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2011 (9) TMI 1202
Issues involved:
The issues involved in the judgment are the disallowance of depreciation claimed by the assessee at the rate of 60% for digital content, the disallowance of deduction under section 10B, and the rectification of the assessment order under section 154.
Disallowance of Depreciation at 60% for Digital Content:
The Revenue challenged the action of the ld. CIT(A) in allowing the assessee's appeal claiming depreciation at 60% for digital content acquired for broadcasting digital movies. The Assessing Officer disallowed the claim of depreciation by adopting a rate of 25% for intangible assets. The assessee contended that digital content should be treated as a tangible fixed asset and depreciation at 60% should be allowed as per IT Rules. The ld. CIT(A) accepted the plea of the assessee, stating that digital content is a tool or machinery in the form of computer software, justifying the claim for depreciation at 60%. The appeal of the Department was allowed for statistical purposes, and the matter was remitted back to the Assessing Officer for re-decision after obtaining necessary details.
Disallowance of Deduction under Section 10B:
The assessee initially claimed a deduction under section 10B, but later withdrew the claim as the tax holiday period had expired by the relevant assessment year. The first appellate authority dismissed the appeal related to the disallowance of deduction under section 10B.
Rectification of Assessment Order under Section 154:
The assessment order was rectified under section 154, resulting in the determination of taxable income at a higher amount. The Assessing Officer did not consider the deduction allowed under section 35DDA for the assessment years 2003-04 and 2004-05. The matter was not adequately discussed in the original assessment order, leading to the decision to remit the issue back to the Assessing Officer for re-decision with proper consideration of relevant provisions and case law.
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2011 (9) TMI 1201
Issues Involved:
1. Legality and arbitrariness of the transfer order.
2. Adherence to government policy on transfer tenure.
3. Allegation of mala fide intent behind the transfer.
4. Competency and authority to issue the transfer order.
5. Judicial review of transfer orders.
Summary:
1. Legality and Arbitrariness of the Transfer Order:
The writ Petitioner, an Executive Engineer in the Water Resource Department, challenged his transfer within six months, alleging it was illegal, arbitrary, and malafide. The learned Single Judge stayed the transfer order, prompting the State to appeal. The Court noted that the transfer was within the same station (Guwahati) and both posts were equivalent, except for the nature of duties and responsibilities. The Court emphasized that transfer orders can only be interfered with in rare and exceptional cases, such as lack of competency, violation of statutory rules, gross discrimination, or malafide intent.
2. Adherence to Government Policy on Transfer Tenure:
The writ Petitioner argued that the transfer violated the government policy u/s Office Memorandum dated 04.02.2002, which stipulates a three-year tenure at a particular station unless justified by proper reasons. The Court referred to the case of *Ranjit Chandra Barman*, where it was held that judicial intervention is not justified for transfers within the same station, even if they breach prescribed norms of recording justification. The Court reiterated that guidelines do not confer a legally enforceable right.
3. Allegation of Mala Fide Intent Behind the Transfer:
The Petitioner claimed the transfer was issued at the behest of a minister, amounting to a mala fide action. The Court found no specific malice attributed to any State Respondents. It cited the case of *Mohd. Masood Ahmad*, where the Supreme Court held that a transfer at the instance of an MLA does not vitiate the order. The Court emphasized that allegations of malafides must be based on concrete materials and not conjectures or surmises.
4. Competency and Authority to Issue the Transfer Order:
The Court found no challenge to the competency of the Appellant to issue the transfer order. It noted that the transfer was approved by the highest authority of the State, and there was no violation of statutory rules or discrimination against similarly placed officers.
5. Judicial Review of Transfer Orders:
The Court highlighted that transfer is an incident of service and judicial review of transfer orders under Article 226 of the Constitution is very limited. It referred to the case of *State of UP v. Govardhan Lal*, where the Supreme Court held that transfer orders should not be interfered with unless they are malafide, violate statutory provisions, or are issued by an incompetent authority. The Court also cited *State of Haryana v. Kashmir Singh*, emphasizing that administrative exigency cannot be judged by judicial authorities.
Conclusion:
The Court concluded that there was no evidence of malafide intent or violation of statutory rules in the transfer order. It emphasized that the executive is the proper authority to assess the suitability of officers for particular posts. Consequently, the writ appeal was allowed, the writ petition was dismissed, and the stay order was vacated.
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2011 (9) TMI 1200
Issues involved: Appeal against Income Tax Appellate Tribunal's judgement on addition of amounts u/s suppression of sale and low GP rate, validity of findings and conclusions, and evidence on record.
Suppression of sale and low GP rate: The Revenue appealed against the Tribunal's decision to delete additions of amounts due to suppression of sale and low GP rate. The Tribunal found that the accounts were available, sales were recorded in regular books, and the stock quantities tallied with the original return and tax audit report. The Tribunal directed the computation of profit based on the books of accounts, leading to the deletion of the addition made on account of low GP. The High Court concluded that the reason for rejecting the books of accounts was not valid, and therefore dismissed the appeal as no substantial question of law arose.
