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Showing 61 to 80 of 692 Records
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2010 (5) TMI 905
Issues involved: Dispute regarding assessment year 1999-2000 under the U.P. Trade Tax Act.
Commission Agent Status: The Tribunal held that the assessee opposite party is a commission agent as he realized freight separately, not liable to include freight in turnover without evidence or contract to prove it. Revenue challenged the Tribunal's decision.
Inward Freight Inclusion: Tribunal excluded inward freight from turnover as it was separately charged in bills, without verifying if the dealer paid freight. Revenue contended that if the assessee is not a commission agent, inward freight should be added to turnover.
Judgment: The High Court upheld the Tribunal's decision, citing a previous case where the assessee was accepted as a commission agent. The Court found no error in treating the assessee as a commission agent and excluding inward freight from taxable turnover. The revision was dismissed for lacking merit.
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2010 (5) TMI 904
... ...
... ... ..... ivil Appeal is dismissed on the ground of delay.
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2010 (5) TMI 903
Issues Involved:1. Deletion of addition on account of foreign exchange fluctuation. 2. Restriction of addition on account of interest paid. 3. Deletion of addition u/s 68 for unsecured loans. Summary:Issue 1: Deletion of addition on account of foreign exchange fluctuationThe assessee claimed expenses of Rs. 1,04,473/- on account of foreign exchange fluctuation under 'income from other sources'. The AO disallowed this, stating that the loss was not actual but a provision created by revaluation of debts. The CIT(A) allowed the loss based on the decision in "Woodward Governor India (P) Ltd.", which was upheld by the Supreme Court. The Tribunal found no error in the CIT(A)'s order and rejected the Department's ground. Issue 2: Restriction of addition on account of interest paidThe AO disallowed Rs. 17,46,330/- as interest expenses, observing that the assessee borrowed funds at higher rates and advanced them to Directors at lower rates. The CIT(A) restricted the disallowance to Rs. 3,70,068/-, representing the difference between interest paid to M/s. Dhampur Alco Chem Ltd. and interest received from Directors. The Tribunal remitted the issue to the CIT(A) to determine if the amount advanced to Directors was out of the loan from M/s. Dhampur Alco Chem Ltd. Issue 3: Deletion of addition u/s 68 for unsecured loansThe AO added Rs. 45,94,525/- u/s 68, as the assessee failed to provide confirmations for unsecured loans. The CIT(A) accepted additional evidence and directed the AO to examine it. The AO's remand report found the confirmations in order. The Tribunal upheld the CIT(A)'s deletion of the addition, noting that the AO had accepted the merits of the confirmations and the transactions were through regular banking channels. Conclusion:The appeal filed by the Department is partly allowed, with the issue regarding interest paid remitted to the CIT(A) for fresh consideration.
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2010 (5) TMI 902
Issues Involved:1. Deletion of penalty u/s 271(1)(c) of the Income-tax Act, 1961. Summary:Issue 1: Deletion of penalty u/s 271(1)(c) of the Income-tax Act, 1961In this appeal, the Revenue challenged the deletion of a penalty of Rs. 27,30,000/- levied u/s 271(1)(c) of the Income-tax Act, 1961. The case involved Mrs. Chandrika B. Shah, the legal heir of late Shri Bharat L. Shah, who had received Rs. 1,30,00,000/- against surrender of tenancy rights. The fair market value as on 1.4.1981 was taken at Rs. 20,60,400/-, and after indexation, the indexed value was Rs. 92,09,988/-, resulting in declared long-term capital gains of Rs. 37,90,012/-. The claim was based on the acquisition of tenancy rights by a partnership firm, M/s. Elrex Corporation, in which late Shri Bharat L. Shah was a partner. The firm dissolved in 1979, and the business continued as a proprietary concern by Shri Bharat L. Shah. The claim was rejected during assessment due to the absence of dissolution documents, and the acquisition cost was taken as 'NIL'. During penalty proceedings, similar contentions were raised and rejected by the Assessing Officer. On appeal, the CIT(A) sought a remand report, which confirmed the partnership firm's acquisition of tenancy rights and its dissolution in 1979. However, the absence of the Dissolution Deed led to the rejection of the claim. The CIT(A) deleted the penalty, stating that the claim could not be equated with concealment of income or filing inaccurate particulars, especially considering the legal heir's inability to produce documents due to the death of Shri Bharat L. Shah. The CIT(A) referenced several judgments, including CIT v. Nath Brothers Exim International Ltd. (2007) 288 ITR 670 and CIT v. Caplin Point Lab. Ltd. [2007] 293 ITR 524, which held that penalty u/s 271(1)(c) cannot be imposed where facts are disclosed but the claim is wrongly made or based on different interpretations. The Tribunal considered the rival submissions and relevant material, noting that the claim regarding acquisition of tenancy rights was partly accepted by the Assessing Officer in the remand report. The Tribunal found that the assessee had a bona fide belief that the acquisition cost could be taken at fair market value as on 1st April 1981, as per section 55(2)(b)(ii) of the Act. The Tribunal also referenced the Hon'ble Supreme Court's decision in CIT v. Reliance Petroproducts Pvt. Ltd. (322 ITR 158), which stated that making an incorrect claim does not amount to furnishing inaccurate particulars. In conclusion, the Tribunal upheld the CIT(A)'s order, confirming the deletion of the penalty, and dismissed the Revenue's appeal. Order pronounced in the Open Court on this 7th day of May, 2010.
