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2012 (3) TMI 674
Issues:
The appellant challenges the acquittal of the respondent under Section 138 of the Negotiable Instruments Act by the Additional Chief Judicial Magistrate.
Analysis:
The appellant, Mr. M.R. Choudhary, alleged that the respondent, Mangilal, failed to honor a cheque for Rs. 39,000 leading to a complaint under Section 138 of the Act. The appellant presented evidence including his testimony and six documents. In contrast, the respondent claimed to have repaid the loan through different cheques, substantiated by a bank statement. The appellant argued that a typographical error in the cheque number led to the acquittal, while the respondent contended that the presumption under Section 139 was rebutted, shifting the burden of proof to the appellant.
Court's Observations:
The learned Magistrate noted discrepancies in the cheque number mentioned by the appellant and the one submitted as evidence. The Magistrate emphasized that the repeated mention of the incorrect number raised doubts. Additionally, the Magistrate acknowledged the respondent's evidence of repayment through various cheques, effectively rebutting the presumption under Section 139. As per legal principles, once the presumption is rebutted, the burden of proof shifts to the complainant, which the appellant failed to discharge.
Conclusion:
The High Court found no fault in the Magistrate's judgment, upholding the acquittal of the respondent under Section 138 of the Act. The appeal lacked merit and was dismissed accordingly.
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2012 (3) TMI 673
Issues Involved:
1. Permissibility of Tata Camelot Housing Colony.
2. Applicability of the Punjab New Capital (Periphery) Control Act, 1952 vs. the Punjab Regional and Town Planning and Development Act, 1995.
3. Compliance with the Environment (Protection) Act, 1986, and the Wild Life (Protection) Act, 1972.
4. Impact on the vision of Chandigarh as planned by Mon Lee Corbusier.
Summary:
1. Permissibility of Tata Camelot Housing Colony:
The core issue raised in the public interest litigation is the permissibility of the Tata Camelot Housing Colony. The petitioner, an advocate, contends that the project violates the Punjab New Capital (Periphery) Control Act, 1952, as necessary permissions and sanctions have not been obtained. The petitioner argues that the project is unauthorized under the Environment (Protection) Act, 1986, and falls within the eco-sensitive area near Sukhna Lake and Sukhna Wildlife Sanctuary, requiring clearance under the Wild Life (Protection) Act, 1972, which has been refused.
2. Applicability of the Punjab New Capital (Periphery) Control Act, 1952 vs. the Punjab Regional and Town Planning and Development Act, 1995:
The respondents argue that the Punjab Regional and Town Planning and Development Act, 1995, supersedes the Periphery Control Act for the project site. They assert that the master plan under the 1995 Act covers the area and are willing to seek necessary sanctions if the Periphery Control Act is deemed applicable. The court concludes that both statutes are complementary and should apply to the project, ensuring regulated development in the peripheral area and beyond.
3. Compliance with the Environment (Protection) Act, 1986, and the Wild Life (Protection) Act, 1972:
The respondents claim they have submitted applications for necessary clearances under the Environment (Protection) Act and the Wild Life (Protection) Act, which are pending. The court refrains from addressing these issues, emphasizing that the statutory authorities must exercise their jurisdiction without fetters. The court underscores the importance of ecological concerns and the duty of authorities to protect natural resources, as highlighted in M.C. Mehta vs. Kamal Nath.
4. Impact on the vision of Chandigarh as planned by Mon Lee Corbusier:
The petitioner and the Chandigarh Administration argue that the project violates the edict of Chandigarh envisioned by Mon Lee Corbusier, particularly the prohibition on construction north of the capital complex. The court interprets the edict as a formal wish rather than a binding decree, emphasizing that authorities must consider the spirit of preserving the city's planning and design while granting necessary clearances and permissions.
Conclusion:
The court holds that the Periphery Control Act and the 1995 Act are complementary and applicable to the housing project. The respondents must comply with all statutory requirements under both Acts. The process of obtaining clearances under the Environment (Protection) Act and the Wild Life (Protection) Act must be completed, considering the court's observations. The PIL is disposed of with these directions.
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2012 (3) TMI 672
Issues Involved:
1. Whether the Tribunal exceeded its jurisdiction by deciding on the non-compete fee of Rs. 15 per share.
2. Whether the Tribunal's decision amounted to an enhancement of tax liability.
3. Whether the Tribunal provided sufficient opportunity of being heard to the assessee.
Summary:
Issue 1: Jurisdiction of the Tribunal
The assessees filed Miscellaneous Applications to recall the Tribunal's order dated 03.02.2011, arguing that the Tribunal decided on an issue (non-compete fee of Rs. 15 per share) which was not a ground before it. The Tribunal clarified that the subject matter of the appeal was the transactions as per the share purchase agreement dated 28-01-06, which included a non-compete fee. The Tribunal held that it was within its jurisdiction to give factual findings on the issue of capital gains or any other income arising from the transactions. The Tribunal cited the case of Indian Management Advisors and Leasing (P) Ltd. vs Commissioner of Income Tax, where it was held that the Tribunal could analyze documents and come to a different conclusion than the AO and CIT(A).
Issue 2: Enhancement of Tax Liability
The Tribunal found that its decision to assess Rs. 15 per share as business income u/s 28(va) did not amount to an impermissible enhancement of tax liability. It stated that the Tribunal is the last fact-finding body and has the jurisdiction to decide on issues arising from the transactions. The Tribunal referenced the case of CIT vs H.P. State Forest Corporation Ltd., where it was held that the Tribunal could not give a direction limiting the income assessment. The Tribunal concluded that the tax liability was a consequential effect and not a mistake apparent from the record.