Validity of findings and conclusions: The Tribunal reversed the findings of the Assessing Officer and the Appellate Commissioner without providing cogent and relevant reasons. However, the Tribunal's decision was based on the availability of accounts and proper recording of sales in the regular books. The High Court observed that the Tribunal's direction to compute profit based on the books of accounts was justified, leading to the deletion of the addition on account of low GP. Consequently, the High Court dismissed the appeal as no substantial question of law was found to arise.
Evidence on record: The Tribunal's decision to compute profit based on the books of accounts was supported by the availability of accounts and proper recording of sales. The High Court noted that the sales were duly recorded in the regular books of accounts, and the stock quantities matched the original return and tax audit report. As a result, the High Court upheld the Tribunal's decision and dismissed the appeal, as no substantial question of law was identified in the case.
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2011 (9) TMI 1199
Issues involved: Appeal against Income Tax Appellate Tribunal's judgement regarding addition of amounts u/s suppression of sale, low G.P., unexplained share capital, reversal of findings, and perversity of order.
Suppression of sale: Revenue appealed against deletion of addition of Rs. 16,12,786 for suppression of sale. Tribunal relied on Apex Court's decision in CIT Vs. Lovely Exports, where it was held that if share application money is received from alleged bogus shareholders, department can proceed to re-open their assessments. Tribunal found no justification for addition, as larger portion of share capital was received in earlier years and credits were accepted. Tribunal's decision upheld, appeal dismissed.
Low G.P.: Revenue appealed against deletion of addition of Rs. 5,63,798 for low G.P. Not specifically addressed in the judgement.
Unexplained share capital: Tribunal deleted addition of Rs. 4,04,000 for unexplained share capital, citing Apex Court's decision in CIT Vs. Lovely Exports. Tribunal found that majority of share capital was received in earlier years and credits were accepted, establishing identity and credit worthiness of creditors. Tribunal's decision upheld, appeal dismissed.
Reversal of findings: Revenue appealed against reversal of findings without cogent reasons. Tribunal's decision on other issues rendered this question moot.
Perversity of order: Revenue questioned whether Tribunal's order was contrary to evidence and material on record. Tribunal's decision found to be justified, no interference warranted. Tax Appeal dismissed.
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2011 (9) TMI 1198
Issues Involved:
1. Conviction and Sentence u/s 307 IPC and u/s 25 of the Arms Act.
2. Identification of Assailants.
3. Alleged Contradictions between Medical and Ocular Evidence.
4. Delay in Lodging FIR.
5. Recovery of Weapons.
6. Applicability of Section 307 IPC.
7. Common Intention u/s 34 IPC.
Summary:
1. Conviction and Sentence u/s 307 IPC and u/s 25 of the Arms Act:
The appeal challenges the judgment of conviction and sentence dated 4.4.2003 by the Additional Sessions Judge, Hisar, sentencing the accused to rigorous imprisonment for five years and a fine of Rs. 1000/- each u/s 307 IPC, and rigorous imprisonment for six months and a fine of Rs. 250/- each u/s 25 of the Arms Act.
2. Identification of Assailants:
The complainant, Rajesh (PW13), identified the accused Narinder and Hargobind as the assailants. Despite it being night, the familiarity between the parties and the presence of street light negated the possibility of mistaken identity.
3. Alleged Contradictions between Medical and Ocular Evidence:
The defense argued that the medical evidence contradicted the ocular version. However, the court found that the injury could be consistent with the complainant's account of being shot while running away, thus dismissing the contradiction claim.
4. Delay in Lodging FIR:
The court found no undue delay in lodging the FIR. The occurrence took place at 11.30 p.m., and the FIR was registered at 2.50 a.m. after the complainant was medico-legally examined and his statement recorded.
5. Recovery of Weapons:
The defense contended that the weapons recovered did not match the description given by the complainant. The court dismissed this argument, noting the delay in recovery and the possibility of the accused having exchanged or altered the weapons. Forensic evidence corroborated the use of firearms by the accused.
6. Applicability of Section 307 IPC:
The court emphasized that the intention and knowledge of the accused are crucial for conviction u/s 307 IPC, not the nature of the injury. The complainant's injury, though not fatal, was inflicted with the intent to kill, fulfilling the criteria for conviction u/s 307 IPC.
7. Common Intention u/s 34 IPC:
The court upheld the conviction of Narinder Singh with the aid of Section 34 IPC, noting that both accused acted in furtherance of a common intention to kill the complainant. The presence of common intention and mens rea was well established.
Conclusion:
The court found no merit in the appeal and dismissed it, affirming the conviction u/s 307/34 IPC and noting that the graver offense under Section 307 IPC rendered a separate conviction under Section 25 of the Arms Act unnecessary.
