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2012 (2) TMI 683
Issues involved: Determination of annual value of second self-occupied property u/s 23(1)(a) for taxation purposes.
Summary:
The appeal was filed against the CIT(A)'s order for the assessment year 2005-06, specifically disputing the annual value of a second self-occupied property. The assessee owned properties in Ahmedabad and Mumbai, both self-occupied. The AO estimated the annual value of the second property as if it were let out, resulting in a determined house property income. The CIT(A) upheld this decision, leading to the appeal before the Tribunal.
The assessee argued that the annual value should be based on the Municipal Rateable Value (MRV) and that the property fell under the Rent Control Act, limiting the Annual Letting Value (ALV) to the standard rent set by the Act. The revenue authorities supported the previous decisions.
Upon review, it was found that the ALV of the second property needed to be determined as if it were let out, in accordance with section 23(1)(a) and 23(4)(b). However, the claim that the property was covered by the Rent Control Act, which would restrict the ALV, was not adequately addressed by the lower authorities. Therefore, the Tribunal set aside the CIT(A)'s order and remanded the matter to the AO for a fresh decision after considering the Rent Control Act provisions and providing the assessee with a hearing opportunity.
Ultimately, the appeal of the assessee was allowed for statistical purposes, with the order pronounced on 29.2.2012.
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2012 (2) TMI 682
Issues involved: The judgment deals with the issue of non-granting of deduction u/s. 54F of the Income-tax Act, 1961 to the assessee for A.Y. 2008-09.
Details of the Judgment:
1. Background: The assessee, a proprietor of Gas Point, claimed deduction u/s. 54F for capital gain on a land sale and subsequent property transactions.
2. Assessing Officer's Decision: The Assessing Officer denied the deduction as the investment in a residential house was made after the specified time limit and the land proposed for purchase was not eligible.
3. CIT(A) Decision: The CIT(A) upheld the denial stating that the purchase of a residential building and renovation did not qualify as constructing a new residential house within the stipulated time.
4. Appellate Tribunal's Decision: The Tribunal considered the provisions of section 54F and various legal precedents. It emphasized that the investment in a habitable house includes making it habitable and renovation costs. The Tribunal took a liberal view and granted the deduction u/s. 54F to the assessee.
5. Legal Precedents: The Tribunal referred to several cases like Saleem Fazelbhoy, Mrs. Meera Jacob, and Jyoti Pal Ram to support its decision.
6. Conclusion: The Tribunal held that the assessee's actions met the conditions of section 54F, considering the purchase date, construction agreement, and renovation costs. Therefore, the appeal of the assessee was allowed, and the deduction u/s. 54F was granted.
7. Legal Principles: The Tribunal invoked legal principles emphasizing the liberal interpretation of tax provisions and the intent of the legislature in granting exemptions.
8. Final Decision: The Tribunal pronounced the order in favor of the assessee on 17th February 2012, allowing the appeal and granting the deduction u/s. 54F.
This summary provides a detailed overview of the judgment, including the background, decisions of the Assessing Officer and CIT(A), the Tribunal's analysis, legal precedents, and the final decision in favor of the assessee.
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2012 (2) TMI 681
Issues involved:
The judgment involves issues related to the treatment of rental income, bank interest income, set off of unabsorbed depreciation and brought forward losses, rental income from a specific property, disallowance of rent and taxes paid, and disallowance of repair and maintenance expenses.
Treatment of Rental Income:
The Assessee's rental income was assessed as 'income from house property' instead of 'business income.' The AO computed the rental income after allowing deductions u/s 24(a) of the Act. The CIT(A) confirmed this action, which was upheld by the Tribunal citing the decision of the Hon'ble Supreme Court in Shambhu Investment P. Ltd. Vs. CIT. The Tribunal dismissed the appeal, affirming the rental income as 'income from house property.'
Treatment of Bank Interest Income:
The AO treated the interest income earned by the Assessee on bank deposits as 'income from other sources' rather than 'business income.' The CIT(A) upheld this decision, and the Tribunal found no material evidence to support the Assessee's claim that the interest was business income. Citing a Delhi High Court decision, the Tribunal upheld the CIT(A)'s order, dismissing the Assessee's appeal.
Set Off of Unabsorbed Depreciation and Brought Forward Losses:
This issue was consequential to the treatment of rental and interest income. Since both were classified as 'income from other sources,' the Tribunal dismissed the Assessee's appeal related to the set off of unabsorbed depreciation and brought forward losses.
Rental Income from Specific Property:
The Assessee received rental income from a property, which was claimed to be on behalf of another individual. The AO taxed this rental income in the Assessee's hands, considering the leave & license agreement and sale agreement provided. The CIT(A) held that the Assessee was the real owner of the property, and the Tribunal upheld this decision, dismissing the Assessee's appeal.