Issue 3: Opportunity of Being Heard
The Tribunal acknowledged that it did not provide sufficient opportunity of being heard to the assessee regarding the non-compete fee of Rs. 15 per share. The Tribunal noted that the hearing was completed within three days and the assessee was not specifically asked to address the issue of the non-compete fee. Citing the case of Honda Siel Power Products Ltd. and Lachman Dass Bhatia Hingwala (P) Ltd. vs ACIT, the Tribunal emphasized that no party should suffer due to a mistake by the Tribunal. The Tribunal decided to keep in abeyance its observations on the non-compete fee and directed the Registry to fix the case for a fresh hearing on this issue.
Conclusion:
The Miscellaneous Applications were allowed in part, with the Tribunal's observations on the non-compete fee being kept in abeyance pending a fresh hearing. The order was pronounced on 28.03.2012.
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2012 (3) TMI 671
Issues involved: Registration under section 12AA of the Income Tax Act, 1956 for a company registered under section 25 of the Companies Act, 1956.
Issue 1: Grounds for rejection of registration application
The Director of Income Tax (Exemptions) rejected the registration application citing reasons such as absence of specific provision in the grant order for infrastructure maintenance by profit-generating institutions, leather industry profit not benefiting the environment, and turnover exceeding the threshold limit under section 2(15).
Issue 2: Assessee's contentions
The assessee, a non-profit company, argued that it was formed to upgrade treatment plants for environmental protection and assist the leather industry without profit motive. It highlighted the separate legal entities managing infrastructure, non-distribution of profits, and compliance with Companies Act section 25 for charitable activities.
Issue 3: Department's stance
The Department supported the rejection of registration, emphasizing the Director's decision and the grounds for refusal based on the activities and income generation of the assessee.
Issue 4: Interpretation of relevant legal provisions
The ITAT referred to Board's circular on charitable purposes and mutual organizations, emphasizing the need for activities to align with charitable objectives. It analyzed the nature of trade, commerce, or business activities in relation to exemption eligibility under section 11 and 10(23C) of the Act.
Issue 5: Application of mutuality principle
The ITAT examined the principle of mutuality in the context of industry associations claiming charitable status, highlighting the importance of dealings with non-members and the impact on exemption eligibility under section 2(15).
Issue 6: Consideration of company's charitable nature
The ITAT affirmed the charitable nature of the assessee, registered under Companies Act section 25, for promoting charity and environmental protection through infrastructure development. It disagreed with the Director's assessment of the company's activities and turnover, emphasizing the non-profit motive and environmental focus.
Issue 7: Decision and conclusion
The ITAT overturned the Director's decision, granting registration under section 12AA to the assessee based on its charitable activities, non-profit status, and compliance with legal provisions. It set aside the rejection and allowed the appeal, pronouncing the order in open court on 28th March, 2012.
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2012 (3) TMI 670
The Supreme Court of India granted leave for the appeal to be heard on the SLP Paper Book. Additional documents can be filed by the parties. Tagged with Civil Appeal No. 8390 of 2011.
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2012 (3) TMI 669
Issues Involved:
1. Quashing of the complaint u/s 482 of the Code of Criminal Procedure.
2. Enforceability of debt at the time of cheque deposit.
3. Legality of a blank cheque filled later.
4. Allegation of cheque misuse.
Summary:
1. Quashing of the complaint u/s 482 of the Code of Criminal Procedure:
The applicants-original accused sought to quash the complaint filed u/s 138 r/w 141 of the Negotiable Instruments Act for dishonour of a cheque. The High Court dismissed the application, stating that the complaint cannot be quashed at this stage as the issues raised by the applicants are matters of evidence to be considered during the trial.
2. Enforceability of debt at the time of cheque deposit:
The applicants argued that the cheque was for a time-barred debt and thus not legally enforceable. The Court held that whether the debt was legally enforceable at the time of cheque deposit is a matter to be determined at trial. The presumption u/s 139 r/w 118 of the N.I. Act that the cheque was issued for a legally enforceable debt is rebuttable and must be addressed during the trial.
3. Legality of a blank cheque filled later:
The applicants contended that the cheque was a blank instrument filled in later by the complainant, thus not constituting a valid cheque or Bill of Exchange. The Court referred to Section 20 of the N.I. Act, which allows the holder of an incomplete instrument to fill in the blanks and make it complete. The Court concluded that the cheque, even if initially incomplete, could be completed by the holder and thus valid for the purposes of Section 138 of the N.I. Act.
4. Allegation of cheque misuse:
The applicants claimed that the cheque was stolen and misused by the complainant. The Court stated that such defenses are to be considered at the time of trial and not at the stage of quashing the complaint. The Court emphasized that the primary consideration at this stage is whether the cheque was issued and dishonoured, not the defenses of the accused.
Conclusion:
The High Court dismissed the application to quash the complaint, stating that the issues raised by the applicants are to be addressed during the trial. The presumption of a legally enforceable debt u/s 139 r/w 118 of the N.I. Act stands unless rebutted by evidence during the trial. The defenses regarding the blank cheque and alleged misuse are also to be considered at trial. The trial court's decision to issue summons/process for the offence u/s 138 r/w 141 of the N.I. Act was upheld.
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2012 (3) TMI 668
Issues Involved:
1. Conversion of acquittal to conviction.
2. Errors of law and appreciation of evidence.
3. Non-examination of independent witnesses.
4. Legality of recovery u/s 27 of the Indian Evidence Act.
5. Discrepancies between ocular and medical evidence.
6. Lack of scientific evidence.
7. Finality of acquittal of co-accused and its effect on the appellant.
Summary:
1. Conversion of Acquittal to Conviction:
The High Court overturned the trial court's acquittal of the appellant, Govindaraju @ Govinda, for an offence u/s 302 IPC. The trial court had acquitted the accused on grounds of insufficient evidence, but the High Court found Govindaraju guilty and sentenced him to life imprisonment and a fine of Rs. 10,000.
