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2010 (11) TMI 1105
Issues involved: Rejection of registration u/s 12AA and approval u/s 80G(5) of the Income-tax Act, 1961 for an assessee-trust.
Summary:
The Appellate Tribunal ITAT Chennai heard appeals against orders rejecting the applications for registration u/s 12AA and approval u/s 80G(5) of the Income-tax Act, 1961. The assessee-trust, created by a trust deed, applied for registration u/s 12AA on 9.6.2009. The ld. CIT conducted an enquiry and found the trust's objects to be charitable, despite the trust not commencing activities. The ld. CIT rejected the registration application citing inability to ascertain genuineness due to non-commencement of activities. The Tribunal held that the trust's charitable objects should suffice for registration, even if activities had not begun. It directed the ld. CIT to grant registration u/s 12AA and approval u/s 80G(5) to the assessee-trust, as the trust's objects were deemed charitable. Both appeals of the assessee were allowed by the Tribunal.
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2010 (11) TMI 1104
Issues involved: Registration of a charitable trust u/s 12AA of the Act based on trust deed and supplementary trust deeds.
Summary:
The appeal was filed by a charitable trust against the order of the ld. CIT, Salem, rejecting its application for registration u/s 12AA of the Act. The trust deed outlined various charitable objects including educational, health, and social welfare activities. The ld. CIT considered supplementary trust deeds as non-est and questioned the genuineness of the trust and its activities, leading to the rejection of the registration application.
Upon review, the Appellate Tribunal found the objects mentioned in the trust deed to be charitable. It was emphasized that factors beyond the charitable objects should not impact the registration process unless the objects themselves are altered by subsequent deeds. Consequently, the matter was remanded to the ld. CIT with a directive to grant registration to the trust u/s 12AA of the Act.
As a result, the appeal of the assessee was allowed, and the order was pronounced in open court on 12.11.2010.
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2010 (11) TMI 1103
Issues Involved: Interpretation of Karnataka Value Added Tax Act, 2003 regarding tax rate applicable to fabrication, supply, and installation of structural glazing works.
Summary:
Issue 1: Jurisdiction of Advance Ruling Authority
The appellant, a private limited company, sought clarification on the tax rate applicable to their works contract involving fabrication, supply, and installation of structural glazing. The Advance Ruling Authority confirmed that the works fell under Entry 4 of the 6th schedule, attracting a tax rate of 4%. However, the Commissioner of Commercial Taxes later attempted to set aside this order, leading to the appellant's appeal.
Details: The appellant argued that the Advance Ruling Authority had the jurisdiction to issue the clarification sought and criticized the Commissioner's decision to set aside the order after two years. They contended that the appellant had relied on the ruling while collecting taxes from clients, and the Commissioner's interference would unjustly burden them financially without valid justification.
Issue 2: Interpretation of Entry 4 of 6th Schedule
The ruling authority clarified that the appellant's works, specifically fabrication, supply, and installation of structural glazing works, fell under Entry 4 of the 6th schedule. However, the respondent misinterpreted the scope of the ruling, leading to a dispute regarding the applicability of Entry 4 to all transactions carried out by the appellant.
Details: The High Court noted that the Advance Ruling Authority correctly identified the specific nature of the appellant's works falling under Entry 4. The court emphasized that the authority had the right to determine whether a particular contract type attracted a specific entry, and the respondent's misinterpretation was unfounded.
Issue 3: Assessing Authority's Discretion
The assessing authority was tasked with determining whether the appellant's contract works, specifically related to structural glazing, aligned with Entry 4 of the 6th schedule. The court highlighted the assessing authority's responsibility to assess each contract's nature and levy taxes accordingly, especially if the works included elements beyond structural glazing.
Details: The court clarified that if the appellant undertook works beyond structural glazing, the Advance Ruling Authority's order would not bind the assessing authority. It was emphasized that the assessing authority had the discretion to exclude works not falling under Entry 4 from the tax rate prescribed by the Act.
In conclusion, the High Court disposed of the appeal, emphasizing the importance of correctly interpreting the tax implications of specific contract works under the Karnataka Value Added Tax Act, 2003.
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2010 (11) TMI 1102
Issues Involved:
1. Disallowance of interest u/s 14A.
2. Reduction of insurance claim and cess refund from profits for computing deduction u/s 80HHC.
3. Restriction u/s 80IA(9) while claiming deduction u/s 80HHC and 80IB.
4. Entitlement to deduction u/s 80HHC on export incentives.
Summary:
1. Disallowance of interest u/s 14A:
The assessee contested the disallowance of Rs. 2,01,718/- as interest under section 14A, arguing that no borrowed funds were used for investment in shares. The CIT(A) had confirmed the disallowance based on an incorrect finding of fresh investment during the year. The Tribunal found that no fresh investments were made during the year, and the assessee had sufficient own funds. The Tribunal reversed the CIT(A)'s order, directing the A.O. to allow the amounts, following the principles established by the ITAT in earlier years.
2. Reduction of insurance claim and cess refund from profits for computing deduction u/s 80HHC:
The assessee received Rs. 82,296/- as an insurance claim and Rs. 1,05,875/- as a municipal cess refund. The A.O. excluded these amounts while computing the deduction u/s 80HHC. The Tribunal noted that these amounts were business receipts and should not be excluded. The Tribunal directed the A.O. to treat these amounts as profits of business while working out the deduction u/s 80HHC, following the principles established by the Hon'ble Bombay High Court in CIT vs. Pfizer Ltd. 233 CTR (Bom) 521.
3. Restriction u/s 80IA(9) while claiming deduction u/s 80HHC and 80IB:
The A.O. excluded amounts claimed u/s 80HHC while working out deductions u/s 80IB. Both parties agreed that the issue should be reconsidered by the A.O. in light of the ITAT Special Bench decision in ACIT vs. Hindustan Mint & Agro Products P. Ltd. 315 ITR (AT) 401 (Del) (SB). The Tribunal restored the issue to the A.O. for reconsideration.
