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Showing 41 to 60 of 948 Records

• 2010 (9) TMI 1270
  
  Issues involved: Appeal against deletion of addition of TDRs taxed on receipt basis u/s 2004-2005 to 2007-2008.
  
  Summary:
  The batch of four appeals by the Revenue challenged the common order by the Commissioner of Income-tax (Appeals) for the assessment years 2004-2005 to 2007-2008. The main issue raised was the deletion of addition of TDRs taxed on receipt basis. The Assessing Officer contended that the value of TDRs should have been accounted for to determine the correct income, as the assessee was crediting the value of TDRs after sale. However, the learned CIT(A) held that the project completion method followed by the assessee was justified, and the sale proceeds of TDRs should be included in the year when the project is completed. The Revenue appealed against this finding.
  
  The Appellate Tribunal considered whether TDRs should be taxed on receipt basis or in the year of project completion. It was noted that the assessee followed the mercantile system of accounting and the project completion method. Previous Tribunal decisions supported including sale proceeds of TDRs in the year of project completion. As the project was unfinished in the assessment years under consideration, the sale of TDRs could not be included in the assessee's income. The Tribunal ruled that the sale proceeds of TDRs should be accounted for in the year of project completion, i.e., assessment year 2008-2009. The assessee had voluntarily included the amount in the income for 2008-2009. Therefore, the Tribunal upheld the order on this issue, and all appeals were dismissed.
  
  *Order pronounced on September 15, 2010.*

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• 2010 (9) TMI 1269
  
  Issues involved:
  The issue in this case revolves around the rectification of an order passed by the Appellate Tribunal regarding the computation of business income for a partnership firm engaged in government contracting. The key point of contention is the discrepancy in the profit margin applied to subcontract receipts, specifically in the case of a sub-contract worth Rs. 37 lakhs given to a particular contractor at a profit margin of 1%.
  
  Summary of Judgment:
  
  1. Computation of Business Income:
  The applicant, a partnership firm engaged in government contracting, filed a Miscellaneous Application pointing out errors in the Tribunal's order regarding the computation of business income for the assessment year 2001-2002. The Tribunal had directed the Assessing Officer to compute the net profit at 4% on both subcontract and contract receipts, including interest income. The applicant argued that a sub-contract worth Rs. 37 lakhs was given at a profit margin of 1%, contrary to the Tribunal's directive. The applicant sought rectification under section 254(2) of the Act.
  
  2. Arguments and Analysis:
  During the hearing, the applicant's representative highlighted the discrepancy in profit margin application, emphasizing that the Tribunal's order lacked reasoning for deviating from the Commissioner of Income Tax (Appeals) decision to consider profit at 1% where applicable. The Revenue's representative contended that the Tribunal's decision was based on past acceptance of 4% profit margin on contract receipts. The Tribunal found merit in the Revenue's argument, emphasizing the conscious view taken based on historical data.
  
  3. Decision and Rationale:
  After considering both sides, the Tribunal noted the details of sub-contracts showing varying profit margins. While acknowledging the lack of explicit mention in the order, the Tribunal concluded that the applicant's request amounted to a review rather than rectification under section 254(2). Citing legal precedent, the Tribunal clarified that rectification powers do not extend to reviewing or rewriting orders. As the applicant's submission sought a review of the Tribunal's decision, the Miscellaneous Application was rejected.
  
  In conclusion, the Tribunal upheld its original order, emphasizing the limitations of rectification powers under section 254(2) and the distinction between rectification and review processes. The judgment was pronounced on 30.09.2010 by the Appellate Tribunal ITAT Ahmedabad.

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• 2010 (9) TMI 1268
  
  Issues: Disallowance of payment of financial charges due to non-deduction of TDS u/s 194A.
  
  The Appellate Tribunal ITAT Visakhapatnam heard appeals by the assessee against the CIT(A)'s order regarding the disallowance of financial charges payment for not deducting TDS u/s 194A. The AO disallowed the financial charges claimed by the assessee on loans for acquiring buses, amounting to Rs. 35,69,482, as TDS was not deducted. The assessee cited the Charanjit Singh Chadha case and CBDT instruction no.1425 to argue that financial charges in hire purchase contracts are not interest but a privilege payment. The CIT(A) upheld the disallowance, leading the assessee to appeal to the Tribunal, challenging the lower authorities' failure to consider legal propositions. The DR supported the CIT(A)'s order.
  
  After reviewing the facts and legal precedents, the Tribunal found that the assessee had not deducted TDS on financial charges paid for buses acquired through hire purchase agreements. Citing the Charanjit Singh Chadha case, the Tribunal noted that financial charges in hire purchase agreements are not interest but represent a payment for the privilege of paying the purchase price in instalments. The CBDT instruction no.1425 clarified that such charges do not constitute interest under the IT Act. Consequently, the Tribunal held that the revenue erred in treating financial charges as interest and disallowing the payment. The Tribunal set aside the CIT(A)'s order, ruling that TDS deduction was not required for financial charges, and directed the AO to allow the deduction of the entire payment.
  
  In conclusion, the Tribunal allowed the assessee's appeals, emphasizing that financial charges in hire purchase agreements do not fall under the purview of section 194A for TDS deduction. The judgement clarified the nature of financial charges and instructed the AO to permit the deduction of financial charges paid by the assessee.

