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Showing 81 to 100 of 1047 Records
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2011 (1) TMI 1519
Issues Involved:
The judgment involves the treatment of F&O losses as speculative or business losses u/s 43(5) of the Income Tax Act, and the levy of interest u/s 234B of the Act.
Treatment of F&O Losses:
The Assessee's appeal contested the treatment of F&O losses as speculative losses by the AO and CIT(A). The AO considered the F&O loss of Rs. 3,58,04,606/- before 25/1/06 as speculation loss based on a CBDT notification. The CIT(A) upheld this decision, citing the insertion of clause (d) to the proviso of section 43(5) by the Finance Act, 2005. The CIT(A) clarified that losses incurred in trading of derivatives prior to 25-01-2006 were speculative losses and not business losses. The appeal was dismissed based on these grounds.
Levy of Interest u/s 234B:
The AO charged interest u/s 234B of the Act, which was confirmed by the CIT(A) as mandatory. The interest amount was quantified in the notice of demand accompanying the assessment order. The Assessee challenged this decision in the appeal.
Appellate Tribunal Decision:
The ITAT, Kolkata, after hearing both parties, referred to a similar case decided by the ITAT, Mumbai Bench, where derivative transactions were treated as covered by the exclusion clause in Section 43(5)(d). The ITAT found the facts of the present case akin to the Mumbai Bench decision and set aside the orders of the revenue authorities. The ITAT directed the AO to treat the loss as speculative loss and re-compute the interest under section 234B of the Act accordingly. Consequently, the appeal of the Assessee was allowed on 07/01/2011.
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2011 (1) TMI 1518
Benami Transactions - Suit for recovery of House Property - Whether the suit of the first Appellant for the recovery of her house property filed prior to the Benami Transactions (Prohibition) Act, 1988 coming into force could be considered to be prohibited by Section 4 of that Act?
HELD THAT:- In the present case it has already been established that the Appellant had purchased the property out of her own funds. Therefore, it could certainly be expected that when she came to know about the clandestine sale of her property to Respondent No. 1, she would send him a notice, which she sent on 8.4.1987. As noted earlier, the notice is sent from one house on the College Road to another house on the same road in the city of Pathankot. The agreement of purchase is signed by the Defendant No. 3 five days thereafter i.e. 13.4.1987. The Appellant had produced a copy of the notice along with postal certificate in evidence. There was no allegation that the postal certificate was procured. In the circumstances, it could certainly be presumed that the notice was duly served on Respondent No. 1 before 13.4.1987. The High Court, therefore, erred in interfering in the finding rendered by the Additional District Judge that Respondent No. 1 did receive the notice and, therefore, was not a bona fide purchaser for value without a notice.
The judgment of the High Court, therefore, deserves to be set aside. The Appellants through their counsel have, however, in all fairness offered to compensate the first Respondent herein by paying him the amount of ₹ 30,000/- with appropriate interest. The first Respondent did not evince any interest in this suggestion. Yet, the end of justice will be met, if this amount of ₹ 30,000/- is returned by the Appellants to him as offered by them with simple interest at the rate of 10%.
The judgment and order passed by the High court are set aside - Appeal allowed.
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2011 (1) TMI 1517
The Supreme Court dismissed the appeal in the case with citation 2011 (1) TMI 1517 - SC. The judges were Dr. Mukundakam Sharma and Mr. Anil R. Dave.
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2011 (1) TMI 1516
Issues Involved:
1. Disallowance u/s 14A applying Rule 8D.
2. Allowance of exemption u/s 10(1) on income from seeds division treating it as agricultural income.
Summary:
1. Disallowance u/s 14A Applying Rule 8D:
The issue in the assessee's appeal pertains to the disallowance of `55,15,000/- u/s 14A by applying the provisions of Rule 8D. The A.O. disallowed the amount, attributing it to the exempt dividend income of `6,12,95,164/-. The CIT(A) confirmed this disallowance. However, the assessee argued that Rule 8D was not applicable for the impugned assessment year, referencing the case of Godrej & Boyce Mfg. Co. Ltd. vs. DCIT 328 ITR 81. Consequently, the Tribunal restored the matter to the A.O. to reconsider the disallowance under section 14A without resorting to Rule 8D, adhering to established legal principles.
