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Showing 41 to 60 of 902 Records
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2009 (8) TMI 1266
Issues Involved:
1. Disallowance of bad debts
2. Disallowance towards Research & Development (R&D) expenses
3. Disallowance towards foreign exchange loss
4. Consequential levy of interest u/s 234B & 234C
Summary:
1. Disallowance of Bad Debts:
The assessee contested the disallowance of bad debts amounting to Rs. 1,09,93,814. The learned CIT(A) did not follow the ITAT, Special Bench, Mumbai decision in DCIT Vs. Oman International Bank SAOG, which supports the allowance of bad debts u/s 36(1)(vii) r.w.s. 36(2). The CIT(A) erroneously required proof of irrecoverability, contrary to established case laws like CIT Vs. Star Chemicals Ltd. and others, which hold that write-off in books is sufficient. The Tribunal directed the Assessing Officer to allow the advances written off as claimed by the assessee.
2. Disallowance towards R&D Expenses:
The assessee's claim of Rs. 1,18,78,000 towards R&D expenses was disallowed due to lack of supporting vouchers. The Tribunal noted that similar claims were allowed in previous years and directed that the expenses incurred for quality control and development in the manufacturing of IMFL should be allowed as they were for business purposes.
3. Disallowance towards Foreign Exchange Loss:
The assessee's claim of Rs. 1,80,22,000 towards foreign exchange loss was disallowed by the Assessing Officer, who argued that the loans were used for investments rather than business purposes. The Tribunal found that the assessee had provided sufficient evidence to establish the nexus between the loans and working capital requirements. The Tribunal held that the forex loss should be allowed as a business loss, referencing the decision in Woodward Governor India (P) Ltd. & Others.
4. Consequential Levy of Interest u/s 234B & 234C:
The levy of interest u/s 234B & 234C was deemed mandatory and consequential to the merit additions considered above.
Conclusion:
The appeal was allowed, with the Tribunal directing the deletion of disallowances and the allowance of claimed expenses and losses. The decision was pronounced in the open court on 21st August 2009.
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2009 (8) TMI 1265
Issues involved:
The judgment addresses the following Issues:
1) Taxability of transfer charges received from transferees
2) Taxability of transfer charges exceeding alleged limits from transferors
3) Taxability of non-occupancy charges exceeding alleged limits
4) Profit motive impact on taxability of charges exceeding prescribed limits
5) Taxability of receipts from sale of scrap
Taxability of transfer charges received from transferees:
The appellant's counsel referred to a previous judgment by the court which covered similar issues. The court ruled in favor of the appellant regarding this question.
Taxability of transfer charges exceeding alleged limits from transferors:
The court ruled in favor of the Revenue and against the appellant on this issue, as per the counsel's statement aligning with the previous judgment.
Taxability of non-occupancy charges exceeding alleged limits:
Similar to the previous issue, the court ruled in favor of the Revenue and against the appellant based on the counsel's submission.
Profit motive impact on taxability of charges exceeding prescribed limits:
The appellant's counsel did not pursue this question, and as a result, it was not further discussed in the judgment.
Taxability of receipts from sale of scrap:
Similarly, the appellant's counsel did not press this question, leading to the disposal of the appeal in accordance with the court's order. No costs were awarded in this matter.
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2009 (8) TMI 1264
Murder - Offence punishable u/s 302 and 394 of the IPC - someone by killing and also amputating the feet of a lady has taken away her silver anklets - The High Court acquitted the respondent of all the charges by setting aside the judgment and order of conviction passed against the accused by the trial court - recovery of ornaments of deceased on the basis of the information furnished by the accused - PW-17, recovered a pair of silver anklets of feet, one pair of silver bracelets of hands, one pair of silver earrings and one golden nose- ring (nath) from Ramcharan and prepared memo, Exhibit P-14. Again on 27.01.1994 accused Naresh gave information, Exhibit P-18, to PW-21 for the recovery of "Khurpi" the alleged weapon of offence and pursuant to which PW-21 recovered "Khurpi" at the instance of accused Naresh under Exhibit P-10.
High Court held that there was no eyewitness to the occurrence and the entire case of the prosecution rests on the circumstantial evidence. Each of the circumstance allegedly making a chain was examined by the High Court and on scrutiny thereof held that none of the said circumstances lead to the inference that the respondent had committed the aforesaid offence.
HELD THAT:- Before we discuss the evidence on record, we must bear in mind the scope of interference with an order of acquittal. An order of acquittal should not be lightly interfered with even if the court believes that there is some evidence pointing out the finger towards the accused. This Court has dealt with the scope of interference with an order of acquittal in a number of cases. The principle deducible from the said Judgments regarding the scope of interference with an order of acquittal could be summarized.
None of the circumstances relied upon by the prosecution stands proved against the accused leading to a definite conclusion that it was the accused, who had committed the offence. It is also not known why the said witness had turned her back towards the accused only because the accused was washing his hands. If accused was washing his hands as stated by Mathura (PW-4) there is no likelihood of body of the accused being smeared with mud as alleged by some of the prosecution witnesses (PWs 7 & 8).