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• 2010 (9) TMI 1267
  

  Jurisdiction of Civil Courts under the Wakf Act, 1995 - Whether the Wakf Tribunal constituted u/s 83 of the Wakf Act, 1995 was competent to entertain and adjudicate upon disputes regarding eviction of the appellants who are occupying different items of what are admittedly Wakf properties - HELD THAT:-The well-settled rule in this regard is that the Civil Courts have the jurisdiction to try all suits of civil nature except those entertainment whereof is expressly or impliedly barred. The jurisdiction of Civil Courts to try suits of civil nature is very expansive. Any statue which excludes such jurisdiction is, therefore, an exception to the general rule that all disputes shall be triable by a Civil Court. Any such exception cannot be readily inferred by the Courts. The Court would, lean in favour of a construction that would uphold the retention of jurisdiction of the Civil Courts and shift the onus of proof to the party that asserts that Civil Court's jurisdiction is ousted.

  The difficulty, however, arises on account of the fact that apart from Section 6(5) which bars the jurisdiction of the Civil Courts to determine matters referred to in Section 6(1), Section 85 of the Act also bars the jurisdiction of the Civil Courts to entertain any legal proceedings in respect of any dispute, question or matter relating to a wakf property.

  In our view, nothing in Section 83 to suggest that it pushes the exclusion of the jurisdiction of the Civil Courts extends beyond what has been provided for in Section 6(5), Section 7 and Section 85 of the Act. It simply empowers the Government to constitute a Tribunal or Tribunals for determination of any dispute, question of other matter relating to a wakf or wakf property which does not ipso facto mean that the jurisdiction of the Civil Courts stands completely excluded by reasons of such establishment. It is noteworthy that the expression "for the determination of any dispute, question or other matter relating to a wakf or wakf property" appearing in Section 83(1) also appears in Section 85 of the Act. Section 85 does not, however, exclude the jurisdiction of the Civil Courts in respect of any or every question or disputes only because the same relates to a wakf or a wakf property. Section 85 in terms provides that the jurisdiction of the Civil Court shall stand excluded in relation to only such matters as are required by or under this Act to be determined by the Tribunal.

  The crucial question that shall have to be answered in every case where a plea regarding exclusion of the jurisdiction of the Civil Court is raised is whether the Tribunal is under the Act or the Rules required to deal with the matter sought to be brought before a Civil Court. If it is not, the jurisdiction of the Civil Court is not excluded. But if the Tribunal is required to decide the matter the jurisdiction of the Civil Court would stand excluded.

  In the cases at hand the Act does not provide for any proceedings before the Tribunal for determination of a dispute concerning the eviction of a tenant in occupation of a wakf property or the rights and obligations of the lessor and the lessees of such property. A suit seeking eviction of the tenants from what is admittedly wakf property could, therefore, be filed only before the Civil Court and not before the Tribunal.

  In the result these appeals succeed and are hereby allowed. The impugned orders passed by the High Court and those passed by the Wakf Tribunal shall stand set aside and the suit filed by the respondent-Wakf Board for the eviction of the appellants dismissed leaving the parties to bear their own costs. We make it clear that this order shall not prevent the Wakf Board from instituting, if so advised, appropriate civil action before the competent Civil Court for redress in accordance with law. No costs.

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• 2010 (9) TMI 1266
  
  Issues Involved:
  
  1. Deletion of disallowance of deduction u/s 80IB(10) of the Act amounting to Rs. 20,81,746/-.
  
  Summary:
  
  Issue 1: Deletion of disallowance of deduction u/s 80IB(10) of the Act amounting to Rs. 20,81,746/-

  The Revenue appealed against the order of the CIT(A)-II, Bangalore, which deleted the disallowance of deduction u/s 80IB(10) of the Act for the assessment year 2006-07. The assessee, a real estate developer, claimed a deduction of Rs. 1.67 crores for profits from housing projects G.R. Grand Residency and G.R. Pinnacle Project. The AO denied the deduction citing several deviations from the sanctioned plan, such as construction of a swimming pool within the residential building area, an extra apartment attached to the commercial building, and other deviations like car parking lots, extra lifts, and balconies. The AO also noted that the built-up area exceeded 1500 sq. ft. for several flats, and the project included commercial space exceeding the permissible limit.

  Aggrieved, the assessee approached the CIT(A), who, after analyzing the contentions and referencing the Tribunal's findings in the assessee's own case for earlier years, accepted the assessee's plea regarding the built-up area. The CIT(A) observed that clause (d) of section 80IB(10) was inserted with effect from 1/4/2005 and did not apply to the appellant's case. The CIT(A) concluded that the project, approved as a residential-cum-commercial project, did not meet the conditions for deduction u/s 80IB(10).

  The Revenue contended that the CIT(A) failed to appreciate that the assessee claimed a wrong deduction u/s 80IB(10) and did not fulfill the stipulated conditions. The Revenue also noted that the findings for the preceding years were pending before the High Court. The assessee argued that the issue was similar to earlier years where the Tribunal decided in their favor.