Disallowance of Rent and Taxes Paid:
The issue of disallowance of rent and taxes paid was not adjudicated by the CIT(A). The Tribunal restored this issue to the AO for further consideration.
Disallowance of Repair and Maintenance Expenses:
The AO disallowed a portion of expenses related to repairs and maintenance, considering it as a contribution to a repair fund. The CIT(A) confirmed this disallowance, but the Tribunal disagreed, stating that the amount was meant for future repairs. The disallowance was deleted, and the Assessee's appeal on this ground was allowed partially.
In conclusion, the Tribunal partly allowed the Assessee's appeal, making specific decisions on each issue raised.
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2012 (2) TMI 680
Issues involved:
The correctness of the order passed by the Commissioner of Income Tax-XII Kolkata u/s 263 r.w.s. 143(3) of the Income Tax Act, 1961 for the assessment year 2006-07.
Issue 1: Correctness of the assessment order
The Assessing Officer finalized the assessment accepting the stated value of a property purchased by the assessee, even though a reference was made to the Departmental Valuation Officer (DVO) for valuation. The DVO's report valued the property significantly higher than the declared value. The Commissioner initiated revision proceedings u/s 263, stating that the assessment order was passed to save time and without proper inquiry into the property's value. The assessee opposed the revision, arguing that the valuation report was an estimation and not binding. The Commissioner set aside the assessment order, directing a fresh assessment. The ITAT held that the purchase price of the property, even if lower than market value, did not render the assessment order erroneous or prejudicial to revenue interests. The ITAT emphasized that there was no statutory provision allowing the AO to substitute purchase price with market value for making additions to income.
Issue 2: Validity of revision proceedings
The Departmental Representative relied on the Calcutta High Court's judgment to support the Commissioner's reliance on the DVO report received after completing the assessment. However, the ITAT found that the revision proceedings were not valid as the DVO's report did not necessitate changes to the assessed income. The ITAT emphasized that the Commissioner must point out errors in the AO's order to invoke powers u/s 263. Additionally, the ITAT rejected the argument that insufficient inquiries rendered the assessment order erroneous, citing that an inquiry into market price should serve a purpose of adding to the assessee's income, which was not the case here. The ITAT concluded that the Commissioner's discretion under section 263 cannot be unfettered and upheld the assessee's grievance, quashing the revision order.
In conclusion, the ITAT allowed the appeal, quashing the revision order and providing relief to the assessee.
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2012 (2) TMI 679
Issues Involved:
1. Deletion of addition in net profit made by the Assessing Officer.
2. Deletion of addition on account of deemed dividend.
Summary:
Issue 1: Deletion of Addition in Net Profit
The revenue challenged the deletion of the addition in net profit by the Commissioner of Income Tax (Appeals). The Assessing Officer had rejected the books of account of the assessee, a firm engaged in the retail sale of Indian Made Foreign Liquor (IMFL), beer, and Country Liquor (CL), on the grounds that sales were not supported by proper vouchers and invoked provisions of section 145(3) of the Act. The Commissioner of Income Tax (Appeals) reversed this decision, noting that the books of account were regularly maintained, audited, and no significant defects were pointed out by the Assessing Officer. The Tribunal upheld this view, referencing previous cases like ACIT vs. M/s Avinash Chalana & Co., where it was established that in the absence of significant defects, books of account could not be rejected merely for not issuing cash memos. The Tribunal directed the Assessing Officer to accept the income declared by the assessee.
Issue 2: Deletion of Addition on Account of Deemed Dividend
The revenue also contested the deletion of Rs. 22,59,970/- added by the Assessing Officer as deemed dividend u/s 2(22)(e) of the Act. The Commissioner of Income Tax (Appeals) ruled in favor of the assessee, relying on the Special Bench decision in ACIT vs. Bhaumik Colour Private Limited, which held that deemed dividend could only be assessed in the hands of a registered and beneficial shareholder of the lender company. Since the assessee was neither a registered nor a beneficial shareholder of the lender companies, the Tribunal confirmed the deletion of the addition, aligning with judicial precedents and the interpretation of section 2(22)(e).
Conclusion:
The Tribunal dismissed the revenue's appeal, confirming the order of the Commissioner of Income Tax (Appeals) on both issues, thereby directing the acceptance of the income declared by the assessee and holding that the addition on account of deemed dividend was not justified.
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2012 (2) TMI 678
Issues involved: Application for modification of interim order u/s 17.01.2012, benefit of Circular Legal No. 39/1983, requirement of furnishing a bank guarantee, continuation of interim order from High Court.
