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2012 (5) TMI 838
Issues involved: Challenge to CIT(A)'s order u/s 17 read with section 16(3) of the Wealth Tax Act, 1957 for the assessment year 2005-06 regarding rented premises exemption u/s 2(ea)(i)(3) and 2(ea)(i)(5).
The Assessing Officer challenged the CIT(A)'s order regarding the assessment under section 17 read with section 16(3) of the Wealth Tax Act, 1957 for the assessment year 2005-06. The ground of challenge was that the rented premises were considered exempt u/s. 2(ea)(i)(3) and 2(ea)(i)(5) of the Wealth Tax Act. The Tribunal noted that the Commissioner's order for the assessment year 2004-05 in the assessee's case was followed in the impugned order. The assessee's counsel submitted that the revenue had accepted the Commissioner's order for the assessment year 2004-05 and did not appeal further. The Tribunal emphasized the principle of consistency in tax proceedings, citing legal precedents that disallowed challenging relief granted to an assessee in one year after accepting it in another year. The Tribunal declined to interfere in the matter as the AO had not challenged the relief granted to the assessee in the assessment year 2004-05, thereby confirming the CIT(A)'s order. The appeal filed by the revenue was dismissed based on this ground, without delving into the merits of the case.
This summary provides a detailed overview of the legal judgment, highlighting the issues involved and the Tribunal's decision based on the principle of consistency in tax proceedings.
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2012 (5) TMI 837
Issues Involved:
1. Whether an order refusing to grant remand has any bearing on the proceedings of the trial itself and its ultimate decision.
2. Whether an order refusing to grant remand can affect the progress of the trial or its decision in any manner.
3. Whether an order refusing to grant police remand is an interlocutory order or an intermediate or a final order.
4. Whether a revision against an order refusing to grant police remand is maintainable u/s 397 CrPC.
Summary:
Issue 1: Bearing on Trial Proceedings and Ultimate Decision
The court considered whether an order refusing to grant remand impacts the trial proceedings or the ultimate decision of the case. The petitioner argued that, as per the Supreme Court's decision in N.M.T. Joy Immaculate, a remand order does not affect the trial's progress or its outcome. The State contended that denying remand could impede the investigation, thereby affecting the trial and its decision. The court concluded that refusing remand has a direct bearing on the trial proceedings and can affect the ultimate decision of the case.
Issue 2: Effect on Trial Progress and Decision
The petitioner maintained that an order refusing remand should be considered an interlocutory order, as it does not influence the trial's progress or decision. The State argued that denying remand could hinder the investigation, thus impacting the trial. The court agreed with the State, stating that denying remand could affect the trial's progress and decision by depriving the Investigating Agency of necessary custodial interrogation.
Issue 3: Nature of Order Refusing Police Remand
The court examined whether an order refusing police remand is interlocutory, intermediate, or final. The petitioner cited the Supreme Court's decision in N.M.T. Joy Immaculate, suggesting that a remand order is purely interlocutory. The State argued that refusing remand is a final order, as it concludes the proceedings related to remand. The court determined that an order refusing police remand is a final order, thereby making it subject to revision u/s 397 CrPC.
Issue 4: Maintainability of Revision u/s 397 CrPC
The court explored whether a revision against an order refusing police remand is maintainable u/s 397 CrPC. The petitioner argued that such an order is interlocutory and thus not subject to revision. The State contended that it is a final order, making revision maintainable. The court concluded that an order refusing police remand is a final order, and a revision u/s 397 read with Section 401 CrPC is maintainable.
Final Conclusion:
1. An order refusing to grant remand has a direct bearing on the trial proceedings and can affect the ultimate decision of the case.
2. An order refusing to grant remand may affect the trial's progress or its decision by depriving the Investigating Agency of effective custodial interrogation.
3. An order refusing to grant police remand is a final order, and a revision u/s 397 read with Section 401 CrPC is maintainable.
The court directed the Registry to place the matter before the Hon'ble Chief Justice for appropriate orders.
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2012 (5) TMI 836
Issues involved: Challenge to deletion of addition made on account of deemed dividend u/s.2(22)(e) of the I.T. Act amounting to Rs. 65,98,007 for the A.Y. 2007-08.
Summary:
The Appellate Tribunal ITAT Mumbai heard an appeal where the revenue contested the deletion of an addition made on account of deemed dividend u/s.2(22)(e) of the I.T. Act for the assessment year 2007-08. The issue revolved around the interpretation and application of the provisions of sec.56 r.w.s. 2(22)(e) of the Act.
The Assessing Officer (A.O.) noted that a certain amount was given by M/s. Yasham Chemphor P. Ltd. to the assessee company, and identified common shareholders in both companies. The A.O. considered the loan amount taxable in the hands of the assessee-company as a deemed dividend u/s.2(22)(e) of the Act due to the common shareholding. The Ld. CIT (A) disagreed and deleted the addition based on a precedent set by the Hon'ble Special Bench of I.T.A.T. and a decision of the Hon'ble Rajasthan High Court.
