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2011 (4) TMI 1497
Issues involved: Appeal against penalty u/s. 271(1)(c) of the I.T. Act for Assessment Year 2003-04 based on additions to total income - Loss on sale of car and loss on sale of shares.
Loss on sale of car: Assessee accepted the addition during assessment proceedings as an inadvertent error, claiming it should be treated as speculation loss u/s. 73 - Assessing Officer disallowed the claim and imposed penalty - Assessee argued for no penalty citing inadvertent mistake and case laws in support.
Loss on sale of shares: Assessee claimed the loss was also inadvertent and should be treated as speculation loss u/s. 73 - Assessee appealed against penalty imposition - Ld. CIT(A) confirmed penalty, stating the losses were capital losses and penalty u/s. 271(1)(c) was justified for furnishing inaccurate particulars of income.
Appellant's arguments: Assessee contended no concealment or deliberate inaccuracy in furnishing income particulars - Relied on case laws including Hindustan Steel Ltd. and Vinod Kapoor - Asserted bonafide claims not inviting penalty u/s. 271(1)(c) - Submitted explanations and relied on relevant case laws.
Department's stance: Departmental Representative argued that assessee accepted mistakes only when confronted by Assessing Officer - Loss on sale of car and shares were capital losses, not speculation losses - Assessee furnished inaccurate particulars of income.
Judgment: Tribunal dismissed the appeal, noting that although assessee corrected the wrong claims during assessment proceedings, it was not a voluntary act - Rejected arguments based on prior case laws and upheld penalty imposition u/s. 271(1)(c) due to clearly non-allowable losses claimed by the assessee.
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2011 (4) TMI 1496
Issues involved: Appeal against order u/s 80G of the Income Tax Act regarding renewal of approval for a trust running a home for orphans and widows.
The appeal was filed by the assessee-trust against the order of the ld. CIT-I, Madurai, dated 25.2.2010, passed u/s 80G of the Income Tax Act. The trust had applied for renewal of approval u/s 80G on 1.9.2009. The ld. CIT refused to renew the approval citing technicalities related to approval from specific authorities despite the trust being registered u/s 12AA and carrying out charitable activities. The trust's activities were oriented towards its charitable objects of running a home for orphans and widows. The assessee raised multiple grounds challenging the CIT's decision, emphasizing that the denial was based on hyper-technical reasons. After hearing both sides, the ITAT Chennai held that the trust was carrying out charitable activities as per its objects and directed the ld. CIT to grant approval u/s 80G by issuing the requisite certificate. The appeal of the assessee was allowed on 29.4.2011.
In the case, the main issue was the denial of renewal of approval u/s 80G of the Income Tax Act to the assessee-trust by the ld. CIT based on technicalities related to approval from specific authorities, despite the trust being registered u/s 12AA and actively engaged in charitable activities, specifically running a home for orphans and widows.
The trust had applied for renewal of approval u/s 80G on 1.9.2009. The ld. CIT refused to renew the approval citing technicalities that the trust had not obtained approval from the Board of Control, Orphanages & Other Charitable Homes Act, 1960, Chennai, or other required certificates. The trust was created on 6.7.2006, registered u/s 12AA on 16.3.2007, and granted approval u/s 80G on the same day valid until 31.3.2008. The trust's activities were focused on running a home for orphans and widows, as evidenced by the accounts filed by the ld.AR.
The assessee raised several grounds challenging the CIT's decision, arguing that the denial of approval u/s 80G was wrong, illegal, and opposed to facts. They contended that the CIT erred in rejecting the application and that the trust did not require the specific recognition or certificates mentioned by the CIT. The assessee emphasized that the CIT's conclusion was hyper-technical and not based on a proper understanding of the trust's activities and circumstances.
After considering the arguments from both sides, the ITAT Chennai held that the trust was registered u/s 12AA and actively engaged in charitable activities aligned with its objects. The ITAT found the denial of approval u/s 80G based solely on technicalities to be invalid and directed the ld. CIT to grant approval to the assessee-trust by issuing the necessary certificate. The appeal of the assessee was allowed on 29.4.2011.
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2011 (4) TMI 1495
Issues involved: The judgment involves the interpretation of section 73 of the Income Tax Act regarding the treatment of share trading profits as speculative profits.
Summary:
1. Issue 1 - Treatment of share trading profit as speculative profit:
- The Assessing Officer contended that the explanation to sec.73 was not applicable as the funds deployed in granting loans were substantially more than in stock trading.
- The Ld. CIT(A) held that the business of purchase and sale of shares should be treated as "speculation business" and directed the set off of profits against speculation losses.
- The Revenue appealed against this decision, arguing that the share trading profit should not be considered speculative under sec.73.