Judgment Summary:
The petitioners filed an application seeking modification of the interim order issued by the Supreme Court on 17.01.2012. They requested to enjoy the benefit of Circular Legal No. 39/1983 dated May 21, 1983, and be exempted from furnishing a bank guarantee as per the previous order. The respondents responded to the application. After arguments, the senior counsel for the respondent State suggested that the petitioners, who had the benefit of an interim order from the High Court since October 2007, should continue to have the same benefit until the disposal of the special leave petition.
The Supreme Court acknowledged the submission of the senior counsel and modified the interim order. The direction to furnish a bank guarantee for 50% of the accrued tax liability/arrears was waived for the petitioners during the pendency of the special leave petition. The application was disposed of in accordance with this modification.
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2012 (2) TMI 677
Issues Involved:
1. Deleting the addition made on account of extrapolation of profit on alleged unaccounted turnover.
2. Estimation of unaccounted sales based on loose papers and duplicate bills.
3. Rejection of books of account u/s 145(3).
Summary:
Issue 1: Deleting the addition made on account of extrapolation of profit on alleged unaccounted turnover
The Revenue filed appeals against the order of CIT(A) for deleting the addition made on account of extrapolation of profit on alleged unaccounted turnover. The search u/s 132 was conducted on 21.11.2006, and notices u/s 153A were issued. The assessee filed returns declaring additional income for excess stock and loose papers. The Assessing Officer (AO) observed discrepancies and made additions based on extrapolated turnover, which were later deleted by CIT(A).
Issue 2: Estimation of unaccounted sales based on loose papers and duplicate bills
During the search, loose papers and duplicate bills were found, leading the AO to estimate unaccounted sales. The AO calculated unaccounted sales using average daily receipts and parallel invoicing methods. However, CIT(A) found these estimations unsupported by facts, noting that loose papers were not reliable indicators of daily transactions. The AO's remand report confirmed actual sales, leading CIT(A) to conclude that unaccounted sales should be estimated at Rs. 45.25 crores up to the search date, not beyond.
Issue 3: Rejection of books of account u/s 145(3)
The AO rejected the books of account u/s 145(3) due to unreliability, supported by the discovery of unaccounted transactions and excess stock. CIT(A) upheld this rejection but found no basis for further additions beyond the surrendered amounts. The Tribunal directed the AO to apply a net profit rate of 3.3% on the unaccounted sales and reduce the surrendered amounts from the calculated profit, distributing the balance between the companies based on their turnover ratio.
Conclusion:
The Tribunal partially allowed the Revenue's appeals, directing the AO to adjust the unaccounted profit calculation and distribute it appropriately, while upholding the rejection of books of account u/s 145(3). The order was pronounced on 13th February 2012.
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2012 (2) TMI 676
Issues involved: Interpretation of provisions of section 54 of the Income Tax Act, 1961 regarding exemption for property purchased in a foreign country.
Summary:
The appeal was against the order of the CIT(A) pertaining to A.Y. 2007-08. The Revenue contended that exemption u/s 54 should not be granted for a property purchased in Canada. The CIT(A) relied on the decision of ITAT Mumbai Bench in the case of Prema P. Shah and Sanjiv P. Shah vs. ITO to allow the exemption. The Revenue argued that the decision of ITAT Ahmedabad Bench in the case of Leena J. Shah was ignored. The assessee's counsel cited the decision of ITAT Mumbai Bench in the case of ITO vs. Dr. Girish M. Shah and the principle from the case of CIT vs. Vegetable Products Ltd. to support the exemption. The Tribunal, considering the previous decisions, upheld the order of the CIT(A) and dismissed the appeal by the Revenue.
The Tribunal concluded that the order of the CIT(A) did not require any interference based on the subsequent decision of the ITAT Mumbai Bench. The appeal by the Revenue was dismissed, and the order was pronounced in the open court on 16th February 2012.
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2012 (2) TMI 675
Issues Involved:
The judgment involves issues related to criminal complaint u/s 138 of the Negotiable Instruments Act, 1881, and the liability of directors and officers of a company u/s 141 of the same Act.
Issue 1: Criminal Complaint u/s 138 of the Negotiable Instruments Act, 1881
The complainant, a public limited company, engaged in business with the accused-company for purchasing Caprolactam used for manufacturing Nylon Filament Yarn. The accused-company issued post-dated cheques worth a significant amount, which were dishonored upon deposit due to stopped payment. The complaint alleged mischievous and deliberate intentions by the accused to cheat the complainant, leading to the filing of the complaint in January 1996.
