Benami transaction - benami ownership of the plaintiff over the suit property taken by the defendant in his written statement - right of coparcener in the Hindu Undivided Family - suit for permanent and mandatory injunction and mesne profits in the year 2010 against Mr. Anil Gulati (brother of her late husband) in respect of suit property - as pleaded in the plaint that the plaintiff is the absolute owner of the suit property by virtue of a registered Gift Deed dated September 03, 1984 executed by her father Late Sh.K.B.Midha - HELD THAT:- The status quo with regard to the possession of the property, as on today, shall be maintained. However without prejudice to the contentions available to the petitioner, he is directed to deposit an amount of ₹ 12,00,000/- (Rupees Twelve Lakhs) with the Trial Court within a period of one month. On such deposit, the respondent is permitted to withdraw the same on furnishing security to the satisfaction of the Court.
Denial of CENVAT Credit - cement and steel - Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in rejecting the claim of the assessee in light of the provisions of Rule 2(k) of the Cenvat Credit Rules, 2004 - it was held by High Court that the appellant was entitled for input credit and the decision of the Division Bench of the Andhra Pradesh High Court [2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT] squarely applies to the facts of the case.
Closing stock estimation - value of scrap items lying on the shop floor at the end of relevant year - insurance premium paid at the time of purchase of car - provision for head office expenses - Mark to market loss in respect of outstanding option contracts - disallowance of deduction claimed under section 80IA in respect of profit derived from captive power generating unit, on the ground that profit of the said unit was to be computed by adopting the transfer price of power as the rate at which power was supplied by local State Electricity Board/ Haryana State Electricity Board (‘HSEB’) to the Dharuhera unit - disallowance of provision for advertisement expenses under section 40(a)(ia) of the Act for alleged failure to deduct tax at source - disallowance of expenditure incurred on account of rental charges paid towards cars taken on lease under section 40(a)(ia) on the ground that the appellant failed to deduct tax at source therefrom under section 194-I - Disallowance of expenditure incurred towards distribution of motor vehicles to winners of game shows organized by TV channels under section 40(a)(ia) on the ground that the appellant failed to deduct tax at source therefrom under section 194B - disallowance of aggregate expenditure incurred on account of (i) booking of banquet halls/space in hotel to convene various meetings/training courses andmeal expenses incurred at the time of such meetings/conferences room on the ground that appellant failed to deduct tax at source from such payments under section 194I/194C, invoking provisions of section 40(a)(ia) of the Act - disallowance made by the assessing officer under section 40(a)(ia) by holding that the appellant was liable to deduct tax at source from hire charges of generator used at the corporate office under section 1941 of the Act - disallowance of additional depreciation claimed under section 32(1)(iia) of the Act on computers installed at supervisory offices located in the compound of manufacturing plants located at Gurgaon and Dharuhera, on the ground that the appellant failed to prove with evidence that the aforesaid computers were installed at the said premises, without appreciating that the aforesaid fact was admitted and not disputed by the lower authorities - assets used for purposes of testing were used for scientific research and, therefore, entire cost thereof was eligible for deduction under section 35(1)(iv) of the Act - HELD THAT:- Questions are framed for determination - Learned counsel for the parties are permitted to file additional documents/papers which are part of the assessment record or were filed before the ITAT within eight weeks.
Disallowance u/s.40-A(3) being 20% of the expenditure incurred in cash - HELD THAT:- Undoubtedly, the assessee company was incurring expenditure on behalf of its clients. The assessee company has shown the handling charges, transport charges, BPT charges, and gunny bag purchases. In fact, all these charges are belonging to the clients and the same cannot be said to be expenditure of the assessee company. The assessee company also explained in this regard that the company was utilizing the said amount for the payment of labour for job work, for stenciling done manually and high piling and speed money charges to the labour for speed delivery of the cargo.
No doubt, to clarify the said expenditure the AO issued notice to the concerned companies but failed to receive the answer from the other companies but it cannot be the ground to disallow the expenditure incurred on behalf of the clients and add the same to the income of the assessee company. Moreover, no expenditure was claimed by the assessee company nor these amounts belong to the assessee company. Thereupon, the said situation, in our view section 40A(3) of the IT Act is not attracted in the hands of the assessee. Hence, the Ld. CIT(A) has rightly deleted the being 20% of the expenses.