We do not find any such direct evidence that the said strap of wristwatch belongs to the watch of the accused. None of the witnesses stated that such strap of wristwatch belongs to the accused nor any wristwatch has been recovered from the accused. So far the time of occurrence is concerned there is also no unanimity and the evidence is scanty regarding the time of occurrence. In our considered opinion, the evidence regarding commission of offence by the accused in the field and also amputation of legs of the deceased is neither cogent nor reliable, and therefore, those circumstances cannot be relied upon for basing conviction of the respondent.
Recovery of ornaments is concerned, the star witness in that regard is PW-20. If the accused has taken away the jewellery on the same day then how could the police recover the same jewellery from the custody and possession of PW-20. Besides, since he had stated that he would not purchase the jewellery there was no occasion for Naresh to keep that jewellery with PW-20. In the disclosure statements the accused stated that he sold the jewellery to Ram Chandra Saraf whereas the same was recovered from PW-20. On scrutinizing the evidence, we find that the aforesaid recovery of jewellery is shrouded in a total mystery as it was not recovered from the place and person to whom allegedly accused sold.
Recovery of "Khurpi" is concerned the same admittedly did not contain any bloodstains on it and it was recovered from an open place. Since there was no bloodstain on it, the police also did not send it for chemical examination. Therefore, it cannot be said that the said weapon was used for committing murder of the deceased. There could be some suspicion regarding the conduct of the accused at the time of occurrence but the same cannot in any manner conclusively prove and establish that the accused has committed the murder of the deceased. Unless and until we are satisfied that the evidence adduced clearly and pointedly establish the guilt of the accused we cannot pass an order of conviction by setting aside the order of acquittal.
The view that is taken by the High Court is found to be a plausible view, and therefore, the benefit must always go to the accused and not to the prosecution. If the prosecution wants to prove the fact, the same must be proved by leading evidence, which is reliable and trustworthy, which pinpoints and conclusively proves the guilt of the accused. This is not a case where we can safely hold that the evidence led was trustworthy and conclusively establishes that it is the accused only, who had committed the offence. Considering the entire facts and circumstances of the case we are not inclined to interfere with the order of acquittal.
We, accordingly, dismiss this appeal and uphold the order of acquittal passed by the Division Bench of the High Court.
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2009 (8) TMI 1263
Commission of offence u/s 467/468/120B of the Indian Penal Code - Whether after charge-sheet has been filed by the investigating agency u/s 173(2) of the CrPC, and charge has been framed against some of the accused on the basis thereof and the other co-accused have been discharged, the Magistrate can direct the investigating authorities to conduct a re-investigation or even further investigation under Sub-section (8) of Section 173 CrPC? - HELD THAT:- Once a charge-sheet is filed under Section 173(2) Cr.P.C. and either charge is framed or the accused are discharged, the Magistrate may, on the basis of a protest petition, take cognizance of the offence complained of or on the application made by the investigating authorities permit further investigation under Section 173(8). The Magistrate cannot suo moto direct a further investigation under Section 173(8) Cr.P.C. or direct a re-investigation into a case on account of the bar of Section 167(2) of the Code.
In the instant case, the investigating authorities did not apply for further investigation and it was only upon the application filed by the de facto complainant under Section 173(8), was a direction given by the learned Magistrate to re-investigate the matter. As we have already indicated above, such a course of action was beyond the jurisdictional competence of the Magistrate. Not only was the Magistrate wrong in directing a re-investigation on the application made by the de facto complainant, but he also exceeded his jurisdiction in entertaining the said application filed by the de facto complainant.
ince no application had been made by the investigating authorities for conducting further investigation as permitted under Section 173(8) Cr.P.C., the other course of action open to the Magistrate as indicated by the High Court was to take recourse to the provisions of Section 319 of the Code at the stage of trial.
No reason to interfere with the order of the High Court since it will always be available to the Magistrate to take recourse to the provisions of Section 319 if any material is disclosed during the examination of the witnesses during the trial.
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2009 (8) TMI 1262
Issues involved:
The judgment involves the issue of quashing a criminal case under Section 138 of the Negotiable Instruments Act based on a petition filed under Section 482 Cr.P.C alleging abuse of process of law and court.
Details of the Judgment:
Issue 1: Alleged offence under Section 138 of the Negotiable Instruments Act
The petitioner borrowed a sum of Rs. 2,20,000 from the respondent and issued a post-dated cheque for the same amount. The cheque was returned unpaid for insufficiency of funds, leading to the initiation of criminal proceedings. The petitioner contended that the cheque was filled up in the name of the respondent by another party, and a reply notice was promptly sent in response to the demand for payment.
Issue 2: Abuse of process of law and court
The petitioner argued that the transaction in question was part of a separate agreement for sale involving her son-in-law and father, and the respondent's brother. The petitioner claimed that the criminal case was an abuse of process of law and court, citing a related civil case for specific performance of contract. The respondent contended that the transactions were distinct and the petitioner was attempting to create confusion.
Judgment Analysis:
The court noted that while a complaint can be quashed if it does not make out the alleged offence, an exception exists if the initiation of proceedings is claimed to be an abuse of process of court. In this case, the court found discrepancies in the complaint and supporting documents, including an agreement for sale and statutory notices. The court concluded that the materials presented by the petitioner were sufficient to rebut the presumption under Section 139 of the Negotiable Instruments Act and discharge the reverse burden of proof. As a result, the court quashed the criminal proceedings, determining that the petitioner had made out a clear case of abuse of process of court.