Issue 2: Liability of Directors and Officers u/s 141 of the Negotiable Instruments Act, 1881
The applicant, a director of the accused-company, sought quashing of the complaint, arguing that as a non-executive director, he was not responsible for the business affairs and did not sign the cheques in question. The applicant referred to legal precedents to support his defense. However, the court emphasized that the liability of directors and officers under section 141 is determined by their roles and responsibilities within the company, as outlined in the complaint.
Conclusion:
The court rejected the application to quash the complaint, stating that the applicant, as a director, was responsible for the business affairs of the company based on the averments in the complaint. The court highlighted that the case should be decided based on the facts and circumstances presented, emphasizing that each case is unique. The court also directed that all pending cases under the Negotiable Instruments Act should be disposed of within six months to avoid delays.
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2012 (2) TMI 674
Issues involved: Determination of whether the petitioner is entitled to the reliefs sought under section 614(1) of the Companies Act, 1956.
Summary of Judgment:
Issue 1: Compliance with Statutory Requirements
- The petitioner filed a petition u/s 614(1) of the Act seeking direction for filing documents by the respondents.
- Respondents claimed the petition was mala fide and lacked evidence of petitioner's creditor status.
- Previous order directed respondents to comply with statutory requirements, but respondents challenged it.
- After analyzing pleadings and documents, the Bench found a mistake in considering petitioner as a creditor due to lack of evidence.
- The petitioner's claim of being a creditor was based on a security deposit for operating club facilities, not established as debt owed by respondents.
- Bench concluded it lacked jurisdiction to decide petitioner's creditor status and dismissed the petition.
Key Points:
- Only members, creditors, or Registrar can apply u/s 614(1) for default compliance.
- Dispute over petitioner's creditor status led to dismissal of the petition.
- Bench emphasized lack of evidence supporting petitioner's creditor claim.
- Previous order directing compliance was challenged and found to be based on mistaken assumption of petitioner's status.
Conclusion:
The petition was dismissed as the Bench lacked jurisdiction to determine the petitioner's creditor status under section 614(1) of the Companies Act, 1956.
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2012 (2) TMI 673
Issues Involved:
1. Treatment of income from letting out industrial park buildings.
2. Allowability of expenses towards valuation of real estate portfolio and Initial Public Offer (IPO) as revenue expenditure.
Summary:
Issue 1: Treatment of Income from Letting Out Industrial Park Buildings
The Revenue's grievance was that the CIT(A) erred in directing the Assessing Officer (AO) to treat the income derived from letting out industrial park buildings as 'income from business' instead of 'income from house property.' Both parties agreed that this issue was covered by a consolidated order of the Tribunal for previous assessment years (2002-03 to 2007-08), where the matter was restored to the AO for proper verification. The Tribunal held that the nature of the income should be determined based on whether the letting out of the building was the predominant activity or if it was incidental to the operation of an industrial park. The Tribunal directed the AO to re-adjudicate the issue afresh for the assessment year 2008-09, following the same principles and allowing sufficient opportunity for hearing to the assessee.
Issue 2: Allowability of Expenses Towards Valuation of Real Estate Portfolio and IPO
The Revenue contended that the CIT(A) erred in allowing the expenses claimed by the assessee towards the valuation of the real estate portfolio and consultancy charges for an IPO as revenue expenditure. The AO had disallowed these expenses, considering them capital in nature. The CIT(A) deleted the disallowance, noting that the expenses were incurred during the course of business and were not for any new project. The Tribunal upheld the CIT(A)'s decision, emphasizing that the expenses were for internal valuation and consultancy for a proposed IPO, which did not result in any enduring benefit or acquisition of a capital asset. The Tribunal found no material to suggest that the expenses were for non-business purposes or for a different new project. The Tribunal also referred to relevant case laws supporting the view that such expenses, incurred out of commercial expediency, should be treated as revenue expenditure.
Conclusion:
The Tribunal allowed the Revenue's appeal for statistical purposes on the first issue, directing the AO to re-adjudicate the matter. On the second issue, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to treat the expenses as revenue expenditure. The appeal of the Revenue was partly allowed for statistical purposes.
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2012 (2) TMI 672
The Kerala High Court referred a matter to the Third Member of ITAT due to a difference of opinion. The Third Member concurred with the proposed order of one of the Members, leading to the appeal of the assessee being allowed. Other grounds in the appeal remained unchanged. The appeal was treated as allowed for statistical purposes.
