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2013 (6) TMI 903
Eligibility to claim depreciation as an application of income for the purpose of claiming exemption under Section 11 - Held that:- In assessee's own case, for assessment years 2005-06 and 2006-07, this Tribunal, had held that an assessee could claim depreciation as application of income of funds while computing its eligible exemption under Sections 11 and 12 of the Act. The same view has been followed by this Tribunal in the case of Sri Ranganathar Trust [2013 (1) TMI 1025 - ITAT CHENNAI] - Decided in favour of assessee.
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2013 (6) TMI 902
Issues involved: Appeal against CIT(A) order for assessment year 2010-2011 regarding grant of depreciation on motor car used for business.
Summary:
The appeal was filed by the assessee against the order of the CIT(A)-XVI, Ahmedabad, challenging the denial of depreciation amount on a motor car used for business. The assessee contended that as per a CBDT notification, a commercial vehicle (Innova Car) used for business purposes was eligible for higher depreciation at a rate of 50%. The assessee argued that the term "commercial vehicle" in the notification included vehicles used for business or profession like lawyer, doctor, etc. The Revenue opposed this claim, relying on the AO and CIT(A) orders.
Upon review of submissions and relevant documents, including the CBDT notification dated 19.1.2009, it was observed that the assessee-HUF fell under the category of "individuals" as per the notification. The notification defined "commercial vehicle" as a vehicle used for business or profession, excluding salaried employees. The assessee asserted that the vehicle was solely used for business purposes, a claim not disputed by the Revenue. All conditions for claiming higher depreciation were met by the assessee, and the Revenue did not raise any objections to the same.
Consequently, considering the facts and legal provisions, the issue was decided in favor of the assessee, and the ground of appeal was allowed. As a result, the appeal of the Assessee was allowed by the Appellate Tribunal ITAT Ahmedabad.
Order pronounced in Open Court on the date mentioned hereinabove.
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2013 (6) TMI 901
Issues involved: Appeal against order u/s. 143(3) of the Income-tax Act, 1961 for Assessment Year 2005-06 involving addition of losses on derivative transactions, disallowance under section 14A, and treatment of business income as speculative.
Grounds raised by the assessee:
1. Addition of losses on derivative transactions as speculative.
2. Disallowance of set-off of losses against normal business income.
3. Disallowance u/s. 14A.
4. Addition u/s. 94(7).
5. Request for modification of orders.
Additional ground raised:
Treatment of entire business as speculative under Explanation below Section 73.
Summary of Judgment:
The assessee, a company engaged in share brokerage, appealed against the disallowance of losses on derivative transactions as speculative under section 43(5) and the disallowance u/s. 14A. The Appellate Tribunal held that the losses from speculative transactions could be set off against profits from deemed speculative business of purchase and sale of shares. The Tribunal directed the AO to restrict disallowance u/s. 14A to 1% of exempt income based on a High Court decision. The Tribunal dismissed a ground not pressed by the assessee and admitted an additional ground related to the treatment of share transactions under Explanation to Section 73.
The Tribunal noted that the Explanation to Sec. 73 deems the purchase and sale of shares by a company as speculative business for income tax purposes. As per Sec. 73(1), losses from speculation business can only be set off against profits from another speculation business. Therefore, the Tribunal allowed the set off of speculative losses against profits from deemed speculative business of share purchase and sale.
In conclusion, the Tribunal allowed the assessee's appeal, directing the AO to grant the benefit of set off as per the provisions discussed.
This summary provides a detailed overview of the judgment, highlighting the key issues, grounds raised by the assessee, and the Tribunal's decision on each issue.
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2013 (6) TMI 900
Issues Involved:
1. Authorization of the Law Officer to represent the complainant-company.
2. Requirement of enquiry u/s 202, Cr.P.C. before issuing process.
3. Maintainability of the writ petition in light of previous CRLMC dismissal.
Summary:
1. Authorization of the Law Officer to represent the complainant-company:
The petitioners challenged the maintainability of the complaint case u/s 138 of the N.I. Act on the ground that the Law Officer, Sri Mahendra Kumar Pradhan, was not authorized by the Board of Directors u/s 291 of the Companies Act, 1956, to represent the company. The Court noted that no resolution or power of attorney was filed before the learned S.D.J.M. authorizing the Law Officer. The Court referenced previous judgments, emphasizing that the power to represent the company in litigation must be given by the Board of Directors through a resolution. The Court concluded that the complaint filed by the Law Officer without proper authorization was incompetent and not maintainable.
