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2008 (10) TMI 664
CENVAT credit - inputs - case of the Revenue is that as the inputs are used in the manufacture of final product which attracts Nil rate of duty, therefore, respondents are not entitled for taking credit - Held that: - the manufacturer is eligible to take credit in respect of input credit of duty paid on inputs which are used in the manufacture of final product being exported in respect of the fact that final products are otherwise exempted - appeal dismissed - decided against Revenue.
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2008 (10) TMI 663
Issues involved: Appeal against the order of CIT(A) regarding set off of depreciation from a previous assessment year against income from other sources for the years 2004-05 and 2005-06.
Summary:
The Revenue appealed against the CIT(A)'s decision allowing set off of depreciation from the assessment year 1996-97 against income from other sources for the years 2004-05 and 2005-06. The Revenue contended that the Tribunal's decision in the case of Southern Travels vs. Asstt. CIT was applicable, which stated that unabsorbed depreciation must be carried forward and set off against profits and gains of the same business. However, the assessee argued that the amended section 32(2) of the Finance Act, 2001, allowed for set off of unabsorbed depreciation against income from any other head.
The original section 32(2) of the IT Act, 1961 was amended by the Finance Act, 2001, restoring the provision that unabsorbed depreciation could be set off against income from any other head. The judgment of the Supreme Court in the case of CIT vs. Virmani Industries (P) Ltd. was cited, which supported the allowance of set off of unabsorbed depreciation against income for the relevant assessment years.
The Tribunal held that the amended provision of section 32(2) from the Finance Act, 2001 was applicable to the assessment years 2004-05 and 2005-06. As per the amended section, the assessee was entitled to set off the unabsorbed depreciation from the assessment year 1996-97 against income from other sources for these two assessment years. Therefore, the appeals of the Revenue were dismissed.
In conclusion, the Tribunal upheld the CIT(A)'s decision to allow the set off of depreciation from a previous assessment year against income from other sources for the years 2004-05 and 2005-06.
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2008 (10) TMI 662
Disallowance of foreign travelling expenses and hotel expenses - expenses related to business activity or not? - HELD THAT:- The expenses on airfare is wholly and exclusively for the purpose of business. Therefore, such expenses could not have been disallowed even in part. As regards hotel expenses, when the assessee or its employees travelled abroad and stayed in the hotel, the expenses are wholly and exclusively for the purpose of business. From the details the AO has not found out as to which part is not towards travel abroad or for otherwise than for the purpose of business. Accordingly the sustenance of disallowance is not in accordance with law. We, therefore, delete the entire disallowance.
Disallowance of the expenses on proportionate basis - AO invoking provision of section 14A - When the assessee specifically denied having incurred any expenditure and having also proved that the expenditure was incurred in the business of real estate agent, it was for the AO to prove that such expenditure was not incurred in the course of carrying on business but were incurred for earning exempt income. The AO having failed to do such exercise cannot presume and allocate the expenditure in the ratio of exempt income to total income. The finding has to be specific. The nexus has to be proved. In absence of such finding or nexus, provisions of section 14A cannot be invoked so as to disallow the expenses on proportionate basis. We, therefore, delete the disallowance
Unexplained investment u/s 69B - construction of house property - difference in the cost of construction and cost of investment in the property - CIT deleted the addition made by AO - Assessee filed complete details in respect of investment made. Total investment by three co-owners - HELD THAT:- Considering the facts it cannot be said that there was any unexplained investment by the assessee in construction of house property, After all the report of DVO is only an opinion and not a conclusive proof that any unexplained investment has been made. Moreover, defects were also pointed out in the said report. Considering these facts, we find that the addition was rightly deleted by the ld CIT(A).
Expenses claimed in excess of income from commission and after reducing the amount of house tax paid is disallowed - AO disallowed the expenses on the ground that the receipt is minuscule whereas the expenses are manifold. However, when the claim is made in respect of business expenses u/s 37(1) what is to be examined is whether the expenses are incurred wholly and exclusively for the purpose of business or not. Since there is no dispute about this fact, there cannot be ad hoc or artificial disallowance without giving a finding that particular expense was not incurred for the purpose of business. We, therefore, delete the disallowance.
In the result, the appeal of the assessee is allowed and that of the revenue is dismissed.