  The Tribunal, after considering the submissions and records, noted that a similar issue for earlier years was adjudicated in favor of the assessee. The Tribunal referenced various judicial decisions, including the Special Bench decision in Brahma Associates v. JCIT, which ruled that the entire profits of a housing project are deductible if it qualifies as a housing project, and proportionate deduction is not relevant.

  In conclusion, the Tribunal upheld the CIT(A)'s decision, allowing the deduction u/s 80IB(10) for the assessment year under dispute and dismissed the Revenue's appeal.

  Pronounced in the open court on this 30th day of September, 2010.

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• 2010 (9) TMI 1265
  
  Issues Involved:
  
  1. Validity of assessment under section 147 of the Income Tax Act.
  2. Adoption of guideline rate for computing capital gains under section 50C.
  3. Denial of exemption under section 54 for investment in two residential properties.
  
  Issue-wise Detailed Analysis:
  
  I. Validity of Assessment under Section 147:
  
  The assessee contested the reopening of the assessment under section 147, arguing that the Assessing Officer (AO) failed to make necessary inquiries before issuing the notice under section 148. The AO issued the notice based on information from the Sub-Registrar's office indicating a higher guideline value for the property sold by the assessee, suggesting an understatement of capital gains. The CIT (A) upheld the AO's action, citing the Supreme Court's decision in ACIT v. Rajesh Jhaveri Stock Brokers P. Ltd., which states that the AO only needs a reason to believe that income has escaped assessment to initiate proceedings under section 147.
  
  The Tribunal agreed with the CIT (A), stating that the AO had sufficient grounds to believe that income had escaped assessment based on the discrepancy between the sale consideration declared by the assessee and the guideline value reported by the Sub-Registrar. The Tribunal found that the AO acted within his jurisdiction and complied with legal requirements, thus validating the reopening of the assessment.
  
  II. Adoption of Guideline Rate for Computing Capital Gains under Section 50C:
  
  The AO adopted the guideline value of Rs. 4,62,56,000 as the sale consideration for computing capital gains, contrary to the assessee's declared value of Rs. 2,68,89,375. The assessee objected to this, leading the AO to refer the matter to the District Valuation Officer (DVO), who determined the fair market value (FMV) at Rs. 3,25,37,000. The CIT (A) directed the AO to adopt the stamp duty authority's value of Rs. 4,06,56,735.
  
  The Tribunal found that the CIT (A) erred in not considering the DVO's valuation and the objections raised by the assessee. The Tribunal held that the DVO's valuation, being lower than the stamp duty authority's value, should be adopted as the FMV. The Tribunal recalculated the property value at Rs. 2,71,03,330, considering the assessee's objections and the prevailing market rates. The AO was directed to re-compute the capital gains based on this revised value.
  
  III. Denial of Exemption under Section 54 for Investment in Two Residential Properties:
  
  The assessee claimed exemption under section 54 for investments in two residential properties. The AO denied the exemption for the second property, citing a Tribunal decision in ITA No: 530/Bang/2007. The assessee relied on the Karnataka High Court's decision in CIT v. D. Anand Basappa, which allowed exemption for investments in multiple residential units if they are considered a single unit.
  
  The Tribunal distinguished the present case from the High Court's ruling, noting that the two properties were located in different areas (Koramangala and Domlur II Stage) and could not be considered a single unit. Therefore, the Tribunal upheld the CIT (A)'s decision to deny the exemption for the second property.
  
  Conclusion:
  
  The Tribunal partly allowed the assessee's appeal, validating the reopening of the assessment under section 147, directing the AO to adopt the revised property value of Rs. 2,71,03,330 for computing capital gains, and upholding the denial of exemption under section 54 for the second residential property.

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• 2010 (9) TMI 1264
  
  Issues Involved:
  1. Computation of deduction u/s.80HHC without clubbing the turnover of all proprietary concerns.
  2. Deletion of disallowance of short-term capital loss amounting to Rs. 63,54,210/-.
  
  Summary:
  
  1. Computation of Deduction u/s.80HHC:
  The first issue in this appeal by the Revenue is against the order of CIT(A) directing the Assessing Officer to re-compute the deduction u/s.80HHC without clubbing the turnover of all proprietary concerns. The Tribunal had previously considered this issue in the assessee's own case for the assessment year 2000-01, where it was decided in favor of the Revenue. The Tribunal referenced the Special Bench decision in the case of International Research Laboratories Ltd. Vs. ACIT [2123 ITR 1 (AT)], which emphasized that the "business" includes both export and domestic turnover, and profits should be apportioned based on the total turnover. The Tribunal, following its earlier decision, allowed this issue in favor of the Revenue and against the assessee.
  
  2. Deletion of Disallowance of Short-Term Capital Loss:
  The second issue pertains to the deletion of disallowance of short-term capital loss amounting to Rs. 63,54,210/-. The Assessing Officer had disallowed the loss on the grounds that the assessee had purchased and sold mutual fund units within a short period, claiming a loss while earning exempt dividend income. The CIT(A) allowed the claim, stating that the transactions were genuine and within the legal framework, supported by various case laws including Union of India vs. Azadi Bachao Andolan (2003) 263 ITR 706 (SC). The Tribunal found that this issue was covered in favor of the assessee by the decision of the Hon'ble Supreme Court in CIT v. Walfort Share And Stock Brokers P. Ltd. (2010) 326 ITR 1 (SC), which held that losses pertaining to exempted income cannot be disallowed for assessment years before the insertion of section 94(7) with effect from April 1, 2002. Consequently, the Tribunal confirmed the order of CIT(A) on this issue, dismissing the Revenue's appeal.
  