2. Requirement of enquiry u/s 202, Cr.P.C. before issuing process:
The petitioners argued that the learned S.D.J.M. issued process without conducting a mandatory enquiry u/s 202, Cr.P.C., as the accused resided beyond the jurisdiction of the Court. The Court highlighted the mandatory nature of the enquiry u/s 202, Cr.P.C., especially when the accused resides outside the jurisdiction. The Court found that the complaint case records did not show any enquiry being conducted, thus violating the mandatory provision, which vitiated the order taking cognizance and issuing process.
3. Maintainability of the writ petition in light of previous CRLMC dismissal:
The opposite party contended that the writ petition was not maintainable as the petitioners had previously filed a CRLMC No. 1977 of 2008, which was dismissed. However, the Court observed that the grounds and points urged in the present writ petition were not raised in the earlier CRLMC. Therefore, the dismissal of the earlier CRLMC did not bar the filing of the present writ petition.
Conclusion:
The Court allowed the writ petition, quashing the proceeding in ICC No. 847 of 2008 pending before the learned S.D.J.M., Bhubaneswar, due to the lack of proper authorization for the Law Officer to file the complaint and the failure to conduct a mandatory enquiry u/s 202, Cr.P.C.
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2013 (6) TMI 899
Issues Involved:1. Whether the respondent's communication was sent to the wrong email address. 2. Whether the petitioner was prejudiced due to the respondent's actions. 3. Whether the petitioner was negligent in checking the provided email addresses. 4. Whether the tender process was conducted fairly and without arbitrariness. 5. Whether the petitioner's delay in approaching the court affects the relief sought. Summary:Issue 1: Wrong Email AddressThe petitioner argued that the respondent sent the communication dated 21st February 2013 to the wrong email address, causing a delay in their response. The court found that the petitioner had provided multiple email addresses, including [email protected], which received the email but was treated as spam. The court held that the respondent was not at fault for sending the email to one of the provided addresses. Issue 2: Prejudice Due to Respondent's ActionsThe petitioner claimed prejudice due to the respondent's mistake in sending the email to the wrong address. The court noted that the petitioner did receive the email on 21st February 2013, and the delay in discovering it was due to the petitioner's own negligence. The court found no fault or malice on the part of the respondent. Issue 3: Negligence in Checking Email AddressesThe court emphasized that the petitioner was duty-bound to check all provided email addresses regularly, as instructed in the bidding form. The court found it unreasonable for a multinational company to neglect checking emails for 18 days, leading to the delay in responding to the respondent's communication. Issue 4: Fairness of Tender ProcessThe court examined the tender process and found no arbitrariness, malice, or violation of natural justice principles. The petitioner was informed on the given email ID to respond by 1st March 2013, and the delay was due to the petitioner's negligence. The court held that the decision-making process was reasonable and did not suffer from arbitrariness or unreasonableness. Issue 5: Delay in Approaching the CourtThe court noted that the petitioner filed the writ petition on 6th May 2013, more than a month after the impugned order dated 4th April 2013. The court found that the delay in approaching the court, coupled with the advanced stage of the tender process, affected the petitioner's challenge to the bidding process. Conclusion:The court dismissed the writ petition, finding no merit in the petitioner's claims. All interim orders were vacated, and all pending CMs were disposed of.
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2013 (6) TMI 898
Issues Involved:
1. Reopening of assessment u/s 16(2)/17 of the Wealth Tax Act.
2. Addition to taxable wealth by estimating the value of jewellery.
3. Addition to taxable wealth by estimating the value of agricultural land.
Summary:
1. Reopening of assessment u/s 16(2)/17 of the Wealth Tax Act:
During the hearing, the learned counsel for the assessee did not press this ground. Consequently, this issue was dismissed as not pressed.
2. Addition to taxable wealth by estimating the value of jewellery:
The assessee contested the valuation of jewellery estimated by the Assessing Officer, arguing that the valuation was without basis as a Valuer report was duly filed. The Assessing Officer's valuation was challenged right from the assessment stage. The Tribunal noted that new documents were filed by the assessee, which highlighted factors such as the difference in price between 24 carat and 22 carat gold, dealers' margin, and melting charges, which were not considered previously. The Tribunal remanded the issue to the Assessing Officer for reconsideration, ensuring no grievance to either side. This ground was allowed for statistical purposes.