2. Allowance of Exemption u/s 10(1) on Income from Seeds Division:
The issue in the Revenue's appeal concerns the allowance of exemption u/s 10(1) on the income of `44,85,20,568/- from the seeds division, treating it as agricultural income. The assessee claimed this income as exempt, substantiating that the seeds were grown with the help of farmers under a Seeds Production Agreement, where the assessee had beneficial ownership of the land and the agricultural produce belonged to the assessee. The A.O. disagreed, citing lack of ownership of land and nexus between the income and agricultural operations. However, the CIT(A) allowed the exemption, following the Tribunal's decisions in the assessee's own case for previous years. The Tribunal upheld the CIT(A)'s decision, referencing consistent rulings in favor of the assessee in similar cases and emphasizing the rule of consistency as per the Supreme Court's decision in Radhaswamy 193 ITR 325.
Conclusion:
The assessee's appeal was allowed for statistical purposes, and the Revenue's appeal was dismissed. The Tribunal's decision was pronounced in the open court on 28th January 2011.
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2011 (1) TMI 1515
Issues Involved:
1. Application u/s 11(6) of the Arbitration and Conciliation Act, 1996.
2. Allegations of fraud and their impact on arbitration.
3. Scope of arbitration agreement and appointment of arbitrators.
Summary:
1. Application u/s 11(6) of the Arbitration and Conciliation Act, 1996:
The Applicant filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator based on an agreement dated 2 January 1995, which contained an arbitration clause.
2. Allegations of fraud and their impact on arbitration:
The Respondent instituted a suit alleging that the agreement was vitiated by fraud, seeking various reliefs including declarations, injunctions, and damages. The Respondent argued that serious allegations of fraud cannot be referred to arbitration, citing Supreme Court precedents. The Applicant contended that the scope of proceedings under Section 11(6) is limited to determining the existence of a valid arbitration agreement and whether disputes fall within its purview. The Court noted that serious allegations of fraud, which require detailed evidence, should be tried in open court and not by an arbitrator.
3. Scope of arbitration agreement and appointment of arbitrators:
Clause 19 of the agreement specified two named arbitrators. Both declined to act, leading the Respondent to argue that no arbitration should occur. The Court referred to Supreme Court rulings, stating that unless an agreement explicitly negates the appointment of substitute arbitrators, the law presumes the parties intended to supply a vacancy. Section 14 and 15 of the Arbitration and Conciliation Act, 1996, support appointing substitute arbitrators if the original ones are unable to act.
Conclusion:
The Court dismissed the application under Section 11, emphasizing that serious triable issues of fraud should be resolved in civil court. The arbitration application was dismissed with no order as to costs.
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2011 (1) TMI 1514
Issues involved: Appeal against Order-in-Appeal No.19/2010 u/s Cenvat Credit Rules, 2004 for availing credit on various services like architect services, authorized service station, interior decoration services, real estate agents services, and stock broker services.
Summary:
Issue 1: Allegations in show-cause notice and denial of credit
The appellant availed Cenvat Credit on services used for business purposes. Lower authorities issued a show-cause notice directing denial of credit. Adjudicating Authority confirmed demands, penalty, and interest. Appellant appealed, contesting the denial of credit. Commissioner(Appeals) upheld the Order-in-Original. The appellant argued that services were used for business enhancement. The Adjudicating Authority's findings were beyond the show-cause notice. The appellant referenced a judgment of the Hon'ble High Court of Bombay.
Issue 2: Eligibility of Cenvat Credit
The appellant utilized services like architect services, authorized service station, real estate agents services, and stock broker services for business purposes. The definition of input service under Rule 2(l) of the Cenvat Credit Rules was considered. The Hon'ble High Court of Bombay's interpretation of the definition was referenced, emphasizing that each limb of the definition can be considered independently for exemption. As the services were used directly or indirectly for business purposes, credit cannot be denied. The impugned order was set aside, and the appeal was allowed.
Conclusion:
The Tribunal decided in favor of the appellant, allowing the appeal based on the eligibility of Cenvat Credit for services used for business enhancement. No findings were recorded on other submissions as the lower authorities had gone beyond the show-cause notice.
