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2012 (9) TMI 1221
Issues involved: Appeal against order of Income Tax Appellate Tribunal regarding addition of stock value and re-opening of assessment.
Addition of Stock Value:
The respondent assessee's assessment for the year 2004-05 was reopened due to underassessment of closing stock amounting to Rs. 30,47,400. The Commissioner of Income Tax (Appeals) deleted this addition, citing the principle that a change of opinion cannot justify exercising powers under section 148 of the Income Tax Act, 1961. The Income Tax Appellate Tribunal upheld the deletion, noting that the value of stock had decreased over time and that the same issue had been accepted in the preceding assessment year 2003-04. The Tribunal emphasized the importance of consistency in such matters, stating that the principle of res judicata may not apply, but consistency must be maintained. The Tribunal found no merit in the department's appeal and dismissed it, as there were no significant differences in the facts of the current assessment year to warrant a different treatment.
Re-opening of Assessment:
The Tribunal considered the legality of the re-opening of the assessment to be academic, as the addition of stock value had been deleted. It was noted that the Assessing Officer had acted on the same facts and material available during the assessment under section 143(3) of the Act, and therefore, had no justification for re-opening the assessment. The Tribunal concluded that the appeal lacked merit and no substantial question of law arose for consideration, leading to the dismissal of the appeal.
In summary, the appeal was dismissed as the Tribunal upheld the deletion of the addition of stock value based on consistency in treatment of similar issues in previous years and found the re-opening of the assessment to be unjustified due to lack of new circumstances.
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2012 (9) TMI 1220
Issues Involved:
1. Infringement of Registered Trademarks
2. Passing Off
3. Contributory Infringement by Search Engine
4. Validity of Registered Trademarks
5. Honest Practices in Trade
6. Balance of Convenience and Irreparable Harm
7. Admissibility of Additional Evidence
Summary:
Infringement of Registered Trademarks:
The appellant, a provider of online matrimonial services, claimed infringement of its registered trademarks (e.g., Bharatmatrimony, Tamilmatrimony) by the respondents using these trademarks as keywords in Google's AdWords program. The court noted that the appellant's trademarks are combinations of descriptive words (e.g., 'Tamil', 'Matrimony') and held that while individual words cannot be monopolized, the combination registered as trademarks must be protected. The court found that respondents' use of these combinations, even with a space in between, could cause confusion and thus constitute infringement u/s 29 of the Trade Marks Act, 1999.
Passing Off:
The appellant argued that the respondents' use of its trademarks in advertisements led to passing off their services as those of the appellant, causing confusion among consumers. The court acknowledged that the use of deceptively similar marks in the ad titles and texts could mislead consumers, thereby supporting the appellant's claim of passing off.
Contributory Infringement by Search Engine:
The appellant accused Google (respondent 1) of contributory infringement by allowing competitors to use its trademarks as keywords. The court noted that Google's AdWords policy prohibits the use of registered trademarks in ad texts and titles. However, the court found that Google had discriminated against the appellant by not applying this policy uniformly, thus facilitating infringement indirectly.
Validity of Registered Trademarks:
Respondents challenged the validity of the appellant's trademarks, arguing they were descriptive and lacked distinctiveness. The court held that registration of a trademark is prima facie evidence of its validity u/s 31 of the Act. The court rejected the respondents' contention, stating that the issue of distinctiveness could be examined during the trial.
Honest Practices in Trade:
The court examined whether the respondents' use of the appellant's trademarks was in accordance with honest practices u/s 30 of the Act. The court found that the respondents' actions were not honest practices as they caused confusion and misled consumers.
Balance of Convenience and Irreparable Harm:
The court found that the balance of convenience favored the appellant, given the potential harm to its business and reputation. However, the court noted that irreparable harm could only be fully assessed during the trial.
Admissibility of Additional Evidence:
The second respondent filed petitions to introduce additional evidence. The court dismissed these petitions, noting the delay and lack of justification for not presenting the documents earlier. However, the court allowed the possibility of introducing these documents during the trial, subject to proof and relevance.