3. Addition to taxable wealth by estimating the value of agricultural land:
The assessee argued that the agricultural land was incorrectly offered as a taxable asset due to ignorance. The Tribunal considered various documents, including revenue records and government documents, indicating that the land was agricultural and construction was not permissible. The Tribunal referred to Circular No. 14(XL-35) dated 11.4.1995, which mandates that officers should assist taxpayers in claiming due reliefs. The Tribunal concluded that the land did not fall under the definition of "urban land" as per Explanation 1(b) to section 2(ea) of the W.T. Act, and thus, should not be considered a taxable asset. This ground was allowed, and the appeals were partly allowed for statistical purposes.
Final Pronouncement:
The order was pronounced in the open Court on 28.6.2013.
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2013 (6) TMI 897
Issues Involved:
1. Disallowance of deduction u/s 80IB(10) due to non-completion of the project within the stipulated period.
2. Interpretation of the term "housing project" and the applicability of additional FSI and TDRs.
Summary:
Issue 1: Disallowance of Deduction u/s 80IB(10)
The assessee, a partnership firm engaged in the business of promoter, builder, and developer, faced disallowance of deduction u/s 80IB(10) amounting to Rs. 1,00,17,003/- for A.Y. 2007-08. The Assessing Officer (AO) disallowed the deduction on the grounds that the project "Gulmohar Paradise Home, Kharadi" was not completed within the stipulated period. The AO noted that the project initially comprised 80 flats as per the commencement certificate issued by PMC on 28.04.2004, and later 46 more flats were added in 2005. The completion certificates for the 126 flats were received in parts on 13.02.2006, 06.05.2008, and 15.12.2008. However, the AO concluded that the project was not completed in totality by 31.03.2009, as required u/s 80IB(10)(a), and thus rejected the deduction claim.
Issue 2: Interpretation of "Housing Project" and Additional FSI
The assessee argued that the project of 126 flats was completed before the due date of 31.03.2009, and the additional FSI sanctioned on 10.06.2009 for constructing 30 additional flats was a separate project. The assessee cited a clarification from CBDT's letter dated 04.05.2001, which allowed additional housing projects on existing sites to qualify for deduction u/s 80IB(10) if undertaken by a separate undertaking with separate books of accounts. The AO, however, maintained that the entire project, including the additional flats, should be considered as one and thus disallowed the deduction.
Tribunal's Decision:
The Tribunal found that the assessee had completed the initial project of 126 flats before the stipulated date of 31.03.2009 and received the necessary completion certificates. The additional construction of 30 flats using the additional FSI sanctioned on 10.06.2009 was considered a separate project. The Tribunal emphasized that the beneficial provisions of section 80IB(10) should not be diluted by narrow interpretations. Therefore, the assessee was entitled to the deduction u/s 80IB(10) for the 126 flats completed before 31.03.2009. The Tribunal directed the AO to allow the deduction accordingly. Similar reasoning was applied for A.Y. 2008-09, and the claim of deduction u/s 80IB(10) was allowed.
Conclusion:
Both appeals filed by the assessee were allowed, and the assessee was granted the deduction u/s 80IB(10) for the 126 flats completed before the due date. The Tribunal's decision was pronounced on 26th June 2013.
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2013 (6) TMI 896
Government providing aids for the persons living BPL - Payment to hospitals for rendering medical services - Need to deduct TDS u/s 194J and attract 201(1) on non-deduction? - HELD THAT - State Government acted as agent of such patients. Since it being the personal expenses of such poor patients, as per second proviso to s. 194J, the patients who are individuals are not required to deduct any tax at source.
Decision in favor of assessee.
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2013 (6) TMI 895
Issues Involved:
1. Disallowance of job charges and forwarding & transportation charges u/s 40(a)(ia).
2. Applicability of the decision in Merilyn Shipping & Transport case.
3. Retrospective application of amendments to Section 40(a)(ia) and Section 201(1).
4. Verification of compliance with TDS provisions and filing of Form 26A.
Summary:
1. Disallowance of job charges and forwarding & transportation charges u/s 40(a)(ia):
The assessee, a company trading in soybean and oil, claimed deductions for job charges of Rs. 1,04,80,591/- paid to M/s. Kartik Solvex Pvt. Ltd. and forwarding & transportation charges of Rs. 11,22,460/- paid to M/s. Swastik Enterprises. The Assessing Officer disallowed these charges u/s 40(a)(ia) due to non-deduction of TDS. The CIT(A) partly deleted the disallowance, allowing relief of Rs. 86,10,068/- for job work charges and Rs. 8,49,445/- for professional and technical services, based on the decision in Merilyn Shipping & Transport.