4. Entitlement to deduction u/s 80HHC on export incentives:
The assessee raised an additional ground regarding the entitlement to deduction u/s 80HHC on export incentives. The Tribunal rejected this ground, following the decision of the Hon'ble Bombay High Court in Kalpataru Colours and Chemicals ITA No. 2887 of 2009 and the ITAT's order in A.Y. 2003-04 in ITA No. 1887/Mum/2007.
Conclusion:
The assessee's appeal was partly allowed, with specific directions to the A.O. on the issues of disallowance of interest u/s 14A, treatment of insurance claim and cess refund for deduction u/s 80HHC, and reconsideration of restrictions u/s 80IA(9) while claiming deductions u/s 80HHC and 80IB. The additional ground regarding export incentives was rejected.
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2010 (11) TMI 1101
Issues involved:
The jurisdiction of the Civil Court in matters related to Wakf properties and the applicability of the Wakf Act, 1995.
Summary:
Jurisdiction of Civil Court:
The dispute in this case pertains to a Wakf estate created by a Registered Deed of Wakf. The High Court initially answered questions regarding the demarcation of the Wakf property and the applicability of the Wakf Act, 1995. However, the Supreme Court held that all matters concerning Wakfs should be brought before the Wakf Tribunal first, as mandated by Section 83 of the Wakf Act, 1995. The Court emphasized that the Wakf Tribunal has the authority to decide disputes, questions, or matters related to Wakf properties, and parties should approach the Tribunal before seeking recourse in the Civil Court or High Court under Article 226 of the Constitution of India.
Applicability of Wakf Act, 1995:
The Wakf Act, 1995 established a special Tribunal to address Wakf-related disputes, aiming to reduce the burden on regular courts. The Act empowers the Wakf Tribunal to decide on all matters concerning Wakf properties, with wide-ranging jurisdiction under Section 83. The Tribunal is granted powers equivalent to those of a Civil Court under the Code of Civil Procedure, including the ability to grant temporary injunctions. The Supreme Court clarified that parties can approach the Wakf Tribunal even without a prior order under the Act, as Sections 83 and 84 of the Act provide independent provisions for seeking resolution of Wakf disputes.
Precedents and Conclusion:
The Court cited legal principles emphasizing that when a special law like the Wakf Act provides for a specific forum, general laws should not be invoked. It was held that the Wakf Tribunal has exclusive jurisdiction in Wakf-related matters, and the Civil Court lacks authority in such cases. The judgment of the Calcutta High Court was set aside, affirming the jurisdiction of the Wakf Tribunal. The parties were directed to approach the Wakf Tribunal for resolution, with the appeal being allowed and no costs imposed.
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2010 (11) TMI 1100
Issues involved: Assessment of closing stock u/s 43B of the Act, Excise duty inclusion in valuation of closing stock, Interpretation of section 145A of the Finance Act, 2/1998.
Assessment of closing stock u/s 43B of the Act:
The High Court noted that the Commissioner of Income Tax found the assessment for the year 1999-2000 to be erroneous as the closing stock declared by the assessee did not include excise duty. The order was set aside with a direction to reconsider the valuation of closing stock in accordance with section 43B of the Act.
Excise duty inclusion in valuation of closing stock:
The appeal before the Income Tax Tribunal raised questions regarding the inclusion of excise duty payable on goods manufactured but not removed in the valuation of closing stock. The Tribunal, while referring to a previous judgment, did not consider the provision of law existing during the assessment year. The High Court emphasized the need to consider the method of accounting under section 145A, inserted by the Finance Act, 2/1998, effective from 01.04.1999, for determining the correct income of the assessee.
Interpretation of section 145A of the Finance Act, 2/1998:
The High Court, observing the failure of the Tribunal to address the substantial questions of law, remitted the matter back for reconsideration with reference to section 145A as it stood from 01.04.1999, applicable to the assessment year 1999-2000. The Court kept all contentions open for further consideration by the Tribunal.
Conclusion:
The High Court disposed of the appeal, ordering a reconsideration by the Tribunal in light of section 145A of the Finance Act, 2/1998, emphasizing the importance of correct valuation of closing stock and adherence to relevant accounting principles for determining the income of the assessee.
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2010 (11) TMI 1099
The High Court of Punjab and Haryana allowed the appeal by the revenue under Section 260-A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal. The court ruled in favor of the revenue based on a judgment of the Supreme Court in CIT v. Sterling Foods (1999) 237 ITR 579 regarding the admissibility of deduction under section 80-I on export incentives and cash compensatory assistance.
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2010 (11) TMI 1098
Issues involved:
The judgment involves a second motion filed by a transferor company under Sections 391, 392, and 394 of the Companies Act, 1956 for demerger and merger, objections raised by the Regional Director regarding coram present in meetings, appointed date contradiction, and merger of authorized share capital.
Demerger and Merger Approval Process:
The transferor company filed a second motion for demerger and merger, following a previous order directing meetings for approval of the scheme by shareholders and creditors. Meetings were held for equity shareholders, preference shareholders, secured and unsecured creditors, and fixed deposit holders. Reports from appointed Chairpersons indicated approval from shareholders and creditors for the scheme.
Objection Regarding Coram in Meetings:
The Regional Director raised concerns about the lack of response from unsecured creditors and fixed deposit holders in the meetings. However, the Court noted that notices were duly sent to all stakeholders, and the scheme was approved by stock exchanges and secured creditors, ensuring no harm to the transferor company.
Appointed Date Contradiction:
An objection was raised regarding the appointed date of 1st April, 2008, conflicting with the incorporation date of the transferee company. The Court clarified that the appointed date was for asset identification and valuation purposes only, not for actual transfer.
Merger of Authorized Share Capital:
Another objection was raised concerning the merger of authorized share capital and resultant increase in the share capital of the transferee company. The Court referenced previous judgments to reject this objection, stating that Sections 391-394 provide a complete code for such arrangements, and compliance with fee payments to authorities is required.
Approval and Order:
No objections opposing the scheme were received from the general public or the Regional Director. The Court approved the scheme of arrangement, clarifying that it does not grant exemption from stamp duty and the transferor company remains liable for fees under the Act and Rules.
Conclusion:
The Court approved the scheme of arrangement, addressing objections raised by the Regional Director and ensuring compliance with legal requirements for demerger and merger processes.