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2010 (5) TMI 901
Issues Involved:
1. Deletion of disallowance made out of interest.
2. Disallowance of interest on borrowed funds diverted for non-business purposes.
Summary:
Issue 1: Deletion of Disallowance Made Out of Interest (ITA No.2960/Ahd/2004 by Revenue)
The Revenue challenged the deletion of disallowance of Rs. 43,05,000/- made out of interest. The AO observed that the assessee had made investments in shares of group companies and calculated that funds not utilized for business purposes amounted to Rs. 2.87 Crores. Applying an interest rate of 15%, the AO disallowed Rs. 43,05,000/-. The assessee argued that the investments were made in earlier years and no disallowance was made in those years. The CIT(A) found no nexus between borrowed money and non-business investments and deleted the disallowance. The Tribunal upheld the CIT(A)'s decision, noting that the assessee had sufficient own funds for the investments and no new investments were made during the assessment year under consideration.
Issue 2: Disallowance of Interest on Borrowed Funds Diverted for Non-Business Purposes (ITA No.2407/Ahd/2005 by Assessee)
The assessee challenged the disallowance of Rs. 21,25,450/- out of Rs. 52,95,000/- on borrowed funds diverted for non-business purposes. The AO disallowed the interest, but the CIT(A) reduced the disallowance to Rs. 21,25,450/- by applying a 9% interest rate. The CIT(A) did not follow the previous year's order, leading to the assessee's appeal. The Tribunal found that no new investments were made in the assessment year and that the AO did not establish a nexus between borrowed funds and non-business investments. The Tribunal deleted the entire disallowance, emphasizing the need for consistency as per the Supreme Court's decision in Radhasoami Satsang Vs CIT.
Cross Appeals for Assessment Year 2003-04 (ITA No.163/Ahd/2007 by Assessee and ITA No.653/Ahd/2007 by Revenue)
Both parties filed cross appeals regarding the disallowance of interest. The CIT(A) restricted the disallowance to Rs. 19,28,304/- at a 9% interest rate. The Tribunal, following the decision for the previous year, deleted the entire disallowance, noting that the facts were identical and no new investments were made during the assessment year.
Conclusion:
All appeals by the Revenue were dismissed, and all appeals by the assessee were allowed. The Tribunal emphasized the need for consistency and found no justification for disallowing interest when no new investments were made during the assessment years under consideration. The decisions of the CIT(A) were upheld where they aligned with these principles.
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2010 (5) TMI 900
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Writ Petition - questioning the legality, validity and propriety of two notifications - issued by Government of Goa dated 15.5.1996 and 01.8.1996 - grant of 25% rebate to Low Tension, High Tension and Extra High Tension Industrial consumers of electricity as a policy of the State Government - ''Doctrine of indoor management''- ''doctrine of constructive notice''- The doctrine of indoor management is in direct contrast to the doctrine or rule of constructive notice, which is essentially a presumption operating in favour of the company against the outsider. It prevents the outsider from alleging that he did not know that the constitution of the company rendered a particular act or a particular delegation of authority ultra vires. The doctrine of indoor management is an exception to the rule of constructive notice. It imposes an important limitation on the doctrine of constructive notice. According to this doctrine, persons dealing, the company are entitled to presume that internal requirements prescribed in memorandum and articles have been properly observed. Therefore doctrine of indoor management protects outsiders dealing or contracting, a company, whereas doctrine of constructive notice protects the insiders of a company or corporation against dealings, the outsiders. However suspicion of irregularity has been widely recognized as an exception to the doctrine of indoor management. The protection of the doctrine is not available where the circumstances surrounding the contract are suspicious and therefore invite inquiry.