The Tribunal found that the assessee company was not a shareholder in M/s. Yasham Chemphor Pvt. Ltd., emphasizing that common directors and shareholders alone cannot justify taxing the amount as deemed dividend. Citing the precedent set by M/s. Bhoumik Colours Pvt. Ltd. and the decision of the Hon'ble Rajasthan High Court, the Tribunal upheld the Ld. CIT (A)'s order, confirming the deletion of the addition.
Ultimately, the Tribunal dismissed the revenue's appeal, affirming the decision to delete the addition made on account of deemed dividend u/s.2(22)(e) of the I.T. Act. The order was pronounced in the open court on 21st May 2012.
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2012 (5) TMI 835
Issues involved: Appeal against CIT(A) order invoking provisions of u/s 40(a)(ia) for disallowance of TDS payment made before filing return and separate addition u/s 40(a)(ia) despite income estimation after rejecting books.
The Appellate Tribunal, ITAT Mumbai, heard an appeal against the CIT(A) order regarding the invocation of provisions of section 40(a)(ia) for disallowance of TDS payment made before filing the return and a separate addition under the same section despite income estimation after rejecting the books of accounts. The Authorized Representative (AR) rejected the books of accounts u/s 145(3) r.w.s. 144 of the Act and estimated the assessee's income at Rs. 3.98 Crores. The CIT(A) partly allowed the appeal but enhanced the income under the head "Enhancement of income (disallowance u/s. 40(a)(ia))" based on TDS discrepancies in sub-contract and transportation charges. The AR argued that TDS payment was made before filing the return and cited legal precedents to support the case. The Departmental Representative (DR) supported the CIT(A) order.
After considering the submissions, the Tribunal found that the CIT(A)'s enhancement was not in accordance with the law. The Tribunal emphasized that for invoking section 40(a)(ia), the dates of filing the return of income should be considered. Citing a Hyderabad case, the Tribunal highlighted that when income is estimated, there is no scope for further disallowances under section 40(a)(ia) or otherwise. Relying on legal precedents, the Tribunal allowed the appeal filed by the assessee, disagreeing with the CIT(A)'s action in invoking section 40(a)(ia) especially when income was estimated after rejecting the books of accounts.
In conclusion, the Appellate Tribunal, ITAT Mumbai, allowed the assessee's appeal, setting aside the CIT(A)'s decision to invoke the provisions of section 40(a)(ia) for disallowance of TDS payments made before filing the return and making a separate addition under the same section despite income estimation after rejecting the books of accounts.
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2012 (5) TMI 834
Issues Involved:1. Deletion of addition of Rs. 12.50 lacs by CIT(A) for investment outside books. 2. Deletion of addition of Rs. 1,62,283 by CIT(A) for interest income not shown in return. 3. Confirmation of addition of Rs. 5 lacs by CIT(A) for advance outside books. 4. Confirmation of addition of Rs. 55,200 by CIT(A) for interest income on advance. 5. Validity of additions based on documents found during search operations. Summary:Issue 1: Deletion of addition of Rs. 12.50 lacs by CIT(A) for investment outside booksThe revenue's grievance was that the CIT(A) erred in deleting the addition of Rs. 12.50 lacs, which the Assessing Officer (AO) added on the grounds of investment outside the books of account. The Tribunal found that the document in question was not found from the possession of the assessee but from his father's briefcase. The AO did not call the father for an explanation, failing to discharge the initial onus. The Tribunal concluded that the evidence was insufficient to establish the assessee's ownership of the investment, thus deleting the addition. Issue 2: Deletion of addition of Rs. 1,62,283 by CIT(A) for interest income not shown in returnThe revenue also contested the deletion of Rs. 1,62,283, which the AO added as interest income on the alleged investment. Since the primary addition of Rs. 12.50 lacs was deleted, the consequential interest income addition was also deleted. Issue 3: Confirmation of addition of Rs. 5 lacs by CIT(A) for advance outside booksThe assessee's appeal contested the confirmation of Rs. 5 lacs as an advance outside the books to Arneja & Co. The Tribunal noted that the document was a photocopy found in the father's briefcase, and the assessee consistently denied any dealings with Arneja & Co. The Tribunal found no corroborative evidence linking the assessee to the transaction and deleted the addition. Issue 4: Confirmation of addition of Rs. 55,200 by CIT(A) for interest income on advanceThe assessee also contested the addition of Rs. 55,200 as interest income on the alleged advance. Since the primary addition of Rs. 5 lacs was deleted, the consequential interest income addition was also deleted. Issue 5: Validity of additions based on documents found during search operationsThe Tribunal examined whether the entries in a diary found during a search at a third party's premises (Shri Brij Mohan Gupta) could be used to make additions in the assessee's case. The Tribunal found that the diary entries were in a coded language and not conclusively linked to the assessee. The Tribunal emphasized that the burden of proof was on the revenue to establish the connection, which was not done. The Tribunal upheld the CIT(A)'s deletion of additions based on these entries. Conclusion:The appeal filed by the assessee is allowed, and the appeal filed by the revenue is dismissed.