Addition of speed money is to be payable by the company to the labourers and others to achieve the result or to do the work at spot. This expenditure has also been incurred by the assessee company on behalf of its client. This amount has not been belonging to the assessee company and in this regard the company also reflected the said amount in its Profit and Loss account. As discussed above, section 40A(3) deals with the computing of income under the head of profit and gains of business and provision under section 40A(3) is one of the sub sections of section 40A and while computing the taxable income under the head of profit and gains of business then the provisions of section 40A(3) can be invoked. When there is no claim with regard to any expenditure, therefore there should not be any disallowance in view of the provision under section 40A(3)
When the expenditure is not related to the assessee company, however executed on behalf of its client, then the question of application of the provisions of section 37(1) of the Income Tax Act, 1961 does not arise
Addition on account of payment made to the Dena Bank as one time settlement against the liability - HELD THAT:- The assessee has constructed the warehouse project and installed plant and machinery. The warehouse project was completed in the year of 1990 & 1991 and amount debited in the balance sheet for the year of 1990-91 - Against the said project, the assessee took the loan from Dena Bank and failed to repay the same, hence, the bank has filed the recovery suit against the assessee. There was a settlement for the amount payable to the bank against the assessee’s term loan liability.
The assessee paid a sum of ₹ 23,74,000/- in assessment year of 2006-07 and ₹ 24,26,000/- in assessment year of 2007-08 making total payment to ₹ 48 lakhs to Dena Bank. The amount was debited to the separate account and shown separately on the asset side as against the Dena Bank’s settlement of term loan. The intimation was given by the assessee by virtue of letter dated 24.10.09.Therefore, in the said situation the ld. CIT(A) has rightly deleted the amount from the income of the assessee. - Decided against revenue.
Revision u/s 263 - Deduction u/s 80P(2)(a)(i) - assessee is a cooperative credit society and derives its income from business of accepting deposit and lending loans to its members HELD THAT:- As decided in M/S BANGALORE COMMERCIAL TRANSPORT CREDIT CO-OPERATIVE SOCIETY LTD. [2011 (4) TMI 1222 - ITAT BANGALORE] section 80P(4) is applicable only to cooperative banks and not to credit cooperative societies. The intention of the legislature of bringing in cooperative banks into the taxation structure was mainly to bring in par with commercial banks. Since the assessee is a cooperative society and not a cooperative bank, the provisions of section 80P(4) will not have application in the assessee’s case and therefore, it is entitled to deduction u/s 80P(2)(a)(i) of the Act.
Following the decision of the coordinate Bench of the Tribunal in the case of Bangalore v. M/s. Bangalore Commercial Transport Credit Co-operative Society Ltd. (supra), we quash the order u/s. 263 passed by the ld. Pr. CIT. - Decided in favour of assessee.
Seeking recall of order - power of criminal court to review its own order - difference between review and recall - the fact about the pendency of one more criminal revision against the same impugned order was informed to this court within 5 minutes of passing of the order - Principles of natural justice - opportunity of hearing not provided to the applicants - HELD THAT:- There is no dispute that the opposite party nos. 2, 3 and 4 were not given opportunity of hearing when this Court passed the order dated 7.3.2013.
Whether a criminal court has power to recall its order? - HELD THAT:- Section 362 Cr.P.C. reveals that a Court is not authorised to alter or review its judgment except for the limited purpose of correcting some clerical or arithmetical error. However, there is a saving provision also because Section 362 Cr.P.C. starts with the words “Save as otherwise provided by this Code or by any other law for the time being in force” - saving provision is section 401 Cr.P.C. which clearly provides that no order under this section shall be made to the prejudice of the accused or other person unless he has had an opportunity of being heard either personally or by pleader in his own defence.