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2010 (11) TMI 1097
Issues involved: Challenge to conviction and sentence under Section 138 of Negotiable Instrument Act, maintainability of revision petition without surrender, interpretation of High Court Rules regarding surrender requirement, impact on personal liberty and Article 21 of the Constitution of India.
Maintainability of Revision Petition without Surrender:
The Petitioner challenged the judgment convicting him under Section 138 of the Negotiable Instrument Act. The Public Prosecutor raised a preliminary objection regarding the maintainability of the revision petition due to the Petitioner not surrendering before filing. The Petitioner's Counsel argued that the High Court Rules do not mandate surrender before filing a revision petition, distinguishing between "presentability" and "maintainability" of a petition. The Counsel contended that Rule 311 of the High Court Rules, requiring a surrender certificate, does not affect the petition's maintainability under Section 397 of the Code of Criminal Procedure. The Counsel further argued that imposing a surrender requirement would violate Article 21 of the Constitution of India.
Interpretation of High Court Rules and Impact on Personal Liberty:
The Court analyzed Rules 308 and 311 of the High Court Rules, emphasizing that Rule 311(3) only requires a surrender certificate for a petition with a sentence of imprisonment. The Court clarified that the absence of this certificate affects the petition's presentability, not its maintainability under the law. It was highlighted that Section 397 of the Code of Criminal Procedure does not necessitate surrender before filing a revision petition. The Court cautioned against an interpretation that would lead to anomalous situations or render the rules unconstitutional, emphasizing the importance of personal liberty and due process of law under Article 21 of the Constitution.
Compromise and Acquittal:
The Court noted the presence of both parties, their identification by counsel, and a compromise agreement produced before the Court. Referring to the Supreme Court's view on Section 138 of the Negotiable Instrument Act, which aims to ensure repayment rather than punishment, the Court observed that the amount in question had been paid and accepted by the complainant, leading to a compromise. Consequently, the Court quashed the previous judgments, acquitted the Petitioner of the offence under Section 138 of the Act, and allowed the petition.
Conclusion:
The High Court of Rajasthan, after considering the arguments on maintainability without surrender, interpreting the High Court Rules, and recognizing the compromise between the parties, acquitted the Petitioner of the offence under Section 138 of the Negotiable Instrument Act, emphasizing the importance of ensuring due repayment over punitive measures.
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2010 (11) TMI 1096
Issues Involved:1. Deletion of addition of Rs. 41,49,365/- made on account of remission of sales tax on finished goods. Summary:Issue 1: Deletion of Addition of Rs. 41,49,365/- on Account of Remission of Sales Tax on Finished GoodsThe appeal preferred by the revenue is directed against the order of the Ld. CIT(A), Kolkata dated 22.12.2009 for the assessment year 2004-05 on the sole ground of deleting the addition of Rs. 41,49,365/- made on account of remission of sales tax on finished goods. Briefly stated facts of the case are that the assessee is engaged in the production of wheat products. The assessee filed its return of income on 1.11.2004 disclosing a total income of Rs. 57,48,960/-. The assessment was completed u/s. 143(3) of the Act on 29.12.2006 at an assessed income of Rs. 1,82,06,720/- which included the addition of Rs. 41,49,365/- as sales tax remission treated as income. The assessee claimed the sales tax remission to be capital in nature and credited the same to the Capital Reserve of the company, explaining that the remission was granted under the West Bengal Incentive Scheme for promoting industrialization in backward areas. The Assessing Officer, however, treated the remission as revenue receipt, relying on the decision of the Supreme Court in Sahney Steel & Press Works Ltd. Vs. CIT 228 ITR 253, and added the amount to the income of the assessee. The Ld. CIT(A) deleted the said addition, leading to the revenue's appeal before the Tribunal. At the hearing, the Ld. DR relied on the order of the Assessing Officer, arguing that the Ld. CIT(A) was not justified in deleting the addition by holding the receipt as capital in nature. The DR cited the Supreme Court's decision in Sahney Steel & Press Works Ltd. and the jurisdictional High Court's decision in C.I.T. vs. Chhindwara Fuels [245 I.T.R. 9], which treated sales-tax subsidies as revenue receipts. Conversely, the Ld. counsel for the assessee argued that the issue was covered by the Tribunal's decision in M/s. Maithan Alloys Ltd. Vs. DCIT, where the Tribunal distinguished between subsidies for running an industry and those for setting up a business. The counsel contended that the incentive in question was for setting up the industry, thus qualifying as a capital receipt. After hearing both parties and reviewing the material on record, the Tribunal found that the issue was covered by its earlier decision in M/s. Maithan Alloys Ltd. Vs. DCIT. The Tribunal reiterated that the character of the subsidy, whether revenue or capital, depends on the purpose for which it is given. If the subsidy is for setting up a business, it is a capital receipt; if it is for assisting in business operations, it is a revenue receipt. The Tribunal noted that the assessee became entitled to the incentive before commencing production, indicating that the subsidy was for setting up the industry. The Tribunal also referenced the Special Bench decision in Reliance Industries Ltd., which supported the assessee's position. The Tribunal concluded that the sales-tax incentive was a capital receipt, not a revenue receipt, and upheld the Ld. CIT(A)'s order, dismissing the revenue's appeal. In the result, the appeal of the revenue is dismissed. The order is announced in the open court on 16.11.10.
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2010 (11) TMI 1095
The Bombay High Court allowed the Appellant to withdraw the Appeal without any costs. (2010 (11) TMI 1095)
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2010 (11) TMI 1094
Issues Involved:
1. Applicability of the enhanced rate of solatium and interest due to the Amendment Act of 68 of 1984 to cases finalized before the amendment.
2. Jurisdiction of the Executing Court to negate the High Court's judgment enhancing the compensation and whether it can go behind the judgment and decree passed by the High Court.
