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2012 (4) TMI 784
Issues involved: Interpretation of Cenvat Credit Rules regarding the classification of equipment used in the manufacture of sponge iron as either inputs or capital goods, and the applicability of an amendment to Rule 2(c) made on 22-6-2010.
Interpretation of Cenvat Credit Rules:
The Appellant, a manufacturer of sponge iron, had taken cenvat credit on a "Tipper chassis" used within the factory. The Revenue demanded reversal of the credit, stating that the goods could not be considered as capital goods or inputs for the manufacture of sponge iron. The Counsel for the appellant argued that an amendment to Rule 2(c) of the Cenvat Credit Rules in 2010 should apply to equipment received even prior to that date. The Revenue contended that the amendment would only apply to capital goods received after the specified date. The Tribunal considered the definitions of "inputs" and "capital goods" under the Cenvat Credit Rules, highlighting that inputs are goods consumed in the manufacture of excisable products, while capital goods are assets used in the factory for production. It was concluded that the "tipper chassis," being a capital asset, cannot be classified as an input. Additionally, since Chapter 87 was not included in the list of capital goods during the relevant period, credit could not be granted on the item as a capital good. The Tribunal dismissed the appeal on this main issue.
Reduction of Penalty:
The Appellant requested a reduction in the penalty amount imposed under Rule 15 of the Cenvat Credit Rules, which mandates a penalty equal to the duty involved. The Tribunal acknowledged the appellant's plea and decided to reduce the penalty from the initial amount to &8377; 15,000. The appeal was dismissed except for the reduction in penalty granted. The stay petition and appeal were disposed of accordingly.
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2012 (4) TMI 783
Issues Involved:
1. Quashing of the First Information Report (FIR) u/s 482 of the Code of Criminal Procedure, 1973.
2. Allegations of offences under sections 403, 406, 415, 418, 420, and 424 of the Indian Penal Code.
3. Determination of whether the company is a "vanishing company."
4. Examination of the basic ingredients of the alleged offences.
5. Delay in filing the FIR.
6. Role and liability of individual directors.
Summary:
Quashing of the FIR:
By these applications u/s 482 of the Code of Criminal Procedure, 1973, the applicants sought quashing of the FIR registered at Navrangpura Police Station I-C.R. No. 846 of 2003. The applicants, who are directors of the company, contended that the FIR is based on the erroneous classification of their company as a "vanishing company" and lacks substantive allegations.
Allegations of Offences:
The FIR alleged that the directors/promoters/signatories to the prospectus committed offences under sections 403, 406, 415, 418, 420, and 424 of the Indian Penal Code by inducing the public to invest funds and misappropriating those funds. The applicants argued that the FIR did not satisfy the basic ingredients of these offences, particularly the intention to cheat at the time of the transaction.
Vanishing Company:
The applicants pointed out that their company, M/s. Komeon Communications Ltd., was wrongly listed as a vanishing company. They provided evidence that the company was always at its registered address and had communicated with SEBI and the Registrar of Companies. The Task Force Committee had removed the company from the vanishing companies list, effective from 8.3.2010.
Examination of Alleged Offences:
The court examined the allegations in the FIR and found them vague and general. There were no specific allegations of false statements in the prospectus or how the funds were misappropriated. The court noted that mere breach of contract does not constitute an offence of cheating unless fraudulent or dishonest intention is shown at the inception.
Delay in Filing the FIR:
The applicants argued that the FIR was barred by delay, as the prospectus was issued on 17th July 1996, and the FIR was lodged on 24th September 2003, more than seven years later. The court acknowledged this delay as a significant factor.
Role and Liability of Individual Directors:
One applicant argued that he had resigned as a director on 26th December 1996 and had no role in the alleged offences. The court noted the lack of specific allegations against him in the FIR.
Conclusion:
The court found that the allegations in the FIR did not constitute the offences alleged under the Indian Penal Code. The FIR was based on the company's erroneous classification as a vanishing company without due inquiry. The court held that continuing the proceedings would amount to an abuse of process of law and quashed the FIR registered vide Navrangpura Police Station I-C.R. No. 846 of 2003. Rule was made absolute in both applications.