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2012 (5) TMI 833
Issues involved: Entitlement to disability pension for military personnel based on the attributability of injury to military service.
Summary:
The Supreme Court heard an appeal against a judgment affirming the entitlement of a respondent to disability pension due to an ailment acquired during Army service. The Court reiterated that if an injury is attributable to military service, the individual is entitled to disability pension, emphasizing the primacy of the Medical Board's opinion in such cases. The Court referenced various precedents supporting this principle. Additionally, the Court highlighted the importance of expert opinions in cases involving disability pension, citing previous judgments to emphasize the deference courts should give to expert opinions.
In a recent case, the Court clarified that a discharged person can only receive disability pension if the disability is linked to military service, as determined by Service Medical Authorities. The Court stressed the significance of the Medical Board's findings in establishing the nexus between the injury and military service for disability pension claims. The Court emphasized that the claimant must demonstrate a reasonable connection between the injury and the expected duties and lifestyle of a military personnel.
The Court emphasized the importance of giving weight to the expert opinion of the Medical Board in disability pension cases. In the specific case under consideration, the Medical Board concluded that the ailment was genetic and not connected to military service, leading the Court to determine that the respondent was not entitled to disability pension. Consequently, the appeal was allowed, the impugned judgments were set aside, and no costs were awarded.
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2012 (5) TMI 832
Issues involved: Appeal filed by Revenue against order of Commissioner of Income Tax (Appeals)-III, Chennai for the impugned assessment year, involving deletion of addition on account of unexpired value of Annual Maintenance Contracts and non-deduction of tax at source u/s 40(a)(i) of Income-tax Act, 1961.
Issue 1 - Unexpired value of Annual Maintenance Contracts:
The assessee recognized income on pro rata basis for the duration of AMC contracts, not offering income for unexpired period outside the relevant previous year. Assessing Officer made an addition for unexpired value of AMCs, but CIT(Appeals) deleted the addition, considering the liability of the assessee for meeting maintenance obligations and the possibility of contract termination by customers. ITAT Chennai upheld CIT(Appeals)' decision, stating that income accrued day by day and was not fully realized at the time of entering into the AMC, aligning with the matching concept of income and expenses.
Issue 2 - Non-deduction of tax at source u/s 40(a)(i):
The Revenue contended that the payment made to a non-resident for market survey constituted fees for technical services falling under Section 9(1)(vii) of the Act, obliging the assessee to deduct tax at source. However, CIT(Appeals) ruled in favor of the assessee, citing DTAA between India and Mauritius and the absence of a permanent establishment in India for the non-resident. ITAT Chennai acknowledged the technical nature of the services but remitted the issue back to the Assessing Officer for fresh consideration, emphasizing the need to analyze the impact of DTAA provisions on the tax liability.
The judgment was pronounced on May 25, 2012, at Chennai.
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2012 (5) TMI 831
Issues involved: Application for registration u/s 12AA of the Income-tax Act, 1961 rejected by the ld. DIT(Exemptions), Chennai.
Summary:
Issue 1: Condonation of Delay
The appeal was filed with a delay of six days, and the ld. A.R. requested condonation of the delay, which was granted by the Tribunal based on reasonable grounds presented by the ld. A.R.
Issue 2: Rejection of Registration Application
The main issue raised in the appeal was the rejection of the application for grant of registration u/s 12AA of the Act by the ld. DIT(Exemptions). The applicant, a Trust with charitable objectives, had its registration application rejected on the grounds that the trust's activities aimed at business establishment and profit accumulation, which were deemed non-charitable purposes. The Tribunal heard arguments from both sides, with the assessee claiming the institution was solely of charitable nature, while the ld. D.R. supported the DIT(Exemptions)'s decision.
Issue 3: Tribunal's Decision
After considering the submissions and reviewing the Trust's objectives, the Tribunal found that the Trust's varied objectives did not necessarily indicate a business intent. Citing relevant judicial precedents, the Tribunal concluded that the Trust was entitled to registration u/s 12AA of the Act. The Tribunal directed the DIT(Exemptions) to grant registration to the Trust under section 12AA of the Income-tax Act, 1961.
Conclusion
The Tribunal allowed the appeal of the assessee, emphasizing that any future contravention of provisions related to charities could be addressed during assessment proceedings. The decision was pronounced on May 2, 2012, in Chennai.
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2012 (5) TMI 830
Issues Involved:
1. Whether the plaint discloses any cause of action against defendant No.3.
2. Whether the properties owned by defendant No.3 can be considered HUF properties.
3. Whether the suit is barred by the provisions of the Hindu Succession Act, 1956, Hindu Minority and Guardianship Act, 1956, Guardians and Wards Act, 1890, Specific Relief Act, 1963, and Benami Transactions (Prohibition) Act, 1988.