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2011 (9) TMI 1197
Issues Involved:
1. Maintainability of the suit due to limitation, delay, and laches.
2. Cause of action post-merger of Bilaspur with the Dominion of India.
3. Bar under Article 363 of the Constitution.
4. Maintainability under Article 131 of the Constitution.
5. Cause of action against Defendant Nos. 3 and 4.
6. Maintainability by virtue of the Punjab Reorganisation Act, 1966.
7. Agreement on power sharing from the Bhakra-Nangal and Beas Projects.
8. Entitlement to 12% free power.
9. Entitlement to 7.19% of the total power generated.
10. Compensation claim of Rs. 2199.77 crores.
11. Award of interest on amounts determined.
Issue-wise Detailed Analysis:
Issue No. 1: Maintainability of the suit due to limitation, delay, and laches
The court held that Article 131 of the Constitution does not prescribe any period of limitation for filing a dispute. Since there has been no final allocation of power from the Bhakra-Nangal and Beas Projects to the Plaintiff-State and the allocations made are only ad hoc or interim, the claim remains live and cannot be considered stale or belated. Thus, the suit is not barred by limitation, delay, and laches.
Issue No. 2: Cause of action post-merger of Bilaspur with the Dominion of India
The court found that the Plaintiff cannot claim rights based on the Raja of Bilaspur post-merger with the Dominion of India. However, the Plaintiff's claim to power is also based on Section 78 of the Punjab Reorganisation Act, 1966, and the rights under the Constitution, which are not affected by the merger. Therefore, the Plaintiff has a cause of action based on these provisions.
Issue No. 3: Bar under Article 363 of the Constitution
The court held that the jurisdiction under Article 131 does not extend to disputes arising out of treaties or agreements entered before the Constitution's commencement. However, the Plaintiff's claim is based on the Punjab Reorganisation Act, 1966, and constitutional provisions, not on any pre-constitutional agreement. Thus, the suit is not barred under Article 363.
Issue No. 4: Maintainability under Article 131 of the Constitution
The court rejected the contention that the suit is a dispute regarding the use of water in inter-state rivers, which would be barred under Article 262(2) of the Constitution. The dispute pertains to the sharing of power generated in the Bhakra-Nangal and Beas Projects, not the use of water, making the suit maintainable under Article 131.
Issue No. 5: Cause of action against Defendant Nos. 3 and 4
The court held that the Plaintiff has a legal right to power from the Bhakra-Nangal and Beas Projects as a successor State under Section 78 of the Punjab Reorganisation Act, 1966. However, since the State of Rajasthan was not part of the composite State of Punjab, the Plaintiff has no cause of action against Rajasthan. The suit is maintainable against Defendant Nos. 2, 3, and 5.
Issue No. 6: Maintainability by virtue of the Punjab Reorganisation Act, 1966
The court found that Section 78(1) of the Punjab Reorganisation Act, 1966, confers a legal right on the Plaintiff to receive and utilize power generated from the Bhakra-Nangal and Beas Projects. The absence of a final agreement or Central Government order determining the rights does not affect this legal right. Thus, the suit is maintainable.
Issue No. 7: Agreement on power sharing from the Bhakra-Nangal and Beas Projects
The court concluded that the allocation of power to Himachal Pradesh was tentative and ad hoc, not final. There is no final agreement between the successor States regarding the allocation of power from the Bhakra-Nangal and Beas Projects as required under Section 78(1) of the Punjab Reorganisation Act, 1966.
Issue No. 8: Entitlement to 12% free power
The court held that the Plaintiff's claim to 12% free power is not based on any legal right, constitutional or statutory, but on a policy decision of the Government of India applicable to Central Sector Hydro-Electric Projects post-1985. Thus, the Plaintiff is not entitled to 12% free power from the Bhakra-Nangal and Beas Projects.
Issue No. 9: Entitlement to 7.19% of the total power generated
The court found that the Plaintiff is entitled to 7.19% of the total power generated from the Bhakra-Nangal and Beas Projects based on the population ratio of the transferred territory. The allocation of only 2.5% was inequitable. The court ordered the entitlement of power to the constituents of the composite State of Punjab, including Himachal Pradesh, to be recalculated.
Issue No. 10: Compensation claim of Rs. 2199.77 crores
The court directed the Union of India to work out the details of the Plaintiff's claim based on the entitlements and file a statement in the court. The Plaintiff's claim for compensation will be determined based on this statement.
Issue No. 11: Award of interest on amounts determined
The court awarded interest at the rate of 6% on the amounts determined to be due to the Plaintiff from Defendant Nos. 2 and 3 for utilizing power in excess of their entitlement.