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2012 (4) TMI 782
Issues Involved:
1. Assessee's claim for depreciation on technical knowhow and right to use trademark.
2. Addition on account of recovery of debts claimed as bad.
3. Reassessment and additions made u/s 143(3) read with section 147.
Summary:
1. Depreciation on Technical Knowhow and Right to Use Trademark:
The main issue in ITA No. 6719/Mum/2008 for AY 2005-06 was the assessee's claim for depreciation on technical knowhow and right to use trademark. The assessee, a company engaged in manufacturing and selling meters, acquired the business of M/s Asia Brows Breweries Ltd. (ABB) and revalued the assets, including technical knowhow and trademark. The AO disallowed the depreciation claim, stating these assets were not listed in the transfer agreement and had no cost of acquisition. The CIT(A) allowed the claim, noting the excess consideration paid was for intangible assets, which were acquired as per the agreement. The ITAT upheld the CIT(A)'s decision, confirming the intangibles were transferred and the consideration paid was for their acquisition.
2. Recovery of Debts Claimed as Bad:
The AO added Rs. 66,34,889/- recovered against bad debts on a protective basis, doubting the additional provision for bad debts made by the assessee. The CIT(A) deleted this addition, stating the provision was not claimed as a deduction, and the recovery was a capital receipt not chargeable to tax. The ITAT upheld this decision, agreeing the recovery did not constitute taxable income.
3. Reassessment and Additions u/s 143(3) read with section 147:
For AY 2004-05, the AO reopened the assessment and disallowed depreciation on technical knowhow and trademarks, and additional provision for bad debts, also adding these to the book profit u/s 115JB. The CIT(A) deleted these additions, following the order for AY 2005-06. The ITAT upheld the CIT(A)'s decision, confirming the disallowances were not justified. For AY 2006-07 and 2007-08, similar issues were decided in favor of the assessee, following the decision for AY 2005-06.
Cross Objection:
The assessee's cross objection challenging the validity of reassessment for AY 2004-05 was dismissed as infructuous since the CIT(A)'s order deleting the additions was upheld.
Conclusion:
All four appeals of the Revenue and the cross objection of the assessee were dismissed. The ITAT upheld the CIT(A)'s decisions, allowing depreciation on technical knowhow and trademarks, and deleting additions related to bad debts recovery.
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2012 (4) TMI 781
Issues Involved: Appeal against order of Commissioner of Income Tax (Appeals)-II, Ludhiana u/s 143(3) of the Income-tax Act for assessment year 2006-07 regarding disallowance of CENVAT credit and interest amount.
Grounds of Appeal:
1. Challenge to disallowance of &8377; 35,94,577/- as irrecoverable CENVAT credit.
2. Challenge to disallowance of &8377; 17,064/- from interest account.
Facts:
The assessee claimed &8377; 35,94,577/- as business expenditure for writing off irrecoverable CENVAT credit due to closure of manufacturing unit. Assessing Officer disallowed the claim stating it did not fall under allowable deductions. CIT (Appeals) upheld the disallowance.
Assessee's Contention:
Assessee argued that the CENVAT credit write-off was a legitimate business expense under section 37 of the Act as it was reflected in the Balance Sheet.
Revenue's Argument:
Revenue contended that the write-off was merely a profit reduction entry and not a valid business expenditure for the year. They argued it was not related to the business operations.
Judgment:
The Tribunal observed that the CENVAT credit was accumulated over years due to higher excise duty on raw material compared to finished products. After closing the manufacturing unit, the unadjusted credit became irrecoverable. The Tribunal held that under section 37(1) of the Act, the write-off was allowable as business expenditure since it met the conditions of being wholly and exclusively for business purposes. The claim was allowed, and the appeal was partly allowed.
Conclusion:
The Tribunal directed the Assessing Officer to allow the write-off of &8377; 35,94,577/- as business expenditure related to the closure of manufacturing activities. The second ground of appeal was dismissed as not pressed.
Separate Judgment by Judges:
No separate judgment was delivered by the judges in this case.