  Conclusion:
  The Tribunal allowed the first issue in favor of the Revenue and dismissed the second issue, thereby partly allowing the Revenue's appeal. The order was pronounced on 17th September 2010.

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• 2010 (9) TMI 1263
  
  Issues involved: Disallowance of claim of bad debts and disallowance u/s 14A of the Act.
  
  Bad Debts Issue: The Assessing Officer disallowed a claim of bad debts amounting to Rs. 1,86,316, stating that the amount claimed was actually TDS deducted from interest income. The appellant argued that the TDS was never deposited by the deductor party into the Government Account and thus should be treated as a debt due from the deductor party. The CIT(A) rejected the appeal, stating that the TDS amount deducted becomes property of the Government and cannot be written off as bad debts. However, the Assessee contended that the amount withheld by the debtor as TDS is certainly due to the Assessee and when written off as irrecoverable, it is allowable as a deduction u/s 36(1)(vii). The appeal was allowed on this issue.
  
  Disallowance u/s 14A Issue: The Assessing Officer computed a disallowance u/s 14A at Rs. 59,974, but the CIT(A) enhanced this amount to Rs. 4,25,860 by invoking Rule 8D for computing disallowance. The appellant argued that Rule 8D is not retrospective and cannot be invoked in the present Assessment Year. The ITAT found that the decision of a Special Bench had been set aside by the jurisdictional High Court, and thus remitted the matter back to the AO to decide the issue afresh in line with the High Court's decision. As a result, the Assessee's appeal was partly allowed.

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• 2010 (9) TMI 1262
  
  Issues involved: Assessment of taxable income u/s 10B for the assessment year 2007-08.
  
  Summary:
  The appeal by the Revenue was against the order of the ld. CIT(A)-XII, Chennai, dated 19.03.2010, regarding the assessment year 2007-08. The assessee, a partnership firm, had claimed a deduction of &8377; 11,27,57,353/- u/s 10B of the Income-tax Act, 1961, which was initially accepted u/s 143(1) but later denied by the Assessing Officer during assessment u/s 143(3). The Assessing Officer contended that the firm was not engaged in manufacturing activity and had been formed by splitting an existing business, leading to a tax demand on export profits. The ld. CIT(A) ruled in favor of the appellant based on precedents and upheld the deduction u/s 10B for the assessment year 2007-08.
  
  The main issues raised by the appellant were similar to those addressed in previous assessment years where a favorable view was taken. The appellant argued that the firm's constitution was not a result of splitting or reconstitution that would disqualify it from the benefits of Sec. 10B. The ld. CIT(A) found that the appellant firm was entitled to the deduction u/s 10B for the assessment year 2007-08 based on consistent views taken in previous years and decisions of the Hon'ble ITAT, Chennai.
  
  The Revenue appealed the decision, citing various grounds including the relevance of a decision by the Amritsar Bench in a different case. However, the Tribunal noted that the issue was already settled in the appellant's own case for previous assessment years, and as such, the decision of the Co-ordinate Bench was followed. The appeal of the Revenue was dismissed, upholding the deduction u/s 10B for the assessment year 2007-08.
  
  In conclusion, the Tribunal upheld the decision of the ld. CIT(A) and dismissed the appeal of the Revenue, confirming the appellant firm's entitlement to the deduction u/s 10B for the assessment year 2007-08.

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• 2010 (9) TMI 1261
  
  Issues Involved:
  1. Deletion of trading addition of Rs. 15,31,790 made by the assessing officer on account of deduction u/s 10B of the Act.
  2. Deletion of addition of Rs. 12,69,701 made by the assessing officer on account of ALP.
  
  Summary:
  
  Issue 1: Deletion of Trading Addition of Rs. 15,31,790 u/s 10B
  
  The revenue's first grievance concerns the deletion of a trading addition of Rs. 15,31,790 made by the assessing officer on account of deduction u/s 10B of the Act. The Assessee, engaged in manufacturing precious and semi-precious stones, showed a GP rate of 27.06% and a net profit rate of 22.97%, while its sister concern, M/s V. Rajendra Exports, showed a GP rate of 11.65% and a net profit rate of (-) 11.48%. The assessing officer suspected profit diversion to claim higher deductions u/s 10B and issued a show-cause notice. The Assessee argued that there were no transactions between the two firms and that their business activities were not comparable. The assessing officer, however, clubbed the turnovers and recalculated the profits, leading to the disallowance of Rs. 15,31,790.
  
  The Tribunal found that the assessing officer failed to establish a close connection between the Assessee and M/s V. Rajendra Exports as required u/s 80-IA(10). The Assessee's GP rate was consistent with the previous year, and the assessing officer did not provide substantial evidence to justify the profit apportionment. The Tribunal upheld the learned Commissioner (Appeals)'s decision to delete the addition, emphasizing the rule of consistency and the lack of material evidence for profit diversion.
  