2. Applicability of the decision in Merilyn Shipping & Transport case:
The CIT(A) relied on the decision of the I.T.A.T. Special Bench in Merilyn Shipping & Transport, which held that disallowance u/s 40(a)(ia) applies only to amounts payable at the year-end. However, the Andhra Pradesh High Court suspended this decision, making the CIT(A)'s reliance on it erroneous.
3. Retrospective application of amendments to Section 40(a)(ia) and Section 201(1):
The Finance Act, 2010 and 2012 amendments to Section 40(a)(ia) and Section 201(1) are clarificatory and retrospective. The amendments state that if TDS is deducted and paid before the due date of filing the return u/s 139(1), the expenditure should be allowed. The Tribunal referenced decisions from the Supreme Court and Kolkata High Court supporting the retrospective application.
4. Verification of compliance with TDS provisions and filing of Form 26A:
The assessee argued that the recipients of the payments had included these amounts in their income and paid due taxes, filing Form 26A. The Tribunal remanded the case to the Assessing Officer to verify the returns filed by the recipients and the certificates from Chartered Accountants, ensuring compliance with TDS provisions. The assessee was given an opportunity to substantiate its claims with additional documents.
Conclusion:
The appeals by the Revenue and the assessee were allowed for statistical purposes, and the cross objection was dismissed. The matter was remanded to the Assessing Officer for fresh consideration based on the Tribunal's observations.
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2013 (6) TMI 894
Issues Involved:1. Deletion of addition of Rs. 14,59,240 made by the AO on the finding that the share transactions were not genuine. Summary:Issue 1: Deletion of Addition of Rs. 14,59,240 by AOThe Department's appeal challenges the CIT(A)'s order dated 15-07-2011, which deleted the addition of Rs. 14,59,240 made by the AO. The AO had considered the share transactions as non-genuine, citing several reasons including SEBI's findings of manipulation in the trading of M/s Shree Nidhi Trading Co. Ltd., the involvement of a broker running a racket of providing accommodation entries, and the assessee's failure to produce vital evidence like the Contract Note in Form A. The assessee argued that the shares were purchased through the stock exchange and reflected in the DEMAT account, and the transactions were genuine. The CIT(A) accepted the assessee's contentions, noting that the DEMAT account showed the shares and the AO had not provided any adverse findings about the DEMAT account. The CIT(A) also pointed out that similar transactions were accepted in the case of Miracle Carriers and Trading Co. The Tribunal considered the submissions and evidence, including the DEMAT account, contract notes, and the fact that the shares were held for more than one year and sold through the stock exchange with applicable taxes paid. The Tribunal concluded that the transactions were genuine and the Long Term Capital Gain was rightly claimed as exempt u/s 10(38) of the Act. Therefore, the Tribunal upheld the CIT(A)'s decision and dismissed the Department's appeal. Conclusion: The appeal filed by the Revenue is dismissed.
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2013 (6) TMI 893
Issues involved:
The judgment involves cross appeals filed by the assessee and the revenue against the order of the learned CIT(A)-I, Ahmedabad for the assessment year 2007-08, concerning the addition of unexplained jewellery found during a search operation.
Details of the Judgment:
Issue 1: Disputed Jewellery Valuation
The AO accepted part of the explanation provided by the assessee regarding the jewellery found during the search operation but made an addition of a significant amount. The CIT(A) confirmed part of the addition and deleted the rest, leading to appeals from both parties.
Issue 2: Benefit of Circular No.1916
The assessee claimed that the benefit of Board Circular No.1916 should be extended to other family members as well, apart from the jewellery purchased by the assessee. The AO had allowed the benefit only to the assessee, leading to a dispute.
Judgment Details:
Issue 1: Disputed Jewellery Valuation
The CIT(A) allowed additional benefit to the assessee based on the valuation report and Will of Virbalaben, the mother-in-law of the assessee, for jewellery found in specific locations. The tribunal upheld this decision, stating that the objection raised by the AO regarding the valuation report not matching the items found was not valid. The tribunal emphasized that the jewellery's ownership could not be disregarded solely because no wealth tax return was filed by Virbalaben.
Issue 2: Benefit of Circular No.1916
The tribunal rejected the assessee's claim for extending the benefit of Circular No.1916 to other family members, stating that the benefit could only be allowed for jewellery belonging to those specific individuals. The tribunal upheld the CIT(A)'s decision on this matter.
In conclusion, the tribunal dismissed both the assessee's and the revenue's appeals, upholding the CIT(A)'s order. The judgment was pronounced on 21/06/2013.