HELD THAT:- the Notification dated 01.08.1996, that it re-introduced the benefit of rebate on tariff and made it available to units on the prevailing tariff in force from time to time at which the units were billed for a period of five years from the date of supply of power was made available to them and who had applied or availed power supply on or after 01.10.1991. The notification dated 30.09.1991 on the other hand made available the rebate on the basis of tariff set out in the Notification dated 27.06.19888 and to Low and High Tension Power consumers who had applied for supply of power and were given power supply on or after 01.10.1991. The Notification dated 01.08.1996, it is seen, extended the scope of benefit of rebate as compared to the Notification dated 30.09.1991 which had been rescinded by the Notification dated 31.03.1995. It is on record and we notice from the judgment of the High Court that the State Government had paid as a result of the Notification dated 01.08.1996 a sum or ₹ 8 crores in excess as compared to the benefit available under the Notification of 1991 and the total amount of rebate would have been more than 30 crores had the benefit as made available by the 1996 Notification been continued.
Thus from the foregoing, it is clear that a decision to be the decision of the Government must satisfy the requirements of the Business Rules framed by the State Government under the provisions of Article 166(3) of the Constitution of India. In the case on hand, as have been noticed by us and the High Court, the decisions leading to the notifications do not comply, the requirements of Business Rules framed by the Government of Goa under the provisions of Article 166(3) of the Constitution and the Notifications are the result of the decision taken by the Power Minister at his level. The decision of the individual Minister cannot be treated as the decision of the State Government and the Notifications issued as a result of the decision of the individual Minister which are in violation of the Business Rules are void ab initio and all actions consequent thereto are null and void.
In our opinion the fact that the State Government did not raise these objections in the earlier batch of Writ Ptitions does not disentitle it to such a stand or prevents it from raising its objections based on legal provisions. This contention of the appellants requires to be turned down for yet another reason in that the 1st respondent herein was not a party to the earlier batch of Writ Petitions before the High Court or this Court. Therefore the principles of res judicata or for that matter even the Doctrine of Estoppel will not apply to or operate against him. Further the contention that the Notification dated 1.8.1996 did not create any additional financial liability on the State Government warranting approval by the Cabinet or the compliance of the Business Rules before it was brought into effect deserves to be rejected having regard to the figures placed on record which the High Court has noticed in its judgment. These figures of additional liability likely to be brought on the State by Notification dated 1.8.1996 falsify the statement of the appellants. Therefore the same deserves to be rejected.
The Appellants have not been able to show any infirmity or illegality in the order of the High Court warranting our interference. In the result, civil appeals are dismissed. Parties are directed to bear their own costs.
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2010 (5) TMI 899
The Supreme Court ruled that slitting/shearing of steel coils to produce sheets does not constitute 'manufacture' for the purpose of levy of Central Excise Duty. This decision was based on a previous case and Circulars from the Court. The Court ruled in favor of the assessee, and all appeals were disposed of with no costs.
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2010 (5) TMI 898
Issues Involved:
The judgment involves the issue of sustaining the addition of Rs. 2 lakhs as unexplained cash credit in the assessment year 2005-06.
Assessment of Unexplained Cash Credit:
The Assessing Officer observed that a partnership firm had raised an unsecured loan of Rs. 2,00,000 from a creditor. The creditor, Shri Dinesh Goyal, claimed to have received a gift of the same amount from relatives and then advanced it as a loan to the firm. However, the creditor could not produce supporting documents like a gift deed or bank passbook. The Assessing Officer concluded that the loan was the firm's unaccounted money routed through the creditor's bank account. Consequently, the addition of Rs. 2,00,000 was made under section 68 of the Income-tax Act.
Confirmation by CIT(A):
The CIT(A) upheld the Assessing Officer's decision, emphasizing that creditworthiness is not solely about having cash but the overall financial capability. Citing legal precedents, the CIT(A) highlighted the need to establish trustworthiness in repaying debts. The appellant's appeal against this decision was brought before the tribunal.