Conclusion:
The petition was allowed, and the criminal proceedings in C.C.No.120/2007 were quashed by the court, along with the closure of the connected MP.No.1 of 2009.
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2009 (8) TMI 1261
Issues involved: Challenge to removal from service by a private unaided school managed by a Society, maintainability of writ petition under Article 226 of the Constitution of India, availability of alternative remedy before the Civil Court.
Challenge to removal from service: The petitioner, an Administrative Officer at a private unaided school managed by a Society, challenged his removal from service through a writ petition. The school, not being an instrumentality of the State, conducted a departmental enquiry and dismissed the petitioner following CBSE Affiliation Bye-laws. The petitioner's appeal against the dismissal was also rejected. The court noted that the petitioner had the option to challenge the impugned orders before the Civil Court, as the school did not fall under the purview of being a State instrumentality. The court found no merit in the petitioner's argument and dismissed the petition, granting liberty to the petitioner to pursue the alternative remedy available.
Maintainability of writ petition: The petitioner argued that due to the public duties discharged by the respondent school, filing a writ petition under Article 226 of the Constitution of India was an efficacious remedy. Citing Supreme Court observations, the petitioner contended that seeking remedy under Article 226 was broader than Article 32. However, the court disagreed, stating that the respondent school, being a private unaided institution managed by a Society, did not qualify as an instrumentality of the State. The court held that the petitioner could challenge the impugned orders before the Civil Court, especially considering the disputed questions of facts raised in the case. Consequently, the court dismissed the petition, allowing the petitioner to pursue the alternative remedy available.
Availability of alternative remedy before the Civil Court: The court emphasized that the petitioner had an efficacious remedy to challenge the impugned orders before the Civil Court. Given that the respondent school was a private unaided institution managed by a Society and not an instrumentality of the State, the court deemed the Civil Court as the appropriate forum for addressing the disputed questions of facts raised by the petitioner. Consequently, the court dismissed the petition, granting the petitioner the liberty to avail his alternative remedy through the Civil Court.
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2009 (8) TMI 1260
Issues Involved:
1. Bail applications u/s 439 of Cr.P.C. 1973.
2. Offence under the Prevention of Money Laundering Act, 2002.
3. Contradictory satisfaction under section 37 of the N.D.P.S. Act and section 45 of the Prevention of Money Laundering Act.
4. Conditions for bail.
Summary:
1. Bail Applications u/s 439 of Cr.P.C. 1973:
Both applicants, the Managing Director of M/s. OPM International Private Limited and a Chartered Accountant/Professional Director of the same company, filed separate bail applications u/s 439 of Cr.P.C. 1973. They are charged with offences under section 4 of the Prevention of Money Laundering Act, 2002 r/w Section 120B of the Indian Penal Code.
2. Offence under the Prevention of Money Laundering Act, 2002:
The proceedings under the Prevention of Money Laundering Act were preceded by an N.D.P.S. Special Case. The applicants were initially granted bail by the Special Court under the N.D.P.S. Act, but the High Court kept the bail order in abeyance. The Supreme Court later directed the applicants to be enlarged on bail with certain conditions.
3. Contradictory Satisfaction under Section 37 of the N.D.P.S. Act and Section 45 of the Prevention of Money Laundering Act:
The Special Court recorded satisfaction under section 37 of the N.D.P.S. Act that the applicants are not guilty of the offences and are unlikely to commit any offence while on bail. However, the applications for bail under the Prevention of Money Laundering Act were rejected by recording a contrary satisfaction under section 45, stating there are no reasonable grounds for believing the applicants are not guilty of the offences.
4. Conditions for Bail:
The court examined the scheme of the Prevention of Money Laundering Act and concluded that the penal provisions get attracted only upon conviction for a scheduled offence. The court found it illogical to secure a conviction under section 3 of the Act if the person is acquitted of the scheduled offence. The court referenced the Supreme Court judgment in Ranjitsingh Sharma Vs. State of Maharashtra, emphasizing that restrictions on granting bail should not be pushed too far.
Final Order:
The applications were allowed, and the applicants were granted bail on the following conditions:
- Execution of bail bonds in a sum of Rs. 2 Lac each with one or two solvent sureties.
- Attendance at the office of Respondent No.1 once a week until the trial's completion.
- Passports to remain with the Intelligence Officer, Narcotic Control Bureau.
- Applicants not to leave Mumbai without prior court permission.
- Initial permission to deposit cash in lieu of surety for four weeks.
The applications were disposed of accordingly.
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2009 (8) TMI 1259
Issues involved: Objections under Order 21 Rules 58 & 59 CPC regarding property attachment; Ownership claim by objectors against Decree Holder's attachment; Allegations of collusion between objectors and Judgment Debtor; Validity of agreements to sell; Wrongful attachment and liability of Decree Holder.
Ownership Claim and Collusion Allegations: The objectors claimed ownership of the property with supporting documents, while the Decree Holder alleged collusion between the objectors and the Judgment Debtor. The Decree Holder contended that the property was the registered office of the Judgment Debtor company, but the court found this insufficient to justify attachment.
Evidence and Lack of Collusion Impact: The Decree Holder failed to provide concrete evidence of collusion and the court questioned the relevance of proving collusion without a direct impact on the execution of the decree against the Judgment Debtor. The court highlighted the loss caused by wrongful attachment as recognized in Section 95 CPC.