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2012 (2) TMI 671
Ramlila maidan Incident - whether an order passed u/s 144 crpc by the authorities stands protected under the restriction clause of Article 19 of the Constitution of India or does it violate the rights of a peaceful sleeping crowd, invading and intruding their privacy during sleep hours - The basic requirements for passing an order u/s 144 CrPC can be passed against an individual or persons residing in a particular place or area or even against the public in general. Such an order can remain in force, not in excess of two months. The Government has the power to revoke such an order and wherever any person moves the Government for revoking such an order, the State Government is empowered to pass an appropriate order, after hearing the person in accordance with Sub-section (3) of Section 144 CrPC. the requirements of existence of sufficient ground and need for immediate prevention or speedy remedy is of prime significance. In this context, the perception of the officer recording the desired/contemplated satisfaction has to be reasonable, least invasive and bona fide. The restraint has to be reasonable and further must be minimal. Such restraint should not be allowed to exceed the constraints of the particular situation either in nature or in duration. The most onerous duty that is cast upon the empowered officer by the legislature is that the perception of threat to public peace and tranquility should be real and not quandary, imaginary or a mere likely possibility.
Test of 'proximate and direct nexus with the expression' - the Court also has to keep in mind that the restriction should be founded on the principle of least invasiveness i.e. the restriction should be imposed in a manner and to the extent which is unavoidable in a given situation. The Court would also take into consideration whether the anticipated event would or would not be intrinsically dangerous to public interest.
The restriction must be provided by law in a manner somewhat distinct to the term 'due process of law' as contained in Article 21 of the Constitution. If the orders passed by the Executive are backed by a valid and effective law, the restriction imposed thereby is likely to withstand the test of reasonableness, which requires it to be free of arbitrariness, to have a direct nexus to the object and to be proportionate to the right restricted as well as the requirement of the society, for example, an order passed u/s 144 CrPC. This order is passed on the strength of a valid law enacted by the Parliament. The order is passed by an executive authority declaring that at a given place or area, more than five persons cannot assemble and hold a public meeting. There is a complete channel provided for examining the correctness or otherwise of such an order passed under Section 144 CrPC and, therefore, it has been held by this Court in a catena of decisions that such order falls within the framework of reasonable restriction.
The distinction between 'public order' and 'law and order' is a fine one, but nevertheless clear. A restriction imposed with 'law and order' in mind would be least intruding into the guaranteed freedom while 'public order' may qualify for a greater degree of restriction since public order is a matter of even greater social concern. 'security of the state' is the paramount and the State can impose restrictions upon the freedom, which may comparatively be more stringent than those imposed in relation to maintenance of 'public order' and 'law and order'.
HELD THAT - In the present case, the State and the Police could have avoided this tragic incident by exercising greater restraint, patience and resilience. The orders were passed by the authorities in undue haste and were executed with force and overzealousness, as if an emergent situation existed. The decision to forcibly evict the innocent public sleeping at the Ramlila grounds in the midnight of 4th/5th June, 2011, whether taken by the police independently or in consultation with the Ministry of Home Affairs is amiss and suffers from the element of arbitrariness and abuse of power to some extent. The restriction imposed on the right to freedom of speech and expression was unsupported by cogent reasons and material facts. It was an invasion of the liberties and exercise of fundamental freedoms. The members of the assembly had legal protections available to them even under the provisions of the CrPC. Thus, the restriction was unreasonable and unwarrantedly executed. The action demonstrated the might of the State and was an assault on the very basic democratic values enshrined in our Constitution. Except in cases of emergency or the situation unexceptionably demanding so, reasonable notice/time for execution of the order or compliance with the directions issued in the order itself or in furtherance thereto is the pre-requisite. It was primarily an error of performance of duty both by the police and Respondent No. 4 but the ultimate sufferer was the public at large.
It is nobody's case that the directions issued by the appropriate authority as well as the Police had not been carried out by the organisers. It is also nobody's case that the conditions imposed in the letters granting permission were breached by the organisers at any relevant point of time. Even on 3rd June, 2011, the Deputy Commissioner of Police, Central District, who was the officer directly concerned with the area in question, had issued a restricted circular containing details of the arrangements, the objectives and the requirements which the deployed forces should take for smooth organization of the camp at Ramlila Maidan. The threat of going on a hunger strike extended by Baba Ramdev to personify his stand on the issues raised, cannot be termed as unconstitutional or barred under any law. It is a form of protest which has been accepted, both historically and legally in our constitutional jurisprudence. The order passed u/s 144 CrPC does not give any material facts or such compelling circumstances that would justify the passing of such an order at 11.30 p.m. on 4th June, 2011. There should have existed some exceptional circumstances which reflected a clear and prominent threat to public order and public tranquility for the authorities to pass orders of withdrawal of permission at 9.30 p.m. on 4th June, 2011. What weighed so heavily with the authorities so as to compel them to exercise such drastic powers in the late hours of the night and disperse the sleeping persons with the use of force, remains a matter of guess. Whatever circumstances have been detailed in the affidavit are, what had already been considered by the authorities concerned right from 25th May, 2011 to 3rd June, 2011 and directions in that behalf had been issued. Exercise of such power, declining the permission has to be in rare and exceptional circumstances, as in the normal course, the State would aid the exercise of fundamental rights rather than frustrating them. The mere change in the purpose or in the number of persons to be gathered at the Ramlila Maidan simplicitor could hardly be the cause of such a grave concern for the authorities to pass the orders late in the night. In the Standing Order issued by the Police itself, it has been clarified that wherever the gathering is more than 50,000, the same may not be permitted at the Ramlila Maidan, but they should be offered Burari ground as an alternative. This itself shows that the attempt on the part of the authorities concerned should be to permit such public gathering by allotting them alternative site and not to cancel such meetings.
