions affording treatment, cure, rest, recuperation and other medical relief to the public and therefore, there is no doubt that the trust is charitable in nature and covered by Section 2(15) of the Act and the activities of the trust are genuine - The trust is already engaged in various charitable activities for attainment of various objectives - There is no material to show that the income from business as provided in Clause 10 of the original deed dated 17.05.2004 would not be utilised by the trust for the purpose of achieving objectives of the trust.
As held in Sanjeevamma Hanumanthe Gowda Charitable Trust Versus Director Of Income-Tax (Exemption) [2006 (3) TMI 91 - KARNATAKA High Court] - what the Commissioner has to look into is not the source of income of the Trust but whether such income is applied for charitable or religious purpose - The satisfaction of the Commissioner should be regarding the application of the income of the trust for the aforesaid purposes which only entitles the assessee to claim exemption - Once the trust deed shows the objectives of the Trust is charitable and the material on record, shows that the Trust is carrying on charitable activities, merely because they proposed to carry on the business in future to augment the income to support charitable purposes, the registration cannot be declined - the tribunal was justified in passing the order and directing the Commissioner to grant the certificate – Decided against revenue.
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