Legal Provisions and Corporate Veil: The judgment discussed the applicability of Section 531 of the Companies Act, 1956 and Section 53 of the Transfer of Property Act in cases of fraudulent transfers. It emphasized that the Judgment Debtor's debts are not recoverable from shareholders or family members unless specific conditions for piercing the corporate veil are met.
Validity of Agreements to Sell: The court addressed the issue of unregistered agreements to sell the property and cited relevant case law regarding such transactions in Delhi. It emphasized that attachment can only continue if the property belongs to the Judgment Debtor.
Decree Holder's Responsibility and Wrongful Attachment: The court criticized the Decree Holder for obtaining attachment without proper inquiry into the property's ownership and for persisting in the attachment despite being informed of the objectors' title. It emphasized the liability of the Decree Holder for wrongful attachment and vacated the attachment in favor of the objectors.
Liability and Redressal: The judgment highlighted the Decree Holder's liability for wrongful attachment and emphasized the need for redressal within the same litigation to prevent litigants from causing harm through baseless litigation. It cited legal precedents regarding wrongful attachment and held the Decree Holder accountable for the wrongful attachment of the objectors' property.
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2009 (8) TMI 1258
The Delhi High Court dismissed the appeal as the question raised was already covered by previous judgments in CIT vs. Woodward Governor India Pvt. Ltd. and Skycell Communications Ltd. The court stated that the question was a pure question of fact and no new legal issue had arisen.
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2009 (8) TMI 1257
Issues Involved:
1. Entitlement of vested remaindermen to notice of acquisition.
2. Legality of the High Court's direction to prosecute the writ petitioners and private respondents.
Summary:
1. Entitlement of Vested Remaindermen to Notice of Acquisition:
The primary issue was whether vested remaindermen of acquired lands were entitled to notice of acquisition, even if their names were not entered in the revenue records. The Supreme Court clarified that the Collector is required to issue individual notices to persons known or believed to be interested in the acquired land, which refers to persons whose names are recorded in the revenue records. The Court emphasized that there is no obligation on the part of the Collector to issue notices to persons whose names are not entered in the revenue records. The vested remaindermen, although persons interested, do not have a right to notice if their names are not recorded. Their rights in regard to compensation are protected by provisions for apportionment and referral of disputes to civil court.
2. Legality of the High Court's Direction to Prosecute the Writ Petitioners and Private Respondents:
The second issue was whether the High Court could have directed the prosecution of the writ petitioners and private respondents. The Supreme Court noted that the Division Bench reversed the Single Judge's decision on a legal ground, holding that only those whose names are entered in the revenue records are entitled to notice. The Division Bench inferred that the vested remaindermen should have had knowledge of the acquisition proceedings due to their close relationship with those served notices. However, the Supreme Court found no evidence of fraud or false claims by the writ petitioners and private respondents. The Court criticized the Division Bench for ordering prosecution without any investigation or enquiry, emphasizing that criminal law cannot be set into motion casually. The Supreme Court highlighted that raising a legal contention in a writ petition does not constitute fraud. Consequently, the direction to initiate criminal proceedings against the appellants and respondents 3 to 18 was deemed wholly unwarranted and was set aside.
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2009 (8) TMI 1256
Issues involved: Setting aside the penalty imposed under the Right to Information Act, 2005 for delay in supplying information.
Summary:
1. The writ petition was filed to challenge the penalty imposed for delay in supplying information under the Right to Information Act, 2005.
2. The Chief Information Commissioner rightly expressed displeasure at appointing non-qualified individuals as CPIOs.
3. The two class-IV officials were assisting the CPIO and were not solely responsible for collecting and supplying information.
4. CPIOs cannot escape their obligations and duties under the Act, and necessary consequences follow in case of failure or delay.
5. The penalty imposed on the petitioner, who was not designated as a CPIO, was based on a wrong assumption and without issuing any notice.
6. The impugned order imposing penalty on the petitioner was set aside, and the matter was remanded back for re-examination by the Central Information Commission.
7. The Central Information Commission will re-examine the case, issue notice to the concerned CPIO, and impose penalty if required.
8. The Court clarified that it did not express any opinion on imposing a penalty and stated that the Central Information Commission has the authority to pass an appropriate order.
The writ petition was disposed of, and the deposited amount was to be released to the petitioner.
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2009 (8) TMI 1255
Issues Involved:
1. Disallowance of staff welfare expenses.
2. Disallowance of contributions to PF/ESI.
3. Consideration of export benefit for deduction u/s 80HHC.
4. Consideration of interest income for deduction u/s 80HHC.
5. Deduction u/s 80HHC.
6. Consideration of export benefit for deduction u/s 80IB.
7. Consideration of interest income for deduction u/s 80IB.
8. Deduction u/s 80IB.
9. Deletion of addition on account of sales promotion expenses.
10. Deletion of addition on account of foreign traveling expenses.
11. Deletion of addition on account of miscellaneous expenses.
12. Deletion of addition on account of advance written off.
13. Deletion of addition on account of legal and professional expenses.
14. Deletion of addition on account of excise refund receivable.
15. Exclusion of excise duty and sales tax from turnover for deduction u/s 80HHC.
16. Inclusion of exchange gain, cash discount, and miscellaneous income for deduction u/s 80HHC.
17. Inclusion of exchange gain, cash discount, rental income, and miscellaneous income for deduction u/s 80IA.
Detailed Analysis:
1. Disallowance of Staff Welfare Expenses:
The assessee claimed staff welfare expenses of Rs. 1,31,880/- for providing refrigerators to staff on auspicious occasions. The AO disallowed this amount, deeming it as gifts rather than business expenses. The CIT(A) upheld this disallowance. The Tribunal confirmed the disallowance, stating that the expenditure was voluntary and not for business purposes, thus not allowable under section 37(1).