Conclusion:
The court confirmed the common order passed in the original applications, dismissing the appeals and the petitions for additional evidence. The court directed that the current arrangement, based on Google's undertaking to protect the appellant's trademarks, should continue until the disposal of the suit. The court requested the trial to be expedited and completed preferably by the end of 2013.
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2012 (9) TMI 1219
Issues Involved:
1. Ban on mining operations.
2. Resumption of mining operations in Category B mines.
3. Compensatory payments and Reclamation and Rehabilitation (R&R) plans.
4. Constitution of a Special Purpose Vehicle (SPV) for environmental restoration.
Summary:
Ban on Mining Operations:
This Court, by orders passed on July 29 and August 26, 2011, had imposed a ban on mining operations in all the mining leases (except two mining leases of M/s. NMDC Ltd.) in the districts of Bellary, Tumkur, and Chitradurga in the State of Karnataka. Later, the ban was lifted for some 'Category A' mines under certain conditions.
Resumption of Mining Operations in Category B Mines:
The Court now proposes to deal with the Category B mines. The CEC has categorized 65 mining leases in 'Category B' and 7 in 'Category B-1'. This order pertains to the 63 'Category B' mining leases. The amicus suggested steps essential before considering the resumption of mining operations, including compensatory payments and the implementation of the R&R plan.
Compensatory Payments and Reclamation and Rehabilitation (R&R) Plans:
I. Compensatory Payment:
(a) Leaseholders must pay Rs. 5 crores per hectare for illegal mining pits outside the sanctioned area.
(b) Rs. 1 crore per hectare for illegal overburden dumps, roads, offices, etc., outside the sanctioned lease area.
A Committee will determine the final compensatory amount based on the value of illegally extracted ore and environmental damage.
II. Guarantee Money for R&R Plan:
The CEC will estimate the expenses for the R&R plan, and leaseholders must pay this amount as a guarantee. If a leaseholder defaults, the CEC may use the guarantee money to implement the R&R plan through another agency.
III. Additional Payment:
Each leaseholder must pay 15% of the sale proceeds of its iron ore sold through the Monitoring Committee.
IV. Implementation of R&R Plans:
R&R plans for the 63 'Category B' mines should be prepared and implemented without delay.
Constitution of a Special Purpose Vehicle (SPV) for Environmental Restoration:
The State of Karnataka is directed to set up an SPV for ameliorative and mitigative measures as per the "Comprehensive Environment Plans for the Mining Impact Zone" (CEPMIZ). The SPV would be under the Chairmanship of the Chief Secretary, Government of Karnataka, and would include senior officers from relevant departments. The SPV would function transparently, with accounts audited annually by the CAG. The CEC is directed to submit a detailed report on the larger reclamation and rehabilitation program to be undertaken by the SPV by October 10, 2012.
Additional Directions:
The Joint Team is directed to prepare survey sketches for six mining leases in the Bellary Reserve Forest in District Anantapur, Andhra Pradesh. Mining operations in these leases shall remain suspended until further orders. The CEC is also at liberty to forward a representation received from M/s. Laxmi Narayan Mining Company to the Central Bureau of Investigation.
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2012 (9) TMI 1218
Issues Involved:
The correctness of treating the amount as long-term capital gains instead of short-term capital gains for the assessment year 2005-06.
Summary:
Issue 1: Correctness of Capital Gains Classification
The Assessing Officer disputed the claim of the assessee that the gains from the sale of shares should be treated as long-term capital gains eligible for exemption u/s. 54EC. The dispute arose from the holding period of the shares, with the Assessing Officer claiming it was less than twelve months. The CIT(Appeals) noted that the assessee did not have a de-mat account at the time of purchase and opened one later, which affected the calculation of the holding period. The CIT(Appeals) directed the Assessing Officer to treat the gains as long-term capital gains and allow the exemption u/s. 54EC based on the circumstances presented.