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2012 (4) TMI 780
Issues Involved:
1. Imposition of penalty u/s 15HA and 15HB of the SEBI Act, 1992.
2. Alleged violation of regulations 3 and 4 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (FUTP Regulations).
3. Alleged breach of the code of conduct prescribed under SEBI (Stock Brokers and Subbrokers) Regulations, 1992.
Summary:
Issue 1: Imposition of penalty u/s 15HA and 15HB of the SEBI Act, 1992
The appellant, a member broker of the Bombay Stock Exchange (BSE), was penalized Rs. 3 lacs: Rs. 2 lacs u/s 15HA for violating FUTP Regulations and Rs. 1 lac u/s 15HB for breaching the code of conduct under the Broker's Regulation. The adjudicating officer found the appellant guilty of artificially inflating the price of the scrip of Oregon Commercial Limited during the investigation period from November 21, 2008, to June 08, 2009.
Issue 2: Alleged violation of regulations 3 and 4 of the FUTP Regulations
The appellant, along with other brokers, was accused of placing buy orders at prices significantly above the last traded price, thereby artificially propping up the scrip's price. The adjudicating officer concluded that the appellant knowingly assisted in the artificial inflation of the scrip's price, thus violating regulations 3 and 4 of the FUTP Regulations. The appellant's defense that trading above the last traded price is not an offense was rejected, as the trading pattern indicated a well-thought-out plan to inflate the share price.
Issue 3: Alleged breach of the code of conduct prescribed under SEBI (Stock Brokers and Subbrokers) Regulations, 1992
The appellant was also found guilty of violating clauses 1 and 2 of Schedule II of the code of conduct under regulation 7 of the Broker's Regulations. The adjudicating officer noted that the appellant failed to exercise due diligence and care, as evidenced by the repeated fictitious/self trades executed by one of its employees. The appellant's argument that the volume of trades was negligible and that it acted at the behest of the client was not accepted.
Conclusion:
The Tribunal upheld the finding that the appellant violated regulations 3 and 4 of the FUTP Regulations and the code of conduct under the Broker's Regulations. However, considering the facts, the penalty for violating FUTP Regulations was reduced from Rs. 2 lacs to Rs. 1 lac, while the penalty of Rs. 1 lac for breaching the code of conduct was upheld. The appeal was partly allowed, reducing the total penalty to Rs. 2 lacs.
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2012 (4) TMI 779
Issues involved: Acceptance of recommendations from the Report of Central Empowered Committee, setting production ceilings for iron ore, approval of guidelines for R&R Plans, utilization of iron ore for local steel plants, continuation of e-auction system for iron ore sale, payment mechanism for e-auction sales, responsibilities of the Monitoring Committee, continuation of mining operations for M/s NMDC, and implementation of Reclamation and Rehabilitation Plans.
Acceptance of Recommendations: The Supreme Court accepted the recommendations from the Report of Central Empowered Committee, including fixing boundaries of mining leases, setting production ceilings for iron ore in different districts, approving guidelines for R&R Plans, utilizing iron ore for local steel plants, continuing e-auction system for iron ore sale, and specifying the responsibilities of the Monitoring Committee.
Utilization of Iron Ore: The judgment directed that the iron ore available should be used to meet the requirements of steel plants in Karnataka and neighboring states, with exports permitted only for surplus material not purchased by local industries at or above the average price realized by the Monitoring Committee. Additionally, exports of processed iron ore from beneficiation plants were not allowed.
E-Auction System: The sale of iron ore was mandated to continue through e-auction, overseen by the Monitoring Committee. The quantity, grade, lot size, base price, and delivery period for e-auction were to be determined by lease holders, with 90% of the sale price paid directly to them and the remaining 10% deposited with the Monitoring Committee.
Responsibilities of Monitoring Committee: The Monitoring Committee was tasked with monitoring R&R Plan implementation, ensuring compliance with environmental and statutory approvals, verifying adherence to approved Mining Plans and production ceilings, maintaining safety zones, and enforcing applicable conditions. Any lease found violating conditions could face closure or termination.
Continuation of Mining Operations: Mining operations for M/s NMDC were permitted to continue, subject to the payment of penalty/compensation as applicable for leases falling in "Category-B." The existing Members of the Monitoring Committee were to continue for the next two years.
Implementation of R&R Plans: The judgment mandated the immediate start of Reclamation and Rehabilitation Plans for all categories, with supervision by the Central Empowered Committee. The implementation, monitoring, and preparation of R&R Plans were to be carried out under their oversight.