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2013 (6) TMI 892
Issues involved:
Assessee's appeal against CIT(A)'s order for AY 2008-09 challenging addition u/s 14A r/w rule 8D, applicability of Rule 8D, excessive disallowance made by AO.
Issue 1 - Addition u/s 14A r/w rule 8D:
The assessee contested the addition of Rs. 1,24,9432/- made by the AO u/s 14A of the IT Act r/w rule 8D, while the assessee had already made a suo motu disallowance of Rs. 2,46,888/-. The AR argued that no further disallowance could be made without proving the initial disallowance incorrect. The Tribunal examined the AO's findings and held that the AO was not required to establish the nexus of expenditure with exempt income since the assessee admitted to incurring such expenditure. The Tribunal also referenced a Mumbai Bench decision emphasizing that Rule 8D can only be invoked if the AO is not satisfied with the correctness of the assessee's claim regarding such expenditure.
Issue 2 - Applicability of Rule 8D:
The Tribunal analyzed the provisions of section 14A of the Act and the Mumbai Bench decision to determine the applicability of Rule 8D. It was concluded that the AO had recorded his dissatisfaction with the correctness of the assessee's claim regarding expenditure for earning exempt income, justifying the use of Rule 8D for disallowance calculation. The Tribunal rejected the assessee's argument that the basis for estimating expenditure (0.5% of dividend income) was faulty, as dividend income fluctuates yearly and does not necessarily correlate with expenditure.
Issue 3 - Excessive Disallowance:
The assessee contended that the disallowance of Rs. 1,49,6320/- was excessive and sought a reduction. However, the Tribunal upheld the AO's disallowance calculation based on Rule 8D, finding no reason to interfere with the CIT(A)'s order.
In conclusion, the Tribunal dismissed the assessee's appeal, upholding the addition made by the AO u/s 14A r/w rule 8D and confirming the disallowance amount. The decision was based on the AO's satisfaction with the correctness of the expenditure claim and the applicability of Rule 8D for disallowance calculation.
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2013 (6) TMI 891
Issues Involved:
The validity of the assessment order passed u/s 143(3) r.w.s. 147 of the Act due to non-communication of reasons recorded for reopening the assessment.
For AY 2005-06:
The assessee challenged the assessment order passed u/s 143(3) r.w.s. 147 of the Act, questioning the validity of the assessment order due to non-communication of reasons for reopening the assessment. The AO initiated proceedings u/s 147 of the Act by issuing a notice u/s 148 after the return was processed u/s 143(1). The AO disallowed certain amounts and additions were made to the total income. The CIT(A) confirmed the assessment order. The learned AR argued that the assessment order is invalid as reasons for reopening were not communicated, relying on legal precedents. The learned DR contended that reasons were communicated and objected to raising legal grounds not presented before the CIT(A). The ITAT held that the assessment order passed without communicating the reasons for reopening is null and void, following legal precedents. The ITAT allowed the appeal of the assessee for AY 2005-06.
For AY 2006-07:
The facts in this case were similar to AY 2005-06. Following the decision in AY 2005-06, the ITAT set aside the order passed by the CIT(A) and allowed the appeal of the assessee for AY 2006-07.
In conclusion, both appeals of the assessee were allowed by the ITAT.
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2013 (6) TMI 890
Issues Involved:
1. Addition of unexplained cash credits.
2. Addition of unexplained cash credit u/s 68.
3. Addition of undisclosed income from gifts.
4. Addition of undisclosed income from loans.
5. Addition of unexplained loan from a bank.
Summary:
1. Addition of Unexplained Cash Credits:
The first and second interconnected issues pertain to the CIT(A) confirming the addition of advances received against the sale of flats amounting to Rs. 1,80,000/- as unexplained cash credit. The CIT(A) also confirmed cash receipts of Rs. 1,00,000/- from three unidentified persons, Rs. 70,000/- from Sri Saradindu Sarkar, and Rs. 10,000/- from Sri Sujoy Ghatak. The Tribunal upheld the CIT(A)'s decision, noting that the assessee could not explain these cash receipts even during the appellate proceedings.
2. Addition of Unexplained Cash Credit u/s 68:
The third issue involves the CIT(A) confirming the addition of Rs. 1,85,500/- received from Smt. Rekha Guha as unexplained cash credit u/s 68 of the Act. The Tribunal found that the amounts were received through proper banking channels and were mentioned in the repayment details of the loan account. Consequently, the Tribunal deleted this addition.