Issue 2: Challenge by Assessing Officer
The Assessing Officer challenged the CIT(Appeals) decision, arguing that the date of purchase of shares was not in question and the holding period exceeded one year, thus the gains should be treated as capital gains. The Assessing Officer's challenge to treating the gains as long-term capital gains lacked a legally sustainable basis as the date of purchase was undisputed, and the delay in transferring shares to the de-mat account was explained by the assessee. The Tribunal found merit in the assessee's argument and upheld the CIT(Appeals) decision, dismissing the appeal filed by the Revenue.
In conclusion, the Tribunal affirmed the CIT(Appeals) decision, emphasizing the importance of not altering the date of purchases when the genuineness of the transaction is not in question. The appeal by the Revenue was dismissed, and the decision was pronounced on 14th September 2012.
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2012 (9) TMI 1217
Issues involved: Application u/s 35H(1) of the Central Excise Act, 1944 for reference of a question of law arising from the Tribunal's order.
Comprehensive Details:
1. The applicant, engaged in manufacturing lamps falling under Chapter 85 of the Central Excise Tariff Act, imported a machine in 1996 for lamp production. The machine was used for both dutiable and exempted products. The Central Excise Department issued a show-cause notice disallowing Modvat credit, alleging exclusive use for exempted products. The Assistant Commissioner allowed the credit, but the Tribunal reversed this decision.
2. The High Court considered whether the Tribunal was correct in holding the capital goods were exclusively used for exempted products, invoking Rule 57R of the Central Excise Rules, 1944. The Court allowed the application u/s 35H(1) and directed the Tribunal to refer the question to the Court for consideration.
3. The judgment concluded by disposing of the matter, indicating the resolution of the case.
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2012 (9) TMI 1216
Issues Involved:
1. Fraud on the Registrar of Trade Mark.
2. Registered proprietorship of the trademark 'EXIDE'.
3. Prior user and proprietorship of the trademark 'EXIDE' in India.
4. Suppression of material facts.
5. Acquiescence.
6. Infringement of the trademark 'EXIDE'.
7. Passing off.
8. Use of the mark 'EXIDE' as passing off.
9. Relief.
Summary:
Issue 1: Fraud on the Registrar of Trade Mark
The defendant No. 1 argued that the plaintiff obtained the trademark registration fraudulently. However, the court held that the civil court cannot examine the validity of the registration and that such matters must be decided by the appropriate authority u/s 56 of the Trade Marks Act, 1958. Therefore, the issue was decided in favor of the plaintiff.
Issue 2: Registered Proprietorship of the Trademark 'EXIDE'
The court confirmed that the plaintiff is the registered proprietor of the trademark 'EXIDE' based on the registration certificates (Ex. PW2/1 to Ex. PW2/3). The defendant No. 1's arguments regarding the conditional assignment and fraudulent registration were not upheld. Thus, the issue was decided in favor of the plaintiff.
Issue 3: Prior User and Proprietorship of the Trademark 'EXIDE' in India
The court found that the plaintiff and its predecessors had been using the trademark 'EXIDE' in India since around 1960. The defendant No. 1 failed to prove that the plaintiff was merely a common law licensee or registered user. The court held that the plaintiff is the prior user and thus the owner of the trademark 'EXIDE' in India.
Issue 4: Suppression of Material Facts
The court held that any alleged suppression by the plaintiff does not affect the substantive rights proven during the trial. Therefore, the issue was decided against the defendant No. 1.
Issue 5: Acquiescence
The court found no evidence of the defendant No. 1 selling goods under the trademark 'EXIDE' from 1950 to 1997 and no special circumstances were proven. Thus, the issue of acquiescence was decided in favor of the plaintiff.
Issue 6: Infringement of the Trademark 'EXIDE'
The court held that the defendant No. 1's use or proposed use of the trademark 'EXIDE' constitutes infringement of the plaintiff's registered trademark. Therefore, the issue was decided in favor of the plaintiff.
Issue 7: Passing Off
The court found that the plaintiff is the prior user of the trademark 'EXIDE' in India, and the defendant No. 1's use of the trademark constitutes passing off. Thus, the issue was decided in favor of the plaintiff.