  Issue 2: Deletion of Addition of Rs. 12,69,701 on Account of ALP
  
  The second grievance pertains to the deletion of an addition of Rs. 12,69,701 made by the assessing officer on account of ALP. The Assessee sold goods to M/s Pioneer Gems, New York, a concern of a related party. The assessing officer applied the CUP method and determined the ALP at Rs. 173.91 per carat, compared to the sale price of Rs. 145.42 per carat to M/s Pioneer Gems, leading to the addition.
  
  The Tribunal noted that the learned Commissioner (Appeals) found the average sale rate method inappropriate for gem stones, where value varies significantly. The assessing officer's adjustments lacked justification, and the Assessee's higher GP rate contradicted the claim of non-arm's length pricing. The Tribunal agreed with the learned Commissioner (Appeals) that the assessing officer did not fulfill the requirements of Section 92C(3) and failed to establish that M/s Pioneer Gems was an AE u/s 92A. The Tribunal upheld the deletion of the addition, emphasizing the need for proper quality adjustments and timely receipt of sale proceeds.
  
  Conclusion:
  
  The appeal of the revenue was dismissed, with the Tribunal upholding the learned Commissioner (Appeals)'s decisions on both issues.

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• 2010 (9) TMI 1260
  
  Issues Involved:
  1. Deletion of trading addition of Rs. 15,31,790 related to deduction under Section 10B of the Income Tax Act.
  2. Deletion of addition of Rs. 12,69,701 related to Arm's Length Price (ALP) adjustments.
  
  Issue-wise Detailed Analysis:
  
  1. Deletion of Trading Addition of Rs. 15,31,790:
  The revenue contested the deletion of a trading addition of Rs. 15,31,790 made by the assessing officer (AO) on account of deduction under Section 10B of the Income Tax Act. The Assessee, engaged in manufacturing precious and semi-precious stones, had shown a higher GP and net profit rate compared to its sister concern, M/s V. Rajendra Exports, which did not qualify for the same deduction. The AO suspected profit diversion to claim higher deductions under Section 10B and invoked Section 80-IA(10) for recalculating profits. The Assessee argued that there were no transactions between the two firms, and their business models differed significantly. The Commissioner (Appeals) agreed, noting that the AO failed to establish a close connection or business transactions between the firms. The GP rate was consistent with the previous year, and there was no substantial evidence to justify the AO's findings. The Tribunal upheld the Commissioner (Appeals)'s decision, emphasizing the rule of consistency and the lack of material evidence supporting the AO's claims.
  
  2. Deletion of Addition of Rs. 12,69,701 Related to ALP Adjustments:
  The revenue's second grievance was the deletion of an addition of Rs. 12,69,701 made by the AO on account of ALP. The AO applied the Comparable Uncontrolled Price (CUP) method, comparing the Assessee's sales to related and unrelated parties. Adjustments were made for export expenses and quality differences, leading to the addition. The Commissioner (Appeals) found the AO's approach flawed, as the ALP could not be determined based on average prices due to the varying nature of gem stones. The Commissioner (Appeals) also noted procedural lapses, such as the lack of a show-cause notice, and the arbitrary nature of the AO's quality adjustments. The Tribunal agreed, highlighting the subjective nature of gem valuation and the absence of material evidence supporting the AO's adjustments. The Tribunal concluded that the Commissioner (Appeals) was justified in deleting the addition, as the Assessee's sales rates were comparable to market rates after accounting for quality differences.
  
  Conclusion:
  The appeal of the revenue was dismissed, with the Tribunal upholding the Commissioner (Appeals)'s decisions on both issues. The Tribunal emphasized the importance of consistency, proper procedural adherence, and substantial evidence in making adjustments to deductions and ALP calculations.

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• 2010 (9) TMI 1259
  
  Issues involved: The judgment deals with the deduction under sec. 80IA of the Income-tax Act, 1961, specifically focusing on the initial assessment year and the set off of earlier year notional depreciation and business loss.
  
  Comprehensive Details:
  
  1. Initial Assessment Year: The assessees claimed deduction under sec. 80IA based on the initial assessment year being considered as 2000-01. The AO refused the deduction citing that the windmill business started before 2000-01, and there were notional unabsorbed depreciation to be set off against the income. The CIT(A) allowed the claim, stating that the assessee had the option to choose the initial assessment year and notional set off could not be forced upon. The Tribunal upheld this decision, citing the High Court's ruling in a similar case.
  
  2. Set Off of Notional Unabsorbed Depreciation: The Tribunal examined the provisions of sec. 80IA and emphasized that the deduction is for eligible businesses and the option must be exercised by the assessee. The Tribunal highlighted that the provision overrides other sections, and losses from earlier years already set off cannot be brought forward notionally. The Tribunal referred to the High Court's decision, which supported the assessee's eligibility for the deduction under sec. 80IA and rejected the Revenue's appeal.
  
  3. Judicial Precedents: The Tribunal relied on previous decisions, including a coordinate Bench ruling and the High Court's judgment, to support the assessee's position regarding the initial assessment year and the set off of notional unabsorbed depreciation. The Tribunal concluded that the assessees were eligible for the deduction under sec. 80IA, and hence, dismissed the appeals of the Revenue.
  