2. Disallowance of Contributions to PF/ESI:
The AO disallowed Rs. 880/- for late contributions to PF/ESI. The Tribunal reversed this disallowance, citing the Supreme Court's decision in CIT v Vinay Cement Ltd., which allows such payments if made before the filing of the return.
3. Consideration of Export Benefit for Deduction u/s 80HHC:
The assessee did not press this ground during the hearing, so it was dismissed as not pressed.
4. Consideration of Interest Income for Deduction u/s 80HHC:
The AO assessed interest income of Rs. 6,04,462/- as business income but excluded 90% of it for deduction u/s 80HHC. The Tribunal directed the AO to exclude 90% of the net interest, not gross, provided the assessee proves related expenses.
5. Deduction u/s 80HHC:
This ground was not pressed by the assessee during the hearing and was dismissed.
6. Consideration of Export Benefit for Deduction u/s 80IB:
The AO excluded export benefits of Rs. 3,95,05,367/- from deduction u/s 80IB, stating it was derived from the Export Promotion Scheme, not the industrial undertaking. The CIT(A) upheld this, relying on CIT v Sterling Foods. The Tribunal directed the AO to allow the deduction after verifying the nature of DEPB received by the assessee.
7. Consideration of Interest Income for Deduction u/s 80IB:
The AO disallowed interest income of Rs. 13,37,366/- for deduction u/s 80IB. The Tribunal upheld this disallowance, citing Pandian Chemicals Ltd. v CIT, but directed the AO to exclude only the net interest after verifying related expenses.
8. Deduction u/s 80IB:
Grounds related to this issue were not pressed and thus dismissed.
9. Deletion of Addition on Account of Sales Promotion Expenses:
The AO disallowed Rs. 8,381/- out of sales promotion expenses. The CIT(A) deleted this disallowance, stating the AO did not justify that the expenses were not for business purposes. The Tribunal upheld the CIT(A)'s decision.
10. Deletion of Addition on Account of Foreign Traveling Expenses:
The AO disallowed Rs. 7,32,290/- out of foreign travel expenses, suspecting personal use. The CIT(A) deleted this disallowance, noting the AO did not prove the expenses were personal. The Tribunal upheld the CIT(A)'s decision.
11. Deletion of Addition on Account of Miscellaneous Expenses:
The AO disallowed Rs. 14,628/- out of miscellaneous expenses. The CIT(A) deleted this disallowance, stating the AO made the addition based on presumptions. The Tribunal upheld the CIT(A)'s decision.
12. Deletion of Addition on Account of Advance Written Off:
The AO added back Rs. 7,47,181/- of advances written off, questioning their business purpose. The CIT(A) deleted this addition, referencing CIT v Girish Bhagwati Prasad. The Tribunal upheld the CIT(A)'s decision.
13. Deletion of Addition on Account of Legal and Professional Expenses:
The AO disallowed Rs. 35,000/- of legal and professional expenses, deeming them capital in nature. The CIT(A) deleted this addition, stating no asset of enduring nature was created. The Tribunal upheld the CIT(A)'s decision.
14. Deletion of Addition on Account of Excise Refund Receivable:
The AO added Rs. 1,71,50,151/- of excise refund receivable as income. The CIT(A) deleted this addition, noting it was not claimed as an expense in the profit and loss account. The Tribunal upheld the CIT(A)'s decision.
15. Exclusion of Excise Duty and Sales Tax from Turnover for Deduction u/s 80HHC:
The Tribunal ruled in favor of excluding excise duty and sales tax from turnover for deduction u/s 80HHC, citing Laxmi Machine Works Ltd.
16. Inclusion of Exchange Gain, Cash Discount, and Miscellaneous Income for Deduction u/s 80HHC:
The Tribunal directed the AO to verify if the exchange gain was received within the permissible period and exclude 90% of rental income, but not discount from suppliers or insurance claims.
17. Inclusion of Exchange Gain, Cash Discount, Rental Income, and Miscellaneous Income for Deduction u/s 80IA:
The Tribunal allowed deductions for exchange gain, discount from suppliers, and insurance claims but excluded rental income from eligible business profit for deduction u/s 80IB.
Conclusion:
Both the appeals were partly allowed, and the cross objection filed by the assessee was dismissed. The Tribunal provided specific directions for re-computation and verification of various deductions and disallowances.
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2009 (8) TMI 1254
Issues Involved:
1. Contempt of Court
2. Maintenance under Hindu Adoption & Maintenance Act, 1956 (HAMA)
3. Benami Transactions (Prohibition) Act, 1998
4. Validity of interim orders
5. Application under Order VII Rule 11 CPC
Detailed Analysis:
1. Contempt of Court:
The Plaintiff filed a contempt petition against the Defendants for willful disobedience of the interim order dated 15th February 2007, which restrained the Defendants from alienating or creating third-party interests in certain properties. The Defendants argued that the interim order was not continued beyond 22nd May 2008, and thus, the sale deed executed on 9th June 2008 was not in violation. The Court noted that the interim order was not extended beyond 22nd May 2008 and hence, the sale was not in contempt. Regarding the property at Aya Nagar, the Court found no evidence of a sham transaction and noted that FMPL, the entity involved, was not a party to the suit or contempt petition. Consequently, the contempt petition was dismissed, and the contempt notices were discharged.