Issue 8: Use of the Mark 'EXIDE' as Passing Off
The court agreed that the issue was wrongly framed and should focus on whether the plaintiff's use of 'EXIDE' amounts to passing off the defendant No. 1's trademark. The court found no such passing off by the plaintiff. Therefore, the issue was decided in favor of the plaintiff.
Relief:
The suit was decreed in favor of the plaintiff, and the counter-claim by defendant Nos. 1 and 2 was dismissed. The plaintiff was declared the registered proprietor and prior user of the trademark 'EXIDE' in India. The defendants were injuncted from using the trademark 'EXIDE' or any deceptively similar mark.
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2012 (9) TMI 1215
Issues Involved:
1. Disallowance of weighted deduction u/s 35(2AB)
2. Disallowance of 50% depreciation on energy-saving plant and machinery
3. Disallowance of depreciation on assets purchased from Pravin Metal Corp.
4. Disallowance of computer software expenditure
5. Overall deduction u/s 80HHC
6. Disallowance of deduction on account of DEPB credit u/s 80HHC
7. Consideration of interest and rental income under different heads
Summary:
1. Disallowance of weighted deduction u/s 35(2AB):
The assessee challenged the disallowance of Rs. 34,14,178 claimed as a weighted deduction u/s 35(2AB). The Assessing Officer (AO) disallowed the deduction due to the absence of an agreement with the prescribed authority (DSIR) and the lack of Form 3CM approval. The Commissioner (Appeals) upheld the AO's decision, emphasizing the necessity of Form 3CM for eligibility. The Tribunal, however, noted that the assessee had obtained the required approval for the Vapi unit in Form 3CM after the Commissioner (Appeals)'s order. The Tribunal directed the AO to verify this approval and allow the deduction for the Vapi unit while disallowing it for the Thane unit due to the absence of Form 3CM.
2. Disallowance of 50% depreciation on energy-saving plant and machinery:
The assessee did not press this ground, and it was dismissed as "not pressed."
3. Disallowance of depreciation on assets purchased from Pravin Metal Corp.:
The Tribunal restored this issue to the AO for re-examination, following its earlier decision in the assessee's case for assessment year 2001-02, where the facts were not explicitly clear.
4. Disallowance of computer software expenditure:
The Tribunal allowed the assessee's claim for computer software expenditure, following its earlier decision for assessment year 2001-02. The expenditure on SAP accounting package, which was scrapped due to commercial expediency, was considered a business expenditure.
5. Overall deduction u/s 80HHC:
The assessee did not press this ground, and it was not adjudicated.
6. Disallowance of deduction on account of DEPB credit u/s 80HHC:
The Tribunal directed the AO to re-compute the deduction u/s 80HHC in accordance with the Supreme Court's decision in Topman Exports v/s CIT, where the sale value less the face value of DEPB represents profit on transfer of DEPB.
7. Consideration of interest and rental income under different heads:
The Tribunal restored this issue to the AO for fresh consideration, following its earlier decision in the assessee's case for assessment year 2001-02. The AO was directed to decide the issue afresh in light of the Tribunal's observations and relevant judicial precedents.
Conclusion:
The appeal was partly allowed, with specific directions for verification and re-examination by the AO on certain issues. The Tribunal's decision emphasized adherence to procedural requirements and judicial precedents in determining the eligibility for deductions and allowances.
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2012 (9) TMI 1214
The Supreme Court allowed the civil appeal filed by the assessee based on previous judgments. Three special leave petitions were dismissed in light of the civil appeal decision.
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2012 (9) TMI 1213
Determination of Territorial jurisdiction of magistrate - Dishonor of cheque - discharge of legally enforceable debt or blank cheque issued for the purpose of security - rebuttal of presumption - accused is guilty for commission of offence punishable u/s 138 of N.I. Act or not? - Application u/s 482 CrPC for Quashing complaint - plea of the petitioner is that the entire business transaction including the taking of the loan and deposit of security cheques took place in Kolkata, respondent cannot create jurisdiction of the Gurgaon Court simply because depositing the cheque (for encashment) at a place, other than the place of its issuance.
