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Showing 41 to 60 of 925 Records
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2012 (6) TMI 895
Issues involved:
1. Deletion of addition of Rs. 95,22,350 in respect of increase in share capital.
2. Deletion of addition of Rs. 5,01,200 made under section 68 of the Act being unsecured loan from M/s. Sharthak Securities Ltd. and M/s. Ama Finvest Pvt. Ltd.
Deletion of addition of Rs. 95,22,350 in respect of increase in share capital:
The Tribunal's decision in CIT v. Lovely Exports Pvt. Ltd. established that if the identity of the shareholder is established, no addition can be made in the hands of the receiving company for share application money. The revenue can pursue proceedings against the investors. Thus, the first question raised by the revenue does not present a substantial question of law.
Deletion of addition of Rs. 5,01,200 under section 68 of the Act:
The Tribunal upheld the finding of the CIT(Appeals) regarding the addition made under section 68 of the Act. The Tribunal's order confirmed the CIT(Appeals) finding, leading to a conclusion of fact. Both questions raised by the revenue are settled by factual findings and do not raise any substantial question of law. Consequently, the Tax Appeal lacks merit and is dismissed.
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2012 (6) TMI 894
Issues involved: Jurisdiction of AO u/s 147 of the IT Act for reopening assessment beyond four years from relevant assessment year based on failure to disclose fully and truly all material facts.
Summary:
1. The petitioner, a private limited company engaged in manufacturing, filed its return for the assessment year 1995-96 u/s 44AB of the IT Act. After scrutiny assessment u/s 143(3), the AO made additions and disallowances. Subsequent to the petitioner's appeal being dismissed, the AO issued a notice u/s 148 seeking to reopen the assessment beyond the four-year limit. The petitioner challenged the notice on grounds of jurisdiction, citing no failure to disclose material facts. The AO's reason for reopening was excess deduction claimed u/s 80M of the Act. The petitioner argued that the AO had properly applied his mind during the initial assessment, making the reopening a mere change of opinion.
2. The respondent contended that the petitioner had claimed more deduction u/s 80M than entitled to, resulting in income escaping assessment. The respondent argued that the AO had allowed the deduction without proper discussion or application of law, making the reopening valid. The respondent claimed that the petitioner furnished inaccurate particulars, justifying the jurisdiction of the AO to reopen the assessment beyond the four-year period.
3. The AO is required to form a belief that income has escaped assessment due to failure to disclose material facts for assuming jurisdiction u/s 147 beyond four years from the relevant assessment year. In this case, the AO needed to establish that income escaped assessment due to the petitioner's failure to disclose all material facts. Non-filing of the return was not in dispute, requiring the AO to show that income escaped assessment due to the petitioner's failure to disclose material facts.
4. The reasons for reopening cited the excess deduction claimed u/s 80M as the sole ground. However, there was no indication of the nature of the petitioner's failure to disclose material facts. The AO's belief was based on the petitioner claiming more deduction than allowable, without proper discussion in the assessment order. The court found that the AO failed to demonstrate the petitioner's failure to disclose material facts, making the reopening invalid.
5. The court concluded that as there was no failure on the petitioner's part to disclose all material facts, the AO's jurisdiction u/s 147 beyond the four-year limit was without merit. The impugned notice seeking to reopen the assessment for the assessment year 1995-96 was quashed and set aside, ruling in favor of the petitioner.
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2012 (6) TMI 893
Issues involved: Challenge to allowance of deduction u/s. 80IA of the Income-tax Act, 1961 on captive power generation plant.
Issue 1: Challenge to deduction u/s. 80IA
- The Revenue challenged the allowance of deduction claimed u/s. 80IA by the CIT(A) on the captive power generation plant of the assessee.
- The Assessing Officer disallowed the claim of deduction u/s. 80IA on the basis that the paper mill, boiler unit, and turbine constitute one single industrial undertaking.
- The CIT(A) upheld the claim of the assessee for deduction u/s. 80IA in respect of the captive power generation undertaking and 9.5 MW turbine power undertaking.