- The Ld. Counsel for the assessee supported the decision of the Ld. CIT(A).
2. Issue 2 - Applicability of exceptions under sec.73:
- The Assessing Officer's direction indicated that the company did not fall under the exceptions provided in the explanation to sec.73.
- The Ld. CIT(A) analyzed the company's income composition and fund deployment over the years to determine the principal business.
- The judgment referenced a special bench decision highlighting the factors to consider in determining the principal business of an assessee.
- It was concluded that both exceptions under sec.73 were not applicable to the appellant's case, leading to the treatment of share trading as a speculation business.
3. Final Decision:
- The Tribunal upheld the order of the Ld. CIT(A) as no contrary material was presented by the Revenue.
- Consequently, the appeal of the Revenue was dismissed, affirming the treatment of share trading profits as speculative and the set off against speculation losses.
This judgment clarifies the application of sec.73 in determining the nature of profits derived from share trading activities and emphasizes the importance of considering fund deployment and income composition in such assessments.
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2011 (4) TMI 1494
Issues Involved:
1. Violation of provisions u/s 13 of the Income Tax Act.
2. Eligibility for exemption u/s 11 of the Income Tax Act.
3. Nature of lease rental advances as application of funds or investment.
4. Levy of interest u/s 234A and 234B.
Summary:
1. Violation of provisions u/s 13 of the Income Tax Act:
The Assessing Officer concluded that the provisions of section 13(2)/13(3) were violated for the direct benefit of the trustees of the trust, thus denying exemption u/s 11. The trustees were also directors of M/s Merit Resorts Pvt. Ltd (MRPL), and the leased premises were taken over by Canara Bank under the Securitization & Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
2. Eligibility for exemption u/s 11 of the Income Tax Act:
The trust was registered u/s 12AA and engaged in providing Hotel Management Education. It had taken on lease premises owned by MRPL, M/s Nilgiris Enterprises, and M/s Prince Palace, paying lease rental advances. The Assessing Officer and CIT(A) denied exemption u/s 11, but the Tribunal found no evidence that trustees benefited from the lease rental advances. The trust had not paid any lease rentals but used the property, and the lease rental advance of Rs. 9.40 crores was repaid in full by MRPL before the bank took symbolic possession.
3. Nature of lease rental advances as application of funds or investment:
The Tribunal examined whether lease rental advances were an application of funds or an investment. Citing judicial precedents, it concluded that the advances were an application of funds for pursuing the trust's objectives, not an investment. The trust benefited from the agreement, and the trustees did not derive any personal benefit. Therefore, the provisions of section 13(1)(d) did not apply.
4. Levy of interest u/s 234A and 234B:
Since the trust was entitled to exemption u/s 11, the interest levied u/s 234A and 234B would not survive. The Tribunal set aside the order of the CIT(A) and allowed the appeal of the assessee-trust.
Conclusion:
The Tribunal held that the assessee-trust did not violate any provisions of section 11 or section 13 of the Act and was entitled to exemption u/s 11. The appeal of the assessee-trust was allowed. The order was pronounced in the open court on 19.4.2011.
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2011 (4) TMI 1493
Issues Involved:
The appeal filed by the Revenue against the order of CIT(A) regarding the deletion of addition of Rs. 93.21 lakhs by allowing exemption to the income of the assessee society under Section 10(23C)(vi) of the Income-tax Act, 1961.
Issue 1: Exemption u/s 10(23C)(vi) of the Act
The Revenue contested the CIT(A)'s authority to grant exemption u/s 10(23C)(vi), arguing that only the competent authority has the power to grant such exemptions. The Authorized Representative of the assessee highlighted that the application for registration was filed on 23.12.2004, and 85% of the income was used for charitable purposes as required u/s 10(23C)(vi). They emphasized that no time limit was prescribed at that time for granting or refusing approval, and various case laws were cited to support the contention that in the absence of a decision within a reasonable time, the application should be deemed accepted.
Issue 2: Timing of Application for Exemption
The Tribunal noted that the application for registration u/s 10(23C)(vi) was filed after the relevant accounting year had ended, and the amendment brought by the Finance Act, 2006, regarding the timing of application filing did not apply to the assessment year 2004-05. The Tribunal agreed with the Authorized Representative that the 14th Proviso inserted in Section 10(23C)(vi) for exemptions made after 1st June 2006 did not apply to this case.
Issue 3: Status of Registration and Pending Application
The Tribunal observed that the assessee had been granted registration u/s 12A from 1st April, 2004, making it eligible for exemption u/s 10(23C)(vi). However, there was no evidence presented to show the status of the application with the Department or any action taken by the competent authorities regarding the approval u/s 10(23C)(vi). Due to the lack of clarity on the application's status, the matter was remanded back to the CIT(A) for further verification and decision.