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2011 (1) TMI 1513
Issues Involved:
1. Jurisdiction of the Delhi High Court to decide the probate and testamentary matters.
2. Legitimacy of the ninth Defendant's claim and objections to the probate proceedings.
3. Whether the trustees should be restrained from dealing with the estate of the deceased.
Issue-wise Detailed Analysis:
Issue No. 1: Jurisdiction of the Delhi High Court
The Court's jurisdiction to decide the probate and testamentary matter was affirmed by the Royal Court of Jersey on 13-2-2007. The Jersey Court stated, "we proceed on the basis that the Delhi High Court has jurisdiction to determine the Probate Action not only under Indian law but also for the purposes of enforcement of any judgment of the High Court in Jersey under the rules of private international law." The Jersey Court recognized the Delhi High Court's jurisdiction but did not stay its own proceedings due to the expected lengthy resolution time in India. The Delhi High Court emphasized that the wills were executed in Delhi by the deceased, who had a permanent abode in Delhi. The Plaintiff, the sole beneficiary of the will, and the sixth Defendant, the executrix of the wills, are residents of Delhi. The Court concluded that the cause of action arises in Delhi, reinforcing its jurisdiction.
Issue No. 2: Legitimacy of the Ninth Defendant's Claim
The ninth Defendant contested the proceeding, alleging that the wills are forged and unenforceable. He claimed to be the legitimate son of the deceased, entitled to a share of the estate. He argued that the Delhi High Court is not the competent jurisdiction and that the estate is overseas. However, the Court noted that the ninth Defendant's objections pertained mainly to the merits of the probate proceedings and were not relevant to the current suit. The Court found that the ninth Defendant failed to establish that the Delhi High Court is a forum non conveniens.
Issue No. 3: Restraining the Trustees from Dealing with the Estate
The Plaintiff sought a permanent injunction to prevent the trustees from dealing with the estate until the probate proceedings were concluded. The trustees had applied to the Royal Court of Jersey for permission to use the estate's assets for legal proceedings, which could dissipate the estate. The Court noted that the trustees are not parties to the probate proceedings and have no interest in the properties. The Court emphasized that if the trustees were allowed to continue their actions, it would render the probate proceedings meaningless. The Court found that the trustees' actions could be oppressive and vexatious, as there would be nothing gained beyond what could be achieved in the Delhi High Court. The Court applied the principles from Modi Entertainment Network v. W.S.G. Cricket Pte. Ltd., determining that an anti-suit injunction was justified to avoid injustice.
Conclusion:
The Delhi High Court concluded that it has jurisdiction over the probate and testamentary matters. The ninth Defendant's objections were found to be without merit. The Court granted the permanent injunction sought by the Plaintiff, restraining the trustees from dealing with the estate and initiating any proceedings regarding it until the probate proceedings were resolved. The suit was decreed in favor of the Plaintiff, with costs payable by the ninth Defendant.
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2011 (1) TMI 1512
Issues involved:
The judgment involves appeals filed by the revenue against two separate orders passed by the ld. CIT(A) for assessment years 2006-07 & 07-08. The main issue revolves around the disallowance of expenditure claimed by the assessee due to the absence of business activities during the relevant years and the treatment of outstanding liabilities under section 41(1) of the Income Tax Act, 1961.
For A.Y. 2006-07:
The grounds of appeal focused on the allowance of expenditure u/s 37(1) despite the lack of business activities, contrary to the decision in M/s Bombay Steam Navigation Co. P. Ltd. Vs. CIT. The appellant argued for the addition of fresh grounds of appeal or amendments. The Tribunal noted that the ld. CIT(A) allowed the claim despite a previous remand order, leading to the appeal by the revenue.
For A.Y. 2007-08:
Similar grounds of appeal were raised regarding the allowance of expenditure u/s 37(1) and the treatment of business income despite the absence of business activities. The ld. CIT(A) was criticized for ignoring relevant decisions and not waiting for the outcome of the previous year's remand order. The issue was restored to the AO for fresh adjudication as per Tribunal directions.
Treatment of Outstanding Liabilities:
The AO treated outstanding liabilities as ceased under section 41(1) due to non-payment for three years. The assessee argued that these were not ceased liabilities but outstanding amounts awaiting payment upon debt realization. The ld. CIT(A) ruled in favor of the assessee, citing the lack of remission or cessation of liability, supported by case law. The Tribunal upheld the decision, noting the absence of evidence of benefit to the assessee from the outstanding liabilities.