Issue-wise Detailed Analysis:
Issue 1: Applicability of Enhanced Rate of Solatium and Interest
The primary issue was whether the benefit of enhancement in the rate of solatium and interest as introduced by the Amendment Act of 68 of 1984 could be given to claimants whose compensation cases were finalized before the amendment came into force on 24.09.1984. The Supreme Court referred to the provisions of Section 23 and Section 34 of the Land Acquisition Act, 1894, as amended by the Amendment Act of 68 of 1984, which provided for enhanced solatium and interest rates. The Court also referred to the transitional provisions under Section 30(1) & (2) of the Amendment Act, which specified that the enhanced benefits were applicable to awards made by the Collector or the Court between 30.04.1982 and 24.09.1984.
The Court cited the decision in Union of India & Anr. v. Raghubir Singh (1989) 2 SCC 754, which clarified that only awards made by the Collector or the Court within the stipulated period could benefit from the enhanced rates. The Court concluded that since the awards in the present cases were made prior to 30.04.1982, the amendments could not be applied to these proceedings. Hence, the judgment and order passed by the High Court granting enhanced solatium and interest were deemed inapplicable.
Issue 2: Jurisdiction of the Executing Court
The second issue addressed whether the Executing Court could negate the High Court's judgment and decree that enhanced the compensation. The Supreme Court affirmed that an executing court cannot go behind the decree as per the decision in State of Punjab & Others v. Krishan Dayal Sharma (AIR 1990 SC 2177). However, it was also established that if a decree is found to be a nullity due to a lack of inherent jurisdiction, it could be challenged at any stage, including during execution or in collateral proceedings.
The Court emphasized that a decree or order made without jurisdiction is non-est and void ab initio, as stated in Union of India v. Sube Ram & Others (1997) 9 SCC 69 and other cases. Therefore, the High Court's order enhancing the compensation based on the Amendment Act of 68 of 1984, which was not applicable, was without jurisdiction and a nullity. Consequently, the Executing Court was justified in dismissing the execution applications based on such a null judgment.
Conclusion:
The Supreme Court concluded that the orders passed by the High Court granting enhanced solatium and interest were without jurisdiction and nullities. The Executing Court and the High Court were justified in holding that the amendments could not be applied to the cases finalized before the stipulated period. The appeals were dismissed, and the orders of the Executing Court and the High Court were upheld as legal, valid, and justified.
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2010 (11) TMI 1093
Issues involved: Appeal against orders dated 5.2.2008 passed by ld. CIT(A)-IX for Assessment Year 2001-02 regarding assessment of deemed dividend u/s. 2(22)(e) of the Act.
Issue 1: Assessment of deemed dividend u/s. 2(22)(e) of the Act
The appellant contended that the assessment order wrongly assumed M/s. Lauren Information and Technologies Pvt. Ltd as a shareholder of the appellant company from 14.4.2000 to 31.3.2001, whereas the correct period was 16.3.2001 to 31.3.2001 due to a merger. The appellant faced challenges in providing the necessary documents to the AO due to shifting of records and resignations in key departments. The AO made an arbitrary addition as deemed dividend u/s. 2(22)(e) without proper verification. The appellant requested admission of additional evidence, citing Rule 29 of the I.T. Rules, 1963. The Tribunal, following precedents, allowed the appeals and remitted the issue back to the AO for reevaluation with all evidences considered.
Significant Phrases:
- Deemed dividend u/s. 2(22)(e) of the Act
- Rule 29 of the I.T. Rules, 1963
- M/s. Lauren Information and Technologies Pvt. Ltd
- Annual Return filed with the Registrar of Companies
- Shareholder holdings
- Addition as deemed dividend
- Merger process under the Companies Act, 1956
- Shifting of records to warehouse
- Unprecedented rains and floods in Mumbai
- Certified true copy of Annual Return
- Audited Balance Sheet
- Admissibility of additional evidence
- Rule 46A of the I.T. Rules, 1962
- Abhay Kumar Shroff case
- Remittance of issue back to the AO
- Tribunal's decision and reasoning
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2010 (11) TMI 1092
Issues involved: Appeal by Revenue against deletion of addition of bad debts written off in assessment u/s 143(3) read with section 147 of the Income Tax Act, 1961 for the assessment year 2001-02.
The Appellate Tribunal, ITAT Chennai, heard the appeal filed by the Revenue against the order of CIT(A)- (Large Taxpayer Unit) at Chennai dated 28.04.2010. The appeal was related to the addition of &8377; 9,65,49,749/- being the disallowance of bad debts written off in respect of assessee's transaction with M/s. ETK Soft tech Pvt. Ltd. The Revenue contended that the CIT(A) erred in deleting this addition. However, citing precedents such as the decision of ITAT, Mumbai, Special Bench in the case of DCIT Vs. Oman International Bank (SAOG) [2006]286 ITR (2008) 08 (AT) (SB) (Mum.) and subsequent rulings by the Hon'ble Bombay High Court and the Supreme Court in various cases, it was established that if bad debts are written off as irrecoverable in the books of account, the deduction is allowable in computing the taxable income. The Tribunal noted that the conditions for claiming deduction towards bad debts were met by the assessee in this case, and hence, the appeal filed by the Revenue was deemed liable to be dismissed.
Decision: The appeal filed by the Revenue was dismissed by the Appellate Tribunal, ITAT Chennai, based on the established legal principles and precedents regarding the deduction of bad debts written off as irrecoverable in the books of account.
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2010 (11) TMI 1091
Issues Involved:
1. Disallowance of provision for warranty.
2. Exclusion of insurance claim from profits for deduction u/s 80HHC.
3. Exclusion of income from services rendered, sale of scrap, discount, recovery of doubtful debt, and sundry neutral revenue from profits for deduction u/s 80HHC.
Summary:
1. Disallowance of Provision for Warranty:
The CIT(A) confirmed the disallowance of the provision for warranty to the extent of Rs. 3,908,000 for A.Y 1996-97. The Tribunal had earlier directed the AO to verify the amount of provision made and allow a reasonable amount. The AO fixed the reasonable amount at 0.1% of net sales, rejecting the assessee's claim of 0.5% due to lack of supporting details. The CIT(A) upheld this decision. The Tribunal, upon review, found the AO's estimation of 0.1% unreasonable and increased it to 0.4% of net sales, partly allowing the assessee's appeal.