In conclusion, the Tribunal allowed the Revenue's appeal for statistical purposes and directed the CIT(A) to investigate the factual position regarding the pending application of the assessee before the competent authorities for grant of approval u/s 10(23C)(vi) and to decide the issue afresh.
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2011 (4) TMI 1492
Issues involved: Interpretation of Section 65(105)(zh) of the Finance Act, 1994 regarding online information and database access and/or retrieval services.
Summary:
The High Court of Karnataka heard an appeal filed by the revenue challenging a Tribunal order that online information and database access services provided by the assessee were not covered under Section 65(75) of the Finance Act, 1994. The Tribunal held that private network services are distinct from online information services. The revenue appealed this decision, questioning the Tribunal's interpretation of Section 65(105)(zh) of the Finance Act.
The High Court considered the substantial question of law regarding the interpretation of Section 65(105)(zh) in light of a Board Circular. The Court noted that since the appeal was filed under Section 35G of the Act, it did not have jurisdiction to decide on issues related to excise duty or goods valuation, as per precedent. The Court held that such matters fall under the exclusive jurisdiction of the Apex Court, and therefore, the appeal was rejected as not maintainable. The Revenue was granted liberty to approach the Apex Court for further recourse, and the High Court registry was directed to return the certified copies of the orders to the Department for appeal filing.
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2011 (4) TMI 1491
Supreme Court condoned delay and admitted appeals in the case. (Citation: 2011 (4) TMI 1491 - SC Order) Judges: Mr. D.K. Jain and Mr. H.L. Dattu.
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2011 (4) TMI 1490
Offence under PMLA - Whether the order of the Adjudicating Authority confirming the provisional attachment order is valid - In present case, During investigation, it was found that the fake and forged documents of export were prepared with the help of his two employees and two customs broker and no actual export was ever done by Shri Gopinath Das or his company against the export invoices/documents submitted to banks for discounting and obtaining funds from SBI and OBC. The funds so fraudulently obtained through acts of forgery u/s 467 of IPC are proceeds of crime and it was found that out of these proceeds of crime, immovable properties were acquired and mortgaged with the appellant as security to obtain loan. Statement of Sh. Gopinath Das was recorded by the respondent u/s 50 of the Act, in the statement, he inter-alia stated that he has purchased various properties out of funds consisting of proceeds of crime and these properties were mortgaged with the Syndicate Bank. The properties owned by M/s. Himalayan Projects Pvt. Ltd. of which Shri Gopinath Das is the Managing Director were attached and complaint was filed with the Adjudicating Authority u/s 5(5) of the Act. The matter was placed before the Adjudicating Authority and the order of provisional attachment was confirmed by detailed order which is now being assailed before us in the present proceedings.
HELD THAT:- The appellant is not owner of the properties attached. The properties are in the name of Gopinath Das and M/s. Himalayan Projects Pvt. Ltd. Sh. Gopinath Das has been charged for commission of a schedule offence. Further, any person who is in possession of proceeds of crime and even if not charged for commission of a schedule offence is covered by the provisions of section 5(1) of the Act in view of the findings of this Tribunal in its Judgment in the case of Radha Mohan J. Lakhotia & Others vs. Dy. Director, [2010 (8) TMI 947 - BOMBAY HIGH COURT] where it has been held that the property which is proceeds of crime and is in possession of any person, even though he is not charged of having committed a scheduled offence, can be attached. Thus, we are in full agreement with the reasoning of the Adjudicating Authority given in its order in Original Complaint. Thus, the appellants are covered under the Act and attachment proceedings commenced by the authorities under the Act were valid proceedings.
question of prevalence of a subsequent legislation - The Securitisation Act has been enacted for the purpose of establishing a expeditious system for recovery of debts due to Banks and for matters connected therewith or incidental thereto. It only lays down a procedure for recovery of debts due to Banks. The Prevention of Money Laundering Act vests the statutory authorities with a power to forfeit proceeds of crime involved in money laundering to the State. There is thus no apparent conflict between the two statutes. The two statutes operate in their exclusive fields. The question is only who will have his first claim on any property where the claim of the State concur with the claim of any other person.
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2011 (4) TMI 1489
Issues involved: Appeal against order of Commissioner of Income(Appeals) for assessment year 2008-09 regarding deletion of addition of unsecured loan and deletion of addition of interest paid on late payment of TDS.