Territorial Jurisdiction - HELD THAT:- keeping in view of principle of law laid down in K. Bhaskaran's case [1999 (9) TMI 941 - SUPREME COURT], it is held that complaint is maintainable within the territorial jurisdiction of Gurgaon as the complainant company (respondent herein) has its corporate office at Gurgaon and the collecting bank with regard to the cheque in question is situated at Gurgaon. The criminal courts at Gurgaon have territorial jurisdiction to try and decide the complaint.
Regarding Security Cheque - There can be no doubt regarding the fact that the security cheque is an integral part of the commercial process entered into between the Petitioner and Respondent/Complainant. The security cheque is not only a deterrent for the drawer against dishonoring his financial commitment but can also be legally and validly utilized towards the discharging of the liability of the Drawer.
In the considered opinion of the Court, a security cheque is an acknowledgment of liability on the part of the drawer that the cheque holder may use the security cheque as an alternate mode of discharging his/its liability. Thus, the argument of the ld counsel for the petitioner that on dishonoring of a security cheque no offence punishable u/s 138 of the Negotiable Instruments Act is made out.
Consequently, this petition is dismissed.
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2012 (9) TMI 1211
Issues involved:
The Revenue and the assessee are aggrieved against the orders of the ITAT for assessment years 1999-2000 and 2000-01, 2001-02, and 2002-03. The Revenue questions the determination of income attributed to India for the assessee, while the assessee challenges its tax liability based on its business activities in India.
Revenue's Issue:
The Revenue challenges the determination of the quantum of income attributed to India for the assessee. The Tribunal's decision in this matter was based on a previous order for the years 1995-96 to 1998-99. Appeals against this order were disposed of by a common judgment dated 25.02.2009. It is noted that appeals are pending before the Supreme Court against the said judgment. Given the similarity in factual matrix and legal questions, the High Court disposes of the current appeals in line with the judgment dated 25.02.2009.
Assessee's Issue:
The assessee contests its chargeability to tax in India, arguing that it conducts business activities in the country. The Tribunal's decision was influenced by a previous order for the years 1995-96 to 1998-99, which was addressed in a common judgment dated 25.02.2009. It is acknowledged that appeals related to this judgment are pending before the Supreme Court. Due to the consistency in facts and legal issues, the High Court resolves the present appeals in accordance with the 25.02.2009 judgment.
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2012 (9) TMI 1210
Issues involved: The issues involved in this case are related to the interpretation of the Pondicherry General Sales Tax Act 1967, specifically regarding the classification and exemption of certain tobacco products under the Act.
Issue 1: Burden of proof for exemption category of sales tax
The Sales Tax Appellate Tribunal placed the onus on the revenue to prove exemption category of sales tax, contrary to Section 11 of the Pondicherry General Sales Tax Act 1967 which places the burden of proof upon the assessee. The Tribunal's decision was challenged by the Revenue on substantial questions of law regarding the burden of proof for exemption claims.
Issue 2: Classification of tobacco products for sales tax exemption
The assessee, a registered dealer in tobacco products, contended that certain items like Gutkha, Khaini, Jarda should be classified as tobacco products and hence exempted from sales tax under the Act. The Tribunal accepted the assessee's claim based on evidence provided, including sample pouches of pan masala items and letters from the Commissioner of Commercial Tax. The Tribunal held that the items in question are indeed tobacco products and exempted from sales tax under the Act.
Issue 3: Levy of tax on Gutkha and Revenue's appeal
Regarding the levy of tax on Gutkha, the Revenue sought to restore the assessment made by the first Appellate Authority, citing previous court decisions. However, the Tribunal rejected the Revenue's submission, stating that without filing a cross appeal as per Section 37 of the PGST Act, the claim could not be considered. The Tribunal granted exemption on the sale of certain tobacco products, leading the Revenue to appeal the decision.