2. Maintenance under Hindu Adoption & Maintenance Act, 1956 (HAMA):
The Plaintiff sought maintenance under Section 18 HAMA, claiming rights to the properties held by her in-laws. The Court observed that under Section 18 HAMA, a wife is entitled to claim maintenance only from her husband and not from her in-laws. Citing the Supreme Court judgment in Vimlaben Ajitbhai Patel v. Vatslaben Ashokbhai Patel, the Court reiterated that in-laws cannot be legally liable to maintain a daughter-in-law from their property. Consequently, the Plaintiff's claim for maintenance against Defendants 2 and 3 was found to be untenable.
3. Benami Transactions (Prohibition) Act, 1998:
The Plaintiff alleged that the properties were held benami by Defendant No.3 for Defendant No.1. The Court referred to Section 4 of the Benami Act, which bars any suit to enforce rights in respect of benami properties. The Court found no evidence or pleading to substantiate that Defendant No.3 held the property in a fiduciary capacity for Defendant No.1. Therefore, the Plaintiff's claims were barred under the Benami Act, and no relief could be granted regarding the properties owned by Defendant No.3 and FMPL.
4. Validity of Interim Orders:
The interim order dated 15th February 2007 was initially continued but not extended beyond 22nd May 2008. The Court emphasized that interim orders must be explicitly extended to remain effective, as held in Ashok Kumar v. State of Haryana. Since the interim order was not extended beyond 22nd May 2008, the subsequent sale of the property did not violate any court order.
5. Application under Order VII Rule 11 CPC:
Defendants 2 and 3 filed an application under Order VII Rule 11 CPC seeking rejection of the plaint for not disclosing a cause of action against them. The Court agreed that the suit did not disclose any cause of action for maintenance against the in-laws under Section 18 HAMA. Additionally, the suit was barred under the Benami Act, and the Plaintiff failed to seek cancellation of the title deeds. Consequently, the plaint was rejected vis-`a-vis Defendants 2 and 3.
Conclusion:
The contempt petition was dismissed, and the interim orders were vacated. The application under Order VII Rule 11 CPC succeeded, leading to the rejection of the plaint against Defendants 2 and 3. The Plaintiff's claims for maintenance and rights to the properties were found to be legally untenable under the relevant statutes.
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2009 (8) TMI 1253
Issues Involved:
1. Levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961.
2. Validity of revised returns filed after the issue of notice u/s 143(2) of the Act.
Summary:
Issue 1: Levy of Penalty u/s 271(1)(c) of the Income-tax Act, 1961
The primary issue in these appeals is the levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961 on the amounts of cash loans disclosed by the respective assessees in their revised returns filed after the issue of notice u/s 143(2) of the Act. The Assessing Officer (AO) issued a notice u/s 271(1)(c) as the assessees did not establish the identity or creditworthiness of the persons from whom cash loans were received nor the genuineness of transactions. The AO contended that the revised returns were invalid as they were filed after the issue of notice u/s 143(2) and levied penalties accordingly.
On appeal, the CIT(A) upheld the levy of penalty, stating that the filing of the revised returns was not voluntary and was done only after the case was selected for scrutiny. The CIT(A) emphasized that the burden was on the assessee to declare true income in the original return filed u/s 139(1) and that the revised returns were filed only after the proceedings for scrutiny were initiated.
Issue 2: Validity of Revised Returns Filed After Issue of Notice u/s 143(2)
The assessees argued that the revised returns were filed voluntarily to buy peace and avoid litigation, relying on the decision of the Hon'ble Supreme Court in CIT v. Suresh Chandra Mittal (2001) 251 ITR 9 (SC). However, the AO did not accept this contention, stating that the revised returns were invalid as they were filed after the issue of notice u/s 143(2).
The Tribunal found that neither the assessment order nor the penalty order contained any material suggesting that the differential income declared in the revised returns was detected by the Department before the assessees furnished the revised returns. The Tribunal noted that the CIT(A) had canceled the penalty in similar cases where returns were revised before the issue of notice u/s 143(2), but upheld the penalty in these cases simply because the returns were revised after the issue of notice.
The Tribunal concluded that the levy of penalty u/s 271(1)(c) was not justified as there was no positive proof of concealment. The Tribunal emphasized that the burden was on the Department to prove that the assessees had concealed the particulars of income and that the amounts added represented the income of the assessees. The Tribunal referred to various judicial precedents, including the decision of the Hon'ble Supreme Court in Suresh Chandra Mittal, to support its conclusion that the revised returns were filed in good faith and to buy peace, and therefore, no penalty could be levied.
Conclusion:
The Tribunal vacated the findings of the CIT(A) and canceled the penalties levied by the AO. The appeals were allowed, and the penalties u/s 271(1)(c) were deemed unjustified as the revised returns were filed voluntarily before any detection of concealment by the Department. The Tribunal emphasized the need for the Department to prove concealment with positive evidence, which was not done in these cases.