Reliefs Granted:
1. The suit is decreed in part against Defendant Nos. 2 and 3 and dismissed against Defendant Nos. 1, 4, and 5.
2. Plaintiff-State is entitled to 7.19% of the power from Bhakra-Nangal and Beas Projects from the respective dates.
3. Defendant No. 1 to work out the details of the Plaintiff's claim and file a statement in the court.
4. Plaintiff-State is entitled to 6% interest on the amounts due from Defendant Nos. 2 and 3.
5. Plaintiff-State to receive its share of 7.19% from November 2011.
6. Plaintiff-State awarded costs of Rs. 5 lakhs each from Defendant Nos. 2 and 3.
The matter will be listed after six months for verification of the statements and making the final decree.
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2011 (9) TMI 1196
Issues Involved:
1. Legality of the bail granted to respondent No.2.
2. Consideration of fresh grounds for bail.
3. Evaluation of the FSL report and its impact on the bail decision.
4. Examination of alleged threats and their influence on the bail decision.
5. Applicability of precedents in bail cancellation.
Summary:
1. Legality of the Bail Granted to Respondent No.2:
The petitioner assailed the order dated 21.04.2011 by the learned Additional Sessions Judge admitting respondent No.2 to bail. Initially, the bail application u/s 439 CrPC was dismissed on 07.03.2011 due to serious allegations of cruelty and threats, with the court noting that releasing the accused could tamper with evidence and hamper a fair trial.
2. Consideration of Fresh Grounds for Bail:
The second bail application was moved on 31.03.2011, citing new grounds such as no apprehension of threat to witnesses and the accused's cooperation during the investigation. The learned Additional Sessions Judge granted bail after respondent No.2 spent 45 days in custody, noting the absence of admissible evidence in the form of a suicide note and the accused's stable employment as a Section Officer.
3. Evaluation of the FSL Report and Its Impact on the Bail Decision:
The FSL report dated 09.11.2010 revealed that the handwriting in the alleged suicide note could not be attributed to the deceased. This was a significant factor in granting bail, as the earlier decision was based on the premise that the FSL report confirmed the handwriting of the deceased.
4. Examination of Alleged Threats and Their Influence on the Bail Decision:
The investigating officer's report and supplementary statements did not substantiate the alleged threats. The court noted that the brother of the deceased did not mention any threats in his statement dated 26.04.2010.
5. Applicability of Precedents in Bail Cancellation:
The petitioner relied on precedents such as Kalyan Chandra Sarkar Vs. Rajesh Ranjan and Prakash Kadam Vs. Ramprasad Vishwanath Gupta, emphasizing the need for fresh grounds to grant bail and the consideration of the gravity of the offense. The court, however, found no supervening circumstances to cancel the bail, noting the accused's cooperation and the lack of evidence of absconding or tampering with evidence.
Conclusion:
The court concluded that no ground to interfere with the impugned order was made out, and the order granting bail was well-reasoned. The petition was dismissed with no costs.
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2011 (9) TMI 1195
Issues involved:
The correctness of CIT(A)'s order u/s 143(3) of the Income Tax Act, 1961 for the assessment year 2005-06 regarding the eligibility of income in the form of interest from investment of surplus fund with other banks for deduction u/s 80P(2)(a) of the Act.
Summary:
Issue 1: Eligibility of income for deduction u/s 80P(2)(a) of the Act
The Assessing Officer disputed the eligibility of income received on fixed deposits from banks other than a cooperative bank for the benefit of section 80P(2) of the Income Tax Act. The CIT(A) ruled in favor of the assessee based on a previous ITAT decision for the assessment year 2003-04. The Departmental Representative cited a Supreme Court judgment but the Tribunal found that the issue was already settled in favor of the assessee by the Bombay High Court's judgment in a similar case. The Tribunal upheld the CIT(A)'s decision and dismissed the appeal.
In conclusion, the Tribunal affirmed the CIT(A)'s decision, stating that the issue was already settled in favor of the assessee by the Bombay High Court's judgment and a previous ITAT decision. The appeal was dismissed.
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2011 (9) TMI 1194
The Appellate Tribunal ITAT Visakhapatnam dismissed the appeal of the assessee against the order of the CIT(A) as none appeared on behalf of the assessee during the hearing. The Tribunal confirmed the order of the CIT(A) as no infirmity was noticed. The appeal was dismissed on 06.09.2011.
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2011 (9) TMI 1193
Issues involved: Appeal against rejection of registration of Trust u/s 12AA(1)(b)(ii) of the Income-tax Act,1961.
Summary:
Issue 1: Rejection of registration u/s 12AA(1)(b)(ii)
The assessee Trust applied for registration u/s 12A(a) of the Act, but the application was rejected by the Commissioner of Income Tax, Ludhiana. The rejection was based on the delay in filing the application and the lack of charitable activities by the Trust. The Commissioner held that the delay in filing the application was not justified, and the Trust's activities did not align with the provisions of law. The Trust was given opportunities for hearing, but no response was received. The Tribunal found that the Commissioner did not provide adequate opportunity for the assessee to be heard and did not confront the reports of the Assessing Officer and Joint Commissioner to the assessee, violating the principle of natural justice. The Tribunal set aside the Commissioner's order and directed a fresh decision after affording due opportunity of being heard to the assessee within two months.