Issue 1 - Unsecured Loan:
The Revenue appealed against the deletion of addition of Rs. 7 lakhs on account of unsecured loan. The Revenue argued that the assessee failed to prove the genuineness of the transaction as no confirmation was filed before the Assessing Officer. The assessee, however, submitted the confirmation before the Commissioner of Income(Appeals) without it being confronted to the Assessing Officer. The Tribunal noted that the audited account clearly mentioned the loan of Rs. 7 lakhs taken from Allied Traders for bill discounting. The Tribunal found that the confirmation was not furnished before the Assessing Officer but was presented before the Commissioner of Income(Appeals) without allowing an opportunity for the Revenue to respond. Consequently, the Tribunal set aside the order of the Commissioner of Income(Appeals) and directed the assessee to provide the confirmation/confirmed account details with PAN of Allied Traders to the Assessing Officer for re-adjudication of the addition of Rs. 7 lakhs.
Issue 2 - Interest on Late Payment of TDS:
The second ground of appeal pertained to the deletion of the addition of Rs. 11,676 on account of interest paid on late payment of TDS. The Assessing Officer disallowed this interest, stating that interest on TDS is not an allowable expense. The Commissioner of Income(Appeals) allowed the deduction, equating it to interest received on tax refund. However, the Tribunal referred to a Supreme Court judgment which held that interest for late payment of direct taxes is not deductible. As the assessee paid interest due to late deposit of TDS, the disallowance of Rs. 11,676 was upheld.
In conclusion, the appeal of the Revenue was treated as partly allowed with respect to the disallowance of interest on late payment of TDS.
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2011 (4) TMI 1488
Issues Involved:
1. Locus Standi of the Appellant.
2. Validity of the Amendment to Clause 6.2.4 of BCCI Regulations.
3. Conflict of Interest.
4. Maintainability of the Suits.
Issue-wise Detailed Analysis:
1. Locus Standi of the Appellant:
The court examined whether the Appellant, a past president of BCCI, had the locus standi to file the suit. The definition of "Administrator" in Clause 1(n) of the BCCI Regulations includes past and present Presidents, Vice Presidents, Honorary Secretaries, and Treasurers. The court found that the Appellant, as a past president, is indeed an Administrator within the meaning of Clause 1(n). Therefore, the Appellant had the necessary locus standi to challenge the amendment to Clause 6.2.4 of the BCCI Regulations.
2. Validity of the Amendment to Clause 6.2.4 of BCCI Regulations:
The court scrutinized the amendment process of Clause 6.2.4, which excluded IPL, Champions League, and Twenty20 matches from the prohibition against administrators having commercial interests. The Appellant argued that the amendment was introduced to benefit Respondent No. 2, who had a commercial interest in the IPL team Chennai Super Kings. The court noted that the amendment was passed unanimously by the General Body of BCCI, following the proper procedure. Therefore, the amendment was found to be valid and not contrary to the provisions of the Tamil Nadu Societies Registration Act, 1975.
3. Conflict of Interest:
The Appellant contended that Respondent No. 2, as an office bearer of BCCI and Vice Chairman and Managing Director of India Cements Ltd., which owned Chennai Super Kings, had a direct conflict of interest. The court examined the concept of conflict of interest and concluded that the participation of Respondent No. 2 in the IPL auction, while holding an office in BCCI, created a situation of potential conflict of interest. However, the court also noted that the amendment to Clause 6.2.4 was made to address the commercial nature of IPL and Champions League, which were not covered by the original regulations. The court found that there was no evidence of actual financial loss to BCCI due to the alleged conflict of interest.
4. Maintainability of the Suits:
The court analyzed whether the suits filed by the Appellant were maintainable. The Appellant argued that the suits were filed in his capacity as an Administrator of BCCI. The court held that the Appellant, being a past president and thus an Administrator, had the right to file the suits. The court also considered whether the suits were representative actions under Order I Rule 8 of the Code of Civil Procedure or public interest suits under Section 91 of the Code of Civil Procedure. The court concluded that the suits were maintainable as they were filed by the Appellant in his individual capacity as an Administrator.
Conclusion:
The court dismissed the appeals, upholding the validity of the amendment to Clause 6.2.4 and rejecting the claim of conflict of interest. The court found that the Appellant had the locus standi to file the suits, but the amendment was validly passed, and there was no evidence of actual financial loss to BCCI due to the alleged conflict of interest. The suits were deemed maintainable, but the interim relief sought by the Appellant was denied.