2. Errors of Law and Appreciation of Evidence:
The High Court's judgment was challenged on the basis that it was contrary to settled principles of criminal jurisprudence. The trial court had noted that all witnesses had turned hostile, and the conviction was based solely on the testimony of a police officer, which was deemed insufficient. The Supreme Court emphasized that an appellate court must re-appreciate evidence while respecting the presumption of innocence and the trial court's findings.
3. Non-examination of Independent Witnesses:
The prosecution failed to examine material witnesses, including the doctor who performed the post-mortem and the constables present at the scene. The Supreme Court noted that this created a reasonable doubt about the prosecution's case and warranted adverse inference against it.
4. Legality of Recovery u/s 27 of the Indian Evidence Act:
The recovery of the weapons was not proved in accordance with Section 27 of the Indian Evidence Act. The memos did not bear the signatures of the accused, and all recovery witnesses turned hostile, casting doubt on the lawfulness of the recovery.
5. Discrepancies between Ocular and Medical Evidence:
The Supreme Court found inconsistencies between the ocular evidence provided by PW-1 and the medical evidence. The post-mortem report indicated multiple stab wounds, but the sequence of events described by PW-1 was deemed improbable and not corroborated by other witnesses.
6. Lack of Scientific Evidence:
The prosecution's case was not supported by scientific evidence. The Forensic Science Laboratory (FSL) report was incomplete, and no effort was made to produce and prove the final report from the FSL, Calcutta. This lack of scientific corroboration weakened the prosecution's case.
7. Finality of Acquittal of Co-accused:
The Supreme Court left open the legal question regarding the effect of the finality of the acquittal of the co-accused, Govardhan @ Gunda, on the appellant's case. The trial court's acquittal of Govardhan had attained finality, and the appellant argued that his role was lesser compared to that of Govardhan, entitling him to acquittal as well.
Conclusion:
The Supreme Court allowed the appeal, acquitting Govindaraju @ Govinda of the offence u/s 302 IPC, and ordered his immediate release. The Court found that the High Court had interfered with the trial court's judgment based on legal and factual presumptions that could not be sustained. The prosecution failed to prove its case beyond reasonable doubt, and the sole witness's testimony was deemed unreliable.
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2012 (3) TMI 667
The High Court of Karnataka set aside an order due to lack of notice and hearing for the petitioner, and remitted the matter to the Assessing Officer for fresh consideration. The petitioner was directed to appear before the Assessing Officer without any fresh notice. All contentions were left open.
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2012 (3) TMI 666
Issues Involved:
The judgment involves issues related to assessment under section 263 of the Income-tax Act, 1961, disallowance of expenses under section 40(a)(ia), and the provision for TDS in the case of a firm engaged in civil contract works.
Assessment under Section 263:
The appeal pertains to the assessment year 2007-08 and challenges the revision order passed by the Commissioner of Income-tax-I at Madurai under section 263 of the Income-tax Act, 1961. The initial assessment determined the total income at &8377; 40,04,760/-, with disallowances made under section 40(a)(ia) and for self-made vouchers. The Commissioner found discrepancies in sub-contract payments and directed additional disallowances, leading to a revised total income of &8377; 1,53,27,510/-. The Commissioner's decision was based on the contention that TDS provisions should have applied to sub-contract payments, despite the assessee's explanation that individual payments did not exceed &8377; 20,000/- and total payments did not exceed &8377; 50,000/-.
Disallowance under Section 40(a)(ia):
The Assessing Officer had initially disallowed &8377; 30,64,000/- under section 40(a)(ia) for non-deduction of TDS. However, the Commissioner of Income-tax found a higher amount of sub-contract payments and directed further disallowances, disregarding the assessee's explanation that TDS provisions did not apply due to the nature of payments made to laborers. The Commissioner's decision was primarily based on the provision for TDS made by the assessee in its accounts, overlooking the actual applicability of TDS provisions based on payment thresholds and crediting of accounts.
Provision for TDS and Liability Determination:
The Commissioner's rejection of the assessee's argument was based on the provision made for TDS in the accounts, without considering the actual applicability of TDS provisions based on payment and crediting thresholds. The Tribunal noted that the provision for TDS does not conclusively establish liability under TDS provisions. The Commissioner's decision was deemed erroneous as it failed to assess whether the assessee was bound by TDS provisions based on actual payments and credits to sub-contractors.
Conclusion:
The Tribunal set aside the revision order passed by the Commissioner of Income tax, highlighting the erroneous nature of the decision. The assessment order had thoroughly examined the TDS issue, leading to the conclusion that the disallowance was justified only for the specific amount where TDS was not deducted. The Tribunal's decision rendered the stay petition filed by the assessee as infructuous.
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2012 (3) TMI 665
Issues Involved:
1. Deletion of addition on account of sale value of exhaust steam supplied to SSL.
2. Eligibility of steam as a form of power for deduction u/s 80IA.
3. Eligibility of 50% of receipts from UPSEB for computation of deduction u/s 80IA.
Summary:
Issue 1: Deletion of addition on account of sale value of exhaust steam supplied to SSL
The Assessing Officer (AO) added an amount of Rs. 6,82,84,240 to the income of the assessee for the sale of steam to SBEC Sugar Ltd. (SSL) at Rs. 236 per tonne, despite the assessee not showing any income from this supply. The assessee argued that no real income accrued as SSL had decided not to pay for the exhaust steam since October 2001. The CIT(A) deleted the addition, following the ITAT's decisions in preceding years (AY 2000-01, AY 1999-00, AY 2001-02, AY 2003-04 to AY 2006-07), which held that only real income could be taxed and not notional income. The CIT(A) emphasized that the transaction between the assessee and SSL was part of a barter system where bagasse and water were supplied free of charge by SSL, and thus, no income should be recognized for the steam supplied.