Issue 2: Lack of charitable activities
The Commissioner noted that the Trust had not performed charitable activities during the relevant assessment years and had utilized funds for purposes not considered charitable. The Trust was also found ineligible for income exemption under Section 10(23C)(iiab) as it did not meet the criteria. The Tribunal did not find sufficient justification for these conclusions and emphasized the importance of providing a fair hearing and following due process. The Tribunal allowed the appeal for statistical purposes.
Separate Judgement:
No separate judgment was delivered by the judges in this case.
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2011 (9) TMI 1192
Issues involved:
Appeal against the order of CIT (Appeals) dated 30.07.2010 relating to assessment year 1999-2000 u/s 148 of the I.T. Act, 1961.
Assessment made u/s 144 of the Income Tax Act:
The assessee raised the issue of assessment being made u/s 144 of the Income Tax Act through ground Nos. 5 to 8. The Tribunal noted similar issues in previous cases where assessments were completed ex-parte u/s 144. The Tribunal remitted the issue back to the file of the CIT (Appeals) for decision.
Validity of service of notices and orders:
The assessee claimed that notices u/s 148, 143(2), 142(1), and the order u/s 144 were not served as they were affixed on locked premises. The Tribunal observed discrepancies in the documents provided by the assessee but found that the CIT (Appeals) failed to address the validity issue. The Tribunal remitted the issue back to the CIT (Appeals) for proper consideration.
Additional grounds raised by the assessee:
The assessee raised additional grounds regarding non-issuance of notice u/s 143(2) of the Act, which were not raised before the CIT (Appeals). The Tribunal decided to restore this issue to the file of the CIT (Appeals) for a decision. The grounds of appeal raised by the assessee were allowed for statistical purposes.
Penalty under section 271(1)(c) of the Act:
The issue of penalty under section 271(1)(c) was also remitted back to the CIT (Appeals) for reconsideration in line with the Tribunal's directions. The Tribunal allowed the appeals of both the assessee and the Revenue.
This judgment primarily dealt with the assessment made u/s 144 of the Income Tax Act, the validity of service of notices and orders, additional grounds raised by the assessee, and the penalty under section 271(1)(c) of the Act. The Tribunal remitted several issues back to the CIT (Appeals) for proper consideration and decision in accordance with the law.
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2011 (9) TMI 1191
Public servant taking gratification - offence punishable u/s 7, 13(1)(d)(ii) r/w Section 13(2) of the Prevention of Corruption Act, 1988 (Act) - Article 142 and its applicability - Quantum of sentence - the appellant working as a Head Clerk in the Traffic Cadre Section, he was caught red handed along with the money which was recovered from the right hand side pocket of his pant and was convicted u/s 7 of the Act for which he was sentenced to undergo rigorous imprisonment for six months and to pay a fine of ₹ 500/-, in default, simple imprisonment for one month. He was also convicted for the offence u/s 13(1)(d)(ii) r/w Section 13(2) of the Act and sentenced to undergo rigorous imprisonment for one year and fine of ₹ 500/-, in default, simple imprisonment for one month. The trial Court ordered that both the sentences of imprisonment shall run concurrently. the appellant submitted that inasmuch as the alleged incident took place on 14.11.1997 and 14 years have elapsed since then, the amount of ₹ 200/- said to have been received by the appellant is trivial in nature and also of the fact that due to the said conviction and sentence he lost his job, leniency may be shown and sentence be reduced to the period already undergone. He fairly admitted that out of the maximum period of one year, the appellant had served only 52 days in prison.
HELD THAT:- In the case on hand, it is to be noted that on appreciation of oral and documentary evidence led in by the prosecution and the defence and on appreciation of entire materials, the court of first instance i.e. the trial Court convicted the appellant and sentenced him. The High Court, as an appellate Court, once again analysed all the material, and the prosecution had proved the guilt of the accused beyond reasonable doubt concurred with the conclusion arrived at by the trial Court and dismissed the appeal of the appellant. Inasmuch as both the courts have thoroughly discussed the matter with reference to the charges leveled against the appellant and in view of the limited order dated 28.01.2008 by this Court issuing notice confining to quantum of sentence only. we feel that it is not a case of such nature that the appellant should be heard on all points, consequently, we reject the request of the learned senior counsel appearing for the appellant. Consequently, the appeal fails and the same is dismissed. Since the appellant is on bail, the bail bonds executed by him stand cancelled.
applicability of Article 142 of the Constitution of India is not in dispute, we make it clear that exercise of such power would, however, depend on the facts and circumstances of each case. The High Court, in exercise of its jurisdiction, u/s 482 of the Crpc and this Court, under Article 142 of the Constitution, would not ordinarily direct quashing of a case involving crime against the society particularly, when both the trial Court as also the High Court have found that the charge leveled against the appellant under the Act has been made out and proved by the prosecution by placing acceptable evidence.