- The ITAT Hyderabad Bench in earlier assessment years had allowed the claim of deduction u/s. 80IA in the assessee's own case.
- The CIT(A) directed the AO to compute the profits of the undertakings as per the guidelines contained in the ITAT order and allow the deduction u/s. 80IA for the assessment year in question.
Conclusion:
- The ITAT Hyderabad Bench found that the issue was squarely covered by its earlier orders in the assessee's own case for previous assessment years.
- The order passed by the CIT(A) was upheld, and the grounds raised by the Revenue were dismissed.
- The appeal by the Revenue was ultimately dismissed on 15th June, 2012.
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2012 (6) TMI 892
Issues involved: Appeal against order of Ld. CIT(A) IV, Surat for assessment year 2006-07 regarding addition of Gross profit on alleged unaccounted production of yarn and unrecorded investment in stock.
Gross profit addition: The appeal was based on the tribunal order in the assessee's own case for the assessment year 2005-06. The A.O. made an addition of &8377; 11,92,336 for unaccounted turnover based on electricity consumption. Another addition of &8377; 7,76,260 was made for alleged unrecorded investment in stock. The tribunal noted that in the previous year, a similar addition was made and later deleted by Ld. CIT(A) due to lack of evidence. The tribunal upheld the deletion, stating that no adverse material supported the allegation of unaccounted production, and therefore, both additions were unjustified and deleted.
Conclusion: The tribunal allowed the appeal, stating that the additions made by the A.O. and confirmed by Ld. CIT(A) were not justified, and hence, both additions were deleted.
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2012 (6) TMI 891
Issues involved: Appeal against the judgment of the Income Tax Appellate Tribunal regarding penalty imposition u/s 271D read with Section 269SS for the assessment year 2007-08.
Summary:
The main issue in this case was whether the penalty imposed should be upheld or not. The Tribunal found that the assessee had received amounts from family members and explained that these were cash balances belonging to different family members, recorded in the assessee's books of account. The Tribunal noted that a similar issue had been decided by a Coordinate Bench in the case of Tervinder Singh Sethi Vs. Income Tax officer. The penalty amount in question was slightly over Rs. 10 lakhs. The appellant's counsel could not confirm if the judgment in the case of Tervinder Singh Sethi had been challenged. Considering the circumstances and the precedent, the appeal of the revenue was not admitted and was dismissed. Consequently, the connection application was also disposed of as it had become infructuous. All parties were directed to act on a signed photocopy of the order.
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2012 (6) TMI 890
Issues involved: Interpretation of u/s.115JAA for credit in case of amalgamation, Permissibility of adjustments u/s.143(1)
The appeal was filed by the assessee against the order of the Commissioner of Income-tax (Appeals)-I at Coimbatore dated 29.6.2011, pertaining to the assessment year 2009-10 u/s.143(1) of the Income-tax Act, 1961. The main contention of the assessee was that the amalgamated company should be entitled to credit u/s.115JAA for taxes paid by the amalgamating companies, as the assets and liabilities of the amalgamating company become those of the amalgamated company post amalgamation. The assessee argued that there is no restriction in sec.115JAA regarding the carry forward and set off of MAT credit from the amalgamating company to the amalgamated company, unlike in the case of unlisted public companies or private companies converted into limited liability partnerships.
The Tribunal agreed with the grounds raised by the assessee, stating that the amalgamated company is indeed entitled to the credit available to the amalgamating company u/s.115JAA. Additionally, the Tribunal noted that the adjustment made by the Assessing Officer during the proceedings u/s.143(1) was impermissible. It was emphasized that proactive adjustments should not be made at this stage, and if the Assessing Officer required scrutiny of MAT credit details, a notice u/s.143(2) should be issued for further proceedings.
Consequently, the Tribunal allowed the appeal of the assessee and directed the Assessing Officer to provide the MAT credit as requested. The order was pronounced in an open court on Wednesday, the 6th of June, 2012, at Chennai.
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2012 (6) TMI 889
Issues involved: Cross appeals by assessee and revenue regarding the treatment of remission of principal loan amount and unexplained expenditure, and the power of CIT(A) to set aside orders for verification.