2. Exclusion of Insurance Claim from Profits for Deduction u/s 80HHC:
The CIT(A) excluded 90% of the insurance claim from the profits of business for the purpose of deduction u/s 80HHC. The Tribunal noted that the insurance receipts should be considered eligible business profits as per the Bombay High Court's judgment in M/s. Pfizer Ltd. The matter was set aside to the CIT(A) for reconsideration in light of this judgment and other relevant facts.
3. Exclusion of Income from Services Rendered, Sale of Scrap, Discount, Recovery of Doubtful Debt, and Sundry Neutral Revenue from Profits for Deduction u/s 80HHC:
- Services Rendered and Sale of Scrap: The CIT(A) excluded 90% of income from services rendered and sale of scrap from the profits for deduction u/s 80HHC. The Tribunal directed the CIT(A) to reexamine these issues in light of the Bombay High Court's judgment in M/s. Pfizer Ltd.
- Discount, Recovery of Doubtful Debt, and Sundry Neutral Revenue: The AO reduced 90% of these receipts from the profits for deduction u/s 80HHC. The Tribunal directed the CIT(A) to reconsider these issues, taking into account relevant judicial pronouncements and the arguments presented by the assessee.
Conclusion:
The appeals for both A.Y 1996-97 and 1998-99 were partly allowed. The Tribunal directed the CIT(A) to reexamine several issues, including the treatment of insurance receipts, inclusion of scrap sales, service charges, discount claims, recovery of doubtful debt, and sundry neutral revenue, in light of relevant judicial pronouncements and after providing the assessee a reasonable opportunity to be heard.
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2010 (11) TMI 1090
Issues Involved:
1. Retrospective application of Rule 25 of the Delhi Cooperative Societies Rules, 1973.
2. Applicability of society bye-laws in debarring a member.
3. Impact of property purchased in the name of Hindu Undivided Family (HUF) on membership.
4. Determination of the nature (residential or commercial) of the property in question.
Issue-wise Detailed Analysis:
Issue I: Retrospective Application of Rule 25
The appellant contended that Rule 25 of the Delhi Cooperative Societies Rules, 1973, applies to all members regardless of when they were enrolled. The respondent argued that at the time of his enrollment and property purchase, the Bombay Cooperative Societies Act, 1925 governed cooperative societies in Delhi, which did not prohibit property ownership. Rule 25(1)(c)(i) disqualifies members owning a residential house or plot in Delhi. Rule 25(2) deems a member to have ceased membership from the date disqualification was incurred. The Court held that Rule 25 is not retrospective merely because it affects existing members based on past actions. The rule operates prospectively, disqualifying members from the date the rule came into force (April 2, 1973).
Issue II: Applicability of Society Bye-laws
Bye-law 8(vii) of the society, effective from 1962, disqualifies members who purchase a house or plot in their own or dependents' names. Bye-law 5(i)(e) states that a person is ineligible for membership if they or their dependents own a dwelling house or plot in Delhi. The Court concluded that the term "eligible to be a member" includes both becoming and continuing as a member. Therefore, the respondent was disqualified under bye-law 5(i)(e) for owning another property.
Issue III: Property Purchased in the Name of HUF
The respondent argued that the property was purchased in the name of HUF, not in his personal capacity. Rule 25(1)(c)(i) exempts co-sharers with a share less than 66.72 sq. meters. The respondent's share exceeded this limit. Additionally, the perpetual lease deed executed with the appellant society prohibited allotment to members owning property in Delhi, including family members. The Court held that ownership by HUF, consisting of respondent's family, falls within this prohibition.
Issue IV: Nature of the Property
The respondent claimed the property was used solely for a nursing home (commercial purpose). The appellant argued that the property was also used for residential purposes. The Court examined self-assessment property tax forms and an objection letter by the respondent, which indicated the property was used for residential and self-occupied purposes. The Court concluded that the property was used as a residential property, disqualifying the respondent under Rule 25 and society bye-laws.
Conclusion:
The Court found the arguments raised by the respondent without merit and allowed the appeal, reinstating the termination of the respondent's membership from the appellant society.
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2010 (11) TMI 1089
Issues Involved: Appeal against order relating to assessment year 2007-08 regarding treatment of expenses for acquiring audio rights and disallowance of advertisement expenses.
Treatment of Audio Rights Expenses:
The revenue appealed against the CIT(A)'s decision to treat expenses of Rs. 3,17,07,305/- for acquiring audio rights as revenue expenditure, not capital expenditure. The Assessing Officer disallowed Rs. 2,37,80,479/- as capital expenditure u/s 32 of the IT Act after allowing depreciation. The CIT(A) allowed the claim following the Tribunal's decision in the assessee's own case. The Tribunal, based on previous rulings, dismissed the revenue's appeal, citing consistency in treating such expenses as revenue expenditure.
Disallowance of Advertisement Expenses:
The revenue challenged the CIT(A)'s deletion of the addition made on account of disallowance of 1/3rd of the Rs. 2,07,82,937/- claimed as advertisement expenses. The Assessing Officer disallowed Rs. 69,27,645/- based on past disallowances and pending appeals. The CIT(A, following precedent, deleted the addition. The Tribunal, in line with previous decisions, dismissed the revenue's appeal, upholding the treatment of advertisement expenses in favor of the assessee.
General Grounds:
The Tribunal dismissed general grounds of appeal 2 & 3, stating they were of a general nature. Consequently, the appeal filed by the revenue was dismissed on 10th November 2010.
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2010 (11) TMI 1088
Issues involved: Assessment of income u/s.148 for assessment year 2000-2001.
The Appellate Tribunal ITAT MUMBAI, in the case concerning the assessment of income u/s.148 for the assessment year 2000-2001, addressed the issue raised against the direction of the CIT(A) upholding the assessment of income at Rs. 3,87,90,040. The assessee, a contractor following cash system of accounting, had shown work in progress at Rs. 23,32,66,919 without offering any income for taxation. The Assessing Officer applied a 15% profit rate on the work in progress, resulting in an addition of Rs. 3,47,90,038. The Tribunal noted previous instances where similar additions were made and later deleted, emphasizing the completion of the project and the offering of income for taxation in subsequent years. The Tribunal set aside the order and remanded the matter to the Assessing Officer for further examination to determine if the projects were part of the work completed in a later assessment year where income was already offered for taxation.