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2008 (10) TMI 661
Issues involved: Appeal against confirmation of duty, penalty, and interest under Section 11AB of the Central Excise Act, 1944.
Confirmation of duty, penalty, and interest:
The appeal arose from an Order-in-Appeal confirming duty, penalty, and interest under Section 11AB. The Tribunal held that interest and penalty were not leviable based on previous rulings and judgments. The Tribunal referred to the case law of Rashtriya Ispat Nigam Ltd. and CCE vs. Machine Montell (I) Ltd., which were upheld by the Hon'ble Apex Court and the Tribunal's Larger Bench judgment. The matter was remanded by the High Court to consider the aspect of interest levy. The High Court confirmed the Tribunal's order regarding the non-levy of penalty.
Levy of interest under Section 11AB:
The appellant argued that the duty demand pertained to a period before the amendment to Section 11AB, and thus interest should not be levied for that period. The appellant contended that the second proviso to Section 11AB should not apply in this case. The respondent argued that interest could be charged for the period before the amendment to Section 11AB. The Tribunal considered both submissions and ruled in favor of the appellant. It held that no interest liability would arise on the duty amount payable before the date of the amendment to Section 11AB.
This judgment highlights the Tribunal's decision to not levy interest and penalty based on previous rulings and the specific circumstances of the case regarding the duty demand and the applicability of Section 11AB.
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2008 (10) TMI 660
Validity of reopening of assessment u/s 147 - Jurisdiction of ITO - notice u/s 147 was issued by the ITO, Ward 25(4) on the basis of the address mentioned in the bank account of the assessee with the SBI - Having received the notice u/s.148 issued by the ITO, Ward 25(4) the assessee raised objection challenging the jurisdiction of the ITO, Ward 25(4).
HELD THAT:- The fact that the present assessee filed his return of income for the AY 1995-96 before the ITO, Ward 24 (1) is not in dispute. In the assessment for the AY 1995-96, the AO charged interest u/s. 234A against which the assessee filed an application u/s.154 before the ITO, Ward 24(1), who completed the assessment for the AY 1995-96. The ITO, Ward 24(1) then passed an order u/s. 154 and reduced the interest u/s. 234A. It is thus clear that the ITO, Ward 24(1) exercised jurisdiction over the assessee when he passed the order u/s. 154 on an application filed by the assessee u/s.154 with reference to the return of income for the AY 1995-96.
The present notice has been issued u/s.147 by the ITO, Ward 25(4), when the jurisdiction over the assessee’s case was with ITO, Ward 24(1), New Delhi. Thus, from this aspect of the matter also, the notice u/s.147 issued by ITO, Ward 25(4) was without jurisdiction. Moreover, the ITO, Ward 33(2) who passed the present assessment order without issuing any fresh notice u/s.148 cannot be said to have a valid jurisdiction over the assessee unless and until the case has been transferred to him from ITO, Ward 25(4), by an order passed u/s.147 by any competent authority. In the present case, the ITO, Ward 33(2) had exercised the jurisdiction merely on the basis of intimation given by the ITO, Ward 25(4), and merely on file being transferred by the ITO, Ward 25(4) of his own to the ITO, Ward 33(2).
The Hon’ble Delhi High Court in the case of CIT vs. Smt. Anjali Dua [2008 (7) TMI 958 - DELHI HIGH COURT] held that the notice issued u/s.148 by the then ITO, Ludhiana was without jurisdiction inasmuch as the assessee had shifted from Ludhiana to New Delhi and had been filing his return of income for AY. 1997-98 onwards at New Delhi.
We are inclined to uphold the order of the CIT(A) in holding that the assessment made by the ITO, Ward 33(2) is without jurisdiction and thus invalid and is thus to be cancelled. The order of the CIT(A) is thus upheld.
Appeal filed by the Revenue is dismissed.
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2008 (10) TMI 659
Prayer for Re-allotment/re-sitement of the two petrol pumps - due to construction of the grid separator - not have any access for refueling - economically unviable - legitimate expectation - recommendation of the Technical Committee binding on the DDA? - Whether rejection of appellants claim for resitement on the basis of the revised policy of the year 2003, their substantive legitimate expectation of being considered under the old policy of 1999 has been defeated? - The stand of the DDA before the High Court was that its policy and guidelines of 1999 for re-sitement of petrol outlets and gas godowns had been revised in June, 2003, superceding all its earlier policies on the subject. As per the new policy, re-sitement was permissible only when the land of an existing outlet was utilized for a planned proposal/scheme directly necessitating its closure - DDA rejected appellants' prayer - High Court having dismissed both the appeals.