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2011 (4) TMI 1487
Issues Involved:1. Maintainability of the suit against the 2nd defendant on the Original Side of the Madras High Court. Summary:Issue 1: Maintainability of the suit against the 2nd defendant on the Original Side of the Madras High CourtWhether suit against 2nd defendant/2nd respondent State Bank of India, Tirupur is maintainable on the Original Side of the Madras High Court is the point arising for consideration in this appeal, which arises out of an order of learned single Judge dated 7.7.2010 in Application No.805 of 2010 in C.S.D.No.12201 of 2008 declining to grant leave to sue the 2nd respondent. The appellants/plaintiffs filed the suit in C.S.D.No.12201 of 2008 for recovery of a sum of Rs. 40,90,020.95 with interest at the rate of 18 percent per annum. The appellants availed loan/credit facilities from the 2nd respondent/2nd defendant and provided securities including equitable mortgage of properties in Chennai and Tirupur. Due to market slump, the appellants defaulted, leading to a One Time Settlement with the 2nd respondent Bank. The appellants settled their dues and closed the account on 21.7.1998. Subsequently, a foreign buyer went into liquidation, and the appellants' claim was accepted by the Norway Company, which paid Rs. 19,64,183 to the 2nd defendant Bank. The appellants claimed this amount, but the Bank adjusted it towards their claim. The appellants filed W.P.No.10294 of 2000 seeking certiorarified mandamus to quash the Bank's communication and release the amount with interest. The writ petition was dismissed, and the appellants were directed to approach the Civil Court. The appellants then filed the suit in C.S.D.No.12201 of 2008 against the 2nd defendant for recovery of Rs. 40,90,020.95 with interest. The 2nd defendant resisted the grant of leave, contending that the major part of the cause of action arose in Tirupur, where the transactions occurred. The learned single Judge held that the major part of the cause of action arose in Tirupur, and the suit was not maintainable on the Original Side of the High Court. The appellants argued that part of the cause of action arose in Chennai, where the Head Office approved the One Time Settlement. The respondents contended that the transactions were with the Tirupur Branch, and no part of the cause of action arose in Chennai. For determining jurisdiction, the averments in the plaint are considered. Clause 12 of the Letters Patent states that suits can be instituted where the cause of action arose wholly or in part. The expression "cause of action" means every fact necessary for the plaintiff to prove to support their right to judgment. The Supreme Court in various cases emphasized that the cause of action must include some act done by the defendant giving the plaintiff the right to claim relief. The learned single Judge rightly held that the suit is not maintainable on the Original Side of the Madras High Court as the integral facts constituting the cause of action arose in Tirupur. The appeal is dismissed, giving liberty to the appellants/plaintiffs to move the concerned Court. In the result, the Appeal is dismissed giving liberty to the appellants/plaintiffs to move the concerned Court. However, there is no order as to costs.
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2011 (4) TMI 1486
Issues involved: Disallowance of amount paid to Employees' Recreation Club u/s 40A(9) of the Income-tax Act for A.Y. 2006-07.
Summary:
The appeal by the revenue challenged the disallowance of the amount paid to the Employees' Recreation Club u/s 40A(9) of the Income-tax Act for A.Y. 2006-07. The club was formed by the employees of a government company to provide recreation facilities to all permanent employees. The AO disallowed the claim, but the CIT(A) allowed it, leading to the revenue's appeal before the tribunal.
The Learned AR for the assessee cited the judgment of the Hon'ble High Court of Mumbai in CIT Vs Bharat Petroleum Corporation Ltd., where a similar payment to a club formed for employee welfare was found allowable. The Learned DR relied on the AO's order.
Upon review, the tribunal found the dispute centered on the expenditure incurred by the assessee for the employees' recreation club. While the High Court judgment supported reimbursement of expenses by the club, it was unclear whether the payment made by the assessee was reimbursement or a general contribution. Therefore, the tribunal set aside the order and remanded the matter to the AO for a fresh examination in light of the High Court judgment and after providing a hearing to the assessee.
The appeal of the revenue was allowed for statistical purposes. The decision was pronounced on 27.04.2011.
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2011 (4) TMI 1485
Issues involved:
The issues involved in this case are:
1. Whether the CESTAT was correct in ordering to fix the separate/individual liability of the seven persons involved in perpetuating fraud and causing revenue loss.
2. Whether the CESTAT was correct in ordering denovo proceedings due to alleged irregularities in the claimed rebate and failure to supply demanded documents.
Issue 1:
The Hon'ble CESTAT was questioned on the correctness of ordering separate liability for the seven individuals involved in the fraudulent rebate claim. The law distinguishes between levy and collection of duty, with the former arising initially under the Central Excise Act. As the acts of the seven individuals were intertwined in defrauding the revenue, determining individual liability was deemed challenging. The CESTAT was asked to consider the joint and several liability of the wrongdoers, emphasizing that fraud and forgery vitiate everything, making all perpetrators jointly and severally liable for the damage caused.