Arguments and Decision:
The appellant argued that they had proven the identity, creditworthiness, and genuineness of the loan, as it was received through banking channels. However, the Departmental Representative contended that the creditor's creditworthiness and the transaction's genuineness were not adequately proven. The tribunal noted that for a loan under section 68, the lender's identity, creditworthiness, and transaction genuineness must be established. In this case, the creditor's financial situation, lack of corroborative evidence, and immediate transfer of funds to the firm raised doubts. Referring to legal precedents, the tribunal concluded that the appellant failed to discharge the burden of proof required by section 68. Therefore, the CIT(A)'s decision was upheld, and the appeal was dismissed.
Conclusion:
The tribunal affirmed the CIT(A)'s decision to sustain the addition of Rs. 2 lakhs as unexplained cash credit, as the appellant could not sufficiently prove the creditworthiness and genuineness of the loan transaction. The appeal was dismissed on 14.5.2010.
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2010 (5) TMI 897
Issues Involved:
1. Addition of Rs. 8,85,000/- as unexplained cash u/s 69.
2. Addition of Rs. 4,13,500/- as unexplained cash u/s 69.
3. Addition of Rs. 20,90,088/- as unexplained cash credit u/s 68.
Summary:
1. Addition of Rs. 8,85,000/- as unexplained cash u/s 69:
The assessee challenged the addition of Rs. 8,85,000/- made by the Assessing Officer (AO) and confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)] as unexplained cash u/s 69. The AO found excess cash of Rs. 8,85,001/- during a survey and added it as unexplained money. The assessee explained that Rs. 8,41,079/- was payable to three parties against cheque discounting, but failed to provide confirmations or establish the identity of these parties. The Tribunal found that the lower authorities did not verify the assessee's explanation from the bank or the three parties directly. The Tribunal set aside the addition of Rs. 8,41,079/- for proper verification by the AO and confirmed the addition of Rs. 43,922/-. Thus, the ground of appeal was partly allowed for statistical purposes.
2. Addition of Rs. 4,13,500/- as unexplained cash u/s 69:
The assessee contested the addition of Rs. 4,13,500/- found at its Bhavanivad premises, which was explained as belonging to a director from the encashment of a Fixed Deposit Receipt (FDR). The AO and CIT(A) did not accept this explanation due to the lack of evidence linking the cash found to the FDR encashment. The Tribunal found that the initial onus was discharged by the assessee by showing the withdrawal of Rs. 9,10,000/- from the director's bank account. The revenue failed to provide material evidence to disprove the assessee's claim. Therefore, the Tribunal deleted the addition of Rs. 4,13,500/- and allowed the ground of appeal.
3. Addition of Rs. 20,90,088/- as unexplained cash credit u/s 68:
The assessee disputed the addition of Rs. 20,90,088/- as unexplained cash credit u/s 68. The AO found sundry creditors totaling Rs. 21,40,858/- and asked the assessee to prove their genuineness, which the assessee failed to do. The CIT(A) deleted the addition of Rs. 35,000/- for three parties and confirmed the addition of Rs. 20,90,088/- for the remaining ten parties. The Tribunal upheld the CIT(A)'s decision, stating that the assessee did not provide sufficient evidence to establish the nature and source of the cash credits as required u/s 68. The Tribunal dismissed this ground of appeal.
Conclusion:
The appeal of the assessee was partly allowed, with the addition of Rs. 8,41,079/- set aside for verification, the addition of Rs. 4,13,500/- deleted, and the addition of Rs. 20,90,088/- confirmed.
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2010 (5) TMI 896
Issues involved: The judgment involves issues related to the allowability of payment of market fees to the Agricultural Marketing Board as application of income for charitable purposes and the allowability of depreciation on fixed assets.
Allowability of payment of market fees: The appeals by the Revenue were against the orders of CIT(A) Rohtak allowing payment of market fees to the Agricultural Marketing Board as application of income for charitable purposes under section 11(1) of the Income Tax Act. The Tribunal noted that the contribution to the Board by the market committee was a statutory requirement under the Punjab Agricultural Produce Markets Act, 1961. Referring to previous decisions, the Tribunal upheld the claim of the assessee, stating that the contribution was spent on specified development projects and not for the benefit of the market committee. Consequently, the appeal of the Revenue was dismissed, allowing the deduction claimed on market fees paid to the Board for charitable purposes.