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2011 (9) TMI 1190
The Gujarat High Court granted a request for a three-month extension for the petitioners to comply with the pre-deposit requirement imposed by the Tribunal. The petitioners must comply by 08.12.2011, and if they sell any immovable properties during this period, the proceeds must first be used for the pre-deposit. An undertaking must be filed by the Director of the Company within one week.
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2011 (9) TMI 1189
Issues Involved:
1. Deleting addition of Rs. 14,94,000/- in respect of loss claimed on forfeiture of shares.
2. Disallowance of professional fee paid to Shri S.K. Mitra.
3. Levy of tax on long-term capital gain at 20% instead of 35%.
4. Treating amount of Rs. 11,06,271/- as short-term capital gain instead of business income.
5. Addition/deletion of interest of Rs. 4.79 crores due to differential interest rates on loans.
Summary:
1. Deleting addition of Rs. 14,94,000/- in respect of loss claimed on forfeiture of shares:
The first common issue relates to the deletion of the addition of Rs. 14,94,000/- for the assessment year 2001-02 concerning the loss claimed on forfeiture of shares by the issuing company. The CIT(A) deleted the addition, observing that the loss was not speculative as it did not involve the purchase or sale of shares but was due to forfeiture of application money. The Tribunal upheld this view, stating that the assessee did not fall under Explanation to Section 73 of the Income-tax Act, 1961, and thus, the loss should be treated as a capital loss.
2. Disallowance of professional fee paid to Shri S.K. Mitra:
The next issue pertains to the disallowance of a professional fee of Rs. 40 lakhs paid to Shri S.K. Mitra. The AO disallowed the claim, citing no business requirement and the provisions of Section 14A. The CIT(A) allowed the claim, noting that Mitra's services were multifarious and related to various company activities, not just exempt income. The Tribunal modified the CIT(A)'s order for the assessment year 2001-02, directing the AO to restrict the disallowance to 10% of the payments made to Mitra u/s 14A.
3. Levy of tax on long-term capital gain at 20% instead of 35%:
The Revenue's grievance regarding the levy of tax on long-term capital gain at 20% instead of 35% was addressed. The CIT(A) directed the AO to tax the gains at 20%, treating them as long-term capital gains, which the Tribunal upheld, noting the AO's lack of reasoning for the 35% rate.
4. Treating amount of Rs. 11,06,271/- as short-term capital gain instead of business income:
For the assessment year 2002-03, the issue was whether Rs. 11,06,271/- should be treated as short-term capital gain or business income. The CIT(A) treated the gain from the redemption of mutual fund units as capital gains, which the Tribunal upheld, finding no reason to interfere with the CIT(A)'s order.
5. Addition/deletion of interest of Rs. 4.79 crores due to differential interest rates on loans:
In the assessment year 2004-05, the issue was the addition of Rs. 4.79 crores due to the differential interest rates on loans. The AO disallowed the interest, citing that loans were taken at 10.5% but given to sister concerns at 7%. The CIT(A) deleted the addition, noting the decline in interest rates and the impracticality of repaying fixed-period debentures. The Tribunal, however, set aside the CIT(A)'s order, directing the AO to re-examine the issue in light of the Supreme Court's decision in S.A. Builders, which requires examining the commercial expediency of such loans.
Conclusion:
The appeals for the assessment years 2001-02, 2004-05, and 2005-06 were allowed in part for statistical purposes, while the appeal for the assessment year 2002-03 was dismissed. The order was pronounced in the open court on 16th September 2011.
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2011 (9) TMI 1188
Issues involved: Claim of deduction u/s 80IB of the Income Tax Act for manufacturing activity.
Summary:
The Revenue appealed against the Tribunal's judgment regarding the deduction of Rs. 46,05,565 under section 80IB of the Income Tax Act, contending that the activity carried out by the assessee did not amount to manufacturing. The Tribunal allowed the deduction based on the creation of a new product, NPK mix, and the principle of consistency in granting benefits. The High Court, after reviewing the case, found no substantial question of law and upheld the Tribunal's decision, emphasizing that the activity qualified as manufacturing and benefits were granted in previous years without issue. The tax appeal was consequently dismissed.