Issue 2: Eligibility of steam as a form of power for deduction u/s 80IA
The AO disallowed the claim for deduction u/s 80IA on the sale of steam, arguing that steam was not considered power within the meaning of the section. However, the CIT(A) held that steam is a form of power and eligible for deduction u/s 80IA, citing the ITAT's decision in AY 2000-01 and subsequent years (AY 1999-00, AY 2001-02). The ITAT had consistently held that steam qualifies as a form of power and thus, income from its sale is eligible for deduction u/s 80IA.
Issue 3: Eligibility of 50% of receipts from UPSEB for computation of deduction u/s 80IA
The AO disallowed the claim for deduction u/s 80IA on 50% of the receipts from the sale of power to UPSEB, arguing that the expenditure incurred was higher than the net sale proceeds. The CIT(A) allowed the claim, following the ITAT's decisions in AY 1999-00 and AY 2001-02, which held that the AO was not justified in reducing the amount received from UPSEB for the purpose of deduction u/s 80IA. The CIT(A) noted that this issue had been consistently decided in favor of the assessee in earlier years.
Conclusion:
The ITAT upheld the CIT(A)'s decision on all three issues, noting that the CIT(A) had merely followed the ITAT's decisions from preceding years. The Revenue's appeal was dismissed as no contrary decision or material was presented to warrant a different view.
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2012 (3) TMI 664
Issues Involved:
1. Whether the cognizance of an offence can be taken twice?
2. Whether a second complaint in respect of the same offence under the Prevention of Food Adulteration Act, 1954 can be filed?
3. Whether the second complaint filed under the Act can be based on a public analyst report that stands superseded?
Summary:
Issue 1: Cognizance of an Offence Twice
The court held that "the cognizance of an offence can be taken only once." The first complaint was filed against three accused, and the second complaint was barred. The cognizance of the offence against new accused persons could only be taken during the trial under Section 319 Cr.P.C. The learned Magistrate and Sessions Judge erred in allowing the second complaint, which was not permissible under the law.
Issue 2: Filing of Second Complaint
The court found that the second complaint was not maintainable. The learned Sessions Judge's reliance on Section 173(8) Cr.P.C., which permits a supplementary charge-sheet in police cases, was erroneous. The procedures for police cases and complaint cases are distinct, and amalgamating them caused serious prejudice to the accused. The Prevention of Food Adulteration Act does not allow for a second complaint akin to a supplementary charge-sheet.
Issue 3: Superseded Public Analyst Report
The court agreed with the petitioner that the second complaint, based on a superseded public analyst report, was illegal. The petitioner's right to have the second sample tested by the Central Food Laboratory was defeated, causing prejudice. The second complaint, filed on the basis of a sanction obtained from a superseded report, was non-est.
Conclusion:
The court quashed the entire proceedings in both cases, setting aside the orders dated 11.05.2004 in Crl.R.P.No.321/2004 and 04.09.2004 and 26.07.1999 in Crl.M.C. No.2695/2004. The second complaint was not maintainable, and no useful purpose would be served by putting the petitioner to trial due to the passage of time and the putrid state of the sample. Both petitions were allowed.
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2012 (3) TMI 663
Issues Involved:
1. Addition of Rs. 18,65,000/- as anonymous donation u/s 115 BBC.
2. Disallowance of depreciation of Rs. 1,36,57,327/- claimed as application of income.
3. Treatment of repayment of loan as application of income.
Summary:
Issue 1: Addition of Rs. 18,65,000/- as Anonymous Donation u/s 115 BBC
The assessee contended that they had maintained the names and addresses of the donors, thus complying with the requirements of section 115 BBC(3). The AO treated the amount as anonymous donation due to lack of confirmations. The CIT(A) upheld this addition. However, the Tribunal found that the assessee had maintained the required records and referred to "Hans Raj Samarak Society v. ADIT(E)" which supported the assessee's compliance with section 115 BBC(3). Consequently, the Tribunal deleted the addition of Rs. 18,65,000/-.
Issue 2: Disallowance of Depreciation of Rs. 1,36,57,327/- Claimed as Application of Income
The AO disallowed the depreciation on the grounds that it would amount to double deduction since the expenditure for acquiring capital assets had already been claimed. The CIT(A) upheld this disallowance, relying on "Escorts Ltd. v. Union of India". The Tribunal, however, referred to "CIT v. Tiny Tots Education Society" and "DIT (Exemp) v. Framjee Cawasjee Institute", which held that depreciation should be allowed for charitable institutions to preserve the corpus of the trust. The Tribunal accepted the assessee's claim and allowed the depreciation.
Issue 3: Treatment of Repayment of Loan as Application of Income
The AO did not treat the repayment of loan of Rs. 1,46,38,551/- as application of income, considering it a double deduction since interest on the loans was already claimed. The CIT(A) treated the repayment as application of income, referring to "DIT(Exemp) v. Span Foundation". The Tribunal upheld the CIT(A)'s decision, emphasizing that section 11(1)(a) focuses on the spending of income and not the source. The Tribunal found the CIT(A)'s order just and proper, thus rejecting the Department's appeal.
Conclusion:
The appeal of the assessee was partly allowed, deleting the addition of Rs. 18,65,000/- and allowing the depreciation of Rs. 1,36,57,327/-. The Department's appeal regarding the treatment of repayment of loan as application of income was dismissed.
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2012 (3) TMI 662
Issues involved: Appeal against withdrawal of registration u/s 12AA of the Income Tax Act, 1961.
Summary:
The appellant filed an appeal against the withdrawal of registration u/s 12AA by the Ld. CIT-II, Agra. The registration was initially granted w.e.f. 01.04.2003, but a notice for withdrawal was issued w.e.f. Assessment Year 2009-10 under section 12AA(3) read with section 293C of the Act. The withdrawal was based on the grounds that the activities of the assessee were not deemed charitable under the proviso to section 2(15) inserted by Finance Act, 2008.