ITA 154/Chd/2011:
The assessee challenged the treatment of remission of principal loan amount and unexplained expenditure. The AO observed that the loan waiver amount was consisting of capital waiver and interest amount. The assessee contended that the interest was never claimed and therefore not taxable u/s 41(1). The AO disagreed, citing provisions of Section 56(2)(vi) and disallowing the set-off of interest. The capital waiver was held taxable based on a decision of the Bombay High Court.
ITA 291/CHD/2011:
The revenue raised concerns about the CIT(A) directing verification of interest expenditure claimed in earlier years and sought restoration of the AC's order. The CIT(A) confirmed the addition on account of capital waiver but set aside the issue of interest for further verification by the AO.
After hearing both parties, the ITAT found that the CIT(A) had exceeded his powers by setting aside the order for verification post the amendment in Section 251(1). The matter was restored to the CIT(A) for a proper determination regarding the interest claimed as expenditure and the nature of the loan for the capital waiver. The ITAT directed the CIT(A) to re-examine the issues in light of relevant court decisions. The appeals of both the assessee and revenue were allowed for statistical purposes.
*Order pronounced in the Open Court on 22nd June, 2012.*
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2012 (6) TMI 888
Issues involved: Assessment barred by limitation.
Summary:
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2005-06, claiming that the assessment was barred by limitation as the order was served after the deadline. The assessee argued that the assessment order was received on 25.01.2009, after the deadline of 31.12.2008. The Revenue contended that the assessee failed to provide evidence to support the claim of the assessment being barred by limitation. The Tribunal examined the issue and found that the assessment order was dispatched on 21.01.2009 and received by the assessee on 25.01.2009, concluding that the assessment was indeed passed after the statutory time limit. Relying on a decision of the Hon'ble Punjab & Haryana High Court, the Tribunal held that the assessment was barred by limitation and quashed the assessment.
The Tribunal considered the evidence presented, including the dispatch register and issue of assessment order for the relevant year, and determined that the assessment order was dispatched after the statutory time limit. Citing a previous decision of the Hon'ble Punjab & Haryana High Court, the Tribunal emphasized the importance of meeting statutory time limits for assessments. Based on the evidence and legal precedents, the Tribunal concluded that the assessment in question was indeed barred by limitation and therefore allowed the appeal filed by the assessee, resulting in the quashing of the assessment.
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2012 (6) TMI 887
Issues involved:
The issues involved in this judgment are whether directors can be prosecuted under Sections 138/141 of the Negotiable Instruments Act based on the complaint filed against them, and whether a director who has resigned can be prosecuted after resignation has been accepted by the Board of Directors.
Issue 1: Prosecution of Directors based on complaint:
The petitioners, three directors of a company, filed a petition seeking to quash a complaint against them under Sections 138/141 of the N.I. Act. The complaint alleged that the directors were in charge of and responsible for the conduct of the company's business when the offense was committed. The petitioners raised two questions for consideration:
i) Whether directors can be prosecuted based solely on the assertion in the complaint that they were in charge of the company's business.
ii) Whether a director who has resigned can be prosecuted after acceptance of resignation by the Board of Directors.
The court referred to previous judgments to determine the liability of directors. It was held that specific averments in the complaint regarding the director's role in the company's management are essential to establish liability under Section 141. Mere directorship is not sufficient to make a person liable. The court emphasized the need for clear allegations on how the directors were responsible for the company's business.
Issue 2: Prosecution of Resigned Director:
Regarding the second question, whether a resigned director can be prosecuted, the court did not delve into this issue. Due to the settled legal position in favor of the petitioners on the first question, the court decided to quash the proceedings against the present directors. The complaint was allowed to proceed against the company and another director who issued the bounced cheque. The court directed the trial court to conclude the trial expeditiously.
Conclusion:
The court quashed the complaint against the directors as the complaint lacked specific allegations regarding their role in the company's management. The proceedings were allowed to continue against the company and another director. The trial court was directed to expedite the trial process.