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2011 (9) TMI 1187
Issues Involved:
1. Exemption u/s 5(1)(vi) of the Wealth Tax Act for Station Road Property.
2. Valuation of immovable property at Shanti Kunj, near Circuit House, Alwar.
Summary:
Issue 1: Exemption u/s 5(1)(vi) of the Wealth Tax Act for Station Road Property
The Revenue contested the decision of the ld. CWT(A) directing the AO to allow exemption u/s 5(1)(vi) of the Wealth Tax Act for the Station Road Property, Alwar, claiming it was a residential property. The AO argued the property was vacant and later converted into a commercial complex, Datta Arcade, thus valuing it at Rs. 2,13,48,113/- using the DLC Rate. The ld. CIT(A) countered, stating the property's nature as residential was established in earlier wealth tax proceedings and upheld by appellate orders, and the AO could not unilaterally change its classification. The Tribunal agreed with the ld. CIT(A), noting the property had construction and was used as residential quarters for laborers. The Tribunal directed the AO to ascertain the un-built area exceeding 70% of the aggregate area and value it accordingly, while the constructed area plus 70% of the aggregate area would be exempt u/s 5(1)(vi).
Issue 2: Valuation of immovable property at Shanti Kunj, near Circuit House, Alwar
The Revenue challenged the ld. CIT(A)'s direction to adopt the valuer's report for the Shanti Kunj property, valued at Rs. 8.00 lacs, instead of the AO's valuation of Rs. 15,13,050/-. The ld. CIT(A) favored the technical valuation over the non-technical AO's assessment. The Tribunal restored the issue to the AO to ascertain the plot's area and market value for different assessment years, as discrepancies in the plot's area were noted.
Conclusion:
The Tribunal partly allowed the Revenue's appeals for statistical purposes, directing the AO to re-evaluate the valuation of the Shanti Kunj property and to consider the un-built area exceeding 70% of the aggregate area for the Station Road property. The order was pronounced in the open Court on 23-09-2011.
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2011 (9) TMI 1186
Issues Involved:
1. Addition on account of suppressed profit.
2. Rejection of books of accounts.
3. Estimation of profit from suppressed turnover.
Detailed Analysis:
1. Addition on Account of Suppressed Profit:
The primary issue is the addition made by the Assessing Officer (AO) on account of suppressed profit. The AO based this addition on a show cause notice from the Central Excise Department, which indicated that the assessee was suppressing the maximum retail price (MRP) of ceramic tiles. The AO estimated suppressed sales at Rs. 21,52,03,905 and applied a 25% profit rate, resulting in an addition of Rs. 5,38,00,976.
The Commissioner of Income Tax (Appeals) [CIT(A)] held that while the AO was justified in rejecting the books of accounts due to suppression of sales, the AO failed to consider comparable cases and did not provide evidence to support the 25% profit rate. The CIT(A) noted that the facts in the cases of Vijay Proteins Ltd. and Sanjay Oil Cake Industries, relied upon by the AO, were not applicable as they involved inflation of purchases rather than suppression of sales.
The CIT(A) concluded that a more reasonable profit rate should be applied, considering comparable cases and the fact that the assessee had declared some portion of the suppressed profit in their regular books. The CIT(A) ultimately applied a net profit rate of 13.20% on the suppressed sales, resulting in a confirmed addition of Rs. 2,84,06,915.
2. Rejection of Books of Accounts:
The AO and CIT(A) both rejected the books of accounts on the grounds of suppression of turnover. The Tribunal agreed with this decision, stating that the suppression of turnover was sufficient reason for rejection of the books of accounts.
3. Estimation of Profit from Suppressed Turnover:
The Tribunal examined whether the profit estimation from the suppressed turnover was fair and reasonable. The AO's application of a 25% profit rate was rejected by the CIT(A) due to lack of evidence and comparable cases. The CIT(A) instead considered the net profit rates of comparable cases and the fact that the assessee had declared higher gross profits from declared sales.
The Tribunal agreed with the CIT(A) that the AO's 25% profit rate was unsupported. However, the Tribunal found that the CIT(A)'s estimation of 13.20% was still on the higher side. The Tribunal decided that a fair and reasonable profit rate should be based on the average net profit rates of comparable cases, which were 13.20%, 10.68%, 7.38%, and 3.65%, resulting in an average of 8.72%. To cover miscellaneous benefits, the Tribunal added 0.28%, arriving at a final profit rate of 9%.
Applying this 9% profit rate to the suppressed sales, the Tribunal recalculated the additions:
- For Vrundavan Ceramics Pvt. Ltd., the addition was reduced to Rs. 1,93,68,351.
- For Gokul Ceramics Pvt. Ltd., the addition was reduced to Rs. 72,06,934.
The Tribunal confirmed these revised additions and deleted the excess amounts:
- Rs. 90,38,554 for Vrundavan Ceramics Pvt. Ltd.
- Rs. 13,45,295 for Gokul Ceramics Pvt. Ltd.
Conclusion:
The Tribunal partly allowed the appeals of the assessee by reducing the additions based on a fair and reasonable profit rate of 9% on suppressed sales. The appeals by the revenue were dismissed. The Tribunal's decision emphasized the importance of considering comparable cases and ensuring that profit estimations are supported by evidence and reasonable assumptions.