Allowability of depreciation on fixed assets: The issue raised was against the allowability of depreciation on fixed assets, the cost of which was claimed and allowed as application of income towards charitable purposes. Referring to previous decisions, the Tribunal held that depreciation should be allowed on assets for which the cost had been fully allowed as application of income under section 11 in past years. The Tribunal directed the issue to be restored to the Assessing Officer for verification of additions made to fixed assets and the rate of depreciation to be allowed. The claim of deduction on account of depreciation was allowed, but the issue was remitted back to the Assessing Officer for further verification.
Exemption u/s 11(2) of the IT Act: The Revenue raised a ground regarding the allowance of exemption u/s 11(2) amounting to a specific sum. The basis for disallowing the claim under section 11(2) was the non-furnishing of the resolution passed by the trust along with Form No.10. The assessee later provided the copy of the resolution before the CIT(A), leading to the allowance of the claim. The Tribunal upheld the decision of the CIT(A) in allowing the claim once the resolution was furnished, as the Revenue failed to provide evidence to the contrary. Consequently, the ground raised by the Revenue was dismissed.
In conclusion, all the appeals of the Revenue were partly allowed, with different issues being addressed and decided upon by the Tribunal.
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2010 (5) TMI 895
Issues involved: Challenge to Ext.P3 order passed by first respondent u/s 17 D of KGST Act.
Summary:
Issue 1: Challenge to Ext.P3 order
The petitioner challenged the Ext.P3 order passed by the first respondent, seeking to sustain the order passed by the assessment officials, the second respondent, Fast Track Team (Ext.P1) u/s 17 D of the KGST Act. The petitioner argued that the assessment had been finalized as per the relevant provisions of law by a team of 5 members, and thus, the first respondent had no authority to reconsider the matter and vary the scope and extent of the liability. The first respondent's action was deemed unjustifiable as per legal provisions.
Issue 2: Legal validity of Ext.P3 order
The Court noted that Ext.P3 was passed by the first respondent after obtaining necessary sanction from the Commission. However, the Court found it difficult to accept the first respondent's actions, especially since he was not a party to the order passed by the Fast Track Team. The Court referred to a previous decision regarding the scope and finalization process u/s 17 D and highlighted that the order passed by the Fast Track Team was appealable within a specified period, indicating the legislative intent to provide finality to such proceedings. Consequently, the Court deemed Ext.P1 order as legal and set aside Ext.P3, allowing the Writ Petition. The respondents were given the option to pursue further legal recourse if available.
This judgment highlights the importance of adhering to legal procedures and ensuring the finality of assessment proceedings under the KGST Act.
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2010 (5) TMI 894
Issues involved:
The appeal involves the assessment u/s 143(3) of the Income Tax Act, 1961 for the assessment year 1998-99. The grievances raised by the assessee include the determination of whether the appellant is a conduit for Satellite Television Asian Region Limited (Star Ltd.), the status of Star India Pvt Ltd as a dependent agent of Star Limited, and the tax implications under the double taxation avoidance agreement and Circular 742 issued by the Central Board of Direct Taxes.
Issue 1 - Conduit Company Status:
The appellant, a company incorporated in the Netherlands, holds the exclusive right for advertising time sales in India on STAR TV network channels owned by STAR Limited. The Assessing Officer contended that the appellant was a conduit company for tax planning purposes, as India had a favorable tax treaty with the Netherlands. Despite the appellant's arguments and submission of tax residency certificates, the Assessing Officer concluded that the appellant was a conduit company and assessed the income in its hands. The CIT(A) upheld this decision, leading to the current appeal.
Issue 2 - Taxability of Advertising Revenues:
The revenue's case was based on the perception that the appellant was used as an intermediate entity to limit tax exposure for STAR Limited in India. However, the Tribunal found this perception erroneous, citing legal precedents and the now-withdrawn CBDT circular no. 23. The Tribunal noted that the advertising revenues were generated through a commission agent, Star India Pvt Ltd, and were already taxed in its hands. The Tribunal also considered the commercial justifications for routing sales through the appellant company on a global basis, beyond Indian tax considerations.
Conclusion:
The Tribunal held that the Assessing Officer was not justified in taxing the income from advertising time sales in India in the hands of the appellant, as the revenues were appropriately taxed in the hands of the commission agent. The Tribunal remitted other issues raised in the appeal for fresh adjudication by the CIT(A). The appeal was partly allowed, emphasizing the need for a comprehensive review of the tax implications and other consequences raised by the assessee.