Issue 2:
The appropriateness of the CESTAT's decision to order denovo proceedings was questioned based on the alleged failure to supply requested documents. The Adjudicating Authority had ordered the recovery of the fraudulently claimed rebate amount, interest, and penalties. The CESTAT remanded the proceedings to the Adjudicating Officer to determine liability and penalty separately for each individual involved. The Tribunal emphasized the need for supplying relied-upon documents and ensuring the respondents had a fair opportunity to present their case before a final decision was made.
The Tribunal's decision to remand the matter for fresh consideration regarding individual liability and the necessity of supplying relied-upon documents was upheld. The Tribunal's directive for the revenue to provide the necessary documents and allow the respondents a fair chance to present their case was deemed essential to uphold principles of natural justice. The dismissal of all Tax Appeals was based on the similarity of facts with previous orders, leading to the conclusion that the appeals lacked merit and were therefore dismissed.
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2011 (4) TMI 1484
Issues Involved:1. Non-allowance of deduction u/s 80QQB for royalty received from outside India. 2. Procedural requirement of filing Form No. 10CCD along with the return of income. 3. Powers of CIT(A) in admitting additional evidence and granting relief. Summary:Issue 1: Non-allowance of deduction u/s 80QQB for royalty received from outside IndiaThe assessee, a reader at the University of Delhi and author of the book "Difficult Daughters," claimed a deduction u/s 80QQB amounting to Rs. 1,63,075 for royalty received from outside India. The deduction was disallowed by the AO and confirmed by the CIT(A) on the grounds that the requisite certificate in Form No. 10CCD was not filed along with the return of income. Issue 2: Procedural requirement of filing Form No. 10CCD along with the return of incomeThe assessee argued that the certificate in Form No. 10CCD was received after the filing of the return of income and could not be submitted on time due to the illness of her tax counsel. The CIT(A) admitted the certificate under r. 46A(4) but upheld the disallowance, stating that the statutory requirement u/s 80QQB(3) mandates filing the certificate along with the return. The CIT(A) noted that the assessee could have waited to file the return u/s 139(4) after receiving the certificate. Issue 3: Powers of CIT(A) in admitting additional evidence and granting reliefThe assessee's representative cited various case laws, including CIT v. Trehan Enterprises and CIT v. Hardeodas Agarwalla Trust, arguing that procedural provisions should not be construed as mandatory if defects can be rectified subsequently. The Tribunal agreed, stating that filing the certificate is a procedural provision and should not be mandatory. The CIT(A) has plenary powers similar to the AO and should have granted relief based on the admitted certificate. The Tribunal directed that the deduction u/s 80QQB be allowed, emphasizing that procedural provisions are meant to advance justice. Conclusion:The Tribunal allowed the appeal, directing the deduction u/s 80QQB to be granted to the assessee, as the procedural lapse of not filing Form No. 10CCD with the return was rectified during appellate proceedings.
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2011 (4) TMI 1483
Issues Involved:
1. Disallowance of warranty costs.
2. Disallowance of telephone expenses.
3. Disallowance of traveling expenses.
4. Disallowance of stamp duty paid in cash u/s 40A(3).
5. Disallowance of prior period expenses.
6. Deletion of addition on account of bad debts.
Summary:
1. Disallowance of Warranty Costs:
The assessee claimed a provision for warranty costs amounting to Rs. 10,58,327/-. The AO disallowed this amount, considering it a contingent liability, as the assessee, being a trader and not a manufacturer, did not provide evidence of incurring such expenses. The Tribunal upheld the disallowance but allowed a partial relief, reducing the disallowance to Rs. 1,38,869/-, the actual amount debited to the profit and loss account.
2. Disallowance of Telephone Expenses:
The AO disallowed Rs. 56,102/- out of telephone expenses, which the CIT(A) reduced to Rs. 30,000/-. The Tribunal upheld the CIT(A)'s decision, noting that mobile phones used by the Director or employees could be for business purposes even if registered at different addresses.
3. Disallowance of Traveling Expenses:
The AO disallowed Rs. 2,00,000/- on a lumpsum basis without specific disallowable items. The Tribunal found the disallowance unjustified, considering the nature of the assessee's business and turnover, and deleted the disallowance.
4. Disallowance of Stamp Duty Paid in Cash u/s 40A(3):
The AO disallowed Rs. 29,045/- for cash payments exceeding the limit prescribed u/s 40A(3). The Tribunal remanded the issue back to the AO for re-examination, as the assessee claimed the expenditure was for stamp duty on a loan agreement, which was not explained earlier.
5. Disallowance of Prior Period Expenses:
The AO disallowed Rs. 7,236/- as prior period expenses. The Tribunal upheld the disallowance, noting that the assessee failed to establish that the liability for such expenses accrued during the relevant accounting year.