The appellant contended that the issue was similar to a previous case of Agra Development Authority, ITA No.447/Agr/2011. The ITAT found the facts to be identical to the Agra Development Authority case and referred to the objection raised by the Ld. Authorised Representative regarding the jurisdiction of the CIT to cancel registration earlier granted under section 12A of the Act. The ITAT upheld the objection, citing that the CIT's order was without jurisdiction as there was no provision in section 12AA for such cancellation.
The ITAT also highlighted the distinction between "approval" and "registration" under the Act, noting that section 293C, which deals with withdrawal of approval, cannot apply to a case of registration. Therefore, the impugned order was annulled due to lack of jurisdiction. The appeal of the assessee was allowed with no order as to costs.
Given the identical facts, the ITAT followed the decision in the Agra Development Authority case and allowed the appeal filed by the assessee. The issue was decided in favor of the assessee based on the preliminary objection raised regarding jurisdiction, without expressing any opinion on the merit and other aspects of the matter. The CIT was granted liberty to take action in accordance with the law if suggested.
In conclusion, the appeal filed by the assessee was allowed, maintaining consistency with the previous order of the ITAT in the Agra Development Authority case.
(Order pronounced in the open Court on 30.03.2012)
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2012 (3) TMI 661
Issues involved: Appeal against order dated 02.03.2011 passed by CIT (Appeals)-5, Mumbai u/s.143(3) for Assessment Year 2007-08. Issues raised: 1. Addition of unutilised Cenvat Credit Receivable as income. 2. Adjustment to taxable income after section 145A adjustments. 3. Deletion of addition made for unutilized Cenvat Credit.
Issue 1: Addition of unutilised Cenvat Credit Receivable as income
The appellant, a Private limited company in chemical manufacturing, showed unutilised Cenvat Credit receivable in balance sheet. Assessing Officer added the amount to closing stock per section 145A, citing CBDT circular no. 772 and ITAT Mumbai Bench decisions. Appellant argued Cenvat Credit not income, not routed through profit and loss account, and is a benefit set off against excise duty. CIT(Appeals) agreed with Assessing Officer, stating exclusion violates section 145A, but directed verification of capital goods exclusion.
Issue 2: Adjustment to taxable income after section 145A adjustments
Appellant contended that if Cenvat Credit is in closing stock, adjustment should be made in opening stock too, citing judgments of Hon'ble Bombay High Court and Delhi High Court. ITAT upheld inclusion of Cenvat Credit in closing stock per section 145A but directed corresponding adjustment in opening stock as per judicial precedents.
Issue 3: Deletion of addition made for unutilized Cenvat Credit
ITAT partly allowed the appeal, directing Assessing Officer to make corresponding adjustment in opening stock as per judicial precedents and verify exclusion of capital goods amount. Upheld CIT(Appeals) direction for exclusion of capital goods amount if found correct.
Conclusion: ITAT partially allowed the appeal, emphasizing the need for corresponding adjustments in opening stock as per judicial precedents and directing verification of exclusion of capital goods amount.
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2012 (3) TMI 660
Issues Involved:
1. Whether Clause 16 of the Agreement mandates arbitration.
2. Applicability of the judgment in Sukanya Holdings (P) Ltd. v. Jayesh H Pandya.
3. Whether Respondent No. 1 waived its right to arbitration by filing a complaint in the United States District Court for the Eastern District of Pennsylvania.
Summary:
1. Mandatory Nature of Clause 16:
The court examined whether Clause 16 of the Agreement is mandatory for arbitration. Clause 16 uses the word "shall," indicating a mandatory nature. The concluding part of Clause 16, which allows parties to seek interim relief from a court, does not detract from the mandatory arbitration requirement. The word "decree" in Clause 16 should be interpreted ejusdem generis with "temporary restraining order" and "preliminary injunction," implying it refers to interim relief rather than final adjudication. The court also referenced the judgment of the United States District Court for the Eastern District of Pennsylvania in Speciality Bakeries, Inc. v. Robhal, Inc., which supports the view that such clauses do not derogate from arbitration provisions.
2. Applicability of Sukanya Holdings (P) Ltd. v. Jayesh H Pandya:
The court considered the applicability of the Sukanya Holdings judgment, which held that if a suit involves parties not bound by the arbitration clause, the parties cannot be referred to arbitration. In the present case, the Petitioner joined Respondent No. 2 (DHL) to the suit to defeat the arbitration clause. The court found that the claim against Respondent No. 2 was contingent and not bonafide, aimed at avoiding arbitration. The court distinguished the facts from Sukanya Holdings, noting that Section 45 of the Arbitration and Conciliation Act, 1996, does not include the "subject matter" concept, unlike Section 8. Thus, Sukanya Holdings does not apply to Section 45.
3. Waiver of Right to Arbitration:
The Petitioner argued that Respondent No. 1 waived its right to arbitration by filing a complaint in the United States District Court for the Eastern District of Pennsylvania. However, the court found that Respondent No. 1 withdrew the complaint at the Petitioner's counsel's request to proceed with arbitration. The court held that the Petitioner, having participated in the arbitration and filed a counterclaim, could not now claim waiver by Respondent No. 1.
Conclusions:
1. The trial court's view on the existence of the Arbitration Agreement and arbitrability of the dispute is prima facie.
2. The Arbitral Tribunal will finally adjudicate the existence and arbitrability of the dispute.
3. The parties can raise their contentions before the Arbitral Tribunal.
4. The Arbitral Tribunal will decide based on the applicable law to the Agreement.
5. The Suit filed by the Petitioner against Respondent No. 2 (DHL) is not bonafide and aims to frustrate the Arbitration Clause; hence, Sukanya Holdings does not apply.
The Writ Petition was dismissed, and the rule was discharged with no order as to costs.