4. Whether the plaintiff, a minor, has the right to seek partition of HUF properties during her father's lifetime.
5. Whether the mother of the plaintiff can act as the guardian/next friend in the suit.
Summary:
1. Cause of Action Against Defendant No.3:
The defendant No.3 filed an application u/s Order VII Rule 11 CPC, alleging that the plaint does not disclose any cause of action against her and is barred by various provisions of Hindu Law and specific Acts. She contended that as a woman, she cannot be a coparcener in the HUF of her husband/sons, and thus, her properties cannot be termed as HUF properties.
2. Properties Owned by Defendant No.3:
The plaintiff, a minor Hindu female, through her mother, filed a suit for partition and rendition of accounts, claiming a share in the joint family properties. Defendant No.3 argued that the properties listed in the plaint are owned by her and cannot be subject to partition as HUF properties. The court noted that the existence of the HUF was admitted by defendant No.3, and the determination of whether the properties are HUF properties requires evidence.
3. Barred by Provisions of Law:
Defendant No.3 asserted that the suit is barred by the Hindu Succession Act, 1956, and other relevant laws. However, the court emphasized that the scope of Order VII Rule 11 is limited and must be based on the averments in the plaint. The court found that the issues raised require evidence and cannot be decided at this stage.
4. Right to Seek Partition During Father's Lifetime:
The court referred to precedents, including Nanak Chand vs. Chander Kishore, which held that a son or daughter can ask for partition of HUF property during the father's lifetime. The court rejected the contention that the plaintiff, a minor, cannot claim a share in the HUF properties during her father's lifetime.
5. Mother's Role as Guardian/Next Friend:
The court dismissed the contention that the plaintiff's mother cannot act as her guardian/next friend. An application for the mother to sue as a next friend was pending, and the court noted that the interests of the mother and the plaintiff do not clash.
Conclusion:
The court dismissed the application filed by defendant No.3, stating that the plaint cannot be summarily rejected at this stage, and the issues raised require evidence to be determined.
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2012 (5) TMI 829
Issues involved: Challenge to assessment order u/s 143(3) of the Income Tax Act, 1961 on grounds of violation of natural justice, applicability of section 50C of the IT Act, 1961, valuation made by the DVO, and permission to press new grounds of appeal.
Assessment Order Challenge:
The appellant challenged the assessment order u/s 143(3) on the grounds of violation of natural justice. The issue revolved around the correctness of the CIT(A)'s order dated 1st December, 2011. The appellant sought to quash the assessment order citing violation of principles of natural justice.
Applicability of Section 50C:
The dispute centered on the applicability of section 50C of the IT Act, 1961. The appellant contended that the provisions of section 50C did not apply in the case, and thus, the enhancement of the sale proceeds by Rs. 27,40,000/- should be deleted. The Assessing Officer had computed the capital gains invoking section 50C, leading to the appeal.
Valuation by DVO:
Another issue raised was the valuation made by the DVO, which the appellant argued was not in accordance with the law. The appellant sought a reduction in the value assessed by the DVO and consequently a reduction in the capital gains as well. The dispute arose from the variance in the valuation of the property by the DVO compared to the sale consideration.
New Grounds of Appeal:
The appellant also sought permission to press new, additional grounds of appeal or modify and withdraw any of the existing grounds at the time of the appeal hearing. This request was made to ensure flexibility in presenting additional arguments or modifying existing ones during the appeal process.
The judgment addressed the narrow compass of material facts where the appellant had transferred leasehold rights in a property at a certain price, but the stamp duty valuation differed significantly. The Assessing Officer computed capital gains invoking section 50C, leading to the appeal. The Tribunal considered the factual matrix and legal position of the case.
The Tribunal found that a Coordinate Bench decision favored the appellant's case, emphasizing the distinction between ownership rights and tenancy rights in property transfers. It was established that in the present case involving a leasehold property, section 50C did not apply. The Tribunal upheld the grievance of the assessee based on previous decisions and directed the Assessing Officer to adopt the actual sales consideration in the computation of capital gains, providing relief to the appellant.
In conclusion, the appeal was allowed in favor of the appellant, and the order was pronounced in the open court on the specified date. The judgment clarified the application of section 50C in the context of leasehold property transfers and provided relief to the appellant based on established legal principles and precedents.
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2012 (5) TMI 827
Issues Involved:
1. Admissibility of sample handwriting or signature obtained from an accused during investigation.
2. Interpretation of "measurements" u/s 2(a) of The Identification of Prisoners Act, 1920.
3. Powers of police officers and Magistrates u/s 4 and 5 of The Identification of Prisoners Act, 1920.
4. Constitutional guarantee under Article 20(3) of the Constitution of India.
5. Applicability of Section 73 of The Indian Evidence Act, 1872.
6. Legislative changes and their impact on the admissibility of evidence.
Summary:
1. Admissibility of Sample Handwriting or Signature:
The court examined whether sample handwriting or signature obtained from an accused during investigation is admissible. It was concluded that neither Section 4 nor Section 5 of The Identification of Prisoners Act, 1920 encompasses handwriting. Therefore, an investigating officer cannot obtain handwriting or signature samples from an accused, and even a Magistrate could not direct an accused to give such samples prior to June 23, 2006.