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2012 (4) TMI 778
Petition for Sufficiency of Quantum of compensation - Motor Accident Claims Tribunal - the Motor Vehicles Act, 1988I (the Act) - the appellant’s husband died in a road accident when the Maruti car in which he was travelling with husband of respondent No. 2 and the father of respondent Nos. 3 and 4 went out of control. husband of respondent No. 2, who was driving the vehicle also suffered multiple injuries and died on the spot.
HELD THAT:- It is also not possible to approve the view taken by the Tribunal which has been reiterated by the High Court albeit without assigning reasons that the deceased would have spent 1/3rd of his total earning, i.e., ₹ 500/-, towards personal expenses. It seems that the Presiding Officer of the Tribunal and the learned Single Judge of the High Court were totally oblivious of the hard realities of the life. It will be impossible for a person whose monthly income is ₹ 1,500/- to spend 1/3rd on himself leaving 2/3rd for the family consisting of five persons. Ordinarily, such a person would, at best, spend 1/10th of his income on himself or use that amount as personal expenses and leave the rest for his family. The Tribunal’s observation that the two sons of the appellant cannot be treated dependant on their father because they were not minor is neither here nor there. In the cross-examination of the appellant, no question was put to her about the source of sustenance of her two sons. Therefore, there was no reason for the Tribunal to assume that the sons who had become major can no longer be regarded dependant on the deceased.
In the result, the appeal is allowed, the impugned judgment as also the award of the Tribunal are set aside and it is declared that the claimants shall be entitled to compensation of ₹ 2,94,840 [₹ 1,500 + 30% of ₹ 1,500 = ₹ 1,950 less 1/10th towards personal expenses = ₹ 1,755 x 12 x 14 =₹ 2,94,840]. The claimants shall also be entitled to ₹ 5,000/- for transportation of the body, ₹ 10,000/- as funeral expenses and ₹ 10,000/- in lieu of loss of consortium. Thus, the total amount payable to the claimants will be ₹ 3,19,840/-. The enhanced amount of compensation i.e. ₹ 1,42,340/- (₹ 3,19,840 - ₹ 1,77,500) shall carry interest of 7 per cent from the date of application till realisation.
Respondent No.1 – Insurance Company is directed to pay to the appellant the total amount of compensation within a period of three months by getting prepared a demand draft in her name which shall be delivered to her at the address given in the claim petition filed before the Tribunal. While doing so, respondent No.1 shall be free to deduct the amount already paid to the appellant.
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2012 (4) TMI 777
Issues involved: Petition for grant of registration u/s 12AA of the Income-tax Act, 1961 retrospectively.
Summary:
The Appellate Tribunal ITAT CHENNAI considered a miscellaneous petition filed by the Commissioner of Income-tax-I at Madurai regarding the order of the Tribunal dated 18-8-2011 in ITA No.1949(Mds)/2009. The Tribunal had directed the Commissioner to grant registration to the assessee retrospectively under section 12AA of the Income-tax Act, 1961. The Commissioner expressed difficulty in granting registration from the inception of the trust due to the six-year time limit for reopening cases. The Tribunal clarified that the time limit for reopening cases does not apply in this scenario as the registration is to be granted as a result of the Tribunal's order, and no specific time limit is prescribed under the Act for such cases. Therefore, the Commissioner of Income-tax was deemed to be within the law to grant retrospective registration as directed by the Tribunal. Consequently, the petition filed by the Commissioner of Income-tax was dismissed. The order was pronounced in open court on April 20, 2012, in Chennai.