The Assessing Officer contended that the total work done up to assessment year 1997-98 was Rs. 36.78 crores, and the total work in progress up to assessment year 2000-2001 was about Rs. 63.67 crores. However, in assessment year 2001-2002, the work in progress was noted at Rs. 19.59 crores, indicating a discrepancy in the figures. The Tribunal agreed that there might be confusion regarding the work in progress and the projects undertaken, suggesting a need for clarification. The matter was remanded to the Assessing Officer to determine if the work in progress for the current year was carried over to subsequent years and if the projects were completed in a later assessment year where income was offered for taxation. The decision was left to the Assessing Officer based on the factual matrix and legal considerations.
In conclusion, the appeal was allowed for statistical purposes, and the order was pronounced on November 24, 2010.
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2010 (11) TMI 1087
Double Jeopardy - Double prosecution and punishment for same offence - conviction of the appellants under Section 120-B, 419 and 420 IPC and other provisions including under Section 13 (1) (d) read with 13 (2) of the Prevention of Corruption Act - allegation against Accused No. 3 (appellant in Criminal Appeal No. 782/2007) is that she obtained a second passport in the assumed name of Sana Malik Kamal from the Regional Passport Office, Secunderabad by submitting false documents like residence certificate, educational certificate with the help of A-4 to A-9.
Double Jeopardy - whether the appellant's guaranteed fundamental right under Article 20 (2) has been infringed? - HELD THAT:- Article 20 (2) of the Constitution provides that no person shall be prosecuted and punished for the same offence more than once - The fundamental right guaranteed under Article 20 (2) has its roots in common law maxim nemo debet bis vexari - a man shall not be brought into danger for one and the same offence more than once. If a person is charged again for the same offence, he can plead, as a complete defence, his former conviction, or as it is technically expressed, take the plea of autrefois convict. This in essence is the common law principle.
In MAQBOOL HUSSAIN VERSUS STATE OF BOMBAY [1953 (4) TMI 19 - SUPREME COURT], this Court explained the scope of the right guaranteed under Article 20 (2) and as to what is incorporated in it as "within its scope the plea of autrefois convict as known to the British jurisprudence or the plea of double jeopardy as it known to the American Constitution but circumscribed it by providing that there should be not only a prosecution but also a punishment in the first instance in order to operate as a bar to a second prosecution and punishment for the same offence." That in order for the protection of Article 20 (2) to be invoked by a person there must have been a prosecution and as well as punishment in respect of the same offence before a court of law of competent jurisdiction or a tribunal, required by law to decide the matters in controversy judicially on evidence.
What is the meaning of expression used in Article 20 (2) "for the same offence"? - HELD THAT:- If the offences are distinct, there is no question of the rule as to double jeopardy being applicable - In Leo RoyLEO ROY FREY VERSUS SUPERINTENDENT, DISTRICT JAIL, AMRITSAR AND ANOTHER [1957 (10) TMI 1 - SUPREME COURT], petitioners therein were found guilty under Section 167 (8) of the Sea Customs Act and the goods recovered from their possession were confiscated and heavy personal penalties imposed on them by the authority. Complaints thereafter were lodged by the authorities before the Additional District Magistrate under Section 120B of the Indian Penal Code read with provisions of the Foreign Exchange Regulations Act, 1947 and the Sea Customs Act. The petitioners approached the Supreme Court for quashing of the proceedings pending against them in the court of Magistrate inter alia contending that in view of the provisions of Article 20 (2) of the Constitution they could not be prosecuted and punished twice over for the same offence and the proceedings pending before the Magistrate violated the protection afforded by Article 20 (2) of the Constitution. This Court rejected the contention and held that criminal conspiracy is an offence under Section 120B of the Indian Penal Code but not so under the Sea Customs Act, and the petitioners were not and could not be charged with it before the Collector of Customs. It is an offence separate from the crime which it may have for its object and is complete even before the crime is attempted or completed, and even when attempted or completed; it forms no ingredients of such crime.
The State of Bombay vs. S.L. Apte [1960 (12) TMI 82 - SUPREME COURT]], this Court laid down the law stating that if the offences were distinct there is no question of the rule as to double jeopardy as embodied in Article 20 (2) of the Constitution being applicable. It was the case where the accused were sought to be punished for the offence under Section 105, Insurance Act, after their trial and conviction for the offence under Section 409, Penal Code, this Court held that they were not sought to be punished for the same offence twice but for two distinct offences constituted or made up of different ingredients and therefore the bar of Article 20 (2) of the Constitution or Section 26 of the General Clause Act, 1897, was not applicable.
It is thus clear that the same facts may give rise to different prosecutions and punishment and in such an event the protection afforded by Article 20 (2) is not available. It is settled law that a person can be prosecuted and punished more than once even on substantially same facts provided the ingredients of both the offences are totally different and they did not form the same offence.
Whether the appellant can be said to have satisfied all the conditions that are necessary to enable her to claim the protection of Article 20 (2) of the Constitution? - HELD THAT:- The charges upon which the appellant has been convicted now, for the charges under the Indian Penal Code, we will presume for present purpose that the allegations upon which these charges are based, proved, resulting in conviction and punishment of the appellant are substantially the same which formed the subject matter of prosecution and conviction under the penal provisions of Portugal law. But there exists no doubt to hold that the punishment of the appellant is not for the same offence - Be that as it may, there is no factual foundation laid as such by the appellant taking this plea before the trial court. Nothing is suggested to the Investigating Officer or to any of the witnesses that she is sought to be prosecuted and punished for the same offence for which she has been charged and convicted by a competent court of jurisdiction at Lisbon. She did not even make any such statement in her examination under Section 313 Cr.P.C. It is true that the fundamental right guaranteed under Article 20 (2) of the Constitution is in the nature of an injunction against the State prohibiting it to prosecute and punish any person for the same offence more than ones but the initial burden is upon the accused to take the necessary plea and establish the same.