  In conclusion, the Tribunal upheld the CIT(A)'s decision, emphasizing the assessee's right to choose the initial assessment year and rejecting the notion of bringing forward notional set offs from earlier years. The judgment highlighted the importance of exercising the option under sec. 80IA and the limitations on reworking set off amounts notionally.

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• 2010 (9) TMI 1258
  
  Issues Involved:
  1. Classification of lease rent and interest income.
  2. Disallowance of expenses due to no business activity.
  3. Set off of accumulated unabsorbed business losses.
  
  Summary:
  
  Issue 1: Classification of Lease Rent and Interest Income

  The appellant contested the treatment of lease rent and interest as "income from other sources" instead of "income from business." The appellant argued that in previous years, similar interest income was consistently assessed as business income, invoking the principle of consistency. However, the tribunal noted that the principle of res judicata does not apply in income tax proceedings and emphasized that the principle of consistency is only applicable if the earlier view is legally tenable. Since the appellant was not in the business of money lending, the tribunal concluded that interest income could not be assessed as business income. Consequently, the tribunal upheld the CIT(A)'s order, rejecting the appellant's ground.

  Issue 2: Disallowance of Expenses Due to No Business Activity

  The appellant claimed deductions for various expenses against the lease rent and interest income, which were disallowed by the A.O. on the grounds that no business was carried out. The tribunal referred to the judgment of the Hon'ble High Court of Calcutta in CIT Vs New Savan Sugar & Gur Refining Co. Ltd., which allows deductions for expenses incurred to maintain an establishment and comply with statutory obligations even if no business is carried out. The tribunal remanded the matter back to the A.O. to determine the extent of expenses incurred for maintaining the establishment and complying with statutory obligations, and to verify if the business was facing a temporary lull or was discontinued. The tribunal allowed the appellant's grounds for statistical purposes.

  Issue 3: Set Off of Accumulated Unabsorbed Business Losses

  The appellant sought to set off brought forward unabsorbed business losses, which was disallowed by the A.O. and upheld by the CIT(A). The tribunal noted that u/s 72(1), brought forward business losses can only be set off against business income. Since the appellant had no business income in the current year, the tribunal concluded that the set off of brought forward business losses could not be allowed, thereby rejecting the appellant's ground.

  Conclusion:

  The appeal was partly allowed for statistical purposes, with the tribunal remanding the issue of expense deductions back to the A.O. for fresh consideration.

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• 2010 (9) TMI 1257
  
  Issues involved: Refund of amount with interest u/s 42 of the Delhi Value Added Tax Act, 2004.
  
  Refund of Amount: The respondents had not refunded the amount with interest as payable to the petitioner u/s 42 of the Act. The counter affidavit claimed that the amount had been refunded, detailing the specific amounts refunded for various months in 2009.
  
  Interest Calculation: The main issue was whether the granting of refund interest should have been allowed. Section 42 of the Value Added Tax Act, 2004 mandates that a person entitled to a refund shall receive simple interest at the notified annual rate, calculated on a daily basis. The interest calculation should be done by the Value Added Tax Officer and paid to the petitioner within eight weeks from the date of the order.
  
  Conclusion: The High Court held that the petitioner was entitled to interest on the refunded amount as per the provisions of Section 42 of the Act. The writ petitions were allowed, directing the calculation and payment of interest within a specified timeline, with no orders as to costs.

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• 2010 (9) TMI 1256
  
  Issues Involved:
  1. Maintainability of the suit in view of the bar contained in Order 23 Rule 3-A of the Code of Civil Procedure (CPC).
  
  Summary:
  
  Issue 1: Maintainability of the Suit in View of Order 23 Rule 3-A of CPC
  
  The appellants-defendants filed a Second Appeal u/s 100 of CPC against the judgment and decree dated 10-05-2001, which affirmed the trial court's decision dated 13-10-1995. The substantial question of law was whether the suit was maintainable given the bar in Order 23 Rule 3-A of CPC.
  
  The respondents-plaintiffs sought a declaration that the decree dated 7-7-1980 in Civil Suit No. 393-A/1980 was null and void, alleging fraud and lack of proper representation as minors. The trial court decreed in favor of the plaintiffs, and the appellate court upheld this decision.
  
  The appellants contended that the suit was barred by Order 23 Rule 3-A of CPC, citing various judgments to support their claim. Conversely, the respondents argued that the decree was void due to non-compliance with mandatory provisions for recording compromise on behalf of minors.
  
  The court examined the provisions of Order XXIII Rule 3 and Rule 3-A, as well as Order XXXII regarding suits involving minors. It was found that no guardian was appointed for the minor defendant Amarchand in the original suit, rendering the compromise and subsequent decree void.
  
  The court referenced several Supreme Court judgments, including Ram Chandra Arya v. Man Singh and Kaushalya Devi v. Baijnath Sayal, which established that a decree against a minor without a guardian is a nullity. The court also noted that a void decree is not binding on minors and can be challenged.
  