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2012 (3) TMI 659
Issues Involved:
The judgment involves appeals filed by the assessee against appellate orders of the Commissioner of Income Tax (Appeals)-III, Baroda for multiple assessment years. The main issue revolves around cash deposits made by the assessee, promoter's contribution, and subsequent additions and disallowances by the Assessing Officer.
ITA No.2118/Ahd/2000 and 851/Ahd/2009 (A.Y.1997-98):
The Assessing Officer noted cash deposits in the bank account of the assessee, which the assessee claimed were book entries to meet SEBI requirements. The assessee contended that the bank accounts were manipulated with the bank manager's involvement. The Tribunal directed the assessee to provide details and evidence regarding the cash credits received from various persons for share application money. The burden was placed on the assessee to prove the source of cash deposits, and the matter was remanded back to the AO for fresh decision.
Penalty Appeal for A.Y.1997-98:
The penalty imposed by the AO under Section 68 of the Act was canceled since the addition was remanded back to the AO for fresh consideration. The Tribunal held that the penalty appeal did not survive in light of the remand order.
Quantum Appeals for A.Y.1995-96 and 1996-97:
Similar to the A.Y.1997-98 issue, the Tribunal set aside the orders of the CIT(A) for these years as well, directing the matter to be reconsidered by the AO. The Tribunal allowed the quantum appeals for A.Y.1995-96 and 1996-97 for statistical purposes.
Overall Decision:
The Tribunal partly allowed the quantum appeals for A.Y.1995-96, 1996-97, and 1997-98 for statistical purposes. The penalty appeal for A.Y.1997-98 was allowed, and the penalty was canceled due to the remand of the addition back to the AO. The Tribunal emphasized the assessee's burden to provide evidence supporting the source of cash deposits and directed fresh consideration by the AO for all relevant issues.
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2012 (3) TMI 658
Issues Involved:
1. Set-off of loss of the amalgamating company.
2. Classification of income from sale of premises.
3. Disallowance of provision for premium on redemption of debentures.
4. Disallowance of expenditure on gifts and presentation articles.
5. Disallowance of loss representing the unrealizable portion of inter-corporate deposits.
6. Disallowance of provision for probable claim against the appellant by the Department of Telecommunications.
7. Allocation of expenses u/s 80-IA.
8. Disallowance of expenses on foreign tour of Director's relative.
9. Classification of foreign exchange fluctuation loss.
10. Treatment of various receipts for deduction u/s 80HHC.
11. Allowance of depreciation on leased assets and financial cost.
12. Treatment of sales tax and excise duty for deduction u/s 80HHC.
13. Disallowance of leave encashment.
14. Treatment of software expenses.
15. Disallowance of miscellaneous expenses.
16. Disallowance of repairs and maintenance expenses.
17. Disallowance of interest on advances to subsidiary companies.
18. Allocation of expenses for determination of profits u/s 80IA.
19. Disallowance of administrative expenses attributed to earning of dividends.
20. Disallowance of liquidated damages.
21. Disallowance of buy-back expenses.
22. Disallowance of provision for slow-moving stock.
23. Disallowance of club membership fees.
24. Disallowance of repairs and maintenance expenses.
25. Disallowance of interest on advances to subsidiary companies.
26. Disallowance of administrative expenses attributed to earning of dividends.
27. Disallowance of expenditure on gift and representations.
28. Allowance of deduction u/s 80IA.
29. Allowance of deduction u/s 80IB on sale of scrap.
30. Allowance of deduction u/s 80HHC on excise duty and sales tax.
Summary:
1. Set-off of loss of the amalgamating company:
The Tribunal upheld the assessee's claim for the set-off of losses of the amalgamating company, FSL, for the assessment years 1998-99 and 1999-2000, against the positive income of the assessee company. The Tribunal concluded that fixing the appointed date of amalgamation as 1.4.1997 was not a colorable device to evade taxes and directed the Assessing Officer to allow the claim.
2. Classification of income from sale of premises:
The Tribunal upheld the view of the lower authorities that the profit on sale of flats constructed by the assessee should be taxed under the head "profits and gains of business" and not as "capital gains," as the activity was characteristic of a person carrying on the business of a builder and developer.
3. Disallowance of provision for premium on redemption of debentures:
The Tribunal followed the decision of its coordinate Bench in assessee's case for the assessment year 1997-98 and allowed the provision for premium on redemption of debentures on a pro-rata basis.
4. Disallowance of expenditure on gifts and presentation articles:
The Tribunal set aside the disallowance of Rs. 1,00,000 on gift expenses, following the reasoning given in the earlier order of the Tribunal dated 30.3.2010, and allowed the claim of the assessee.
5. Disallowance of loss representing the unrealizable portion of inter-corporate deposits:
The Tribunal allowed the claim of the assessee for the write-off of the irrecoverable amount of inter-corporate deposits as a deduction within the meaning of section 36(1)(vii) of the Act, holding that the activity of giving ICDs was a business activity.
6. Disallowance of provision for probable claim against the appellant by the Department of Telecommunications:
The assessee did not press this Ground, and it was dismissed as not pressed.
7. Allocation of expenses u/s 80-IA:
The Tribunal set aside the issues regarding the allocation of expenses while working relief u/s 80-IA to the file of the Assessing Officer to be adjudicated afresh in the light of the directions given by the Tribunal in its order dated 30.3.2010.
8. Disallowance of expenses on foreign tour of Director's relative:
The Tribunal followed the parity of reasoning given in the order of the Tribunal dated 30.3.2010 and decided the issue against the assessee.
9. Classification of foreign exchange fluctuation loss:
The Tribunal followed the decision of its coordinate Bench in assessee's case for assessment year 2001-02 and decided the issue in favor of the assessee, holding that the loss on exchange fluctuation was not speculative.