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2012 (4) TMI 776
Issues Involved:1. Maintainability of applications under Order XXII Rule 10 CPC. 2. Validity of assignment and devolution of interest. 3. Locus standi of the original parties and their successors-in-interest. 4. Legal consequences of non-disclosure of changes in party constitution. Summary:Issue 1: Maintainability of Applications under Order XXII Rule 10 CPC Order XXII Rule 10 CPC deals with the procedure to be adopted by a civil court where one of the parties to the proceedings before it dies. It is premised on the pendency of the suit. In the present case, the two entities who were claimants before the Tribunal can be said to be in the position of plaintiffs in a suit. The applications by Alstom and GE Canada are held to be misconceived and deserve to be dismissed as such. Issue 2: Validity of Assignment and Devolution of Interest The SPA dated 19th July 1991 did constitute the assignment of rights and interest of MGI in the project in question in favour of GAE. Further, such assignment could not have been made without the consent of NHPCL and was, for the purposes of Order XXII Rule 10 CPC, not a valid assignment. The reference of the disputes to arbitration could have been made properly only by GAE. Issue 3: Locus Standi of the Original Parties and Their Successors-in-Interest On the date of reference of the disputes to the ICC, MGI had no right or interest in the disputes arising out of the contract dated 3rd August 1984. MGI could not have filed a suit against NHPCL after 19th July 1991. The position was no different from that of the death of a plaintiff in a suit which, in the absence of substitution of LRs during the pendency of the suit, abates. Issue 4: Legal Consequences of Non-Disclosure of Changes in Party Constitution There is no explanation whatsoever either in the application or in the rejoinder for this monumental lapse on the part of GAE to bring the above changes to the notice of the learned Tribunal. These facts did not surface till 2010 when applications were filed both before this court as well as the Division Bench by the two applicants Alstom and GE Canada. The procedure under Order XXII Rule 10 CPC is available only during the pendency of the suit. On this short ground, the applications by Alstom and GE Canada are held to be misconceived and deserve to be dismissed as such. Conclusion:Both applications are dismissed with no order as to costs due to the serious lapse in bringing the fundamental changes in the constitution of the original parties to the contract to the notice of the Tribunal and the court.
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2012 (4) TMI 775
Issues Involved:
1. Maintainability of the application for stay of the suit u/s 124 of the Trade Marks Act, 1999.
2. Requirement of leave of the Court before filing rectification proceedings.
3. Applicability of the principle of constructive res judicata.
Summary:
1. Maintainability of the Application for Stay of the Suit u/s 124 of the Trade Marks Act, 1999:
The defendant sought a stay of the suit u/s 124 of the Trade Marks Act, 1999, arguing that rectification proceedings against the plaintiff's trade mark MERONEM were pending. The plaintiff opposed, stating the application was not maintainable as it violated Section 124 of the Act, was time-barred, and was previously dismissed by the Court. The Court noted that the defendant had filed the rectification in 2005, and the application for stay was not maintainable as it was filed without the Court's leave.
2. Requirement of Leave of the Court Before Filing Rectification Proceedings:
The Court emphasized that u/s 124(b) CPC, if rectification proceedings are not pending, the party seeking rectification must obtain the Court's prima-facie satisfaction regarding the invalidity of the registration. The Court referenced previous judgments, including Kedar Nath v. Monga Perfumary and Flour Mills and Patel Field Marshal Agencies vs. P.M. Diesels Ltd., to highlight that the leave of the Court is a prerequisite for filing rectification proceedings after the institution of the suit. The Court found that the plaintiffs had not obtained such leave, rendering their rectification application invalid.
3. Applicability of the Principle of Constructive Res Judicata:
The Court held that the defendant's application was barred by the principle of constructive res judicata, as the issue had already been decided by the learned Single Judge and Division Bench, and the defendant had accepted these findings without challenge. The Court cited Barkat Ali & Another v. Badrinarain and Dwijendra Narain Roy vs. Joges Chandra De to support the principle that a party cannot re-agitate an issue that has been conclusively decided.
Conclusion:
The Court dismissed the defendant's application for stay of the suit, finding it to be an abuse of the process of law and barred by the principle of constructive res judicata. The application was dismissed with costs of Rs. 5,000. The case was listed before the Joint Registrar on 29.05.2012.
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2012 (4) TMI 774
Issues involved: The appeal involves the question of whether bad debts claimed by the assessee can be allowed as a deduction under sec.36(1)(vii) of the Income-tax Act, 1961.
Summary:
1. Background: The assessee had taken over debts from its sister concern and claimed a part of it as bad debts for the assessment year 2007-08.
2. Initial Rejection: The Assessing Officer rejected the bad debts claim, stating that the conditions specified in sec.36(1)(vii) were not fulfilled as the debts were not incurred by the assessee but by its sister concern.
3. First Appeal: The Commissioner of Income-tax(Appeals) upheld the rejection, citing that the assessee had not offered the amounts as income in any earlier assessment year and was not in the field of finance business.