So far as the power to recall its order by a court dealing with criminal matter is concerned, the judgment of Hon'ble Supreme Court discussed earlier makes a clear distinction between “review” and “recall” and authorises a criminal court to recall its order in case it suffers from some technical error or has been passed ex-parte without giving opportunity of hearing to opposite party.
This Court is of the firm view that Section 362 Cr.P.C. only bars a “review” of the order. It does not bar “recall” of any order specially if the order has been passed ex-parte against the principle of natural justice - the recall application is allowed.
Validity of secondary evidence of the contents - whether the High Court is justified in reversing the order passed by the Trial Court allowing the Defendant- Appellant to lead secondary evidence of the contents of the documents? - Sections 34 and 38 of the Specific Relief Act, 1963 - HELD THAT:- The pre-conditions for leading secondary evidence are that such original documents could not be produced by the party relied upon such documents in spite of best efforts, unable to produce the same which is beyond their control. The party sought to produce secondary evidence must establish for the non-production of primary evidence. Unless, it is established that the original documents is lost or destroyed or is being deliberately withheld by the party in respect of that document sought to be used, secondary evidence in respect of that document cannot accepted.
The High Court, following the ratio decided by this Court in the case of J YASHODA VERSUS K. SHOBHA RANI [2007 (4) TMI 11 - SUPREME COURT], came to the conclusion that the Defendant failed to prove the existence and execution of the original documents and also failed to prove that he has ever handed over the original of the disclaimer letter dated 24.8.1982 to the authorities. Hence, the High Court is of the view that no case is made out for adducing the secondary evidence.
It is well settled that if a party wishes to lead secondary evidence, the Court is obliged to examine the probative value of the document produced in the Court or their contents and decide the question of admissibility of a document in secondary evidence. At the same time, the party has to lay down the factual foundation to establish the right to give secondary evidence where the original document cannot be produced. It is equally well settled that neither mere admission of a document in evidence amounts to its proof nor mere making of an exhibit of a document dispense with its proof, which is otherwise required to be done in accordance with law.
All efforts have been taken for the purpose of leading secondary evidence. The trial court has noticed that the photocopy of the Exhibit DW-2/B came from the custody of DEO Ambala and the witness, who brought the record, has been examined as witness. In that view of the matter, there is compliance of the provisions of Section 65 of the Evidence Act. Merely because the signatures in some of the documents were not legible and visible that cannot be a ground to reject the secondary evidence. The trial court correctly appreciated the efforts taken by the Appellant for the purpose of leading secondary evidence - the impugned order passed by the High Court cannot be sustained in law.
Requirement of Board of Control or not - HELD THAT:- The powers intended to be conferred on the Board of Control would unduly interfere with the eights of the Temple Committee. In the Conjeevaram scheme the Board of Control was held necessary because the institution was not subject to the control of the Temple Committee. I am clearly of opinion that, all provisions in the scheme relating to the Board of Control should be omitted - Undoubtedly the Thengalai rights are predominant in this temple; the Subordinate Judge was therefore right in providing for the appointment of an additional Theugalai trustee. No serious objection was taken by any of the contending parties for the inclusion in the Board of. Trustees of a Smartha and Madhwa. It is to be hoped that their presence would tend to compose the differences between the two rival sects of Vaishnavas. We do not think that the provision for the appointment of the Saivitc and Madhwa trustees by the Court is necessary. The Committee should have the same power with regard to them as they have with reference to the other three trustees. As regards Clause 12, in the view that we have taken about the office of the treasurer and having regard to the representations that have been made regarding the funds of the Devasthanam we are of opinion that instead of a treasurer, the trustees should be directed to appoint a cashier on a salary of ₹ 75-0-0 per mensem.
As was done with reference to the Conjeevaram scheme we think liberty should be given to any of the trustees or any member of the Committee or to the 1st plaintiff in this case to move the Court for such alterations in the scheme as seem desirable in the light of the experience that may have been gained of its working.
Reopening of assessment u/s 148 - HELD THAT:- In the cases where assessments are being reopened after the end of four years from the end of relevant assessment year, and where original assessment is completed under section 143(3), it is sin qua non that the Assessing Officer demonstrates that there was failure on the part of the assessee to disclose all the related material facts. No such exercise has been carried out on the facts of the present case. In the reasons recorded by the Assessing Officer it is not even his case that any material facts were withheld by the assessee. In this view of the matter, we quash the reassessment proceedings. The assessee gets the relief accordingly.