2. Interpretation of "Measurements" u/s 2(a) of The Identification of Prisoners Act, 1920:
The term "measurements" as defined in Section 2(a) includes finger impressions and foot-print impressions but does not include handwriting or signatures. The court emphasized that the definition expands on the ordinary meaning of "measurement" but is limited to physical attributes of the human body.
3. Powers of Police Officers and Magistrates u/s 4 and 5 of The Identification of Prisoners Act, 1920:
Section 4 authorizes a police officer to take measurements of a person arrested in connection with an offence punishable with rigorous imprisonment for a term of one year or upwards, in the prescribed manner. Section 5 empowers a Magistrate to direct any person to allow his measurements or photograph to be taken for investigation purposes. However, these sections do not apply to handwriting or signatures.
4. Constitutional Guarantee under Article 20(3) of the Constitution of India:
The court referred to the Supreme Court's opinion in State of Bombay v. Kathi Kalu Oghad, which negated the contention that compelling an accused to give finger print impressions or handwriting would amount to self-incrimination under Article 20(3).
5. Applicability of Section 73 of The Indian Evidence Act, 1872:
The court noted that Section 73 of The Indian Evidence Act, 1872 empowers a court to obtain specimen writing or signatures for comparison purposes. However, this power is limited to the court concerned and does not extend to police officers or Magistrates during investigation.
6. Legislative Changes and Their Impact on the Admissibility of Evidence:
The court highlighted that with the insertion of Section 311A in the Code of Criminal Procedure, 1973, effective from June 23, 2006, a Magistrate is now empowered to direct an accused to give specimen signatures or handwriting. This legislative change addressed the lacuna noted in earlier judgments.
Conclusion:
(i) Handwriting and signature are not "measurements" u/s 2(a) of The Identification of Prisoners Act, 1920. Therefore, Sections 4 and 5 do not apply to handwriting or signature samples, and an investigating officer cannot obtain such samples during investigation.
(ii) Prior to June 23, 2006, even a Magistrate could not direct an accused to give specimen signatures or handwriting samples. According to Section 73 of The Indian Evidence Act, 1872, only the court concerned can direct a person to submit handwriting or signature samples for comparison.
(iii) For finger prints, which are included in "measurements," the prescribed manner must be followed, and it is desirable to follow the procedure under Section 5 to avoid suspicion and ensure the authenticity of evidence. Section 4 does not apply to offences punishable with death or life imprisonment.
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2012 (5) TMI 826
Issues involved: Appeal against order of Dispute Resolution Panel (DRP) regarding exclusion of telecommunication expenditure from total turnover for computing deduction u/s 10B of the Act.
Summary:
The appeal was filed by the assessee against the DRP's order, contending that telecommunication expenditure should be excluded from total turnover for calculating deduction u/s 10B. The assessee relied on a Tribunal decision which supported this exclusion. However, the Assessing Officer and DRP did not accept this argument, citing lack of provision in section 10B for such exclusion and ongoing contestation of the Tribunal decision.
Upon review, the ITAT Chennai noted that the assessee had debited a specific amount towards telecommunication charges and argued for their exclusion from total turnover based on the Tribunal decision. The ITAT considered the interpretation of "total turnover" in the context of the Act's provisions and the purpose of incentivizing exporters. Not finding any evidence of the Tribunal decision being overturned, the ITAT ruled in favor of the assessee, directing the Assessing Officer to deduct the telecommunication charges from the total turnover for computing the deduction u/s 10B. No other grounds were raised during the hearing, leading to the allowance of the assessee's appeal.
The ITAT's decision was based on the consistent interpretation of the Act's provisions and the absence of a defined meaning for "total turnover" in section 10B, aligning with the Tribunal's previous ruling. The ITAT emphasized the need for a uniform construction of the term in line with the legislative intent behind the incentive provisions for exporters.
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2012 (5) TMI 824
Issues Involved:
1. Head of income for royalty, rent, services, and miscellaneous income.
2. Eligibility for deduction u/s 80IA.
3. Classification of assets for depreciation purposes.
4. Set off of brought forward unabsorbed depreciation.
5. Depreciation rate on computer peripherals.
6. Proportionate disallowance of bank charges and interest expenses.
7. Depreciation rate on electrical fittings.
8. Initiation of penalty proceedings u/s 271(1)(c).
Summary:
1. Head of Income for Royalty, Rent, Services, and Miscellaneous Income:
The Tribunal held that income derived by the assessee from royalty, rent, and services is assessable under the head "Income from business" as it is derived from the commercial exploitation of the airport. However, income from film/video shooting and interest on income tax refund should be assessed under "Income from other sources." The nature of other miscellaneous income requires item-wise examination by the AO.
2. Eligibility for Deduction u/s 80IA:
The AO denied the deduction u/s 80IA, stating the assessee did not meet the conditions prescribed u/s 80IA(4). The Ld CIT(A) disagreed, accepting the MOU with Airports Authority of India as the required agreement and distinguishing between "commencement of business" and "starting operation and maintenance of infrastructure facility." The Tribunal directed the AO to re-examine the issue and verify the agreements and factual details.