  The court concluded that since Amarchand was not properly represented, the decree was not binding on him, making the suit maintainable despite Order 23 Rule 3-A. The appellants' failure to raise the issue of maintainability earlier and their submission to the court's jurisdiction further weakened their position.
  
  The appeal was dismissed with costs, affirming that the suit filed by the plaintiffs was maintainable and the provisions of Order 23 Rule 3-A of CPC were not applicable in this case. The appellants were ordered to pay costs to the defendants No. 1 to 3 of all courts, with counsel fees certified at Rs. 2000/-.

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• 2010 (9) TMI 1255
  
  The High Court of Bombay stated that a matter was wrongly placed on the Board as it had already been disposed of in a judgment dated 27/11/2003, which was later reversed by the Apex Court. The court directed the papers to be consigned to record.

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• 2010 (9) TMI 1254
  
  Issues involved: Appeal against order of Commissioner of Income-tax (Appeals) for assessment year 2006-2007.
  
  Deduction u/s.80-IB:
  The appeal raised grounds against granting deduction u/s.80-IB. The Tribunal upheld the deduction for adhesive unit at Bhimpore, Daman, and Epoxy M-Seal unit at Kadaiya, Daman, based on precedent from earlier years where similar deductions were allowed. The grounds related to deduction u/s.80-IB failed.
  
  Deduction u/s.80-IB on DEPB:
  The appeal contested the claim of deduction u/s.80-IB on Duty Entitlement Pass Book (DEPB). Citing a Supreme Court judgment in Liberty India Vs. CIT, it was held that no deduction can be made u/s.80-IB for DEPB entitlements. This ground was allowed.
  
  Relief for ad-film expenses:
  The appeal challenged the relief granted for expenses of &8377; 84,27,270 incurred on ad-film. The Tribunal upheld the relief based on a previous decision in the assessee's favor. Following precedent, the impugned order on this issue was upheld, and the ground failed.
  
  Addition u/s.14A r.w.r. 8D:
  The final ground was against the deletion of addition u/s.14A read with rule 8D. Citing a judgment of the Bombay High Court in Godrej & Boyce Limited Vs. ACIT, it was decided that the disallowance under section 14A should be worked out by the Assessing Officer on a reasonable basis, not rule 8D. The matter was restored to the AO for deciding the quantum of disallowance as per the judgment. The appeal was partly allowed for statistical purposes.

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• 2010 (9) TMI 1253
  
  Issues Involved:
  1. Indexation Benefit on NCPA Flat
  2. Capitalization of Brokerage
  3. Disallowance of Interest Expense
  4. Calculation of Book Profit u/s 115JB
  5. Levy of Interest u/s 234A, 234B, and 234C
  
  Summary:
  
  1. Indexation Benefit on NCPA Flat:
  The assessee contended that the indexation benefit should be calculated from the date of the agreement for the purchase of the NCPA flat, not from the dates of actual payments. The AO and CIT(A) disagreed, stating that indexation should be based on actual payments. The Tribunal, referencing various case laws, ruled in favor of the assessee, stating that the indexation benefit should be given from the date of the agreement. The order of the CIT(A) was set aside, and the ground raised by the assessee was allowed.
  
  2. Capitalization of Brokerage:
  The assessee claimed brokerage of Rs. 1,31,000/- paid to Rupal Estate should be capitalized. The AO disallowed this, noting the receipt did not mention the assessee or the NCPA flat. The CIT(A) upheld this decision. The Tribunal agreed with the lower authorities, stating that without evidence linking the brokerage to the purchase of the flat, it could not be included in the cost of the asset. The ground raised by the assessee was dismissed.
  
  3. Disallowance of Interest Expense:
  The CIT(A) confirmed the disallowance of interest expense amounting to Rs. 8,09,700/-. Both parties agreed that a similar issue had been restored to the CIT(A) for fresh adjudication in the assessee's own case for the assessment year 2005-06. The Tribunal restored this ground to the CIT(A) for fresh adjudication, following the direction of the Tribunal in the assessee's own case and other group concerns. This ground was allowed for statistical purposes.
  
  4. Calculation of Book Profit u/s 115JB:
  The assessee argued that the calculation of book profit u/s 115JB amounting to Rs. 3,71,17,948/- was consequential to the disallowance of interest expense. The Tribunal restored this ground to the CIT(A) for fresh adjudication, in line with the decision on the interest expense.
  
  5. Levy of Interest u/s 234A, 234B, and 234C:
  The CIT(A) upheld the levy of interest u/s 234A, 234B, and 234C, stating it was mandatory and consequential. The assessee argued, referencing the Tribunal's decision in Orion Travels P. Ltd., that interest should not be levied on a notified person under the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992. The Tribunal agreed, directing the AO to delete the interest levied under these sections. This ground was allowed.
  
  Conclusion:
  The appeal filed by the assessee was partly allowed, with the Tribunal ruling in favor of the assessee on the issues of indexation benefit and levy of interest, while dismissing the claims related to brokerage capitalization and restoring the issues of interest expense and book profit calculation for fresh adjudication.

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• 2010 (9) TMI 1252
  
  Issues Involved:
  1. Addition of Rs. 3,40,501 out of Rs. 5,74,087 by the Assessing Officer.
  2. Method of accounting followed by the assessee.
  3. Addition of Rs. 1,80,000 u/s 40(a)(ia) of the Act.
  4. Disallowance of Rs. 81,970 and Rs. 1,11,410.
  