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2010 (5) TMI 893
Issues involved: Stay petition for waiver of pre-deposit of amounts adjudicated by the adjudicating authority; Confirmation of demand of customs duty foregone by the Revenue when the appellant (a 100% EOU) imported capital goods and inputs for establishing and exporting Rose cut flowers under Customs private bonded warehouse.
Confirmation of demand of customs duty foregone:
The appellant's consultant argued that the DGFT authorities had debonded the appellant's EOU due to non-completion of export obligations before the show cause notice was issued. He claimed that all capital goods and inputs procured by the appellant were put to use for exports, and depreciation should be considered while calculating duty forgone. On the other hand, the Revenue's representative stated that the customs bonded warehouse license was not renewed, making the appellant liable for the duty foregone. The Tribunal noted that the adjudicating authority failed to consider the appellant's eligibility for depreciation on capital goods used for exports. The impugned order was set aside, and the matter was remanded for a fresh consideration, emphasizing the eligibility for depreciation and destruction of capital goods and inputs.
Conclusion:
The Tribunal allowed the appeal by way of remand, directing the adjudicating authority to re-consider the issue in light of relevant case laws and principles of natural justice. The stay petition was also disposed of accordingly.
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2010 (5) TMI 892
Issues involved:
The issues involved in the judgment are related to the valuation of Denatured Ethyl Alcohol for captive consumption, provisional assessment, adoption of assessable value, differential duty payment, and the right to be heard before the imposition of duty.
Valuation of Denatured Ethyl Alcohol:
The appellants initially filed a price declaration for Denatured Ethyl Alcohol at &8377; 11,174/- per KL, which was later revised to &8377; 16,486/- per KL with retrospective effect. The Assistant Commissioner ordered provisional assessment of RT 12s based on the price of comparable goods. A show-cause notice proposed adoption of a different price per KL for valuation, leading to reassessment of duty and demand for differential duty.
Differential Duty Payment:
The Assistant Commissioner dropped the proposal to adopt the value of comparable goods but ordered the valuation of Denatured Ethyl Alcohol under Rule 6(b)(ii) and finalization of RT 12 assessments. Subsequently, the Superintendent directed the appellants to pay a differential duty of &8377; 1,14,29,086/-, including input duty on the goods for a specific year, which the appellants contested, claiming an erroneous inclusion of input duty in the assessable value.
Right to be Heard:
The appellants contended that they were not given an opportunity to be heard before the Superintendent directed them to pay the differential duty. The Tribunal found merit in this submission and set aside the order, remitting the case for a fresh decision on merits to the jurisdictional Range Superintendent. The Superintendent was instructed to consider the appellants' submissions and the relevant legal precedent before passing fresh orders.
Conclusion:
The Tribunal allowed the appeal by way of remand, emphasizing the importance of providing a fair opportunity for the appellants to present their case before any decision on differential duty payment is made. The operative portion of the order was pronounced in open court on 04.05.2010.
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2010 (5) TMI 891
Issues involved: Appeal against order of CIT(Appeals)-VI, Mumbai for assessment year 2005-09 regarding cancellation of penalty u/s 271(1)(c) based on conflicting decisions of the Hon'ble Apex Court.
Facts:
The assessee, a company engaged in transportation, faced a disallowance u/s 40(a)(ia) for delay in TDS payment to the Govt. Treasury. The AO disallowed an amount and levied a penalty u/s 271(1)(c) for furnishing inaccurate particulars of income. The assessee appealed, claiming full disclosure and no concealment of income.
Judgment:
The first appellate authority agreed with the assessee, stating that disallowance of expenditure does not equate to concealment of income. Citing the judgment in CIT vs. Ajain Singh & Co., it was held that a mere disallowance does not prove inaccurate particulars of income. The authority emphasized the need for a non-bonafide explanation to justify a penalty. The ITAT upheld this decision, dismissing the Revenue's appeal.
Conclusion:
The ITAT Mumbai, comprising Vice President Shri D. Manmohan and Accountant Member Shri J. Sudhakar Reddy, dismissed the Revenue's appeal against the cancellation of penalty u/s 271(1)(c) based on the principle that a disallowance of expenditure does not automatically imply furnishing inaccurate particulars of income. The judgment highlighted the importance of a bonafide explanation and full disclosure in determining the applicability of penalties in tax matters.