Judgment Summary:
The High Court dismissed the Revenue's revisions, upholding the Tribunal's decision to grant exemption on certain tobacco products based on the evidence provided by the assessee and the Commissioner of Commercial Tax. The Court found no grounds to interfere with the Tribunal's order, noting that the Revenue itself treated the items as tobacco products in subsequent years. The Court emphasized that the Revenue's failure to follow proper procedures and lack of substantial evidence undermined their appeal. Consequently, the Tax Case (Revisions) were dismissed with no costs awarded.
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2012 (9) TMI 1209
In the legal judgment by the Supreme Court of India, the special leave petition was dismissed after hearing the petitioner's counsel.
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2012 (9) TMI 1208
Issues involved: Challenge to Assessment Orders u/s AP VAT Act, 2005
The petitioners, who are engaged in wholesale business of cool drinks, challenged the Assessment Orders passed by the first respondent under the AP VAT Act, 2005. The petitioners contended that their objections submitted in response to show cause notices were not considered by the first respondent, leading to orders of Assessment that lacked proper analysis and reasoning. The court found the impugned orders to be perverse and lacking in application of mind. Consequently, the court quashed the Assessment Orders dated 23.04.2012 and granted liberty to the first respondent to pass fresh orders after duly considering the objections raised by the petitioners.
The court, noting the unreasoned and perverse nature of the Assessment Orders, allowed the writ petitions and imposed costs of &8377; 1,000/- in each petition to be paid by the first respondent to the Secretary, A.P. State Legal Services Authority within two weeks. Additionally, a copy of the order was directed to be sent to the Secretary, A.P. State Legal Services Authority for information purposes.
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2012 (9) TMI 1207
Issues involved: Assessment order u/s 143(1), revised return, notice u/s 148, addition of trading receipts, appeal before CIT(A), appeal before Tribunal.
Assessment Order u/s 143(1) and Addition of Trading Receipts:
The assessee, a State owned Transport Corporation, filed its return of income for the assessment year 2004-05, which was processed u/s 143(1). Subsequently, a revised return was filed and processed u/s 143(1) again. An assessment order was passed u/s 148 making additions to the income. The CIT(A) partly allowed the appeal but upheld the addition of Rs. 7.29 crores as trading receipts. The assessee contended that the funds were provided by the Government for interest payment on terminal benefits to employees. The Assessing Officer treated the undisbursed amount as trading receipt, which the CIT(A) affirmed. However, the Tribunal held that the amount was not a trading receipt as it was received for a specific purpose and later adjusted by the Government for student concession subsidy, thereby allowing the appeal of the assessee.
Conclusion:
The Tribunal set aside the order of the CIT(A) and allowed the appeal of the assessee, emphasizing that the undisbursed amount of Rs. 7.29 crores received for terminal benefits cannot be considered as trading receipts in subsequent assessment years.
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2012 (9) TMI 1206
Issues Involved:
1. Confirmation of penalty levied u/s 271(1)(c) of the Income Tax Act.
2. Interpretation of Section 94(7) regarding the disallowance of short-term capital loss.
Summary:
Issue 1: Confirmation of Penalty Levied u/s 271(1)(c)
The assessee appealed against the CIT(A)'s order confirming the penalty levied by the Assessing Officer (AO) u/s 271(1)(c) for the assessment year 2003-04. The AO had levied a penalty of Rs. 30,56,747/- for furnishing inaccurate particulars of income and concealing income. The assessee contended that the mistake was bonafide and there was no intention to conceal income. The CIT(A) disagreed, stating that the assessee made a false claim and deliberately concealed income, thus triggering Explanation 1 to Section 271(1)(c).