4. Grounds Raised: The assessee raised grounds related to the irrecoverability of the bad debts, offering sums recovered as income, being in the business of money lending, and claiming the deduction under sec.37(1).
5. Tribunal Decision: The ITAT Chennai remitted the issue back to the Commissioner of Income-tax(Appeals) to consider the deduction under sec.37(1) based on an alternate ground raised by the assessee.
6. Reconsideration: The Commissioner of Income-tax(Appeals) again rejected the claim, leading to a second appeal before the Tribunal.
7. Tribunal's Decision: The Tribunal found that the debts were part of the assessee's business design and should be allowed as a deduction under sec.37(1) as they were not collected and partook the character of business loss.
8. Final Ruling: The Tribunal directed the Assessing Officer to allow the deduction for the bad debts claimed by the assessee as a business loss, emphasizing that it is not necessary to focus on the term 'bad debt' but to recognize it as a business loss.
9. Conclusion: The appeal filed by the assessee was allowed, and the deduction for bad debts as a business loss was permitted.
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2012 (4) TMI 773
Issues involved:
The judgment involves the rejection of an application under Order 7, Rule 11 of the Code of Civil Procedure based on the Benami Transactions (Prohibition) Act, 1988.
Comprehensive Details:
1. Background and Allegations:
The respondent filed a suit seeking declaration of title and permanent injunction, alleging a benami purchase of land in the name of his mother. The petitioners denied the allegations and filed an application under Order 7, Rule 11(d) of Civil Procedure Code, contending the suit was not maintainable under the Benami Transactions Act.
2. Petitioners' Contentions:
The petitioners argued that the suit was prohibited under section 4 of the Act, as it claimed rights based on a benami transaction, even if it occurred before the Act came into force. They contended that the suit should have been rejected, but the trial court failed to consider this aspect.
3. Respondent's Defense:
The respondent argued that the objection raised by the petitioners should have been considered after framing issues and recording evidence. They claimed that since the transaction predated the Act and the Act was not retrospective, the suit was maintainable.
4. Court's Analysis:
The Court noted that the Act barred suits based on benami transactions, regardless of when the transaction occurred. Citing relevant case law, the Court clarified that the bar applied to suits filed after the Act's enforcement, not to claims made before. The respondent's claim of title based on a benami transaction fell under the Act's prohibition.
5. Judgment:
The Court allowed the revision, set aside the impugned order, and dismissed the respondent's suit as barred under section 4(1) of the Benami Transactions Act. No costs were awarded in the case.
In conclusion, the Court upheld the application of the petitioners under Order 7, Rule 11(d) and dismissed the suit based on the prohibition outlined in the Benami Transactions Act, emphasizing the Act's applicability to claims made post its enforcement.
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2012 (4) TMI 772
Issues involved: Appeal arising from Income Tax Appellate Tribunal decision regarding exemption of interest under Section 10(23G) of the Income Tax Act for Assessment Year 2004-05.
Summary:
The Appeal questioned the justification of the Hon'ble Tribunal in allowing exemption of interest received by the Assessee Company from Bharti Mobinet Ltd. and Energy Development Corporation under Section 10(23G) of the Income Tax Act. The Assessing Officer sought to deny the exemption on the grounds that the loans were not classified as investments and the companies did not invite open offers for long-term investment. However, both the CIT(A) and the Tribunal noted that the Assessee had previously been allowed the exemption and satisfied the conditions for claiming it. The Tribunal found that the reasons for denying the exemption had no basis in the statutory provision. Under Section 10(23G), income from investments in long-term finance in specified projects approved by the Central Government is exempted.
Upon careful appraisal, both the CIT(A) and the Tribunal concluded that all conditions of Section 10(23G) were fulfilled, except for the two grounds raised by the Assessing Officer. As no substantial question of law was found in the Appeal, it was dismissed with no order as to costs.
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2012 (4) TMI 770
Issues involved: Appeal against the judgment granting disability pension based on injury suffered by military personnel while on leave.
Facts: The respondent, an Army personnel, suffered a serious eye injury while on annual leave at his home town. Medical Board concluded the disability was not attributable to military service. Courts below dismissed the claim for disability pension.
Legal Principles: The opinion of the Medical Board is crucial in deciding disability pension cases for military personnel. Court should not disregard the Board's opinion. Previous judgments emphasize the importance of a nexus between injury and military service for eligibility for disability pension.