6. Deletion of Addition on Account of Bad Debts:
The CIT(A) deleted an addition of Rs. 5,72,626/- on account of bad debts. The Tribunal upheld this deletion, citing the Supreme Court's decision in T.R.F. Ltd. vs. CIT, which states that post-1-4-1989, it is sufficient if the bad debt is written off as irrecoverable in the accounts.
Conclusion:
The assessee's appeal was partly allowed, providing relief on some disallowances, while the Revenue's appeal was dismissed. The order was pronounced in Open Court on 29th April, 2011.
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2011 (4) TMI 1482
Issues involved: Appeal against penalty imposed u/s 271(1)(c) of the I.T. Act for alleged excess claim of depreciation and interest in power generation unit.
Summary:
Issue 1: Alleged excess claim of depreciation and interest
The appeal was filed against the penalty imposed u/s 271(1)(c) of the I.T. Act for an alleged excess claim of depreciation and interest in the power generation unit named "Kalani Wind-farm." The assessee contended that the penalty was unjust as all information was disclosed at the time of filing the return, and there was no intention to conceal income or provide inaccurate particulars. The Assessing Officer argued that the excess claim of depreciation amounted to furnishing inaccurate particulars. The Tribunal considered the facts and legal precedents, including the decision in CIT vs. Reliance Petro Products Pvt. Ltd., and held that a mere wrong claim does not automatically lead to penalty u/s 271(1)(c). The Tribunal found that there was no deliberate concealment or furnishing of inaccurate particulars by the assessee, and hence, the penalty was deleted.
In conclusion, the Tribunal allowed the appeal of the assessee, and the penalty imposed by the Assessing Officer was deleted.
Order pronounced in the open Court on 21st April, 2011.
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2011 (4) TMI 1481
Contempt proceedings - order of sentence against the appellant / Commissioner of police - Allegation that, Respondent No. 2 (IO) made Incorrect/false statement for cancellation of bail in the knowledge of Appellant - Offence punishable u/s 2 (c) of the Contempt of Courts Act, 1971 (the Act) - Respondent No. 1 was elected as Member of Legislative Assembly (`MLA') - Large scale violence and several attempts of booth capturing were reported on the day of election - HELD THAT:- The contempt proceedings being quasi criminal in nature, burden and standard of proof is the same as required in criminal cases. The charges have to be framed as per the statutory rules framed for the purpose and proved beyond reasonable doubt keeping in mind that the alleged contemnor is entitled to the benefit of doubt. Law does not permit imposing any punishment in contempt proceedings on mere probabilities, equally, the court cannot punish the alleged contemnor without any foundation merely on conjectures and surmises.
The analysis of affidavits of the Inspector of Police, Assistant Commissioner and Deputy Commissioner of Police show that there is no acceptable material that the affidavit containing wrong information filed by Respondent No. 2 for cancellation of bail and stay of bail order was made at the instance of the Commissioner of Police. We have already pointed out that the appellant has assumed charge as the Commissioner of Police only on 17.05.2001 i.e. after formation of the new government. The violence in respect of election that took place on 10.05.2001, particularly, the incident relating to Respondent No. 1 was one week before his taking over charge as Commissioner of Police.
When a city like Chennai is managed by several police officers from the level of police constable to the Commissioner of Police, in the absence of specific reference about consultation with the Commissioner of Police or direction to the two officers, namely, Assistant Commissioner of Police and Deputy Commissioner of Police merely because both of them attended the office of the Public Prosecutor for preparation of an application for cancellation of bail based on the affidavit of the Inspector of Police, it cannot be presumed and concluded that the appellant was responsible for giving incorrect information by Respondent No. 2 before the High Court.
We have pointed out that while dealing with criminal contempt in terms of Section 2(c) of the Act, strict procedures are to be adhered. The person filing an application or petition before the court does not become a complainant or petitioner in the proceedings. He is just an informer or relator. His duty ends with the facts being brought to the notice of the court. It is thereafter for the court to act on such information or not. [Vide Om Prakash Jaiswal vs. D.K. Mittal [2000 (2) TMI 831 - SUPREME COURT], Further Section 15 of the Act as well as the Madras High Court Contempt of Court Rules insist that, particularly, for initiation of criminal contempt, consent of the Advocate General is required. Any deviation from the prescribed Rules should not be accepted or condoned lightly and must be deemed to be fatal to the proceedings taken to initiate action for contempt.
In the present case, the above provisions have not been strictly adhered to and even the notice issued by the then Division Bench merely sought for explanation from the appellant about the allegations made by Respondent No. 1. We have already noted that (Respondent No. 2) Inspector of Police, who made an incorrect/false statement for cancellation of bail has been rightly punished by the Division Bench of the High Court and this Court affirmed the same by dismissing his special leave petition.