3. Classification of Assets for Depreciation Purposes:
The Tribunal followed previous decisions, treating Runway, Isolation Parking Bay, Roads, Culverts, and Drains as "Plant" for depreciation purposes. However, the Ld CIT(A) did not verify if all assets were covered by these decisions. The Tribunal directed the AO to verify and follow the decisions of the Tribunals.
4. Set Off of Brought Forward Unabsorbed Depreciation:
Since the income derived by the assessee from royalty, rent, and services is to be assessed under "Income from business," the issue of set off of brought forward depreciation became infructuous.
5. Depreciation Rate on Computer Peripherals:
The Tribunal accepted the assessee's contention, directing the AO to allow depreciation on computer peripherals at the rate applicable to computers, following decisions in similar cases.
6. Proportionate Disallowance of Bank Charges and Interest Expenses:
The Tribunal upheld the disallowance of Rs. 31,88,157/- made by the AO, as the assessee did not possess adequate reserves and surplus at the time of making investments in subsidiary companies.
7. Depreciation Rate on Electrical Fittings:
The Tribunal upheld the AO's decision to restrict depreciation on electrical fittings to 10%, as the assessee did not substantiate its claim for a higher rate.
8. Initiation of Penalty Proceedings u/s 271(1)(c):
The Tribunal upheld the initiation of penalty proceedings u/s 271(1)(c), agreeing with the Ld CIT(A) that the Explanation 1 to sec. 271 automatically applies when the assessed income exceeds the returned income.
Conclusion:
The appeals of the revenue are partly allowed for statistical purposes, and the appeal of the assessee is partly allowed.
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2012 (5) TMI 823
Issues involved: Interpretation of phasing out provisions for deduction u/s 80HHC for computing book profit u/s 115JB of the Act.
Summary:
The appeal arose from an order passed by the Tribunal in Misc. Application No. 692/Mum/2010 for A.Y. 2002-03, recalling its order to decide the issue of phasing out provisions for deduction u/s 80HHC for computing book profit u/s 115JB in light of the decision in Ajanta Pharma Ltd. v. CIT. Both parties agreed that the issue was covered in favor of the assessee by the Supreme Court's decision in Ajanta Pharma Ltd., which emphasized the self-contained nature of sections 115JA and 115JB, eligibility of profits under section 80HHC, and the exclusion of "export profits" from book profits under section 115JB.
After considering the submissions and finding no distinguishing features brought by the Revenue, the Tribunal held that the issue raised was no longer res integra and was settled by the Supreme Court's decisions. Accordingly, the ground taken by the Revenue was rejected, leading to the dismissal of the Revenue's appeal.
The order was pronounced in the open court on 23.5.2012.
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2012 (5) TMI 822
Issues involved: Appeal against Commissioner of Income Tax (Appeals) order u/s 143(3) for assessment year 2008-09 regarding disallowance of detention charges, commission expenditure, and treatment of profit from sale of shares.
Detention Charges Disallowance:
- Assessee engaged in commission agency and trading in chemicals.
- AO disallowed detention charges of Rs. 2,82,702 as penal in nature.
- CIT(A) deleted the addition, considering it as additional rent for delay in returning containers, not penal in nature.
- ITAT upheld CIT(A)'s decision, stating charges were contractual, not infringing any law, hence allowable under section 37(1).
Commission Expenditure Disallowance:
- AO disallowed commission of Rs. 1,20,644 for lack of recipients' income tax returns.
- CIT(A) deleted disallowance, noting services rendered, payment mode, and business turnover.
- ITAT supported CIT(A)'s decision, finding commission genuine, reasonable business expenditure.
Profit from Sale of Shares Treatment:
- Assessee had long term and short term capital gains, also declared business profit on shares.
- AO treated short term gains as business income due to frequent transactions.
- CIT(A) directed treating short term gains as capital gains based on investment intent.
- ITAT upheld CIT(A)'s decision, considering investment motive, dividend income, and limited share transactions.
Conclusion:
- ITAT dismissed revenue's appeal, upholding CIT(A)'s decisions on detention charges, commission expenditure, and profit from sale of shares.
- Shares held for less than one year treated as short term capital gains, aligning with investment intent and judicial precedents.
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2012 (5) TMI 821
Issues Involved:
1. Disallowance of expenditure against exempt income u/s 14A.
2. Taxability of bad debts recovered.
3. Addition of prior period expenses.
4. Addition on account of outstanding balances in NOSTRO-Blocked A/c.
5. Consideration of unreconciled inter bank and inter branch entries for addition to income.
Summary:
1. Disallowance of expenditure against exempt income u/s 14A:
The assessee contended that the CIT(A) erred in holding that 2.5% of the exempt income is disallowable as expenditure against exempt income u/s 14A of the Act. Both parties agreed that this issue is covered against the assessee in its own case for previous assessment years. The Tribunal upheld the CIT(A)'s decision to estimate the disallowance at 2.5% of the tax-free income earned by the assessee, dismissing the assessee's appeal on this ground.