B.S. Chauhan, JJ - I respectfully agree with all the observations and the findings recorded by my colleague and I also concur with the observation that the findings recorded on the sufficiency of reasons in the order
There was no gossip or discussion of something untrue that was going on. To the contrary, it was admittedly an assembly of followers, under a peaceful banner of Yogic training, fast asleep. The assembly was at least, purportedly, a conglomeration of individuals gathered together, expressive of a determination to improve the material condition of the human race. The aim of the assembly was prima facie unobjectionable and was not to inflame passions. It was to ward off something harmful. What was suspicious or conspiratory about the assembly, may require an investigation by the appropriate forum, but to my mind the implementation appears to have been done in an unlawful and derogatory manner that did violate the basic human rights of the crowd to have a sound sleep which is also a constitutional freedom, acknowledged under Article 21 of the Constitution of India.
RIGHT TO SLEEP - It is believed that a person who is sleeping, is half dead. His mental faculties are in an inactive state. Sleep is an unconscious state or condition regularly and naturally assumed by man and other living beings during which the activity of the nervous system is almost or entirely suspended. It is the state of slumber and repose. It is a necessity and not a luxury. It is essential for optimal health and happiness as it directly affects the quality of the life of an individual when awake inducing his mental sharpness, emotional balance, creativity and vitality. Sleep is, therefore, a biological and essential ingredient of the basic necessities of life. If this sleep is disturbed, the mind gets disoriented and it disrupts the health cycle.
HELD THAT:- In Present case, as a sleeping crowd cannot be included within the bracket of an unlawful category unless there is sufficient material to brand it as such. The facts as uncovered and the procedural mandate having been blatantly violated, is malice in law and also the part played by the police and administration shows the outrageous behaviour which cannot be justified by law in any civilized society.
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2012 (2) TMI 670
Issues Involved: Limitation of assessment order, Violation of principles of natural justice, Deduction u/s 80IB(11), Deduction u/s 80IB(11A), Jurisdiction of AO. Limitation of Assessment Order: The assessee contended that the assessment order dated 30.12.2009 was barred by limitation as it was dispatched on 1.1.2010 and received on 2.1.2010. The Tribunal held that the assessment order was made within the statutory time limit of 31.12.2009. It was emphasized that the order must be issued beyond the control of the authority within the prescribed period, though actual service may be beyond that period. The plea of the assessee was rejected, and it was held that the order was within the limitation period. Violation of Principles of Natural Justice: The assessee claimed that the AO failed to consider the detailed submission made on 22.12.2009 in response to the show cause notice. However, the assessee did not press this ground during the hearing, and thus, it was rejected. Deduction u/s 80IB(11): The AO disallowed the deduction u/s 80IB(11) on the grounds that the cold storage facility was not operational before 1.4.2004 and the entire plant became operational in the impugned assessment year. The Tribunal noted that the AO had allowed the deduction for previous assessment years (2004-05, 2005-06, and 2006-07) and that expansion of the existing plant does not disqualify the assessee from claiming the deduction. The Tribunal set aside the orders of the Revenue authorities and directed the AO to allow the deduction as per the directions given in the earlier Tribunal order. Deduction u/s 80IB(11A): The AO denied the deduction u/s 80IB(11A) on the grounds that the assessee only traded in fruits and vegetables and did not process them. The Tribunal found that the AO did not examine all conditions u/s 80IB(11A) and the evidence submitted by the assessee. The matter was remanded back to the AO to decide afresh in light of the Tribunal's observations and the evidence provided. Jurisdiction of AO: The assessee contended that the assessment order for AY 2008-09 was passed by ITO 10(3)(4) while the jurisdiction was with ITO 10(3)(3). The Tribunal upheld the CIT(A)'s finding that the jurisdiction was properly assigned and rejected the ground. Conclusion: The appeals were partly allowed for statistical purposes, with directions for the AO to follow the Tribunal's earlier orders and reassess certain issues.
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2012 (2) TMI 669
... ...