Issue 2: Interpretation of Section 94(7)
The assessee purchased units of SUN F & C Money Value Fund and received exempt dividend income u/s 10(33). The units were later sold at a loss, and the assessee claimed this short-term capital loss. The AO disallowed the loss to the extent of the dividend received as per Section 94(7). The assessee argued that the units were redeemed, not sold, and thus not covered by Section 94(7). The Tribunal held that redemption constitutes a transfer under Section 2(47), and the assessee's claim was not bonafide. However, the Tribunal noted that the assessee disclosed all relevant details and there was no intention to conceal income. Citing precedents, the Tribunal concluded that merely making an incorrect claim does not amount to furnishing inaccurate particulars. Therefore, the penalty u/s 271(1)(c) was not justified.
Conclusion:
The Tribunal allowed the appeal, canceling the penalty levied u/s 271(1)(c), as the assessee's incorrect claim was bonafide and did not amount to furnishing inaccurate particulars of income. The decision was pronounced in the open court on 28th Sept., 2012.
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2012 (9) TMI 1205
Issues involved: Appeal against order of CIT(A) confirming disallowance of depreciation, interest on car loan, and car-related expenses u/s 10(2A) and section 14A of the Income Tax Act, 1961 for assessment year 2006-07.
Details of Judgment:
1. The appellant, an individual and partner in a firm, contested the disallowance of depreciation, interest on car loan, and car expenses totaling &8377;1,38,820 by the Assessing Officer (A.O.). The CIT(A) confirmed 76% of the disallowance based on section 14A of the IT Act, amounting to &8377;1,25,005. The matter was referred to a Special Bench regarding the application of section 14A on exempt income from the firm. The Special Bench held that share income from the firm is excluded from the partner's total income, justifying the disallowance under section 14A. The Special Bench clarified that depreciation is a statutory allowance, not an expenditure under section 14A.
2. Following the Special Bench decision, the disallowance on account of depreciation was deleted. However, the remaining additions were upheld by the Tribunal as the appellant's arguments were not deemed convincing. The appeal was partly allowed based on this decision.
3. The judgment emphasized that the firm and partners are separately assessable entities, and the share income from the firm is excluded from the partner's total income. Therefore, section 14A applies to disallow expenditures incurred in earning the share income. The decision clarified the distinction between statutory allowances and expenditures under section 14A.
4. The Tribunal's decision aligned with the Special Bench's ruling, highlighting that depreciation is not to be considered for disallowance under section 14A. The judgment upheld the CIT(A)'s order to the extent of confirming the disallowance of expenses other than depreciation.
5. In conclusion, the Tribunal partly allowed the appellant's appeal, deleting the disallowance of depreciation but confirming the disallowance of other expenses based on the application of section 14A.
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2012 (9) TMI 1204
Issues involved: Appeal against order of Ld. Commissioner of Income Tax (Appeals)-VI, New Delhi dated 14.11.2011 pertaining to assessment year 2008-09.
Summary:
Issue 1: Disallowance of provision for Auditor's Remuneration under section 40(a)(ia) of the Income Tax Act, 1961
The Assessing Officer disallowed &8377; 11,23,600/- on account of provision for Auditor's Remuneration payable for non-deduction of TDS as mandated by section 40(a)(ia) of the Act. The assessee admitted the delay in TDS payments and requested the disallowance. The Assessing Officer also imposed a penalty u/s 271(1)(c) for furnishing inaccurate particulars of income. The Ld. Commissioner of Income Tax (A) upheld the disallowance but held that penalty cannot be imposed as there was no tax sought to be evaded, relying on the decision in the case of Nalwa Sons Investment Limited 327 ITR 543. The ITAT Delhi upheld the decision of the Ld. Commissioner of Income Tax (A) based on the legal provisions and precedents, stating that penalty cannot be imposed based on disallowances made under regular provisions when income is assessed under MAT.
Decision: The ITAT Delhi dismissed the appeal filed by the Revenue, upholding the order of the Ld. Commissioner of Income Tax (A) regarding the disallowance of provision for Auditor's Remuneration and the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961.
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2012 (9) TMI 1203
Issues involved: Appeal against order of CIT-I, Coimbatore u/s 263 of the Income Tax Act, 1961.