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2012 (6) TMI 886
Issues involved: Disallowance of commission payments to non-resident foreign agents/parties for which no TDS was made.
The assessing officer disallowed the deduction of commission payment to non-resident foreign agents/parties. The CIT(A) set aside the assessing officer's order and disallowed the additions, stating that no TDS was required to be deducted on the commission payment to non-resident agents/parties. The Tribunal upheld the CIT(A)'s decision based on CBDT Circulars of 1996 and 2000, which clarified that payments to non-resident agents operating outside the country are not taxable in India. The Tribunal found no illegality in the CIT(A)'s order and upheld the deletion of the addition. The Department did not dispute the evidence of payment to non-resident agents/parties. Therefore, the Court dismissed the Tax Appeal, as no substantial question of law was found to arise in this case.
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2012 (6) TMI 885
Issues involved: Delay in filing appeal, condonation of delay, substantial justice, liberal approach in condonation of delay.
Delay in filing appeal: The assessee was aggrieved by the impugned order not condoning the delay of 5 months and 6 days in filing the appeal and not deciding the appeal on merit. The order of the Assessing Officer was passed u/s 143(3) of the Act on 31.12.2009, and the appeal was filed after the delay along with an application for condonation of delay.
Condonation of delay: The Tribunal considered whether the delay should be condoned, noting that the delay was caused due to the fault of the earlier Chartered Accountant. The Tribunal referred to the power to condone delay u/s 5 of the Indian Limitation Act, 1963, enabling courts to do "substantial justice" by disposing of matters on merits. The Tribunal emphasized the need for a liberal approach in condoning delay, stating that the interest of both the assessee and the revenue cannot be ignored.
Substantial justice and liberal approach: The Tribunal highlighted that a pragmatic view should be taken in matters of condonation of delay, as refusing to condone delay in a meritorious matter may defeat the cause of substantial justice. The Tribunal emphasized that the law of limitation aims to keep every remedy alive and that delay can be condoned for sufficient and good reasons supported by proper evidence. The Tribunal concluded that condoning the delay would allow the appeal to be decided on merit after providing the assessee with an opportunity to be heard and furnish evidence.
Decision: The Tribunal allowed the appeal for statistical purposes only, condoned the delay, and restored the file to the CIT(A) for fresh adjudication on merit and in accordance with the law. The Tribunal emphasized the importance of providing adequate opportunity for hearing to litigants and upheld the principle of substantial justice in the decision-making process.
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2012 (6) TMI 884
Issues Involved:1. Legitimacy of the peak credit theory applied by CIT(A). 2. Justification of the addition of Rs. 14,57,000/- as peak cash deposit. 3. Examination of material evidence not presented at the assessment stage. Summary:Issue 1: Legitimacy of the peak credit theory applied by CIT(A) The CIT(A) accepted the peak credit theory, which resulted in a relief of Rs. 27,39,953/- for the assessee. The Revenue contested this, arguing that the rotation of funds was not established, and there was no direct nexus between the conclusion of fact and the primary fact upon which the conclusion was based. Issue 2: Justification of the addition of Rs. 14,57,000/- as peak cash deposit The CIT(A) restricted the addition to Rs. 43,44,270/-, reasoning that the peak cash deposit of Rs. 14,57,000/- was justified as it was the highest cash balance on 23.05.2006. The CIT(A) also considered 1% of the total cash credited as deemed income earned by the appellant, amounting to Rs. 1,37,270/-. The assessee's appeal against this addition was dismissed, as the Tribunal found no legally sustainable merits to interfere with the CIT(A)'s conclusion. Issue 3: Examination of material evidence not presented at the assessment stage The Revenue's appeal highlighted that the material evidence for the peak credit of cheques was not furnished at the assessment stage. The Tribunal deemed it appropriate to remit the matter to the Assessing Officer for fresh examination of the material produced before the CIT(A). The assessee was also allowed to provide additional material and explanations. Consequently, the Revenue's appeal was allowed for statistical purposes, limited to this issue. Conclusion The appeal of the assessee was dismissed, and the appeal of the Revenue was allowed for statistical purposes for the limited purpose of re-examining the material evidence. Order pronounced in the Open Court on the day of hearing itself i.e. 25.06.2013.