The appellant's plea of double jeopardy is wholly untenable and unsustainable.
Whether the courts below committed any error in convicting and sentencing the appellant for the charged offences? Is there no evidence against the appellant as contended by the learned senior counsel? - HELD THAT:- It is fairly settled that this Court in exercise of its jurisdiction under Article 136 of the Constitution of India normally does not interfere with the concurrent findings of facts arrived at by the courts below on proper appreciation of evidence. It is not the function of this Court to re-appreciate the evidence and substitute the findings for that of the courts below unless it is clearly established that the findings and the conclusions so arrived at by the courts below are perverse and based on no evidence.
It is evident from the record that the involvement of the appellants is at two stages. Stage one is where Monica Bedi (A-3) and Mohd. Yunis (A-7) are involved in the pre- passport application at the threshold and even before the preparation of application seeking the passport in the assumed name. Stage two is the involvement of Monica Bedi (A-3), Shaik Abdul Sattar (A-5) and D. Gokari Saheb (A-8) after the submission of passport application before the authorities.
The High Court came to the conclusion that in submitting the false verification report in respect of residence of Sana Malik Kamal he may not have been aware and knew that the certificate so obtained would be used for the purpose of securing the passport in the assumed name of Sana Malik Kamal. At any rate there is no evidence on that aspect of the matter. The High Court also came to the conclusion that by the time Mohd. Yunis (A-7) submitted a false verification there is nothing on record that he was hand in glove with the other accused for the purpose of cheating. Be it noted that the High Court confirmed the acquittal of A-7 of the charge under Section 120B IPC. The High Court, accordingly, found that the proper offence made against him would be one for making forged document simplicitor punishable under Section 465 IPC - the High Court was not justified in convicting Mohd. Yunis (A-7) at all for it had found no case against the appellant made out under Section 120B IPC and further found that there is no evidence to assume that he was hand in glove with the other accused for the purpose of cheating. That there is no evidence that A-7 prepared false document with intent to cause damage or injury, to the public or to any person, or to support any claim or title, or to cause any person to part with property, or to enter into any express or implied contract, or with intent to commit fraud. The ingredients of Section 463 are not satisfied. In such an event the conviction of the appellant under Section 465 IPC is unsustainable.
So far as D. Gokari Saheb (A-8) is concerned there is a clear evidence which has been properly appreciated by the courts below that he who took the article (envelop contained the passport) addressed to Sana Malik Kamal from PW-11 representing that he knew the addressee and deliver the same. The said article was actually entrusted to PW-11 for its delivery but D. Gokari Saheb (A- 8) took the same from PW-11 for delivery to Sana Malik Kamal - assumed name of Monica Bedi (A-3). The courts below found that D. Gokari Saheb (A-8) was aware of the contents of the article - the conviction of D. Gokari Saheb (A-8) for the charged offences is accordingly upheld. There are no reason whatsoever to interfere with the view taken by the High Court. However, the sentence of one year rigorous imprisonment under each count awarded while maintaining the fine imposed by the trial court is reduced to that of 6 months rigorous imprisonment under each count while maintaining the fine amount.
So far as the appellant - Monica Bedi is concerned she is involved in the conspiracy as proved at both stages i.e. pre-passport application stage and post-passport application stage. The conspiracy itself has been hatched only with a view to secure a passport for Monica Bedi in the assumed name of Sana Malik Kamal - there are no merit in the submission of Shri Tulsi, learned senior counsel that there is no evidence whatsoever against Monica Bedi to prove her involvement for the offence punishable under Sections 120B, 419 and 420 IPC - It is for her benefit that the entire conspiracy has been hatched involving more than one individual in order to secure a passport for her benefit enabling her to travel abroad in the assumed name of Sana Malik Kamal. There is no material based on which this Court is to differ with the findings and conclusions concurrently arrived at by the courts below.
Having regard to the facts and circumstances of the case and the fact that she had undergone more than 2 = years of sentence, it is considered appropriate to reduce the sentence to that of already undergone by her while maintaining fine amount imposed by the courts below.
Appeal allowed in part.
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2010 (11) TMI 1086
Validity of the memo issued by the Director, Town and Country Planning - agreements mutually entered by and between the parties - whether the Director, Town and Country Planning, is empowered to pass the impugned order? - Appellants were granted licence under the provisions of Haryana Development and Regulation of Urban Areas Act, 1975 and the Rules framed thereunder, i.e. Haryana Development and Regulation of Urban Area Rules, 1976 for setting up residential colonies. The Appellants entered into required agreements with the Governor of Haryana acting through Director Town and Country Planning, Haryana. The Appellants acting under the licence so granted and the agreements commenced setting up colonies by dividing the land into plots. The plots were sold to various buyers. The plot buyers are required to make construction on such plots to be used for the purpose for which the lay out was approved. The Appellants have also allotted flats to various persons and have entered into agreements. Mutual rights and obligations between the Appellants and the plot/flat buyers is structured by the agreements voluntarily entered into by them and all terms and conditions, covenants were mutually agreed by and between the parties. In respect of certain areas even completion certificates were granted as early as in the year 1991-92. The Director all of a sudden without any notice whatsoever to any of the Appellants issued the impugned directions which were challenged on various grounds in the High Court.
Interpretation of Contract - Freedom of contract is generally regarded as a reasonable, social, ideal only to the extent that equality of bargaining power between the contracting parties can be assumed and no injury is done to the interests of the community at large." The Court assumes "that the parties to the contract are reasonable persons who seek to achieve reasonable results, fairness and efficiency.... In a contract between the joint intent of the parties and the intent of the reasonable person, joint intent trumps, and the Judge should interpret the contract accordingly. A party who claims otherwise, violates the principle of good faith.
EXTENSION FEES - Whether the Director is empowered to issue any direction, directing the Appellants not to collect the extension fee with further direction to delete the relevant clauses from the agreement? - HELD THAT:- The provision for payment of "extension fee" has been provided for in the agreement, according to the Appellants, only in the interest of speedy development of each colony, and also in order to prevent purchase of plots by speculators who may keep the plot vacant without making any construction with the only object to earn profit by selling the same at a future date and such an act may prove detrimental to other purchasers as such acts obstruct the all round development of the area which is pre-eminently/predominantly in the public interest.