3. Addition of Undisclosed Income from Gifts:
The first issue in the appeal for A.Y 2004-05 concerns the CIT(A) confirming the addition of Rs. 3,00,000/- received as gifts from six persons as undisclosed income. The Tribunal noted that the assessee had provided complete details, including the identity, creditworthiness, and genuineness of the transactions, supported by income tax documents of the donors. Citing the Calcutta High Court's decision in the case of CIT Vs. M/s. Dataware Private Limited, the Tribunal deleted the addition.
4. Addition of Undisclosed Income from Loans:
The second issue involves the CIT(A) confirming the addition of Rs. 3,00,000/- received as a loan from Smt. Putul Bose as undisclosed income. The Tribunal upheld the CIT(A)'s decision, noting that the assessee failed to provide the bank statement of the loan creditor to substantiate the transaction.
5. Addition of Unexplained Loan from a Bank:
The final issue pertains to the CIT(A) confirming the addition of Rs. 10,00,000/- as unexplained loan taken from West Bengal State Agricultural & Rural Development Bank Ltd. The Tribunal found that the loan was obtained and repaid in the immediately preceding assessment year 2003-04, and thus, no addition could be made on this issue. The Tribunal allowed this ground of appeal.
Conclusion:
The appeals of the assessee were partly allowed, with some additions being confirmed and others deleted based on the evidence and legal precedents. The order was pronounced in the open court on 21-06-2013.
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2013 (6) TMI 889
Issues Involved:
1. Disallowance of penalty of Rs. 67,531/-
2. Addition on account of discount of Rs. 2,05,230/-
3. Disallowance of Rs. 16,67,343/- u/s 14A
4. Addition of Rs. 53,00,631/- u/s 40(a)(ia)
5. Disallowance of payment of Rs. 35 lakhs made to Sri Rajesh Kasat u/s 40A(2)
6. Disallowance of foreign travel expenses of Rs. 1,33,526/-
7. Addition of Rs. 10,57,000/- on account of under-valuation of closing stock
8. Non-allowance of set off of carry forward loss of Rs. 3,71,640/-
Summary:
1. Disallowance of penalty of Rs. 67,531/-:
The assessee contested the disallowance of Rs. 67,531/- as penalty charges. The ITAT found the issue covered in favor of the assessee by the Hon'ble Delhi High Court in CIT Vs. Prasad and Company, where such penalties paid to the stock exchange were deemed deductible as business expenditure. The ITAT directed the deletion of the addition.
2. Addition on account of discount of Rs. 2,05,230/-:
The assessee failed to provide specific details of clients to whom excess brokerage was refunded. The CIT(A) upheld the disallowance due to lack of evidence and non-admission of additional evidence under Rule 46A. The ITAT remanded the issue back to the Assessing Officer to allow the assessee another opportunity to substantiate the claim.
3. Disallowance of Rs. 16,67,343/- u/s 14A:
The assessee argued that the shares were held as stock in trade and the dividend was incidental. The ITAT, following the Pune Bench decision in Smt. Apoorva Patni and others, held that no disallowance u/s 14A is warranted when shares are held as stock in trade. The ITAT directed the deletion of the addition.
4. Addition of Rs. 53,00,631/- u/s 40(a)(ia):
The assessee paid TDS to the government before the due date of filing the return. The ITAT, relying on the Pune Bench decision in H.A. Developers, held that no disallowance u/s 40(a)(ia) is warranted if TDS is deposited before the due date. The ITAT directed the deletion of the addition.
5. Disallowance of payment of Rs. 35 lakhs made to Sri Rajesh Kasat u/s 40A(2):
The ITAT found the sudden increase in remuneration to be questionable and remanded the issue back to the Assessing Officer to verify the reasonableness of the payment and the treatment of similar payments in subsequent years.
6. Disallowance of foreign travel expenses of Rs. 1,33,526/-:
The assessee failed to provide details and business necessity of foreign travel expenses. The ITAT upheld the CIT(A)'s disallowance due to lack of evidence.
7. Addition of Rs. 10,57,000/- on account of under-valuation of closing stock:
The assessee consistently followed the weighted average cost method for valuation, accepted by the department. The ITAT held that there should be no deviation from the consistent method and directed the deletion of the addition.
8. Non-allowance of set off of carry forward loss of Rs. 3,71,640/-:
The ITAT, following the Mumbai Bench decision in Gajendra Kumar T. Agarwal, allowed the set off of brought forward loss from derivatives against the profits of the same business in subsequent years.
Conclusion:
The appeal filed by the assessee was partly allowed for statistical purposes.