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2012 (6) TMI 883
Issues involved: Appeal against the order of the Commissioner of Income-tax u/s 143 for the assessment year 2006-07.
Grounds of appeal:
1. Challenge to orders of authorities as being against law, equity, and facts.
2. Disallowance of bad debts of Rs. 30,00,000.
3. Disallowance u/s 40(a)(ia) of Rs. 54,750.
4. Disallowance u/s 40A(3) of Rs. 9,874.
5. Disallowance of Car Maintenance and Car depreciation of Rs. 15,950.
Details of the Judgment:
- The assessee, deriving income from money lending and a wind mill, filed a return declaring total income of Rs. 1,51,600 for the assessment year 2006-07.
- During assessment, it was found that the assessee admitted additional income of Rs. 1.15 crores, with Rs. 30 lakhs written off as bad debts.
- The Assessing Officer (AO) disallowed the bad debts as the assessee failed to provide details of debtors and nature of debts, holding them not genuine u/s 36(1)(vi) of the Income-tax Act.
- Disallowances were also made for non-deduction of TDS on interest payments and non-payment of insurance premium by crossed cheque or DD.
- The AO disallowed car maintenance and depreciation partially for personal use.
- The CIT(A) confirmed the AO's order, leading to the appeal before the ITAT.
- Regarding bad debts, the ITAT held that the debts were not proven genuine, rejecting the appeal.
- On disallowance u/s 40a(ia), the ITAT found the provision not applicable due to the turnover and additional income declared by the assessee.
- Disallowance u/s 40A(3) for insurance premium to General Insurance Company was upheld as not covered under Rule 6DD exemptions.
- Ground No.5 was rejected for not being raised before the CIT(A).
- Additional grounds on interest charges were allowed as consequential relief to the assessee.
- The appeal was partly allowed by the ITAT.
Conclusion: The ITAT upheld disallowances of bad debts and insurance premium, while allowing relief on disallowance u/s 40a(ia) and additional interest charges.
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2012 (6) TMI 882
Issues involved: Application for recording terms of settlement u/s XXXIX Rule 3 CPC, decree of suit in terms of settlement, refund of court fee u/s Section 16A of Court Fee Act.
Recording terms of settlement: The plaintiff filed a suit for recovery of a specific amount. Both parties filed an application under XXXIX Rule 3 CPC to record the terms of settlement. The application was signed by authorized representatives of both parties and supported by affidavits. A Deed of Settlement was also submitted. The defendant's representative confirmed the authenticity of signatures. The defendant handed over two cheques in full settlement of the claims.
Decree of suit: After hearing the parties and examining the settlement terms, the court found them lawful and decreed the suit in accordance with the Deed of Settlement dated 17.5.2012. Each party was directed to bear their own costs, and a decree sheet was ordered to be prepared.
Refund of court fee: As the parties reached a settlement before framing of issues, the court ordered the refund of court fee to the plaintiff as per Section 16A of the Court Fee Act.
Disposition of applications: Two applications, I.A.16835/2011 (O 37 R 3) and I.A.6313/2012 (Leave to defend), were disposed of due to the settlement between the parties.
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2012 (6) TMI 881
Issues involved: Appeal against duty demand and penalty under Section 11AC of the Central Excise Act, 1944 regarding the benefit of Notification 67/95-CE for the manufacture of petroleum products used in electricity generation.
The appellant filed an appeal against the duty demand and penalty imposed under Section 11AC of the Central Excise Act, 1944, based on Order-in-Original No. CCE/Shillong/07/2007 confirming the demand of Rs. 7.41 Crores. The appellant, engaged in the manufacture of petroleum products for electricity generation, claimed the benefit of Notification 67/95-CE. The Department contended that the electricity generated was used for both refinery and non-refinery operations, denying the benefit of the notification. The appeal was made to challenge this decision (Para 1-2).