2. Taxability of bad debts recovered:
The assessee argued that the CIT(A) erred in holding that bad debts recovered during the year, which were neither claimed nor allowed as a deduction u/s 36(1)(vii), were liable to tax, thereby sustaining the addition of Rs. 55,24,00,000/-. The Tribunal found that this issue was also covered against the assessee in its own case by previous Tribunal orders. The Tribunal upheld the CIT(A)'s decision, dismissing the assessee's appeal on this ground.
3. Addition of prior period expenses:
The assessee contended that the CIT(A) erred in sustaining the addition of Rs. 42,00,000/- being 1/5th of the estimated prior period expenses of Rs. 2,10,00,000/-. The Tribunal noted that this issue was covered in previous years' cases and restored the matter to the AO for fresh decision in accordance with law, directing the assessee to provide necessary evidence.
4. Addition on account of outstanding balances in NOSTRO-Blocked A/c:
The assessee argued that the CIT(A) erred in sustaining the addition of Rs. 11,89,89,000/- on account of outstanding balances in NOSTRO-Blocked A/c. The Tribunal found that the unclaimed deposits in the NOSTRO account were rightly added to the income of the assessee based on RBI guidelines and upheld the CIT(A)'s decision, dismissing the assessee's appeal on this ground.
5. Consideration of unreconciled inter bank and inter branch entries for addition to income:
The assessee contended that the CIT(A) erred in holding that unreconciled inter bank and inter branch entries are covered by Article 22 of the Limitation Act and should be considered for addition to income. The Tribunal restored the issue to the AO to adjudicate as per the terms mentioned in previous Tribunal decisions, directing the assessee to provide necessary cooperation.
Revenue's Cross-Appeal:
The revenue's appeal included issues of relief allowed by CIT(A) on disallowance u/s 14A and restriction of disallowance of prior period expenses. The Tribunal found that these issues were already adjudicated while considering the assessee's appeal and dismissed the revenue's appeal.
Conclusion:
The appeal of the revenue was dismissed, and the appeal of the assessee was partly allowed. The order was pronounced in the Open Court on 16th May 2012.
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2012 (5) TMI 820
Issues involved: Appeal filed by Revenue against CIT(A) order for A.Yr. 2005-06 regarding disallowance of deduction u/s 40(a)(ia) of the IT Act and estimation of profit from business.
Issue 1: Disallowance of deduction u/s 40(a)(ia) of the IT Act:
- Revenue contended that CIT(A) erred in holding no further disallowance of deduction is allowed once profit is estimated after rejecting books of accounts.
- Tribunal observed issue is covered by earlier order in M/s. Designer Exports vs DCIT.
- Citing decisions of various benches, Tribunal found the amendment in section 40(a)(ia) by Finance Act, 2010 to be remedial and curative, allowing retrospective application.
- High Court confirmed the Tribunal's view that TDS paid before due date of filing return u/s. 139(1) is allowable deduction.
- Tribunal dismissed revenue's issue, allowing assessee's claim based on High Court decision.
Issue 2: Estimation of profit from business:
- Revenue argued CIT(A) erred in estimating profit based on assessee's declared rate without basis.
- Tribunal did not delve into this issue as it was not the primary focus of the appeal.
- No specific judgment or decision was provided regarding this issue in the summary.
In conclusion, the Tribunal dismissed the revenue's appeal based on the interpretation of the remedial and curative nature of the amendment in section 40(a)(ia) of the IT Act, allowing for the deduction of TDS paid before the due date of filing the return. The decision was in line with the High Court's ruling, affirming the retrospective application of the amendment.
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2012 (5) TMI 819
Issues Involved:
The judgment involves the issue of deletion of addition of Rs. 17,75,000 made by the Assessing Officer (AO) on account of unexplained cash credit u/s. 68 of the Income Tax Act for the assessment year 2007-08.
Details of the Judgment:
Issue 1: Unexplained Cash Credit u/s 68 of the IT Act
The assessee, a firm with three partners, had one partner, Shri Naresh Agarwal, introduce fresh capital of Rs. 45,45,000 during the relevant year, out of which Rs. 17,75,000 was deposited in cash on various dates. The AO treated this cash deposit as unexplained. Shri Naresh Agarwal, in his statement u/s. 131 of the IT Act, explained that the capital was introduced from past capital, hundi borrowings, and cash withdrawals from his bank account. The ld. CIT(A) considered the explanations and additional evidence, including a cash flow statement and bank statements, and deleted the addition of Rs. 17,75,000. The ld. CIT(A) held that the firm had satisfactorily explained the source of the capital introduced by Shri Naresh Agarwal, except for Rs. 1,25,000 deposited on 06.12.2006. The ld. CIT(A) relied on precedents to conclude that if the firm can prove the source of the amount invested by a partner, the burden is discharged, and the credit entry cannot be treated as income of the firm for income tax purposes. The AO was directed to take action against Shri Naresh Agarwal under section 69 of the IT Act if needed.