Revision u/s 263 - Capital gain assessed in the hands of the larger HUF or in the case of the assessee member of HUF - CIT directing the Assessing Officer to disallow deduction allowed under section 54F of the Act in the hands of the assessee - CIT was of the view that sale proceeds have to be assessed in the hands of legal heirs of late A.R.Pandurangan - HELD THAT:- The assessee is one of the legal heirs of late A.R.Pandurangan who disclosed capital gains on his share after claiming deduction under section 54F of the Act. The Assessing Officer while completing the assessment called for details in respect of claim for deduction under section 54F and capital gains reported by the assessee HUF and accepted the exemption claimed under section 54F of the Act on the sale proceeds reported by the assessee HUF.
The Hon’ble Andhra Pradesh High Court in the case of Addl. CIT Vs. P.Durgamma [1986 (9) TMI 58 - ANDHRA PRADESH HIGH COURT]considered the scope of section 171 of the Act deeming HUF to be undivided.
In the case on hand, no evidence has been brought on record to suggest that late A.R.Pandurangan HUF has been assessed. In such circumstances, the sale proceeds of the property cannot be assessed in the hands of late A.R.Pandurangan (HUF). We also see no reason to disbelieve the memorandum of oral recording partition furnished by the assessee. Thus the contentions of the Commissioner of Income Tax that sale proceeds have to be assessed in the hands of late A.R.Pandurangan (HUF) is not sustainable in law. Thus, we set aside the order of the Commissioner of Income Tax passed under section 263 and restore that of the Assessing Officer since the assessment order cannot be said to be erroneous and prejudicial to the interests of the Revenue. - Decided in favour of assessee.
Maintainability of appeal - HELD THAT:- Since the subject matter of these appeals has become infructuous, the appeals stand dismissed as infructuous - the appeal of the assessee which is pending in the High Court of Bombay shall be decided on its own merits.
The Supreme Court of India dismissed Civil Appeal Nos. 364-365 of 2008 due to low tax effect and because the matters were covered by a previous judgment.
Permission for withdrawal of appeal - HELD THAT:- Appellant has handed over the Additional Affidavit dated 29-10-2015 in the Court today wherein it is mentioned that the parties have settled the matter and in view of the Deed of Settlement dated 30-9-2015 which is signed between the parties, the appellant wants to withdraw the present appeal.
Exemption u/s 11 denied - AO treated the society maintenance fees receipts as business income and not incidental to the attainment of the objects of the assessee society - No separate books of accounts have not been maintained which is violative of provisions of s.11 and 12 -society maintenance fee, being in the name of franchisee income earned by the assessee was taxable - CIT-A deleted the addition - HELD THAT:- The issue is covered in favour of the assessee and against the Revenue by a series of decisions of the Tribunal in the assessee’s own case. The Ld. CIT(A) has followed the binding decisions of the ITAT in the assessee’s own case for the A.Y. 1998-99, 1999-2000, 2001-02, 2003-04 and ITAT orders for the A.Y. 2004-05.
We find no infirmity in the order of the Ld. CIT(A) and we dismiss both the appeals of the Revenue.
Suit for partition and rendition of accounts - Whether the suit properties, as detailed in Schedule-A to the plaint, are liable to be partitioned and if so, what would be the share of the parties? - HELD THAT:- Plaintiffs thus have failed to prove that there existed an HUF before 1956 on account of Sh. Tek Chand having inherited properties before 1956 and that the plaintiffs have further failed to prove that HUF was created after 1956 on account of throwing of property/properties into common hotchpotch either by Sh. Tek Chand or by Sh. Gugan Singh/defendant no.1. Accordingly, it is held that there is no HUF and there are no properties of HUF in which late Sh. Harvinder Sejwal had a share. The entire discussion given above for existence/creation of HUF and plaintiffs failing to discharge the onus of proof upon them will similarly apply qua the alleged family settlement pleaded by the plaintiffs because once again no credible evidence has been led except self-serving statements and which cannot be taken as discharge of the onus. In his cross-examination on 01.04.2013, the defendant no.3 as DW1 has denied the suggestion that there was any family settlement. It is therefore held that plaintiffs have failed to prove the issues.