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2010 (5) TMI 890
Block assessment - undisclosed income - proceedings u/s 158BD - search u/s 132 carried out in the business premises of M/s. Ohm Organizers, Surat on 29.10.1999 - books of accounts and documents seized - HELD THAT:- We admit the additional ground for adjudication in view of the judgment of the Hon’ble Supreme Court in the case of National Thermal Power Corporation Ltd. –vs.- CIT [1996 (12) TMI 7 - SUPREME COURT]. Admittedly, in this case, search u/s 132 was carried out in the business premises of M/s. Ohm Organizers, Surat on 29.10.1999. Certain books of accounts and documents relating to the assessee were also seized. The AO found that certain investment in purchase of flats/ shops were made by the assessee and payment of on-money was made by him to the builder. Thereafter certain inquiries were carried out from the assessee u/s 133(6) by way of notice issued on u/s. 133(6). Further letters were also issued. However, notice u/s 158BD was issued to the assessee on 04.02.2005. In the impugned order, the ld. CIT(A) upheld the legality of action u/s 158BD.
Following the decision in the case of ACIT vs. Vimal Vadilal Shah and vice-versa and others [2010 (5) TMI 889 - ITAT AHMEDABAD], we hold that the block assessment famed in case of the above assessee is not legally valid and therefore is quashed for the reason that notices u/s.158BD was issued in this case long after completion of assessment in the case of person searched i.e. Ohm Developers.
Imposing penalty u/s. 158BFA - HELD THAT:- In quantum appeal filed by the assessee, the assessment framed by the AO is quashed, therefore penalty levied by the AO u/s 158BFA is also quashed.
In the result, both the appeals filed by the assessee are allowed.
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2010 (5) TMI 889
Validity of Block assessment proceedings - Undisclosed income of another person u/s 158BD - period of limitation - satisfaction u/s.158BD has not been recorded by AO of the person searched and notices u/s.158BD has been issued much after the closer of block assessment proceedings u/s.158BC of the person searched - HELD THAT:- As held in Saroj Nursing Home [2007 (9) TMI 325 - ITAT LUCKNOW-B] that proceedings u/s.158BD can be initiated on the satisfaction of the Assessing Officer having jurisdiction over person searched to tax undisclosed Income-tax pertaining to third person who is not subjected to search and books of accounts and in other documents were handed over to the Assessing Officer having jurisdiction over such third person but proceedings initiated u/s.158BD of the Act after a period of six years cannot be regarded as valid.
In the case of Shri Vishnubhai R Barot [2009 (12) TMI 987 - ITAT AHMEDABAD] it was held, following the decision of Hon’ble Supreme Court in the case of Manish Maheshwari v [2007 (2) TMI 148 - SUPREME COURT] and Manoj Agarwal. [2008 (7) TMI 446 - ITAT DELHI-A] held that without there being satisfaction recorded prior to completion of assessment of the person searched proceedings so initiated u/s.158BD will not be valid. In that case notice u/s.158BD was issued on 10-06-2004. But searched against Ohm Developers was carried out on 29-10-1999, therefore assessment u/s. 158BD thereof completed after 31-10-2001 could not be held valid.
Following these decisions, we hold that the block assessment famed in case of assessee are not legally valid and therefore are quashed for the reason that notices u/s.158BD were issued in these cases long after completion of assessment in the case of person searched i.e. Ohm Developers.
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2010 (5) TMI 888
Issues involved: Challenge to order of CIT(A) for assessment year 2005-06 regarding disallowance of outstanding labour charges as unexplained expenditure u/s 69C of the Act.
First issue - Disallowance of outstanding labour charges:
The assessee, engaged in civil construction and labour contract business, declared income of &8377; 14,29,579. AO noticed outstanding labour charges of &8377; 54,56,235 for Jan, Feb, and March 2005. Assessee explained financial crisis prevented immediate payment, but payment was made in subsequent year. AO treated outstanding amount as unexplained expenditure u/s 69C, citing reasons such as lack of dates on wage payments proof, inability to postpone such payments, and site-wise breakdown of outstanding payments. CIT(A) upheld AO's decision. Assessee argued against addition u/s 69C, citing subsequent payment and lack of examination of workers by AO. Tribunal found no evidence of unaccounted money use, accepted subsequent payment, and noted lack of bogus expenditure or worker examination. Tribunal deleted the addition u/s 69C, dismissing remaining grounds not pressed by assessee.