10. Treatment of various receipts for deduction u/s 80HHC:
The Tribunal set aside the order of the Commissioner of Income-tax (Appeals) on this issue and restored the matter back to his file with directions to adjudicate the same afresh in view of the judgment of the Hon'ble Bombay High Court in the case of Pfizer Ltd.
11. Allowance of depreciation on leased assets and financial cost:
The Tribunal set aside the issues regarding the allowance of depreciation on leased assets and financial cost to the file of the Assessing Officer with certain directions, following the parity of reasoning given in the order of the Tribunal dated 30.3.2010.
12. Treatment of sales tax and excise duty for deduction u/s 80HHC:
The Tribunal decided the issue in favor of the assessee, following the judgment of the Hon'ble Supreme Court in the case of Laxmi Machine Works, holding that excise duty and sales tax are not includible in 'total turnover' for the purposes of applying the formula contained in section 80HHC (3) of the Act.
13. Disallowance of leave encashment:
The Tribunal directed the Assessing Officer to consider and allow the claim of the assessee on actual payment basis in case the claim of the assessee in the past years on the basis of the provision made in the account books is found to be ultimately unsustainable.
14. Treatment of software expenses:
The Tribunal allowed the expenditure on software as a revenue expenditure, following the judgment of the Hon'ble Bombay High Court in the case of M/s Raychem RPG Ltd., holding that the expenditure was intended to improve the quality and efficiency of the information systems.
15. Disallowance of miscellaneous expenses:
The Tribunal directed the Assessing Officer to restrict the disallowance to 5% of the amount of Miscellaneous Expenses, following the precedent set in the assessment year 2001-02.
16. Disallowance of repairs and maintenance expenses:
The Tribunal set aside the issue and restored the matter to the file of the Assessing Officer to be decided afresh in accordance with the directions and findings given by the Tribunal for the assessment year 2002-03.
17. Disallowance of interest on advances to subsidiary companies:
The Tribunal set aside the order of the Commissioner of Income-tax (Appeals) and restored the issue to the file of the Assessing Officer to be decided afresh in accordance with the directions and findings given by the Tribunal for the assessment year 2001-02.
18. Allocation of expenses for determination of profits u/s 80IA:
The Tribunal set aside the order of the Commissioner of Income-tax (Appeals) and restored the issue to the file of the Assessing Officer to be decided afresh in accordance with the directions and findings given by the Tribunal for the assessment year 2002-03.
19. Disallowance of administrative expenses attributed to earning of dividends:
The Tribunal set aside the order of the Commissioner of Income-tax (Appeals) and restored the issue to the file of the Assessing Officer to be decided afresh in accordance with the directions and findings given by the Tribunal for the assessment year 2002-03.
20. Disallowance of liquidated damages:
The Tribunal allowed the claim of the assessee for liquidated damages as a deduction, holding that the amounts represented short recoveries from various Government customers and satisfied the conditions prescribed under section 36(1)(vii) read with section 36(2) of the Act.
21. Disallowance of buy-back expenses:
The Tribunal allowed the claim of the assessee for buy-back expenses as a revenue expenditure, following the judgment of the Hon'ble Delhi High Court in the case of Selan Exploration Technology Ltd.
22. Disallowance of provision for slow-moving stock:
The assessee did not press this Ground, and it was dismissed as not pressed.
23. Disallowance of club membership fees:
The Tribunal deleted the disallowance of club membership fees, following the judgment of the Hon'ble Bombay High Court in the case of Otis Elevators (I) Ltd.
24. Disallowance of repairs and maintenance expenses:
The Tribunal set aside the issue and restored the matter to the file of the Assessing Officer to be decided afresh in accordance with the directions and findings given by the Tribunal for the assessment year 2002-03.
25. Disallowance of interest on advances to subsidiary companies:
The Tribunal set aside the order of the Commissioner of Income-tax (Appeals) and restored the issue to the file of the Assessing Officer to be decided afresh in accordance with the directions and findings given by the Tribunal for the assessment year 2001-02.
26. Disallowance of administrative expenses attributed to earning of dividends:
The Tribunal set aside the order of the Commissioner of Income-tax (Appeals) and restored the issue to the file of the Assessing Officer to be decided afresh in accordance with the directions and findings given by the Tribunal for the assessment year 2002-03.
27. Disallowance of expenditure on gift and representations:
The Tribunal decided the issue in favor of the assessee, following past precedents.
28. Allowance of deduction u/s 80IA:
The Tribunal set aside the order of the Commissioner of Income-tax (Appeals) and restored the issue to the file of the Assessing Officer to be decided afresh in accordance with the directions and findings given by the Tribunal for the assessment year 2002-03.
29. Allowance of deduction u/s 80IB on sale of scrap:
The Tribunal decided the issue against the Revenue and in favor of the assessee, following past precedents.
30. Allowance of deduction u/s 80HHC on excise duty and sales tax:
The Tribunal decided the issue in favor of the assessee, following the decision of the Hon'ble Supreme Court in the case of Laxmi Machine Works.
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2012 (3) TMI 657
Issues Involved:
1. Disallowance of payment u/s 40(a)(i) due to non-deduction of tax at source on usance interest.
2. Inclusion of unutilized Modvat credit in the value of closing stock.
3. Treatment of prior period expenses.
4. Imposition of penalty u/s 271(1)(c).
Summary:
1. Disallowance of Payment u/s 40(a)(i):
The primary issue was whether the payment of usance interest could be considered as "interest" within the meaning of Sec. 2(28A) of the Income Tax Act, 1961. The Tribunal concluded that usance interest is indeed "interest" as per Sec. 2(28A) and is deemed to have accrued in India u/s 9(1)(v)(b). The assessee's argument that usance interest was part of the purchase price was rejected, referencing the Gujarat High Court's decision in CIT v. Vijay Ship Breaking Corpn. The Tribunal remanded the issue to the AO to consider the applicability of the DTAA between India and the supplier's countries. The plea of bona fide belief was also rejected, stating the assessee should have sought an appropriate certificate u/s 195.