Judgment: The Supreme Court held that an injury suffered by a military personnel while on leave at home, not attributable to or aggravated by military service, does not entitle the individual to disability pension. The Court emphasized the primacy of the Medical Board's opinion and the need for a causal connection between the injury and military service. The appeal was allowed, setting aside the High Court's judgment and restoring the decisions of the Trial Court and First Appellate Court.
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2012 (4) TMI 769
Issues involved:
The only issue raised in the appeal is the disallowance u/s 14A of the IT Act read with Rule 8D of IT Rules.
Details of the Judgment:
Issue 1: Disallowance u/s 14A of the IT Act read with Rule 8D of IT Rules
The assessee had derived dividend income claimed as exemption u/s 10(38) of IT Act. The Assessing Officer (AO) disallowed an amount under u/s 14A against the dividend income. The disallowance was computed at 0.5% of the average value of investments. The CIT(A) confirmed this disallowance. The assessee contended that there were no borrowings for investments and that expenses debited to the Profit and Loss account were not related to investment activities. The assessee relied on a previous ITAT judgment where a similar disallowance was deleted. The assessee argued that no disallowance should be made under Rule 8D as there was no link between the expenditures and investments. The AO and CIT(A) did not provide any finding against the assessee's claim. The assessee requested to restrict the disallowance to the amount proposed by them. The assessee submitted relevant documents to support their contentions. After considering the submissions and perusing the records, it was observed that investments were made from the assessee's own funds. The Tribunal found no justification for the revenue's estimation of disallowance at 0.5% of investments. The orders of the revenue authorities were set aside, and the AO was directed to accept the disallowance made by the assessee.
Decision:
The appeal of the assessee was allowed, and the disallowance amounting to the dividend income was accepted.
Note:
Separate judgments were not delivered by the judges in this case.
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2012 (4) TMI 768
Issues involved: Appeal against order u/s 263 for AY 2006-07.
Ground 1 - Limitation Issue:
The appeal challenged the revision order u/s 263 as being time-barred. The CIT passed the order on 10.02.2011, within the 2-year limit from the end of the financial year 2008-09 when the original assessment order was passed. Thus, the contention of the assessee that the order was beyond the time limit was dismissed.
Ground 2 - Erroneous Assessment:
Assessee contended that the assessment order was not erroneous or prejudicial to revenue. However, as the Assessing Officer did not discuss the lease transaction in the assessment order, and no information was furnished during assessment, the CIT rightly invoked section 263. Hence, this ground was dismissed.
Grounds 3 and 4 - Lease Transaction Treatment:
The dispute arose from CIT directing to treat a lease transaction as a sale and compute capital gains. The lease agreement was initially for 99 years but later amended to 11 years. The CIT held it as a transfer of capital assets attracting capital gains. However, the Tribunal found that the lease was a simple agreement for a limited period with no transfer of rights, hence not constituting a "transfer" under section 2(47) of the Act. Rulings cited by the CIT were distinguished, and the Tribunal set aside the CIT's order.
In conclusion, the Tribunal partly allowed the appeal, holding that the lease transaction did not amount to a sale, and the order passed u/s 263 was set aside.
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2012 (4) TMI 767
Issues involved: Disallowance of depreciation on BSE Membership Card and disallowance of business loss due to irrecoverable debt.
Depreciation on BSE Membership Card:
The assessee claimed depreciation on the membership right of Bombay Stock Exchange, citing a decision of Mumbai Bench of ITAT allowing depreciation on stock exchange ticket as an intangible asset. The AO rejected the claim, stating the case was under appeal. The CIT(A) upheld the AO's decision. The ITAT allowed the depreciation based on the decision of the Hon'ble Supreme Court in the case of Techno Shares & Stock (P) Ltd., holding the issue was settled.
Disallowance of Business Loss:
The assessee claimed a business loss of &8377; 27.71 lacs due to an irrecoverable debt. The AO disallowed the claim, stating the debt did not qualify as a bad debt u/s.36(1)(vii) as it was not included in the income computation. The CIT(A) upheld the disallowance. The ITAT concurred, finding the claim was an attempt to reduce taxable profits and not a genuine loss, as the debt was not included in the income computation. The appeal was partly allowed, with the disallowance upheld.