Conclusion:
The Tribunal allowed the appeal for A.Y. 2006-07 for statistical purposes and partly allowed the appeal for A.Y. 2007-08. The judgment emphasized the need for proper adjudication based on Tribunal directions and the requirement of evidence for the treatment of outstanding liabilities under section 41(1) of the Income Tax Act, 1961.
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2011 (1) TMI 1511
Issues involved: Challenge to the legality of Section 4(1) of the OVACT Act and Rule 41(1) of the Orissa Value Added Tax Rules, 2004 on grounds of being illegal, invalid, and ultra vires the Constitution of India.
Summary:
Issue 1: Legality of conducting frequent audits without specifying audit cycle in the Rules
The petitioner, a registered dealer under the Orissa Value Added Tax Act, challenged the legality of repeated audits conducted by taxing authorities without a defined audit cycle in Rule 41. Allegations of harassment and abuse of power under Section 41 and Rule 41 were made, contending violation of Articles 14 and 19 of the Constitution. The Revenue authorities argued that the power for conducting audits is essential to prevent tax evasion and ensure tax compliance. The Court examined the provisions of Section 41 and Rule 41, concluding that the Act and Rules empower the Commissioner to select dealers for tax audit based on risk analysis or objective criteria, not violating the Constitution.
Issue 2: Constitutionality of Section 41 and Rule 41 of the Act and Rules
The Court found that the provisions of the OVAT Act and Rules enable the Commissioner to conduct tax audits to prevent tax evasion, enacted by the State Legislature within statutory power. The Court upheld the constitutionality of the provisions, emphasizing the importance of preventing tax evasion in the country. The argument against the provisions was deemed unfounded, and the Revenue's stance was accepted. The Court directed fresh assessment proceedings and quashed Annexure-1, allowing the petitioner to present factual aspects in response to the show cause notice.
Separate Judgement:
No separate judgment was delivered by the judges in this case.
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2011 (1) TMI 1510
Issues Involved:
1. Condonation of delay in filing the appeal.
2. Nature of the assessment (protective vs. substantive).
3. Right to cross-examine witnesses.
4. Legality of additions in block assessment when already assessed in regular assessment.
Issue-Wise Detailed Analysis:
1. Condonation of Delay in Filing the Appeal:
The assessee filed an appeal with a delay of 654 days, attributing the delay to the advice of a Chartered Accountant who mistakenly advised that only one appeal was necessary since the same amount was assessed in both regular and block assessments. The Tribunal noted that the assessee had been actively pursuing the matter and that the delay was due to a reasonable cause, i.e., incorrect legal advice. The Tribunal referenced several case laws, including Collector, Land Acquisition vs. Mst. Katji and Priyanka Chopra vs. ACIT, to support the condonation of delay due to reasonable cause. The Tribunal emphasized that justice should be preferred over technicalities and condoned the delay, allowing the appeal to be admitted.
2. Nature of the Assessment (Protective vs. Substantive):
The assessee argued that the assessment for the year 2002-03 was substantive, not protective, as the AO had raised a tax demand and initiated coercive measures for recovery. The Tribunal reviewed the guidelines for protective assessments, including the necessity for a substantive assessment to precede a protective one and the requirement to specify the substantive assessment in the protective order. The Tribunal found that the AO did not follow these guidelines and that the assessment for 2002-03 was indeed substantive. The Tribunal cited multiple case laws, including Lalji Haridas vs. ITO and M.P. Ramchandran vs. DCIT, to support the conclusion that the assessment was substantive.
3. Right to Cross-Examine Witnesses:
The assessee contended that the addition was based on statements from third parties without an opportunity for cross-examination. The Tribunal acknowledged the legal mandate for the right to cross-examine and noted that the assessee had requested this before the CIT(Appeals). The Tribunal indicated that the assessee should be granted the opportunity to cross-examine the witnesses, aligning with principles of natural justice.
4. Legality of Additions in Block Assessment:
The Tribunal examined whether the same amount could be taxed in both regular and block assessments. The Tribunal referred to Section 158BA(2) Explanation (b), which states that income assessed in regular assessment cannot be included in block assessment. The Tribunal found that the addition in the regular assessment for 2002-03 was substantive and thus could not be added again in the block assessment. The Tribunal cited the case of Caltradeco Steel Sales (P) Ltd. & Ors. vs. DCIT to support this conclusion. Consequently, the Tribunal deleted the addition in the block assessment.