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2009 (8) TMI 1252
Issues Involved:
1. Deduction u/s 80IB for various incomes.
2. Determination of indirect costs for deduction u/s 80HHC.
3. Disallowance of motor car and telephone expenses.
4. Disallowance of foreign travel expenses.
5. Treatment of software expenses as capital or revenue.
6. Deduction u/s 80IB and 80HHC on the same amount of gross total income.
Summary:
1. Deduction u/s 80IB for Various Incomes:
The assessee contested the denial of deduction u/s 80IB for foreign exchange rate income, DEPB sales proceeds, duty drawback, other income, and income from trading activities. The Tribunal referred to the case of Shah Originals v. ACIT, where it was held that foreign exchange fluctuation forms an integral part of export proceeds and should be considered derived from industrial undertakings. Similarly, DEPB sales proceeds and duty drawback were deemed eligible for deduction u/s 80IB as they are integral to the pricing of goods and derived from industrial undertakings. The Tribunal allowed the appeal for these incomes but dismissed the sub-grounds for other income and income from trading activities as not pressed.
2. Determination of Indirect Costs for Deduction u/s 80HHC:
The assessee challenged the determination of total indirect costs attributable to trading exports for deduction u/s 80HHC. The Tribunal upheld the lower authorities' computation, finding no infirmity in their orders, and dismissed the appeal on this issue.
3. Disallowance of Motor Car and Telephone Expenses:
The assessee contested the disallowance of 1/7th of motor car and telephone expenses. The Tribunal found the CIT(A)'s restriction of disallowance to 1/6th reasonable but noted that the Tribunal consistently makes estimated disallowances at 1/10th. Thus, the Tribunal restricted the disallowance to 1/10th, partly allowing the appeal.
4. Disallowance of Foreign Travel Expenses:
The assessee appealed against the disallowance of foreign travel expenses. The CIT(A) had partly disallowed and partly allowed the claim, directing the AO to verify certain expenses. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the appeal on this issue.
5. Treatment of Software Expenses as Capital or Revenue:
The assessee claimed software expenses as revenue, but the AO treated them as capital expenditure, allowing depreciation. The Tribunal referred to the Special Bench decision in Amway India Enterprises v. DCIT, which laid down criteria for determining the nature of software expenses. The Tribunal set aside the issue to the AO to decide based on these guidelines, allowing the appeal for statistical purposes.
6. Deduction u/s 80IB and 80HHC on the Same Amount of Gross Total Income:
The assessee argued for deductions u/s 80IB and 80HHC on the same amount of gross total income. The Tribunal referred to the Special Bench decision in ACIT v. Rogini Garments, which held that relief under section 80IA should be deducted from the profits before computing relief under section 80HHC. The Tribunal dismissed the appeal on this issue.
Conclusion:
The appeal was partly allowed for statistical purposes, with specific issues being set aside for further examination by the AO. The Tribunal upheld the lower authorities' decisions on other contested issues.
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2009 (8) TMI 1251
Issues involved: Claim for exemption u/s Section 28(i) of the Income Tax Act for income received from settlement of dispute among family members regarding business name usage.
Summary:
The assessee, who was carrying on business under the name of M/s. Madhuban Restaurant, received a payment of Rs. 22 lakhs for agreeing not to use the name Madhuban Restaurant in a new business venture. The Tribunal rejected the assessee's claim for exemption, stating that the income received was not for stopping the restaurant business but for agreeing not to use the specific name. The Tribunal found that the assessee continued his business under a different name, leading to the conclusion that the income falls under Section 28(i) of the Income Tax Act as business income. As there was no restriction on the assessee to continue the business, only against using the name Madhuban Restaurant, the Tribunal's decision was upheld, and the appeal was dismissed.
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2009 (8) TMI 1250
Murder - Offence Punishable u/s 302 r/w 149 IPC and 324 of IPC - Two of the candidates contesting the election were the deceased - weight of evidence - the deceased was standing along with PW.1 his nephew in front of the polling station, when all the accused, 20 in number, armed with lethal weapons such as axes, knives, sticks and stones attacked him. A.1 Kotesswara caught hold of the deceased by his hair and gave two blows with a stone on his forehead and also stabbed him with a knife on his chest, A.2 Hanumantha Rao and A.3 Krishniah who were both armed with axes caused injuries on the back of the head of the deceased where after A.1 again stabbed the deceased on his shoulder.
All the accused were charged u/s 148 - A1 to A3 were charged u/s 302 - the others u/s 302 r/w 149 IPC and u/s 324 by the trail court - The Trail Court found that the evidence with regard to the accused other than A.1 to A.3 was even more unacceptable and, having held as above, acquitted all the accused. The State thereupon took the matter to the High court in appeal.
The High Court held that calling the judgment of the trial Court qua A.1 to A.3 as perverse, partly allowed the appeal and convicted them but confirmed the judgment of the trial Court with respect to the other accused. A.1 to A.3 are before us by way of special leave.
HELD THAT:- A perusal of the injuries would reveal that injury No. 1 has been caused by A.1, Injury No. 2 either by A.2 or A.3, Injury No. 3 by A.1, Injury Nos. 4 and 5 by A.1 with a stone and there are three or four additional injuries (on which emphasis has been laid by Mr. Rao) as they remain unexplained. Even assuming, however, that three injuries out of eight are unexplained, this one circumstance alone would not destroy the flow of the other evidence.