... ... ..... l Katiyar, For Respondent(s) Mr. Ajay Vohra,Adv. Ms. Kavita Jha,Adv. ORDER Delay condoned. The special leave petitions are dismissed.
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2012 (2) TMI 668
Issues involved:
The issues involved in this case are:
1. Dismissal of additional evidence by CIT (A)
2. Deletion of agricultural receipts as book entries
3. Possession of agricultural land as per agreement
4. Deletion of LTCG claimed exempt u/s 54B
5. Change in utility of land from agricultural to residential
Issue 1: Dismissal of additional evidence by CIT (A)
The Revenue appealed against the CIT (A)'s order dismissing additional evidence despite opportunities given to the assessee during assessment proceedings. The AO held that the onus was on the assessee to produce evidence, and if the assessee failed to do so, it was their mistake. The CIT (A) admitted the additional evidence without fulfilling the conditions laid down in Rule 46A, as per the judgment in the case of Manish Build Well Pvt. Ltd. Consequently, the revenue's appeal was allowed for statistical purposes.
Issue 2: Deletion of agricultural receipts as book entries
The AO found that the assessee made bulk sales of agricultural products to associate concerns on credit basis, acquiring shares in return. The AO treated these sales as income from other sources, not agricultural income, due to inflated figures. The CIT (A) allowed the assessee's appeal, but the Revenue contended that the assessee's claim was unfounded and denied the exemption.
Issue 3: Possession of agricultural land as per agreement
The AO refused the assessee's claim for exemption on the sale of agricultural land in Ghaziabad, stating that the land's character had changed from agricultural to residential. The CIT (A) admitted additional evidence, but the Revenue argued that the admission was contrary to the conditions laid down in Rule 46A.
Issue 4: Deletion of LTCG claimed exempt u/s 54B
The AO denied the assessee's claim for exemption on long-term capital gains, stating that the land was within municipal limits and the character of the land had changed. The CIT (A) allowed the appeal, but the Revenue contended that the exemption was not applicable.
Issue 5: Change in utility of land from agricultural to residential
The Revenue argued that the utility of the land had changed from agricultural to residential purposes, and the assessee had admitted to this change. The CIT (A) admitted additional evidence, but the Revenue contended that the admission was not in compliance with Rule 46A.
In conclusion, the Revenue's appeal was allowed for statistical purposes due to the admission of additional evidence without fulfilling the conditions laid down in Rule 46A. The issues of agricultural receipts, possession of agricultural land, LTCG exemption, and change in land utility were all contested in this case.
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2012 (2) TMI 667
Issues Involved:
1. Deletion of various additions made by the Assessing Officer.
2. Addition on account of belated payment of PF and ESIC.
Summary:
1. Deletion of Various Additions:
The Revenue challenged the deletion of several additions made by the Assessing Officer, including club fee (Rs. 3,900), vehicle expenses (Rs. 5,20,000), travelling expenses (Rs. 3,20,000), telephone expenses (Rs. 2,70,000), miscellaneous expenses (Rs. 2,40,000), ad hoc addition (Rs. 40,000), advertisement and presentation expenses (Rs. 75,000), and staff welfare expenses (Rs. 64,000). The Tribunal noted that the assessee's accounts were duly audited under both the Companies Act and the Income Tax Act, and the Assessing Officer did not pinpoint any specific disallowable item or defect in the books of account. The Tribunal agreed with the Commissioner of Income Tax (Appeals) that no ad hoc disallowance is permissible without specific defects. The Tribunal referenced several judicial pronouncements supporting this view, including Core Health Limited (70 TTJ 490) and Monarch Foods Private Limited (54 TTJ 405).
2. Addition on Account of Belated Payment of PF and ESIC:
The Tribunal addressed the addition of Rs. 13,05,652/- for belated payment of PF and ESIC and the allowance of Rs. 4,75,473/- u/s 43B of the Act. The Tribunal noted that the amounts were deposited within the grace period allowable under the respective assessment years. The Tribunal referenced decisions from the Hon'ble Gauhati High Court in CIT v. George Williamson (Assam) Limited (284 ITR 619) and the Hon'ble Delhi High Court in CIT v. AMIL Limited (321 ITR 508), which supported the assessee's position. Consequently, the disallowance of Rs. 4,75,473/- was deleted.
Conclusion:
The Tribunal upheld the Commissioner of Income Tax (Appeals)'s decision to delete the ad hoc disallowances and the addition related to the belated payment of PF and ESIC. The appeal of the Revenue was dismissed. The judgment emphasized that for an expenditure to be allowable u/s 37(1) of the Act, it must be wholly and exclusively for business purposes and not of a capital or personal nature. The Tribunal affirmed that commercial expediency and direct benefit to the trade are crucial factors in determining the allowability of expenses.