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2011 (9) TMI 1185
The Supreme Court of India granted leave in the case with no stay. Key persons involved: MR MUKUNDAKAM SHARMA, MR K. S. RADHAKRISHNAN. Petitioner's representatives: Mr. L. Nageswara Rao, Mr. E. M. S. Anam, Mr. Fazlin Anam. Respondent's representatives: Mr. R. P. Bhat, Mr. H. R. Rao, Ms. Neera Gupta, Mr. B. V. Balaram Das.
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2011 (9) TMI 1184
Issues involved: Appeal against deletion of penalty u/s 272A(2)(k) of the IT Act for Asst. Year 2007-08.
Summary:
1. The Revenue filed an appeal against the deletion of penalty u/s 272A(2)(k) of the IT Act amounting to Rs. 5,01,800 for the assessment year 2007-08 by the ld. CIT(A).
2. The assessee, a Public Limited Company, was found to have defaults in filing Form No.24Q and Form No.26Q for 2509 days each by the Addl.CIT, TDS Range, Ahmedabad. The penalty was levied by the AO @ Rs. 100 per day for a total of 5018 days of default.
3. The assessee contended that the delay was due to a bona fide belief that once tax was deducted and deposited, filing the forms immediately was not necessary. The ld. CIT(A) deleted the penalty after considering the facts and legal provisions.
4. The ld. CIT(A) found that the appellant had deposited most of the tax deducted at source with the Government within the stipulated time and with interest for any delays. The penalty was levied by the AO without establishing a lack of reasonable cause for the default.
5. The Tribunal upheld the decision of the ld. CIT(A) citing relevant legal precedents and the provisions of sec.273B of the Act, which states that penalty shall not be imposed if a reasonable cause for the default is shown by the assessee.
6. The Tribunal dismissed the appeal filed by the Revenue, affirming the deletion of the penalty by the ld. CIT(A) based on the facts and legal position discussed in the judgment.
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2011 (9) TMI 1183
Issues Involved:
1. Allowability of provisions for costs on completed contracts.
2. Allowability of provisions for loss on incomplete contracts.
3. Withdrawal of TDS credit.
4. Levy of interest u/s 234D.
Summary:
1. Allowability of Provisions for Costs on Completed Contracts:
The assessee claimed provisions for costs on completed contracts amounting to Rs. 19,613,336. The Assessing Officer (A.O.) disallowed these provisions, stating that the assessee failed to provide evidence to prove the liability as claimed. The Commissioner (Appeals) upheld this disallowance, noting that the provisions were not made on a scientific basis and were contingent in nature. The Tribunal, however, referred to previous assessment years where similar provisions were allowed and held that in principle, provisions for costs on completed contracts should be allowed, subject to the assessee justifying the quantum of the provision. Specific cases like Gujarat State Fertilizer Corp. Ltd., Mangalore Chemical and Fertilizers Ltd., and others were examined, and the Tribunal allowed the provisions to the extent of actual expenditure incurred in subsequent years.
2. Allowability of Provisions for Loss on Incomplete Contracts:
The assessee claimed provisions for loss on incomplete contracts amounting to Rs. 66,506,252. The A.O. disallowed these provisions, stating that the assessee cannot have different methods of accounting for profits and losses and that the provisions were contingent in nature. The Commissioner (Appeals) upheld this disallowance, noting that the assessee did not provide any basis for the estimation of the loss. The Tribunal agreed with the findings of the lower authorities, stating that the assessee failed to substantiate the basis for the provisions and upheld the disallowance of provisions for anticipated loss on incomplete contracts.
3. Withdrawal of TDS Credit:
The assessee's claim for TDS credit amounting to Rs. 2,361,179 was partly disallowed by the A.O. on the ground that the conditions of section 199 of the Income Tax Act, 1961, were not satisfied. The Tribunal upheld the decision of the Commissioner (Appeals), stating that TDS credit cannot be given where the corresponding receipt is not taken into income during the year.
4. Levy of Interest u/s 234D:
The assessee contested the levy of interest amounting to Rs. 1,148,323 u/s 234D of the Act. The Tribunal referred to the judgment of the Hon'ble Jurisdictional High Court in CIT v/s Bajaj Hindustan Ltd., which held that interest u/s 234D cannot be charged in respect of refund granted prior to 1st June 2003. However, in this case, the return of income was processed after 1st June 2003, and thus, the Tribunal upheld the levy of interest u/s 234D.
Conclusion:
The Tribunal partly allowed the assessee's appeal, allowing provisions for costs on completed contracts to the extent of actual expenditure incurred, while upholding the disallowance of provisions for loss on incomplete contracts, withdrawal of TDS credit, and levy of interest u/s 234D.
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