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2013 (6) TMI 888
Issues involved: Jurisdiction of the High Court to entertain a writ petition regarding remarks made by a Minister in a different territory.
Summary:
The petitioner sought a writ of mandamus directing the respondents to consider and act upon his representation regarding remarks made by a Minister. The petitioner alleged that the Minister made remarks against certain individuals at Puducherry and Madurantakam. However, the affidavit did not mention Madurantakam, and only the newspaper cutting referred to remarks made at Puducherry. The High Court at Madurai was established under the State Reorganisation Act, 1956, with territorial jurisdiction over certain districts. The Court emphasized that jurisdiction is based on the cause of action, which must be substantial. The Court cited precedents to highlight the importance of the place of accrual of the cause of action in determining jurisdiction.
The Court referred to a Full Bench decision emphasizing that even a small part of the cause of action within the territorial jurisdiction may not compel the Court to decide on the merit. The Court stressed the need for necessary averments disclosing a cause of action for the Court to entertain a matter. It reiterated that a Court cannot assume jurisdiction it does not possess, as lack of jurisdiction renders any action taken null and void. In this case, the Court found that the remarks were made in Puducherry, outside its territorial jurisdiction, leading to the dismissal of the writ petition due to lack of jurisdiction.
The petitioner was granted liberty to approach the competent Court if advised. A request for Special Leave to appeal to the Supreme Court was rejected due to the undisputed jurisdiction limit.
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2013 (6) TMI 887
Issues involved: Stay of demand for Assessment Years u/s.10B of the I.T.Act,1961, financial stringency due to disallowances u/ss.68 and 69, discretion of the Bench regarding stay.
In this judgment by the Appellate Tribunal ITAT CUTTACK, the petitions for stay of demand for the respective Assessment Years were considered. The assessee had claimed income exempt u/s.10B of the I.T.Act,1961, and the demand was raised due to disallowance of this exemption. The assessee, facing financial stringency as disallowances were made u/ss.68 and 69, requested a stay of demand until the appeals were disposed of by the Tribunal. The Tribunal acknowledged the financial difficulties faced by the assessee and granted stay for both Assessment Years, directing the cases to be fixed for hearing in the next Division Bench. The Revenue's raising of demands had deprived the assessee of legitimate revenue, impacting the business operations which had been closed on government direction. The Tribunal's decision aimed to provide relief to the assessee in light of these circumstances.
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2013 (6) TMI 886
Issues involved:
The issues involved in the judgment are:
1. Addition of income by CIT(A) against the appellant's admission of nil income.
2. Non-acceptance of Notice u/s 11(2) of the Income Tax Act, 1961 by the Assessing Officer.
3. Rejection of rectified Form No.10 by Ld CIT(A) despite filing by the appellant.
4. Denial of exemption of income for charitable trust u/s 11(1) and u/s 11(2) by lower authorities.
5. Legality of assessment order u/s 143(3) and appellate order.
Issue 1: Addition of income by CIT(A)
The appellant appealed against the addition of Rs. 42,75,263/- to the income assessed by the Ld Adll. CIT, Range-2, Muzaffarnagar, despite the appellant admitting nil income. The Ld CIT(A) confirmed this addition, leading to the appeal.
Issue 2: Non-acceptance of Notice u/s 11(2)
The Assessing Officer did not accept the appellant's Notice u/s 11(2) of the Income Tax Act, 1961, citing technical reasons such as the form not being in the specified format and lack of clarity on the purpose of accumulation of funds.
Issue 3: Rejection of rectified Form No.10
The appellant rectified the omission of mentioning Form No.10 before the Assessing Officer by filing it before Ld CIT(A) Muzaffarnagar. However, this rectification was rejected without valid reasons.
Issue 4: Denial of exemption for charitable trust
The authorities did not grant the benefit of exemption of income for the appellant's charitable trust u/s 11(1) and u/s 11(2) of the Income Tax Act, 1961. The appellant argued for the allowance of general exemption of 15% of 'Income from property held for charitable or religious purposes' as per sec. 11(1) of the Act.
Issue 5: Legality of assessment and appellate orders
The appellant challenged the legality of the assessment order u/s 143(3) of the Income Tax Act, 1961 dated 1.4.2010 and the subsequent appellate order dated 3.8.2013, alleging they were against the law and facts.
This judgment highlights the importance of complying with prescribed forms and procedures under the Income Tax Act, especially concerning charitable trusts and accumulation of funds for specific purposes. The Tribunal emphasized the need for proper documentation and adherence to statutory requirements to claim exemptions and deductions effectively.