Both the issues are decided in favour of the defendants and against the plaintiffs, the plaintiffs are not entitled to the reliefs of partition or rendition of accounts - Suit dismissed.
Disallowance on account of service tax and insurance claim by holding that the assessee could not offer any valid explanation for such writing off during the year - assessee had written off service tax which is not available for set off against the CENVAT payable by the assessee and short insurance claim i.e claim not admitted and paid by the insurance company - HELD THAT:- In the case of service tax, we note that ₹ 2,05,177/- were written off by the assessee because the set off of such service tax was not available against the central excise duty. In our opinion, the amount of service tax which is paid by the assessee on the expenditure incurred and for which no set of was available was rightly written off and the order of the ld. CIT (A) cannot be sustained on this point.
Assessee has rightly written off the un-receivable insurance claim during the year which were either rejected or short accepted by the insurance company. More so when these expenses are not related to the prior period as the circumstances and facts under which these amounts were written off came to be finalized during the year.
Assessee further pointed out that the similar expenditure were allowed by the Department in the earlier years. All these write offs are necessitated when their adjustments or recovery is not possible to be made in the in the normal course of business . In the case of CIT Vs Excel Fashion Pvt Ltd.[2007 (5) TMI 647 - DELHI HIGH COURT] has upheld the order of Tribunal in which the tribunal allowed the irrecoverable Export Incentives as bad debt. Under these facts and circumstances order passed by CIT(A) can not be sustained and disallowance of service tax and the insurance claim ordered to be deleted. - Decided in favour of assessee.
Assessment of trust - Anonymous donations u/s. 115BBC - failure on the part of the donors to file confirmation; in response to the notice issued u/s.133(6) - HELD THAT:- In the present case it is an admitted fact that the assessee is registered u/s 12AA of the Act and its income is exempt u/s 11 - AO while framing the original assessment vide order dated 31.03.2011 categorically stated that the activities of the assessee are charitable within the meaning of Section 2(15) of the Act and there was no change in the aims and objects of the assessee as compared to the earlier years.
As the assessee is established for religious and charitable purposes and the anonymous donation was not received with specific direction that such donation is for any university or other educational institution or any hospital or other medical institution run by the assessee trust. Therefore, the AO was not justified in making the addition by invoking the provisions of Section 115BBC(1) of the Act and the ld. CIT(A) rightly deleted the said addition in view of the provisions of Section 115BBC(2)(b) - Decided against revenue.
Rejection of declaration under the Kar Vivad Samadhan Scheme, 1998 - seeking settlement of case - seeking declaration of tax arrears of Central Excise Duty of ₹ 2,69,944 and Penalty of ₹ 3,64,238 - whether the factual position stated by the petitioner in the declaration, which is required to be filed in the prescribed Form No. 1-B, is incorrect in any manner?
HELD THAT:- The Department is right in pointing out that the duty/cess was already paid by the petitioner and was not due on 4-12-1998 when the declaration was filed, we fail to understand as to how that would result in causing willful loss to the public exchequer, as such. It would be a different matter, if the petitioner was to incorrectly claim that the amount was not outstanding on the day of filing declaration. Only then it would be a case of wrong or incorrect disclosure made to cause loss to public exchequer. Further, we hold that the correctness of the declaration submitted in the prescribed form for settlement of the dispute under the Scheme, cannot be judged on the basis of the stand taken by the assessee in the correspondence exchanged with the Department, prior to submission of such declaration. That approach will be counterproductive to the purpose and intent for which the Scheme has been launched - for resolution of the disputes. In other words, the declaration cannot be jettisoned at the threshold as has been done in the present case, by referring to the stand taken by petitioner in its previous correspondence exchanged with the Department. Instead, the Department ought to have treated the disclosures made in the declaration by the petitioner as relevant facts; and the correctness thereof could be judged on its own merits.