2. Inclusion of Unutilized Modvat Credit:
The AO added unutilized Modvat credit of Rs. 2,51,713 to the closing stock value. The CIT(A) upheld this addition but allowed for a corresponding adjustment to the opening stock. The Tribunal sustained this view, directing the AO to make the necessary adjustments as per the Bombay High Court's decision in CIT v. Mahalaxmi Glass Works (P.) Ltd.
3. Treatment of Prior Period Expenses:
The AO disallowed prior period expenses of Rs. 32,00,939, which was upheld by the CIT(A). However, the CIT(A) directed the AO to allow these expenses in the relevant year if the assessee could establish their relation to that year. The Tribunal noted that similar directions had been upheld in the assessee's own case for earlier years and found no reason to interfere with the CIT(A)'s order.
4. Imposition of Penalty u/s 271(1)(c):
The AO imposed a penalty based on several disallowances, including prior period expenses and unexplained expenses u/s 69C. The Tribunal noted that the disallowance u/s 69C was already deleted in quantum proceedings, and the prior period expenses were allowed in the relevant year. For the disallowance of write-off of leasehold premium and provision for gratuity, it was observed that these were debatable issues and fully disclosed by the assessee. Citing the Supreme Court's decision in CIT v. Reliance Petroproducts (P) Ltd, the Tribunal upheld the CIT(A)'s decision to delete the penalty.
Conclusion:
- The appeal by the assessee (ITA No. 7019/Mum/2006) is partly allowed for statistical purposes.
- The appeals by the Revenue (ITA No. 1199/Mum/2007 and ITA No. 1198/Mum/2007) are dismissed.
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2012 (3) TMI 656
Issues involved:
The judgment involves issues related to addition of income accrued to the assessee, deletion of prior period expenses, disallowance of extra depreciation, and allowance of fringe benefits.
Addition of income accrued to the assessee:
The Revenue appealed against the deletion of addition of income accrued to the assessee amounting to Rs. 5,10,00,000. The Revenue argued that the assessee had made a provision for this income in its books but did not offer it as income. The assessee contended that the payer, Cochin International Airport Ltd., had not accepted the liability to pay for the use of ATM/CNS facility, therefore no right had accrued to receive the income. The Tribunal upheld the order of the CIT(A) based on legal principles that income accrues only when a right to receive it is established.
Deletion of prior period expenses:
The Revenue challenged the deletion of prior period expenses amounting to Rs. 9,24,20,455. The Tribunal noted that similar issue was decided in favor of the assessee for a previous year, and the prior period income disclosed by the assessee exceeded the expenses claimed. The Tribunal found no justification to interfere with the CIT(A)'s order and rejected the Revenue's appeal.
Disallowance of extra depreciation:
The Revenue contested the deletion of disallowance of extra depreciation amounting to Rs. 8,30,391. The Tribunal observed that in previous years, similar issues were remanded back to the Assessing Officer for verification. Considering consistency, the Tribunal set aside the matter for readjudication as per directions from earlier years.
Allowance of fringe benefits:
The Revenue objected to the allowance of fringe benefits amounting to Rs. 3,16,8,999, arguing that the claim should have been revised in the return. The Tribunal acknowledged the legal position but held that appellate authorities have the power to admit fresh claims. The Additional Commissioner admitted that fringe benefit tax was not attracted on the calibration expenditure, leading to the dismissal of the Revenue's appeal.
In conclusion, the Tribunal partly allowed the Revenue's appeal regarding prior period expenses and dismissed the appeal concerning fringe benefits. The decision was pronounced on 16th March, 2012.
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2012 (3) TMI 655
Issues involved: Interpretation of provisions u/s 139(1), 139(3), and 139(5) of the Income Tax Act regarding filing of revised return for carry forward of loss.
Summary:
The Appellate Tribunal ITAT Cochin, comprising Shri N.R.S. Ganesan (JM) and Shri B.R. Baskaran(AM), heard an appeal against the order of Commissioner (Appeals)-I, Trivandrum for the assessment year 2005-06. The assessee had initially filed a return of income showing provisional loss within the time limit u/s 139(1) of the Act. Subsequently, after completing the audit, the assessee filed a revised return disclosing the correct loss within the period provided u/s 139(5) of the Act. The Commissioner of Income-tax(A) held that the revised return cannot be treated as the return since the original return was filed within the due date specified u/s 139(1) of the Act. The assessee relied on judgments of Madras High Court and Allahabad High Court to support their case.
On one side, the assessee argued that the revised return filed u/s 139(5) should be considered for carry forward of loss, as the original return was based on provisional accounts. On the contrary, the Departmental Representative contended that the carry forward of loss claimed on the basis of provisional accounts cannot be allowed, hence the revised return should not be considered for this purpose.
After considering the submissions and relevant provisions, the Tribunal noted that the assessee had filed the original return of loss based on provisional accounts within the time limit u/s 139(1) and later filed a revised return based on audited statements within the time provided u/s 139(5). Citing judgments of Madras High Court and Allahabad High Court, the Tribunal held that a return of loss filed u/s 139(3) can be rectified by filing a revised return u/s 139(5). The Tribunal emphasized that once a return is filed, all provisions of the Income-tax Act apply as if it was filed u/s 139(1), thereby allowing the applicability of section 139(5) to a return filed u/s 139(3). Consequently, the Tribunal set aside the lower authorities' order and directed the assessing officer to process the revised return filed by the assessee u/s 139(5) for quantifying the losses in accordance with the law.
In conclusion, the appeal filed by the assessee was allowed by the Tribunal, and the order was pronounced on March 29, 2012.
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