The appellant's Chief Finance Manager argued that they had complied with Rule 6 and reversed proportionate credit on inputs, thus claiming the exemption as per law. Reference was made to a previous case where matters were remanded for examination of Rule 6 of Cenvat Credit Rules, 2004, with retrospective effect. The Department, represented by the ld. A.R., supported the findings of the ld. Commissioner (Appeals) (Para 3-4).
A previous Tribunal order highlighted a common issue where applicants sought waiver of predeposit of duties and penalties under various rules, including Rule 6 of the CENVAT Credit Rules. The Tribunal noted retrospective amendments by the Finance Act, 2010, allowing reversal of credit for inputs used in exempted goods. Consequently, the demands were waived, and the matter was remanded for decision by the Commissioners of Central Excise in line with the retrospective amendments. The present case was remanded to the ld. Commissioner for a fresh decision, following the same approach, with a reasonable opportunity of hearing for the appellants. The appeal was allowed by way of remand (Para 5).
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2012 (6) TMI 880
Issues involved:
The only issue involved is against the deletion of addition of Rs. 22,29,385/- made by the Assessing Officer by holding that the remunerations received by the assessee in respect of the employment in Russia and Tanzania are not taxable in India under the provisions of section 5(2)(a) of the Income-tax Act, 1961.
In this case, the Appellate Tribunal ITAT Delhi considered an appeal filed by the revenue against the order of the CIT (Appeals)-XXIX, New Delhi dated 29.02.2010 for the Assessment Year 2006-07. The assessee, an individual, had filed the return of income for the Assessment Year 2006-07 declaring income of $23,100 on 03.11.2006.
Analysis and Decision:
The Tribunal noted that during the relevant period, the assessee had stayed in India for 135 days, which did not meet the requirement of 180 days for being a resident in India as per section 6(1)(a) and (c) read with Explanation (a) to section 6(1). Therefore, the status of the assessee was that of a non-resident. As the assessee had rendered services outside India and the income had accrued outside India, the income could only be taxed under the provisions of section 5(2)(a) of the Income-tax Act, 1961.
The Tribunal referred to a decision by the Hon'ble ITAT in the case of Ranjit Kumar Bose vs. ITO, where it was held that salary income accrued outside India but received in India could not be taxed on accrual basis under section 15. The Tribunal also cited the case of ADIT vs. Nandan Singh Chauhan, where it was established that merely instructing the salary to be transferred to an FCNR account in India does not bring the amount to taxation under the Indian Income Tax Act for an NRI.
Based on the facts of the case and the precedents cited, the Tribunal upheld the order of the CIT (A) and dismissed the revenue's appeal. Therefore, the appeal of the revenue stands dismissed, and the order was pronounced in open court on 28th June 2012.
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2012 (6) TMI 879
Issues: The judgment involves the question of whether excise duty can be added to the closing stock without a balancing deduction in the Profit & Loss account.
Summary:
The Tribunal's finding, based on the decision in Narmada Chematur Petrochemicals Limited case, highlighted that excise duty cannot be considered a cost in relation to raw materials or finished goods in the closing stock if the duty is not due and payable. The Tribunal emphasized that excise duty is not includible in the valuation of closing stock unless both the events of manufacturing excisable goods and their removal occur, as per the scheme of excise duty. The judgment of the High Court in Narmada Chematur Petrochemicals case was cited to support this position, leading to the dismissal of the Revenue's appeals.
In conclusion, the High Court dismissed the tax appeals, stating that the controversy was already settled by the earlier judgment in ACIT v. Narmada Chematur Petrochemicals Limited, and therefore, no substantial question of law arose for consideration.
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2012 (6) TMI 878
Issues Involved: Disallowance of Legal and Professional Expenses, Treatment of Interest on Advances, Disallowance of Business Expenses.