Issue 2: Applicability of Section 68 of the IT Act
The ld. DR relied on the AO's order and a decision of the M.P. High Court to argue that section 68 applied in this case due to cash credits in the firm's books in the name of a partner without a satisfactory explanation. However, the Tribunal found that the firm had adequately explained the capital contribution by Shri Naresh Agarwal, and the burden was on the AO to take action against the partner individually if creditworthiness was in question. The Tribunal distinguished the cited case law as it pertained to cash credits u/s. 68, whereas in this case, the capital was contributed by the partner for the firm's business operations. The Tribunal dismissed the Revenue's appeal, upholding the ld. CIT(A)'s decision to delete the addition of Rs. 17,75,000.
In conclusion, the Tribunal dismissed the appeal of the Revenue, affirming the deletion of the addition of Rs. 17,75,000 made by the AO on account of unexplained cash credit u/s. 68 of the IT Act for the assessment year 2007-08.
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2012 (5) TMI 818
Issues Involved:
1. Legality of the Registrar's order canceling the registration of the society.
2. Validity of guidelines framed by the Govt. of NCT of Delhi.
3. Applicability of Section 21 of the General Clauses Act.
4. Consequences of furnishing a false affidavit.
Summary:
1. Legality of the Registrar's Order:
The petitioner challenged the order dated 04.02.2011 by the Registrar of Societies canceling the society's registration. The Registrar canceled the registration based on a false affidavit stating that the society's members were not related by blood, whereas two members were father and son.
2. Validity of Guidelines:
The petitioner argued that there is no statutory bar against members being related by blood. The guidelines requiring non-related members are non-statutory and non-binding. The court found the guidelines to lack statutory force and rational basis, deeming them arbitrary and violating Articles 14 and 19(1)(c) of the Constitution of India.
3. Applicability of Section 21 of the General Clauses Act:
The Registrar invoked Section 21 of the General Clauses Act to cancel the registration. The court held that Section 21 does not apply to quasi-judicial orders, referencing the Supreme Court's judgment in Indian National Congress (I) v. Institute of Social Welfare and Others, AIR 2002 SC 1258. The court emphasized that the Registrar's order is quasi-judicial and cannot be undone by Section 21.
4. Consequences of Furnishing a False Affidavit:
The court distinguished between the consequences of a false affidavit and the legality of the society's registration. It noted that while the false affidavit might have legal repercussions for the deponent, it does not justify canceling the society's registration. The court referenced Shrisht Dhawan v. M/s Shaw Brothers, AIR 1992 SC 1555, stating that non-disclosure of facts not required by statute does not constitute fraud.
Conclusion:
The court set aside the impugned order, allowing the petition and restoring the society's registration. The inter se disputes between the parties regarding management and control of the society were left open for resolution in appropriate civil proceedings.
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2012 (5) TMI 817
Issues Involved:
1. Confirmation of addition of Rs. 42,02,500/- related to share trading loss.
2. Applicability of provisions of sec. 40A(2).
Summary:
Issue 1: Confirmation of addition of Rs. 42,02,500/- related to share trading loss
The assessee filed an appeal against the order dated 11.02.2011 of the CIT-(A)-VI, Kolkata, for A.Y. 2007-08, contesting the confirmation of addition of Rs. 42,02,500/- related to share trading loss. The assessee, engaged in share trading and granting loans, incurred a loss of Rs. 42,02,500/- from share trading while earning Rs. 43,89,942/- as interest income. The AO questioned the business logic behind selling shares at a huge loss and suspected the transactions with sister concerns as a tax evasion tactic. The AO, citing the Supreme Court's decision in Mcdowell & Co. Ltd. vs. CTO [1985] 154 ITR 148 (SC), concluded that the transactions were colorable devices to evade taxes and disallowed the loss.
On appeal, the CIT(A) upheld the AO's decision, stating that the sales were not genuine and were a colorable device to book losses and reduce tax liability. The CIT(A) noted that the shares were sold to sister concerns controlled by the same management, and the transactions were timed to manipulate taxable income.
The assessee argued that the sales were genuine, supported by account payee cheques and subsequent resale of shares by the sister concerns to unrelated parties. The assessee provided valuation reports and sale confirmations to substantiate the transactions.
Issue 2: Applicability of provisions of sec. 40A(2)
The AO initially considered applying sec. 40A(2) but later disallowed the loss on the grounds of the transactions being with sister concerns. The assessee contended that the genuineness of the sales was not disputed and that the provisions of sec. 40A(2) were not applicable.
Judgment:
The ITAT Kolkata, after reviewing the submissions and evidence, found no justification in disbelieving the transactions. The Tribunal noted that the sister concerns had subsequently sold the shares at a loss, and the valuation reports were provided. Therefore, the ITAT set aside the orders of the revenue authorities and directed the AO to delete the addition made on account of sales.
Conclusion:
The appeal of the assessee was allowed, and the addition of Rs. 42,02,500/- was deleted. The judgment emphasized that the transactions were genuine and not colorable devices for tax evasion. The order was pronounced in court on 23.05.2012.
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