It is not necessary for us to express any firm opinion with regard to the plea so taken by the Appellants in this proceeding. It may altogether be a different matter if the purchasers raise objection as regards the very covenants incorporated into the agreement entered into by and between the parties in a properly constituted proceedings on such grounds as may be available to them in law.
Whether the Director was justified in issuing directions asking the licensee/owner to virtually amend the clauses/covenants in the agreement? HELD THAT:- The Director's functions and duties are well structured by the Act and the Rules. There is no provision in the Act or the Rules empowering the Director to sit in judgment on the perceived fairness of any clauses incorporated in the agreement entered by the parties. The terms and conditions in the licence granted by the Director do not prohibit incorporation of such a clause in the agreement to be entered between the owners and the purchasers. Nor there is any clause in the agreement entered by the owner with the Governor through the Director empowering the Director to sit in appeal over the agreement entered by the owners with the purchasers of the plots.
TRANSFER FEES - Whether the owner/colonizer in law after obtaining full payments from the allottees is prohibited from transferring the plots to the nominees of the allottees? HELD THAT:- Nor there is any provision whatsoever in the Stamp Act or Registration Act imposing any restriction on the assignment or transfer of rights under a sale/purchase agreement by the purchaser to a third party, before the execution of any conveyance deed in respect of any immovable property.
The parties in the agreement had agreed for the substitution of the name of allottees at the sole discretion of the owner. The conveyance deed executed by the owner is the one which is executed either in favour of the allottee or his nominee as the case may be on which a proper stamp duty and registration fee is required to be paid. In any event the Director has no power under the Act or the Rules to issue any such direction altogether prohibiting such nomination of another person thereby substituting the allottee.
MAINTENANCE FEE/CHARGES LEVIED - Whether the Director is empowered to issue any directions, directing the Appellants to stop charging maintenance fee from the plot/flat holders and also "delete the relevant clauses from the agreement" and refund the amounts so far collected to the Government immediately - HELD THAT:- the maintenance fee/charges levied and collected are clearly not in respect of any of the internal development works defined under Clause (i) to (v) of Section 2(i) . Perhaps, the learned senior counsel conscious of the difficulty to bring it under Section 2(i) (i) to (v) urged that maintenance expenses can be considered to be covered by Section 2 (i)(vi) , which refers to "any other work that the Director may think necessary in the interest of proper development of a colony". We find no merit in the submission.
We have already noticed that providing services of the kind for which the maintenance charges/fee are collected, are in no manner in respect of a "work" of "internal development" which is required to be carried out within the licenced area. The expression "work" in Section (i) (vi) cannot be interpreted in isolation ignoring the Clauses (i) to (v) in Section 2 . Such a construction is impermissible in law.
It is, therefore, clear that Director has no authority or power under the Act to issue any directions directing the owners/colonizers to incur maintenance expenses, by deeming the same to be part of the internal development works covered by Section 2(i). It is needless to reiterate that the maintenance of services specifies in Section 3(3)(a)(iii) cannot be considered to be part of the internal development works as defined by Section 2(i) .
Whether the amount of maintenance service charges was already included in the sale price of the plots/flats? - HELD THAT:- There is no price fixation formula devised under the provisions of the Act, Rules and Regulations framed thereunder. The Statutory Authorities have no role to play in the fixation of price and costs of land and rate at which the plots/flats are to be sold. The price charged by the owner for the plot is fixed and covered by Clauses (1) and (2) of plot sale agreement entered into by and between the parties. The agreed sale price of the plot includes external development charges. The payment of maintenance charges by the plot buyer is provided for in Clause (14) of the said agreement. The sale price charged by the owner from the plot buyers includes maintenance of service charges at the most could be a bonafide contention between the owners/colonizers and the purchasers of plots/flats.
Functions and duties of the Director and the power conferred upon him under the provisions of the Act and Rules - the Director is not authorized to interfere with agreements voluntarily entered into by and between the owner/colonizer and the purchasers of plots/flats. The agreed terms and conditions by and between the parties do not require the approval or ratification by the Director nor is the Director authorized to issue any direction to amend, modify or alter any of the clauses in the agreement entered into by and between the parties. It is thus clear that there is no provision in the Act, Rules or in the licence that empowers the Director to fix the sale price of the plots or the cost of flats.
It is thus clear that there is no provision in the Act, Rules or in the licence that empowers the Director to fix the sale price of the plots or the cost of flats. The impugned directions issued by the Director are beyond the limits provided by the empowering Act. The directions so issued by the Director suffer from lack of power. It needs no restatement that any order which is ultra vires or outside jurisdiction is void in law, i.e. deprived of its legal effect. An order which is not within the powers given by the empowering Act, it has no legal leg to stand on. Order which is ultra vires is a nullity, utterly without existence or effect in law.
LIMIT OF 15% PROFIT - Whether Appellants made any profit over and above 15% would arise for consideration only after the grant of final completion certificate in respect of the entire colony/development - HELD THAT:- The application for grant of final completion certificate remained pending with the authorities since long time. The complete accounts are to be finalized to determine whether the 15% limit on the profit has been exceeded and whether the colonizers/owners made profits over and above that. Further steps may have to be taken in accordance with law only thereafter. It would be appropriate to direct the authorities to decide the application so filed by the developers/colonizers for grant of final completion certificate as expeditiously as possible preferably within six months. In case if it is found that the owners had exceeded the said 15% limit on the profit, it shall always be open to the authorities to take appropriate action in accordance with law.
We find it difficult to sustain the impugned memo of the Director and the same is set aside. But this order of ours shall not preclude owners of plots/flats to avail such remedies as may be available to them in law and raise any dispute that had arisen or may arise and for the enforcement of contractual terms and conditions in which event the matters have to be decided on its own merits uninfluenced by the observation, if any, made in the order of the High Court of Punjab and Haryana and in this order.
Therefore, the judgment of the High court is, set aside. The appeals are, accordingly, allowed. All interlocutory applications and contempt cases are, accordingly, disposed of in terms of this order.
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