Conclusion:
- The delay in filing the appeal was condoned due to reasonable cause.
- The assessment for the year 2002-03 was determined to be substantive, not protective.
- The assessee's right to cross-examine witnesses was upheld.
- The addition in the block assessment was deleted as it was already assessed in the regular assessment.
Final Orders:
- The appeal in IT(SS)A.No. 24/Mum/2009 was allowed.
- The appeal in ITA No. 5102/Mum/2006 was dismissed, confirming the addition in the regular assessment for the year 2002-03.
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2011 (1) TMI 1509
Maintainability of LPA against a judgment or order passed in exercise of “criminal jurisdiction” - Held that:- Both the sides are ad idem that when the writ petition is filed invoking original jurisdiction of this Court, LPA would be maintainable against the order passed by the Single Judge in such a writ petition. However, the parties have joined issues on the question as to whether writ petition filed for quashing the FIR should be treated as invoking criminal jurisdiction of this Court. Whereas Ajay Fotedar (2005 (7) TMI 688 - DELHI HIGH COURT ) suggests that such writ petition would be treated as invoking the criminal jurisdiction and LPA would not be maintainable, some of the observations made in Harwinder Singh (1994 (3) TMI 391 - DELHI HIGH COURT ) suggests otherwise. In view of this, we are of the opinion that the matter needs to be referred to the Full Bench to resolve this issue.
Accordingly, we make following reference for consideration by the Full Bench:-
“Whether the writ petition filed under Article 226 of the Constitution of India read with Section 482 of the Code of Criminal Procedure for quashing a FIR amount to invoking “original jurisdiction” or these proceedings are to be treated as invoking “criminal jurisdiction?”
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2011 (1) TMI 1508
The Supreme Court of India dismissed the special leave petition citing the decision in Virlon Textile Mills Ltd. vs. Commissioner of Central Excise, Mumbai (2007) 4 SCC 440.
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2011 (1) TMI 1507
Issues involved: Disallowance of interest paid u/s 14A of the I. T. Act, 1961.
The appeal was filed against the order of the Ld. CIT(A) Kolkata for the assessment year 2005-06, concerning the disallowance of &8377; 1,66,658 out of interest paid u/s 14A of the I. T. Act, 1961. The Assessing Officer allocated a portion of interest paid by the assessee for earning exempt income from firms, disallowing it against taxable income. The Ld. CIT(A) upheld this decision, leading to the appeal before the ITAT Kolkata.
During the hearing, the Ld. Counsel for the assessee argued that the interest expenditure was for investments in firms where the assessee was a partner, generating both taxable and non-taxable income. It was contended that the share of profit from the firm, though exempt u/s 10(2A) of the Act, was not entirely tax-free, aiming to prevent double taxation. Citing relevant case law, the counsel argued against the disallowance of the expenditure.
On the contrary, the Ld. DR supported the lower authorities' orders and urged the bench to affirm the Ld. CIT(A)'s decision.
After considering the arguments and relevant precedents, the ITAT Kolkata referred to the decision of the Tribunal Mumbai Bench in a similar case. The Tribunal held that the share income of the firm, though exempt under certain sections, retains the character of business income. Consequently, it was deemed unnecessary to disallow the proportionate expenditure claimed by the assessee. Relying on established case law, the ITAT Kolkata set aside the lower authorities' orders and allowed the appeal of the assessee, deleting the disallowance of &8377; 1,66,658.
Therefore, the ITAT Kolkata allowed the appeal of the assessee, based on the interpretation of relevant provisions and precedents, overturning the disallowance of interest paid u/s 14A of the I. T. Act, 1961.
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2011 (1) TMI 1506
Issues Involved:
1. Enlargement of time for filing objections under Section 48 of the Arbitration and Conciliation Act, 1996.
2. Enforcement of a foreign arbitration award under Section 49 of the Act.
3. Interpretation of contractual terms and alleged breach of contract.
4. Challenge to the award on the grounds of public policy and natural justice.
Detailed Analysis:
1. Enlargement of Time for Filing Objections:
The application under Section 148 CPC sought an enlargement of time for filing objections under Section 48. The court allowed this application for reasons stated therein.