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2012 (4) TMI 766
Issues involved: Reopening of assessment u/s 147/148, Addition of cash found during search by CBI.
Reopening of assessment u/s 147/148: The appellant's appeal against the order of ld. CIT (A) for assessment year 2003-04 was dismissed as not pressed due to non-pursuance of the issue.
Addition of cash found during search by CBI: The appellant, an Officer in Archaeological Department, faced an addition of Rs. 12,91,000 on cash found at his residence during a CBI search. The cash was claimed by his brother-in-law, Shri Ratan Lal Meena, who stated it was from the sale of his property. Despite discrepancies in statements of involved parties, it was established that the cash belonged to Shri Ratan Lal Meena, not the appellant. The Tribunal ruled in favor of the appellant, deleting the addition based on the evidence provided and acceptance of the amount in Shri Ratan Lal Meena's returns. The appeal was allowed in part, with the deletion of the Rs. 12,91,000 addition.
This judgment highlights the importance of establishing ownership and sources of funds in assessment proceedings, emphasizing the need for clear documentation and evidence to support claims.
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2012 (4) TMI 765
Issues involved: Capital expenditure vs. revenue expenditure on building repairs.
The judgment pertains to an appeal by the Assessee against the order of the Learned CIT(Appeals)-III, Baroda regarding the nature of expenditure on building repairs for A.Y. 2006-07. The main issue raised was whether the expenditure of &8377; 16,40,187/- on building repairs should be treated as capital expenditure or revenue expenditure.
The facts revealed that the Assessee, a manufacturing company, claimed expenditure under "building repair" for repair of soak-pit system and water proofing at its residential colony attached to the manufacturing unit. The Assessing Officer considered the expenditure as capital in nature based on the enduring benefit to the Assessee and amendments in section 30 and section 31. The Learned CIT(Appeals) affirmed the Assessing Officer's decision but allowed depreciation on the addition to fixed assets.
The Assessee argued that the repairs were long overdue and necessary to maintain existing assets. The Assessee cited various case laws to support the claim for revenue expenditure. On the other hand, the Revenue contended that the expenditure was for laying down new pipelines due to a mandatory requirement, thus justifying the capital treatment.
After considering the evidence and legal aspects, the Tribunal analyzed the nature of the expenditure in light of relevant case laws and statutory provisions. The Tribunal emphasized that expenditure for current repairs should be for preserving and maintaining existing assets, not for obtaining new advantages. It distinguished the present case from the cited precedents and concluded that the expenditure should be treated as revenue expenditure.
Therefore, the Tribunal allowed the Assessee's appeal, directing to treat the claimed expenditure as Revenue Expenditure.
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2012 (4) TMI 764
Issues involved: Disallowance of expenses paid to DHL Express without deduction of tax u/s 40(a)(ia) of the Income Tax Act, 1961.
The judgment pertains to an appeal by the assessee against the order of CIT(A)-XX, Kolkata regarding the disallowance of expenses paid to DHL Express without deduction of tax u/s 40(a)(ia) of the Income Tax Act, 1961 for Assessment Year 2007-08.
The only issue in the appeal was the disallowance of expenses paid to DHL Express without deduction of tax, as confirmed by the CIT(A). The assessee contended that the tax deducted in February 2007 should have been deposited before March 31, 2007, but was actually deposited in May 2007.
The Assessing Officer disallowed the expenses under section 40(a)(ia) of the Act, noting that the tax deducted in February 2007 was deposited in May 2007, which was not in compliance with the provisions. The CIT(A) upheld this decision.
The Tribunal referred to a decision of the Hon'ble Calcutta High Court in a similar case, where it was held that the amendment in section 40(a)(ia) by the Finance Act, 2010 was remedial and curative in nature. The Tribunal, following this precedent, allowed the assessee's appeal as the TDS was paid before the due date of filing the return u/s 139(1) of the Act.
The Tribunal's decision was further supported by the Hon'ble Calcutta High Court, which emphasized the retrospective application of the provisions and dismissed the appeal. Consequently, the Tribunal allowed the claim of the assessee, ruling in favor of the assessee.
In conclusion, the appeal of the assessee was allowed based on the retrospective application of the provisions and compliance with the TDS payment timeline.
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