Grounds raised by the assessee:
1. Challenge to setting aside AO's order without finding it erroneous u/s 263.
2. Dispute over validity of CIT's jurisdiction u/s 263 regarding pre-operative expenditure.
3. Vagueness in direction for setting aside assessment.
4. Overall challenge to CIT's order u/s 263 as unsustainable.
Assessee's arguments:
The CIT erred in invoking u/s 263 as pre-operative expenditure was not covered by section 35D, hence not subject to amortization. The CIT's notice was based on incorrect application of section 35D, leading to wrong tax treatment of trial run income. The CIT acknowledged pre-operative expenses were not under section 35D but directed verification of expenses, creating uncertainty in tax liability calculation. Assessee argued that if trial run receipts are considered income, corresponding expenses should be deducted to avoid surplus.
CIT/DR's position:
Supported CIT's order, highlighting that trial run receipts were not reflected in Profit & Loss Account, hence not taxed, and were offset against pre-operative expenses.
Judgment and Analysis:
The CIT initiated proceedings u/s 263 due to alleged omission of assessing trial run income as taxable. However, after considering submissions, it was found that a portion of the income did not have an assessable element and the rest had corresponding expenses. The CIT's order emphasized the need to verify the expenses for correct tax assessment. The Tribunal noted the absence of a show cause notice specifically for the expenses in question. Furthermore, the CIT did not dispute the assessee's claim regarding the nature of the income. Consequently, the Tribunal found the CIT's order unsustainable as no error was identified in the assessee's submissions. Therefore, the order u/s 263 was canceled, and the assessee's appeal was allowed.
Conclusion:
The Tribunal ruled in favor of the assessee, canceling the CIT's order u/s 263 and allowing the appeal. The decision was based on the lack of jurisdiction in the CIT's order and the absence of errors in the assessee's submissions regarding the disputed income.
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2012 (9) TMI 1202
Issues involved:
The judgment involves disputes on two grounds: (1) addition on account of credit card payment of Rs. 10,29,846/- and (2) addition of Rs. 1,41,250/- on account of unexplained cash credit.
Issue 1 - Credit Card Payment Dispute:
The Assessing Officer (AO) added Rs. 10,29,846/- as unexplained expenditure due to lack of details on credit card payments. The assessee explained that payments were inter-linked between different credit cards, with funds transferred from one to another. The CIT(A) directed the AO to delete the addition after verifying the explanations and documents submitted by the assessee. The Tribunal upheld the CIT(A)'s decision, noting that the AO was satisfied with the explanations provided and found no discrepancies in the transactions.
Issue 2 - Unexplained Cash Credit Dispute:
The AO added Rs. 1,41,250/- as unexplained cash credit due to a deposit in a bank account. The assessee explained that withdrawals from various bank accounts were redeposited, and the cash flow statement supported this claim. The CIT(A) directed the AO to delete the addition, considering the assessee's explanation and lack of evidence showing the cash withdrawals were utilized for other purposes. The Tribunal upheld the CIT(A)'s decision, stating that the AO failed to prove the funds were used differently and accepted the cash flow statement as evidence.
In conclusion, the Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decisions on both disputes.
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2012 (9) TMI 1201
Issues Involved: Appeal against dismissal of appeal by CIT(A) without consideration of subject issues on merit.
Summary:
The appeal by the assessee was against the order of CIT(A) dismissing the appeal without considering the subject issues on merit. The CIT(A) had passed a non-speaking order based on the appellant's non-pursuance of the appeal. The ITAT found the CIT(A)'s order to be non-speaking and not sustainable, as it did not provide a reasoned decision. Referring to the provisions of section 250(6) of the Income-tax Act, the ITAT set aside the CIT(A)'s order and remanded the matter for fresh adjudication, emphasizing the importance of a speaking order. The appeal of the assessee was allowed for statistical purposes.
In conclusion, the ITAT Kolkata allowed the appeal of the assessee against the dismissal of the appeal by CIT(A) without considering the subject issues on merit. The ITAT emphasized the necessity of a speaking order in such cases and remanded the matter for fresh adjudication.
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9911796707