2. Enforcement of Foreign Arbitration Award:
The decree holder, an Arizona-based company, sought enforcement of a foreign award dated 27.3.2008 under Section 49 of the Arbitration and Conciliation Act, 1996. The award was rendered by the International Chamber of Commerce (ICC), Paris, following a dispute over unpaid royalties under a Trade Mark License Agreement (TLA) with the judgment debtor, an Indian company.
3. Interpretation of Contractual Terms and Alleged Breach:
- Decree Holder's Case:
- The TLA granted the judgment debtor a license to use the "Penn" trademark, with royalties due quarterly. The judgment debtor defaulted on payments, leading to contract termination and arbitration.
- The arbitrator ruled that the decree holder did not breach the contract by granting a license to Nebus Loyalty Limited, as Clause 2.2.2 of the TLA permitted such actions.
- Judgment Debtor's Case:
- The judgment debtor argued that the decree holder breached the TLA by granting a license to Nebus, which affected their business and led to substantial losses.
- The judgment debtor claimed the decree holder's actions were unethical and violated the exclusivity clause of the TLA.
4. Challenge to the Award on Grounds of Public Policy and Natural Justice:
- Judgment Debtor's Submissions:
- The judgment debtor challenged the foreign award under Section 48, arguing it was contrary to public policy and that they were unable to present their case adequately.
- They contended that the arbitrator's interpretation of Clause 2.2.2 was incorrect and contrary to the contract's intent.
- They also argued that the arbitrator denied them a fair opportunity to present their defense and counterclaims due to procedural constraints and financial incapacity.
- Decree Holder's Submissions:
- The decree holder argued that the objections under Section 48 could not challenge the award on merits and that the scope of public policy under Section 48 was narrow.
- They cited precedents indicating that foreign awards cannot be impeached on merits and that the enforcement process should be straightforward unless it contravenes the fundamental policy of Indian law, interests of India, or justice and morality.
- They also contended that the judgment debtor was given ample opportunity to present their case but failed to do so.
Discussion & Conclusion:
- The court found no merit in the judgment debtor's objections, stating that the interpretation of the contract by the arbitrator was plausible and within their jurisdiction.
- The court emphasized that the grounds for refusing enforcement under Section 48 are limited and do not permit a review on merits.
- The court also rejected the judgment debtor's claims of procedural unfairness, noting that the arbitrator provided adequate opportunities to file defenses and counterclaims.
- Consequently, the court dismissed the objections under Section 48 and held the foreign award enforceable, deeming it a decree of the court.
Other Applications:
- The court dismissed E.A. No.77/2010, which sought the deposit of the awarded amount by the judgment debtor, as it became infructuous following the dismissal of the objections under Section 48.
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2011 (1) TMI 1505
Issues:
Quashing of preliminary findings recommending provisional anti-dumping duty on PVC Flex Films imports into India and seeking direction for fixing anti-dumping duty based on reference price.
Analysis:
The petition sought to quash the preliminary findings recommending provisional anti-dumping duty on imports of PVC Flex Films into India and to fix the duty based on reference price. The petitioner, an Indian company importing PVC Flex Films, argued that the investigation could not be initiated based on the application of Respondent No. 4, as it did not fall under the definition of the domestic industry. The petitioner also contended that the basis of anti-dumping duty should be the margin of dumping, which was not properly determined in this case. The High Court noted that the petitioner had the remedy of appeal available under Section 96 of the Act before the Tribunal against the levy of provisional duty. The provisional duty was effective until the normal value and margin of dumping were determined. The impugned notification was based on preliminary findings that goods were exported below the normal value, causing injury to the domestic industry. Despite the availability of alternative remedies, the Court held that the findings were based on evidence collected following due procedure. The Court observed that the impugned notification could not be considered perverse or arbitrary at that stage, and thus dismissed the writ petition, emphasizing that the observations made were not a final opinion on the merits and did not affect the statutory remedy of appeal.
In conclusion, the High Court dismissed the writ petition seeking to quash the preliminary findings recommending provisional anti-dumping duty on PVC Flex Films imports into India. The Court emphasized the availability of alternative statutory remedies, including the right to appeal, and held that the findings were based on evidence collected following due procedure. The Court found no grounds to interfere with the impugned notification at that stage, stating that it was not perverse or arbitrary. The Court clarified that its observations did not represent a final opinion on the merits and did not impact the statutory remedy of appeal available to the petitioner.