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2012 (2) TMI 666
Issues involved: Determination of whether interest income from debentures should be taxed as business income or income from other sources for Assessment Year 1996-97.
The High Court of Bombay heard an appeal related to the Assessment Year 1996-97, concerning the taxation of interest income earned by the assessee from fixed convertible debentures. The Assessing Officer contended that the interest income should be taxed under the head of income from other sources as the assessee was not engaged in a systematic lending activity. The Commissioner (Appeals) also held that the main objective of the assessee was textile yarn manufacturing, making the investment activity incidental. However, the Tribunal considered the history of the assessee's investment arm, which was later demerged into a separate company, and previous decisions allowing the interest income as business income. Based on these facts, the Tribunal concluded that the interest income from debentures should be taxed as business income, as there was a systematic investment activity involved. Therefore, the appeal was dismissed as it did not raise a substantial question of law.
In summary, the key issue in this judgment was the classification of interest income earned by the assessee from debentures as either business income or income from other sources for the Assessment Year 1996-97. The Assessing Officer and the Commissioner (Appeals) initially considered the interest income as income from other sources due to the assessee's primary business being textile yarn manufacturing. However, the Tribunal analyzed the history of the assessee's investment arm, which was later demerged, and previous decisions allowing similar interest income as business income. The Tribunal concluded that the interest income should be taxed as business income, as there was a systematic investment activity involved, leading to the dismissal of the appeal.
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2012 (2) TMI 665
Issues involved: Disallowance of deduction u/s. 80IB(11A) of the Income-tax Act, 1961 for A.Y. 2006-07.
Summary:
The appellant's grievance was regarding the disallowance of deduction u/s. 80IB(11A) for income derived from Anjali Warehouse and Balemia Warehouse. The Assessing Officer rejected the claim stating lack of evidence for handling and transportation in addition to storage. The CIT(A) upheld this decision, leading to the appeal. The Tribunal noted that the claim had been allowed in previous assessment years without valid reasons for disallowance in the current year. Citing precedents, the Tribunal emphasized that once a claim is accepted, it cannot be arbitrarily disallowed in subsequent years. Relying on case law, the Tribunal held that the claim under s. 80IB should be allowed, as the past acceptance of the claim was not disturbed. Consequently, the appeal was allowed, and the assessee's claim u/s. 80IB(11A) was upheld for the assessment year in question.
Judgment Highlights:
- The appellant's claim for deduction u/s. 80IB(11A) was rejected due to lack of evidence for handling and transportation in addition to storage.
- The Tribunal emphasized that a claim allowed in previous assessment years cannot be disallowed without valid reasons or changes in circumstances.
- Citing relevant case law, the Tribunal held that the claim under s. 80IB should be allowed based on past acceptance and lack of justification for disallowance.
- The Tribunal allowed the appeal, upholding the assessee's claim u/s. 80IB(11A) for the assessment year in question.
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2012 (2) TMI 664
Issues involved:
The cancellation of registration granted to the assessee-trust u/s 12A of the Income Tax Act by the ld. C.I.T. invoking provisions of sec. 12AA(3) of the Act.
Issue 1: Observations of CIT regarding genuineness of activities of the trust
The assessee appealed against the order of the ld. C.I.T. canceling the registration granted to the appellant trust u/s 12A of the Income Tax Act. The grounds raised included the contention that the activities of the trust were genuine and in accordance with the trust's objects. The ld. C.I.T. erred in not considering the facts of the case properly and in canceling the registration based on observations that the activities were not genuine.
Issue 2: Authority to cancel registration granted u/s 12A
The appellant argued that the ld. C.I.T. did not have the authority to cancel the registration granted u/s 12A of the Act. The appellant contended that the amendment in sec. 12AA(3) of the Act, giving authority to cancel registration, was not applicable in this case. The appellant relied on legal decisions to support this argument.
Issue 3: Interpretation of sec. 12AA(3) and sec. 12A
The Tribunal analyzed the provisions of sec. 12AA(3) and sec. 12A of the Act. It was observed that sec. 12AA(3) empowers the ld. C.I.T. to cancel registration granted under specific clauses. The Tribunal concluded that the registration granted u/s 12A of the Act cannot be withdrawn or canceled by the ld. C.I.T. by invoking the provisions of sec. 12AA(3) of the Act. Legal precedents were cited to support this interpretation.
Decision:
The Tribunal held that the cancellation of registration by the ld. C.I.T. was not in accordance with the law. Citing legal interpretations and precedents, the Tribunal vacated the impugned order of the ld. C.I.T. dated 22/06/2010, thereby restoring the registration granted to the assessee-trust u/s 12A of the Act. The appeal of the assessee was allowed.
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