Hence, the order of the HC convicting the appellant u/s 2(c) and sentencing him u/s 12 of the Act to undergo simple imprisonment for seven days is set aside. The appeal is allowed.
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2011 (4) TMI 1480
Issues:
- Appeal against Company Law Board's order to hear CA No.210/11 along with the company petition.
- Interpretation of Section 10E(4C) of the Companies Act, 1956 regarding the powers of the Company Law Board.
- Determination of preliminary issues by the Company Law Board.
- Application of Code of Civil Procedure to proceedings before the Company Law Board.
Analysis:
The appeal in question challenges the Company Law Board's decision to hear CA No.210/11 alongside the company petition. The appellant argues that their application falls under Order 7 Rule 11 of the Code of Civil Procedure and should be heard first. The respondent, however, points to a previous court order directing the Board to conclude the main proceeding by a specific date. The appellant's motive is questioned, suggesting the application was filed to delay proceedings. Reference is made to a judgment from the Andhra Pradesh High Court regarding the powers of the Company Law Board under Section 10E(4C) of the Companies Act.
The judgment highlights the distinction between power and procedure, emphasizing that while certain coercive powers are conferred on the Company Law Board, procedural rules of justice are separate. Section 141 of the Code of Civil Procedure mandates that civil procedure rules apply unless expressly excluded by statute. It is argued that the Company Law Board can determine preliminary issues, contrary to the interpretation presented in the Andhra Pradesh High Court judgment.
The application before the Company Law Board raises specific issues seeking dismissal of the company petition based on finalized decisions and abandonment claims. The Board is instructed to dismiss the company petition if the appellant demonstrates grounds for dismissal, or proceed with the petition if not. The importance of a prompt decision on CA No.210/11 is stressed to adhere to the earlier court order's timeline. The appeal is admitted, and the matter is disposed of accordingly with the parties' consent, waiving any further undertakings.
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2011 (4) TMI 1479
Issues Involved:
1. Deduction of Liquidated Damages
2. Extension of Time and Acquiescence
3. Legal Interpretation of Liquidated Damages Clauses
4. Proof of Actual Loss
5. Role of Arbitrator and Judicial Review
Summary:
1. Deduction of Liquidated Damages:
The Appeal challenges the concurrent findings of the Arbitral Tribunal and the learned Single Judge regarding the deduction of Rs. 1,32,04,290/- from the Respondent's Running Bills as liquidated damages. The Appellant had placed a Purchase Order on the Respondent for the supply of Tubular Towers, with specific delivery deadlines. Clauses 16.1 and 16.2 of the Contract stipulated the imposition and recovery of liquidated damages for delayed deliveries.
2. Extension of Time and Acquiescence:
The Appellant argued that since it had granted an extension of time for supply subject to liquidated damages and the Respondent did not object, the claim was untenable. The Court, however, opined that failure to record an objection does not inexorably lead to the conclusion that any subsequent demur is unjusticiable. The Court emphasized that acquiescence under duress or coercion can be withdrawn, and the Arbitral Tribunal can determine if the accord and satisfaction were free of extraneous circumstances.
3. Legal Interpretation of Liquidated Damages Clauses:
The Court referred to several precedents, including ONGC -vs- Saw Pipes, to elucidate that liquidated damages cannot be punitive and actual loss need not be proved to sustain a claim for liquidated damages. However, the presence of a liquidated damages clause does not automatically entitle a party to claim damages without proving some loss attributable to the breach.
4. Proof of Actual Loss:
The Respondent contended that the Appellant did not lead evidence to prove actual damages resulting from the delay. The Court noted that the Arbitrator found no delay attributable to the Respondent and no damages resulted from the delayed completion of supplies. These findings were based on documentary evidence and were not perverse, thus not warranting interference.
5. Role of Arbitrator and Judicial Review:
The Court highlighted that its role, as well as that of the learned Single Judge, is not to exercise appellate powers but to ensure that the Arbitrator's conclusions are not perverse or repugnant to public policy. The Arbitrator's findings, based on evidence, were deemed sustainable, and the Court refrained from interfering.
Conclusion:
The Appeal was dismissed as devoid of merits, with no justiciable question arising u/s 34 or u/s 37 of the Arbitration & Conciliation Act. The Court upheld the Arbitrator's findings and the learned Single Judge's decision, emphasizing the limited scope of judicial review in arbitration matters.
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2011 (4) TMI 1478
The appeal by the assessee against the order dated 24.3.2010 for the Assessment Year 2006-07 was dismissed by the ITAT, Mumbai as the assessee did not appear for the hearing and showed lack of interest in pursuing the appeal. The assessee has the option to request the Tribunal to reconsider the dismissal if there is a valid reason for non-appearance.
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