It is clear that the incident had happened in the course of the Mandal Parishad Elections with several people being involved and a large group of spectators being present at the spot. In this scenario we feel that it would have been well nigh impossible for any witness to have given a mathematical or precise description of all the injuries that had been caused and that too in a melee. The fact remains that the injuries found on the dead body correspond fully with the weapons that had been used.
As a matter of fact injury Nos. 4 and 5 which appeared to be inflicted with a stone allegedly in the hands of A.1 clearly prove the veracity of the story as it would have been inconceivable for a witness to have imagined that a stone, (a very unusual weapon for a pre-planned attack) would be used as A.1 was also armed with a knife which he used after the injury had been caused with a stone. We are thus of the opinion that the medical evidence does not in any way contradict the ocular evidence.
As gone through the so called improvements/inconsistencies in the statements given by PW.1 and PW.5 to the police vis-a-vis their statements in court. It must be emphasized that the incident happened in the year 1995 whereas the evidence was recorded after about 8 years. Some discrepancies are, therefore, bound to occur.
The question to be noted is as to whether the discrepancies or improvements are such which go to the root of the matter and affect veracity of the prosecution's story. We are of the opinion that the evidence herein does not fall within this slippery category. It is clear from the FIR recorded by PW.1 and his statement in Court that PW.5 had been present at the time of the incident. The other discrepancies that have been pointed out are to no avail keeping in view the over all picture. We are, therefore, of the opinion that the High Court was fully justified in interfering in the matter and was well within its jurisdiction to do so, even in the light of the judgments cited by Mr. Rao. The appeals are, accordingly, dismissed.
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2009 (8) TMI 1249
Deduction u/s 10B - Gain on forward contracts - Whether proceeds from hedging foreign currency risk does not constitute income derived from exports and is also not received in convertible foreign exchange ? - HELD THAT:- As in the instant case, there are a number of transactions and the forward contracts have been taken in respect of 46 per cent of the export turnover. Thus, it is not an isolated transaction. Hence, in view of Explanation 2 to section 28, the profit from the forward contract will have to be assessed as profit from speculation business.
It is true that section 10B(1) says that a deduction of such profit and gains as are derived by 100 per cent export oriented undertaking is to be allowed as deduction. For the purposes of sub-section (1), the quantum of deduction is to be computed as per section 10B(4). The deduction permissible is in the same proportion to the profit of the business of the undertaking as it bears to the export turnover to the total turnover.
The words uses are "profit of the business of the undertaking". The business of the undertaking is to manufacture and export readymade garments. As held profit from forward contract is profit to be assessed under the head ‘Speculation business’ and speculation business is not the business of the undertaking. Hence, for the purpose of computing deduction u/s 10B, speculation business cannot be considered as the business of the undertaking.
Thus we hold that the CIT(A) was not justified in holding that profit from forward contract is to be included in the profit of the business of the undertaking for the purposes of computing deduction u/s 10B.
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2009 (8) TMI 1248
Determination of market value in regard to lands - acquisitions initiated by notifications issued u/s 4(1) of the Land Acquisition Act, 1894 ("LA Act') - acquired for (i) construction of a supplementary drain; (ii) construction of sewage treatment plant; (iii) re-modeling of drain; and (iv) planned development - awards of the reference court were challenged by the landowners - Whether valuation by the High Court is proper? - HELD THAT:- On deduction of 40% from ₹ 50790/- per bigha which the market value of small plots, the market value for the large tracts of lands acquired in December, 1981 would be ₹ 30,474/- (rounded off to ₹ 30500/-) per bigha. As the earlier three acquisitions were of the same year, but were in February and March (that is on 13.2.1981, 20.2.1981 and 13.3.1981) which are about 10 to 11 months earlier, the compensation in regard to the three earlier acquisitions is determined as ₹ 28000/- per bigha. To this extent, the award of the High Court requires to be modified.
The reference court had, after referring to several sale transactions, determined the market value as ₹ 15,700/- per bigha in one case and ₹ 18,500/- per bigha in another case. On appeal by the claimants, the High Court excluded several sale transactions relied upon by the reference court as not inspiring confidence, and on the basis of a solitary transaction dated 10.9.1981 in regard to a small area of one bigha, increased the market value to ₹ 30,000/- per bigha. This Court held that the High Court erred in relying upon a single sale deed relating to a small extent of one bigha to determine the market value of a large extent of 5484 bighas. It further held that if that sale deed was excluded, there was no other evidence to support the increase in compensation made by the High Court. Consequently, this Court set aside the increase awarded by the High Court and restored the market value determined by the reference court.
We accordingly increase the compensation, in regard to acquisition dated 31.12.1981 from ₹ 27000/- to ₹ 30,500/- per bigha. We also increase the compensation in regard to the acquisition dated 13.2.1981, 20.2.1981 and 13.3.1981 from ₹ 25,000/- to ₹ 28,000/- per bigha. The statutory benefits and interest awarded are not disturbed.
The appeals by the claimants are partly allowed increasing the compensation. As a consequence, the cross objections by DDA seeking reduction of the compensation are rejected without going into the question whether such cross objections are maintainable.
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2009 (8) TMI 1247
The Supreme Court of India dismissed the case without interference based on the facts presented. (Citation: 2009 (8) TMI 1247 - SC)
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