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2011 (1) TMI 1504
Title: Supreme Court Judgment 2011 (1) TMI 1504 - SC Order
Judges: Mr. Dr. Mukundakam Sharma and Mr. Anil R. Dave
Decision: Delay condoned, appeal dismissed.
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2011 (1) TMI 1503
Issues Involved:
1. Unexplained investment u/s 69 of the Act.
2. Travelling & conveyance expenditure.
3. Telephone expenditure.
4. Fooding charges.
5. Fuel charges.
6. Repair and maintenance.
Summary:
1. Unexplained Investment u/s 69 of the Act:
The department contested the deletion of an addition of Rs. 13,08,900/- made by the A.O. as unexplained investment u/s 69 of the Act. The assessee had advanced this amount to M/s. Ashok Leyland Finance Ltd. and showed it in the balance sheet. The A.O. added this amount as unexplained investment based on the Tax Audit Report, which stated that the loan could not be verified due to the absence of a balance confirmation certificate. However, the ld. C.I.T.(A) directed the deletion of this addition, noting that the investment was duly recorded in the books of accounts and supported by a confirmation certificate from M/s. Ashok Leyland Finance Ltd. The Tribunal upheld the ld. C.I.T.(A)'s order, emphasizing that the basic requirement of section 69 was not fulfilled since the investment was recorded in the books of accounts and adequately explained by the assessee.
2. Travelling & Conveyance Expenditure:
The A.O. disallowed Rs. 24,665/- out of the travelling & conveyance expenditure claimed by the assessee, citing that all bills were not produced. The ld. C.I.T.(A) deleted this addition, stating that the A.O. failed to point out specific instances where bills were not produced. The Tribunal upheld this decision, noting that the disallowance was made on an estimated basis without specific evidence.
3. Telephone Expenditure:
Similarly, the A.O. disallowed Rs. 9,371/- out of the telephone expenditure on the grounds of non-production of all bills. The ld. C.I.T.(A) deleted this addition, and the Tribunal upheld this decision, reiterating that the A.O. did not provide specific instances of missing bills and made an adhoc addition.
4. Fooding Charges:
The A.O. disallowed Rs. 32,459/- out of the fooding charges claimed by the assessee, again due to the non-production of all bills. The ld. C.I.T.(A) deleted this addition, and the Tribunal upheld this decision, emphasizing the lack of specific evidence from the A.O. to justify the disallowance.
5. Fuel Charges:
The A.O. disallowed Rs. 1,92,900/- out of the fuel charges, alleging non-production of supporting bills. The ld. C.I.T.(A) found that the assessee had furnished various details and supporting bills during the assessment proceedings and that the A.O. did not point out specific instances of missing bills. The Tribunal upheld the deletion of this addition, noting the A.O.'s failure to indicate specific defects or omissions.
6. Repair and Maintenance:
The A.O. disallowed Rs. 15,780/- out of the repair and maintenance charges on similar grounds of non-production of supporting bills. The ld. C.I.T.(A) deleted this addition, and the Tribunal upheld this decision, citing the same reasons as for the fuel charges.
Conclusion:
The Tribunal dismissed the department's appeal, upholding the ld. C.I.T.(A)'s order to delete all the additions made by the A.O. The Tribunal emphasized the importance of specific evidence and proper justification for any disallowance or addition made by the A.O.
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2011 (1) TMI 1502
Issues involved: Appeal against order u/s 12AA(3) of the Income-tax Act, 1961 regarding registration under sec. 12A.
Details of the Judgment:
1. Grounds of Appeal: The assessee claimed that the order u/s 12-A dated 29-09-2010 was barred by limitation as the application for registration u/s 12-A was made on 26-03-2006. However, the actual application was dated 26.03.2010, and the order by the Commissioner of Income-tax was passed within the six-month period, despite being received by the assessee after the expiry of six months. The ground raised by the assessee was rejected.