We have no manner of doubt that in the facts of the present case, it was not open to the Department to non-suit the petitioner from participating in the said Scheme at the threshold on the ground that the factual position stated in the declaration dated 4-12-1998, submitted in the prescribed Form 1-B, Annexure P-11, was incorrect as it was not consistent with the previous communication sent by the petitioner dated 15-6-1998 - much less is of such a nature that it would cause loss to public exchequer either directly or indirectly. If the petitioner has already paid the amount towards Duty/cess, there can be no loss to the public exchequer as such. The petitioner, at best, would be entitled for adjustment as per the Scheme propounded, which is a matter to be considered by the Appropriate Authority. It is also open to the Appropriate Authority to consider as to whether the assessee, who has already paid the amount towards Duty/cess is eligible to participate in the Scheme.
The communication dated 3-3-1998, Annexure P-12, is founded on incorrect understanding of the requirement of declaration to be filed in the prescribed format and disclosures made by the assessee in respect of the respective items to be declared therein. In the fact situation of the present case, it is not possible to hold that the petitioner had misdeclared the relevant information, as noted in the impugned communication.
The impugned communication, Annexure P-12, is quashed and set aside. Instead, the Appropriate Authority is directed to process the proposal/declaration of the petitioner under the Scheme as per law - Petition allowed.
Nature of expenses - research and development expenses - revenue or capital expenditure - Revenue pointed out that the expenditure claimed by the assessee on research and development was because of the own R&D expenses carried on by the assessee - HELD THAT:- Looking at the nature of expenditure incurred by the assessee, we are of the view that the same is revenue expenditure allowable as deduction in the hands of assessee either under the provisions of section 35(1)(i) or 37(1) - expenditure having been incurred by the assessee by way of research, which resulted in reduction in the weight of body parts and also generation of revenue in the hands of assessee to the extent of ₹ 4.20 crores cannot be said to be capital expenditure.
Even if the expenditure is of enduring benefit, but having not been incurred in the capital field, is to be allowed as deduction in view of the ratio laid down by Pune Bench of Tribunal in Opus Software Solutions (P.) Ltd. . [2012 (11) TMI 619 - ITAT PUNE]- As the nature of expenditure is not such that it can be said to be capital expenditure and in the absence of product developed by the assessee having been patented, we find no merit in the order of Assessing Officer in this regard - Decided against revenue
Disallowance of premium paid on cancellation of foreign currency cover - CIT-A allowed claim - CIT(A) was of the view that the aforesaid expenditure related to payment of commitment charges for canceling agreement entered into by the assessee for FOREX cover, purchased for Dollar fluctuation relating to repayment of ECB loan and interest, therefore, the same was not in the nature of interest - HELD THAT:- In order to avail the foreign exchange cover offered by Citi Bank, it had to close its agreement with DBS Bank and for pre-mature closure of the offer made by DBS Bank, the prepayment charges / commitment charges relating to the cancellation of the said foreign exchange cover was paid by the assessee. The said commitment charges are not relatable to the acquisition of any foreign assets, but are on account of business agreement entered into by the assessee, which because of its business exigencies, had to be foreclosed, in view of the offer made by the principal lender i.e. Citi Bank.
Such commitment charges paid by the assessee having been paid during the course of carrying on its business are allowable as revenue expenditure in the hands of the assessee. The same are not relatable to loan taken by the assessee from Citi Bank for acquisition of assets. However, the foreign exchange cover was taken by the assessee in order to prevent itself from future currency rate fluctuations. The expenses have been incurred for the purpose of business are incidental to carrying on of the business by the assessee, are allowable as expenditure under section 37(1) - See Hon’ble Supreme Court in DCIT Vs. Gujarat Alkalies & Chemicals Ltd. [2008 (2) TMI 11 - SUPREME COURT] and Addl.CIT Vs. Akkamba Textiles Ltd.[1996 (10) TMI 71 - SC ORDER] for the said proposition. We uphold the order of CIT(A) in this regard. - Decided against revenue.
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