  Summary:
  
  Issue 1: Addition of Rs. 3,40,501 out of Rs. 5,74,087 by the Assessing Officer
  The assessee, a partnership firm engaged in chartered accountancy, filed its return of income declaring Rs. 89,558. The Assessing Officer (AO) scrutinized the accounts and found that the assessee was following a hybrid system of accounting, which is not permissible u/s 145(1) of the Act. The AO determined the taxable income as Rs. 10,42,985, including an addition of Rs. 5,74,087. This amount included Rs. 4,13,586 related to M/s. Das Gupta Management Services (P) Ltd. and advances against traveling expenses. The CIT(A) upheld the addition of Rs. 3,40,501 but excluded Rs. 2,55,586 as it was an opening balance.
  
  Issue 2: Method of accounting followed by the assessee
  The assessee contended that it followed the mercantile system of accounting, consistently accepted in previous assessments. The CIT(A) rejected this claim based on the audit report note. The Tribunal found that the assessee had no outstanding bills and had realized all professional bills within the year, indicating a mercantile system. The Tribunal concluded that the assessee followed the mercantile system, and the AO's inference of a hybrid system was based on surmises and conjecture.
  
  Issue 3: Addition of Rs. 1,80,000 u/s 40(a)(ia) of the Act
  The AO disallowed Rs. 1,80,000 paid to M/s. Dass Gupta Management Services (P) Ltd. for non-deduction of TDS. The CIT(A) upheld this disallowance. The Tribunal found that the AO's findings were contradictory, as the amount was included in the Rs. 4,13,586 addition. The Tribunal noted that the amount paid for job work was less than Rs. 50,000, exempting it from TDS u/s 194C. The Tribunal allowed the appeal and deleted the disallowance.
  
  Issue 4: Disallowance of Rs. 81,970 and Rs. 1,11,410
  The AO disallowed these expenses as they remained unpaid, assuming the assessee followed the cash method of accounting. The Tribunal, having established that the assessee followed the mercantile system, allowed these expenses as there was no dispute about their nature and admissibility.
  
  Conclusion:
  The Tribunal allowed the appeal, deleted the disallowances, and confirmed that the assessee followed the mercantile system of accounting. The decision was pronounced on 24.09.2010.

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• 2010 (9) TMI 1251
  
  Issues Involved:
  1. Validity of the exemption of land from certain provisions of the Punjab Regional and Town Planning and Development Act, 1995.
  2. Impact of the exemption on the legality of the land acquisition process.
  3. Requirement of rehabilitation measures for expropriated landowners and applicability of the 'Land Pooling Scheme'.
  
  Issue-wise Detailed Analysis:
  
  1. Validity of the Exemption Notification:
  The appellants did not challenge the notification dated 10th February 2004 granting exemption in their writ petitions. The High Court noted that without challenging the exemption notification, the appellants could not argue the acquisition violated the 1995 Act. Despite this procedural lapse, the court examined the merits. Section 178(2) of the Punjab Regional and Town Planning and Development Act, 1995 allows the State Government to exempt areas from the Act's provisions if it causes undue hardship or if circumstances render it expedient. The court found that the exemption was justified due to the rapid growth of Mohali and the need for planned development to avoid haphazard construction. The exemption was not just based on the cumbersome process of formulating master plans but on a realistic assessment of urgent needs. The court concluded that the exemption was legally valid, as the government had exercised its power appropriately to prevent unplanned development.
  
  2. Impact on Legality of Land Acquisition:
  Since the exemption was upheld, the question of the acquisition being invalid due to non-compliance with the 1995 Act did not arise. The appellants did not challenge the acquisition process under the Land Acquisition Act itself. The court distinguished the present case from Sanjeet Singh's case, noting that the acquisition was for the expansion of an existing township (Mohali) and not for establishing a new city. The land was already declared a local planning area under Section 56(5) of the 1995 Act. The court rejected the appellants' contention that the notification was issued without following due procedure, as no such challenge was raised in the writ petitions. Thus, the acquisition process was upheld as valid.
  
  3. Requirement of Rehabilitation Measures:
  Article 300A of the Constitution and the Land Acquisition Act do not mandate rehabilitation measures as a precondition for land acquisition. The court noted that while rehabilitation is not a legal requirement, it is a matter of fairness and equity. The appellants argued for the applicability of the Land Pooling Scheme formulated by the State Government in 2008. However, the court found that the scheme was prospective and could not be applied retrospectively to completed acquisitions. The court also noted that applying the scheme retrospectively would create confusion and potential litigation. The court acknowledged the State Government's offer to allow the appellants to seek higher compensation through a reference to the civil court, despite the lapse of the statutory period for such applications. The court directed that if the appellants file applications within six weeks, the Collector should refer the claims to the civil court for determination of compensation.
  
  Conclusion:
  The Supreme Court upheld the exemption notification, validated the land acquisition process, and rejected the argument for mandatory rehabilitation measures. However, it provided relief to the appellants by allowing them to seek higher compensation through the civil court. The appeals were dismissed with no costs.

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