2. Merits of the Issue: The order under sec. 12AA(3) cancelled the registration granted to the trust. The Commissioner's conclusion was based on the satisfaction that the trust's activities were not genuine or not in line with its objects. The order was found to be contradictory as it did not mention any registration earlier granted to the assessee under sec. 12A. The decision of the Hon'ble Allahabad High Court in City Montessori School vs. Union of India was highlighted, emphasizing the need for proper consideration of facts. The Memorandum of Association and Rules were found to lack clarity on important aspects like the distribution of surplus and dissolution procedures, requiring further investigation by the Commissioner. The matter was remanded back to the CIT for fresh adjudication after providing a reasonable opportunity for the assessee to be heard.
3. Conclusion: The appeal filed by the assessee was treated as allowed for statistical purposes, and the case was remanded back to the CIT for reevaluation based on the highlighted issues and considerations.
4. Decision: The judgment was pronounced in the Open Court on 17.01.2011 after the hearing, with the matter being sent back to the Commissioner for fresh adjudication.
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2011 (1) TMI 1501
Disallowance of deduction claimed u/s 43B - ''incentive'' sales tax remission - nature of receipt - the assessee claimed that the incentive in the form of sales tax remission as enjoyed by it under the West Bengal Incentive Scheme, 1999 was a capital receipt, not chargeable to Income Tax. the AO treated the said amount as revenue receipt only. He also stated that even otherwise the sales tax collected by the assesee has not been paid within the due date of filing of return and hence as per the provision of section 43B the amount needs to be added back to the income for the year. Hence, he dismissed the assessee’s contention and the amount of the deferred sales tax being the assistance received was added back to the income of the assessee. In appeal, the Ld. CIT(A) was of the opinion that the assistance given by way of sales tax remission is in the nature of capital receipt and accordingly, he directed the Assessing Officer to delete the addition. Aggrieved by the said order, now the revenue is in appeals.
HELD THAT:- I am of the opinion that the assistance given by way of sales tax remission is in the nature of capital receipt. Accordingly, I direct the A.O. to delete the addition. In this view of the matter and in the absence of any contrary material brought on record by the revenue at the time of hearing before us, we do not find any infirmity in the order of the Ld. CIT(A) and the same is hereby upheld. Therefore, the appeals of revenue for all the years are dismissed.
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2011 (1) TMI 1499
Issues Involved:
1. Disallowance of consultancy charges.
2. Deduction u/s 80HHE.
3. Recalculation of deduction u/s 80HHE.
4. Levy of interest u/s 234B and u/s 234D.
Summary:
1. Disallowance of Consultancy Charges:
The assessee, a Private Ltd. Co. engaged in consulting engineering services, appealed against the disallowance of Rs. 95,89,626/- incurred on consultancy charges. The AO disallowed the claim for two bills raised in April 2004, arguing that the expenses were not crystallized in FY 2003-04. The CIT(A) confirmed this disallowance without detailed reasoning. The Tribunal found the disallowance unjustified, stating that the consultancy charges pertained to the same agreement and services rendered throughout the year. The Tribunal emphasized that the liability accrued in FY 2003-04 and should be allowed based on the mercantile system of accounting. The Tribunal cited several judicial precedents supporting the principle that expenses incurred for earning income should be deducted in the relevant year, even if the payment is made later. Consequently, the Tribunal allowed the assessee's claim for consultancy charges.
2. Deduction u/s 80HHE:
The assessee claimed a deduction u/s 80HHE of Rs. 15,96,993/- in the original return, which was revised to Rs. 16,58,315/- due to recalculated depreciation. The AO disallowed the additional claim, citing the lack of a revised auditor's report. The CIT(A) upheld this disallowance. The Tribunal, however, held that the filing of the audit report in form No.10CCAF before the CIT(A) satisfied the legal requirement, considering it a technical breach. The Tribunal allowed the assessee's claim for the additional deduction without remanding the matter back to the AO, deeming it unnecessary.
3. Recalculation of Deduction u/s 80HHE:
The Tribunal did not specifically address this issue separately, as it was inherently resolved within the discussion on the deduction u/s 80HHE.
4. Levy of Interest u/s 234B and u/s 234D:
The Tribunal deemed the issue of interest u/s 234B and u/s 234D as consequential and did not require specific adjudication. The Tribunal noted that no specific arguments were raised by the assessee on this matter and thus rejected this ground.
Conclusion:
The appeal was partly allowed, with the Tribunal granting relief on the disallowance of consultancy charges and the additional deduction u/s 80HHE, while rejecting the ground related to interest u/s 234B and u/s 234D.
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