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2013 (6) TMI 885
Issues involved: Appeal against order of Commissioner of Income-tax (Appeals) regarding disallowance u/s 10A for assessment year 2008-2009.
Issue 1: Disallowance u/s 10A
The only issue raised in the appeal is the confirmation of addition on account of disallowance u/s 10A amounting to Rs. 1,60,09,182. The Assessing Officer opined that loss of ineligible units should be reduced from profits of eligible units for working out deduction u/s 10A. Certain expenses were not properly apportioned between eligible and ineligible units. The A.O. apportioned expenses based on turnover and did not allow deduction u/s 10A on other income not derived from the industrial undertaking. The CIT(A) upheld the A.O.'s action, stating that profits or losses of eligible unit cannot be set off against non-eligible unit. The appeal raised concerns about set off of losses from non-eligible units against profits of eligible units and apportionment of expenses.
Issue 2: Apportionment of Expenses
The Tribunal upheld the authorities' decision on apportionment of expenses and treatment of other income as not eligible for deduction u/s 10A. The Hon'ble Bombay High Court held that profits of eligible units cannot be set off against losses of non-eligible units. The Tribunal directed the matter to be restored to the A.O. to decide the issue afresh without setting off loss from non-eligible unit against profits of eligible units.
In conclusion, the appeal was partly allowed for statistical purposes, and the order was pronounced on June 26, 2013.
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2013 (6) TMI 884
Issues involved: The judgment involves appeals by the Revenue for the assessment years 2005-06, 2006-07, and 2007-08, addressing various issues including disallowance of charges paid, disallowance of interest on borrowed funds, disallowance under section 14A, and charges paid without tax deduction at source.
Assessment Year 2005-06:
1. Disallowance of Charges Paid to M/s.Fumigation Services:
The Commissioner of Income-tax(Appeals) erred in granting relief under section 40(a)(ia) for charges paid to M/s.Fumigation Services. The Tribunal held that the decision of the Special Bench of the Tribunal no longer holds good due to a judgment of the Hon'ble Calcutta High Court. Consequently, the disallowance made by the Assessing Officer was confirmed, deciding in favor of the Revenue.
2. Disallowance of Freight Charges to M/s.Goodearth Maritime Limited:
The Revenue challenged the deletion of disallowance under section 40(a)(ia) for freight charges paid to M/s.Goodearth Maritime Limited. The Tribunal upheld the Commissioner's decision, citing that the amendment to section 40(a)(ia) regarding TDS payment before the due date for filing of the return is retrospective. As the assessee complied with this requirement, the disallowance was not justified, ruling against the Revenue.
Assessment Year 2006-07:
1. Disallowance of Interest on Borrowed Funds:
The Revenue contested the deletion of the addition made for disallowance of interest on borrowed funds under section 36(1)(iii). The Tribunal upheld the Commissioner's decision, stating that there was no diversion of funds and the loans were covered by the assessee's internal resources, deciding against the Revenue.
2. Disallowance under Section 14A:
The Revenue challenged the deletion of disallowance under section 14A. While Rule 8D did not apply retrospectively, the Tribunal modified the decision, reducing the disallowance amount, partly allowing the ground raised by the Revenue.
3. Charges Paid to M/s.Fumigation Services:
The Revenue raised an issue regarding charges paid to M/s.Fumigation Services without tax deduction at source. The disallowance was confirmed, aligning with the decision for the assessment year 2005-06.
Assessment Year 2007-08:
1. Disallowance of Interest on Borrowed Funds:
Similar to the assessment year 2006-07, the Revenue contested the deletion of disallowance of interest on borrowed funds under section 36(1)(iii). Following the previous decision, the Tribunal upheld the Commissioner's order, ruling against the Revenue.
2. Disallowance under Section 14A:
The Revenue challenged the deletion of disallowance under section 14A. The Tribunal retained a disallowance amount, partly allowing the Revenue's claim.
3. Charges Paid to M/s.Fumigation Services:
The issue of charges paid to M/s.Fumigation Services without tax deduction at source was raised. The disallowance was confirmed, in line with the decision for the assessment year 2006-07.
4. Disallowance of Lorry Expenses:
The Revenue contested the relief granted towards disallowance of lorry expenses not supported by evidence. The Tribunal found the disallowance confirmed by the Commissioner to be sufficient considering the nature of expenses, deciding against the Revenue.
In conclusion, the Tribunal partly allowed the appeals filed by the Revenue for all three assessment years, addressing various issues related to disallowances and charges paid without tax deduction at source.
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