Legal and Professional Expenses Issue: The assessee challenged the disallowance of &8377; 3,34,750 claimed under 'Legal and Professional Expenses'. The AO disallowed the charges related to legal proceedings before the Bombay High Court, stating it was not connected to earning interest income. The CIT(A) upheld the disallowance, noting the absence of business activity or intention. However, the Tribunal found contradictions in the facts presented. It was revealed that the expenses were related to defending a Civil Suit concerning the 'Dheeraj Project'. Considering the nature of the business, the Tribunal directed the AO to allow the professional charges, except for a specific payment, as they were essential for the builder and developer activities.
Interest on Advances Issue: The dispute revolved around the treatment of interest income from advances made to sister concerns, assessed under 'Income from Other Sources' instead of 'Business Income'. The assessee argued that the funds were temporarily parked and should be considered business income. However, the Tribunal disagreed, stating that the interest income should be assessed under 'Income from Other Sources' due to the surplus funds situation. The decision of the CIT(A) was upheld, and the appeal on this issue was dismissed.
Business Expenses Disallowance Issue: The AO disallowed &8377; 80,970 out of the total business expenses claimed by the assessee. While some expenses were allowed, others were disallowed on the grounds of lack of business activity. The Tribunal considered the recurring nature of the expenses and allowed most of them, except for business promotion expenses. The AO was directed to allow the claimed expenses, except for the specified amount related to business promotion. As a result, the appeal was partly allowed on this issue.
The Tribunal's decision on each issue was based on a detailed analysis of the facts and legal arguments presented by both parties, ensuring a fair and reasoned outcome.
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2012 (6) TMI 877
Rejection of books of accounts - section 145 applicability - Held that:- No dispute to the fact that the assessee was not maintaining stock register. The vouchers, most of them which are self made. Wages registers were not produced. Therefore, submissions of the assessee, Mr. P.N. Arora are that whatever details required by the AO have been produced before the AO and no defect in the same has been pointed out, can not help the assessee, since the facts remained that the assessee has not maintained stock register. The assessee has not produced wages register and have maintained the payment vouchers which are without any receipts and are self made vouchers. In such facts and circumstances of the case, the results declared by the assessee are not reliable and the books of account cannot be said to be complete and correct and correct income cannot be deduced from such books of account. No infirmity in the order of the ld. CIT(A), who has rightly invoked the provisions of section 145(3)
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2012 (6) TMI 876
Issues Involved:
1. Refusal of registration u/s 12AA(1) of the Income-tax Act, 1961.
2. Denial of exemption u/s 80G(5) of the Income-tax Act, 1961.
Summary:
Issue 1: Refusal of registration u/s 12AA(1)
The assessee-society, engaged in providing education, applied for registration u/s 12AA(1) of the Act. The Commissioner of Income-tax denied the registration, observing that the society operated like a commercial enterprise due to the surplus in its financial statements. The Commissioner relied on the judgment of the Hon'ble Apex Court in Municipal Corpn. of Delhi v. Children Book Trust [1992] 63 Taxman 385. However, the Tribunal noted that the Commissioner did not provide evidence that the society was engaged in non-charitable activities. The Tribunal emphasized that the scope of enquiry for registration u/s 12AA is limited to the genuineness of the trust and its objects, as established in CIT v. Red Rose School [2007] 163 Taxman 19 (All.) and other cited cases. The Tribunal concluded that mere surplus does not disqualify the society from registration, directing the Commissioner to grant registration u/s 12AA.
Issue 2: Denial of exemption u/s 80G(5)
Following the denial of registration u/s 12AA(1), the Commissioner also rejected the application for exemption u/s 80G(5). The Tribunal, referencing cases like Dr. Virendra Swarup Educational Foundation v. CIT [2010] 43 DTR 267 and Gaur Brahmin Vidya Pracharini Sabha [2011] 203 Taxman 226, reiterated that surplus generation alone is not a valid ground for denying exemption u/s 80G(5). The Tribunal found no evidence that the society's activities deviated from its educational objectives. Consequently, the Tribunal set aside the Commissioner's order and directed the grant of exemption u/s 80G(5).
Conclusion:
The Tribunal allowed the appeals, directing the Commissioner to grant both the registration u/s 12AA and the exemption u/s 80G(5) to the assessee-society.
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