Conclusion:
Tribunal allowed the appeal partly, deleting the addition of outstanding labour charges as unexplained expenditure u/s 69C of the Act.
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2010 (5) TMI 887
Issues Involved:
1. Eligibility for deduction u/s 80IB(10) for entire projects.
2. Pro-rata deduction for housing projects.
3. Retrospective or prospective application of section 80IB(14)(a).
4. Correct methodology for computing built-up area.
Summary:
1. Eligibility for deduction u/s 80IB(10) for entire projects:
The revenue contended that the assessee was not eligible for deduction u/s 80IB(10) due to violation of clause (c) of sub-section 10 of section 80IB. The CIT(A) allowed the deduction, which the revenue appealed against. The Tribunal found that the assessee complied with all conditions u/s 80IB(10) and was eligible for the deduction. The Tribunal noted that the measurement of flats by the A.O. was flawed and not representative of the entire project. The Tribunal upheld the CIT(A)'s decision, dismissing the revenue's appeal.
2. Pro-rata deduction for housing projects:
The CIT(A) allowed pro-rata deduction for the housing project, which the revenue contested. The Tribunal held that the pro-rata deduction was justified as the A.O.'s sample measurement was not representative. The Tribunal emphasized that beneficial provisions should be interpreted liberally and granted pro-rata deduction if necessary. The Tribunal dismissed the revenue's grounds, supporting the CIT(A)'s pro-rata deduction approach.
3. Retrospective or prospective application of section 80IB(14)(a):
The Tribunal addressed whether section 80IB(14)(a) was retrospective or prospective. It concluded that the provision was substantive and thus prospective, rejecting the revenue's contention of its retrospective application. The Tribunal relied on judicial decisions and CBDT circulars clarifying that the definition of built-up area applied from the assessment year 2005-06 onwards.
4. Correct methodology for computing built-up area:
The Tribunal determined that in the absence of a specific definition in the Act for the assessment year in question, the built-up area should be computed according to local laws, specifically the M.P. Bhoomi Vikas Rules. The Tribunal found that the built-up area of the flats, as per local laws, was within the specified limit, making the assessee eligible for the deduction. The Tribunal dismissed the revenue's appeal and allowed the assessee's cross-objection, directing the A.O. to grant the deduction as claimed.
Conclusion:
The Tribunal dismissed the revenue's appeals and allowed the assessee's cross-objection, affirming the CIT(A)'s decision to grant deduction u/s 80IB(10) and pro-rata deduction for the housing project. The Tribunal emphasized the prospective application of section 80IB(14)(a) and the use of local laws for computing the built-up area.
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2010 (5) TMI 886
Issues involved: Appeal against deletion of addition on account of annual letting value and deemed dividend u/s 2(22)(e).
Annual Letting Value Issue:
The appeal was based on the deletion of an addition of Rs. 17,13,614 on account of the annual letting value of a property at M Block, Connaught Place. The CIT(A) directed the deletion by relying on previous ITAT decisions for the assessment years 2003-04 and 2004-05. The Tribunal found that the issue was covered by its earlier decision for the assessment year 1998-99, emphasizing the principle of consistency in revenue authorities' views. Consequently, the addition was deleted, and the appeal was allowed.
Deemed Dividend Issue:
The appeal also challenged the deletion of an addition of Rs. 9,15,556 on account of deemed dividend u/s 2(22)(e). The CIT(A) directed the deletion based on previous ITAT decisions for the assessment years 2003-04 and 2004-05. The Tribunal noted that the issue was covered by a special bench decision in the case of Bhaumik Colours Pvt. Ltd., which clarified the intention behind the provisions of section 2(22)(e) to tax dividend in the hands of shareholders. As the assessee was not a shareholder in the concerned company and did not have substantial interest, the addition of deemed dividend was deleted. The Tribunal upheld the deletion, and the appeal was dismissed.
Conclusion:
The Tribunal dismissed the appeal, upholding the deletion of additions related to annual letting value and deemed dividend u/s 2(22)(e) based on previous ITAT decisions and the principle of consistency in revenue authorities' views. The order was pronounced on 06.05.2010.
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