HELD THAT:- We find it difficult to hold that the recommendation of the Technical Committee of the DDA fructified into an order conferring legal right upon the appellants. From the notings of the Commissioner and the order of the Vice Chairman, it is manifest that although there were several notings which recommended consideration of the appellants' case for relocation but finally no official communication was addressed to or received by the appellants accepting their claim. Thus, It is clear that though the proposals had the recommendations of State Level Co-ordinator (oil industry) and the Technical Committee but these did not ultimately fructify into an order or decision of the DDA, conferring any legal rights upon the appellants.
This Court in Punjab Communications Ltd. vs. Union of India and Ors.[1999 (5) TMI 605 - SUPREME COURT], referring to a large number of authorities on the question, observed that a change in policy can defeat a substantive legitimate expectation if it can be justified on "Wednesbury" reasonableness. The decision maker has the choice in the balancing of the pros and cons relevant to the change in policy. Therefore, the choice of the policy is for the decision maker and not for the Court. The legitimate substantive expectation merely permits the Court to find out if the change in policy which is the cause for defeating the legitimate expectation is irrational or perverse or one which no reasonable person could have made. Bannari Amman Sugars Ltd. vs. Commercial Tax Officer and Ors.[2004 (11) TMI 320 - SUPREME COURT].
It is well settled that the concept of legitimate expectation has no role to play where the State action is as a public policy or in the public interest unless the action taken amounts to an abuse of power.
It is manifest that even under the 1999 policy, on which the entire edifice of appellants substantive expectation of getting alternative land for resitement is built does not cast any obligation upon the DDA to relocate the petrol pumps. The said policy merely laid down a criterion for relocation and not a mandate that under the given circumstances the DDA was obliged to provide land for the said purpose. Therefore, at best the appellants had an expectation of being considered for resitement. Their cases were duly considered, favourable recommendations were also made but by the time the final decision-making authority considered the matter, the policy underwent a change and the cases of the appellants did not meet the new criteria for allotment laid down in the new policy.
We are convinced that apart from the fact that there is no challenge to the new policy, which seems to have been conceived in public interest in the light of the changed economic scenario and liberalized regime of permitting private companies to set up petrol outlets, the decision of the DDA in declining to allot land for resitement of petrol pumps, a matter of largesse, cannot be held to be arbitrary or unreasonable warranting interference. Moreover, with the change in policy, any direction in favour of the appellants in this regard would militate against the new policy of 2003. In our opinion, therefore, the principle of legitimate expectation has no application to the facts at hand.
Therefore, the appeal is devoid of any merit and deserves to be dismissed. It is dismissed accordingly.
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2008 (10) TMI 658
Assessment-Reassessment under section 143(3),147 – No new Information – The Tribunal took the view that no new information/material had come to the Assessing Officer after completing the original assessment to form any belief about the escapement of the assessee’s income and that such a belief was entirely based on reappraisal or reconsideration of the material/information already available on record at the time of completion of the original assessment. The tribunal also noted that the letter which was relied upon by the Department as the new information/material coming into the possession of the Assessing Officer was a letter dated August 28, 1999. The Tribunal arrived at the conclusion that the reassessment under section 147/143(3) was not justified as no new material had come before the Assessing officer. Thus it cannot be said that any income had escaped assessment. Taking note of the Supreme Court decision in the case of Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996 the Tribunal accepted the assessee’s plea that the reopening of the assessment was not warranted under law. Consequently, the reassessment completed by the Assessing Officer under section 147/143(3) of the said Act was quashed. In this case Delhi High Court-held that the Tribunal has correctly appreciated the law No interference with the decision of the Tribunal is called for. In any event, no substantial question of law arises for our consideration. The appeal is dismissed. – Decision in favor of assessee – against the revenue
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2008 (10) TMI 657
Issues:
1. Assessment of sales tax liability on amounts collected by the assessee.
2. Validity of enhanced lease rent agreement and deductions claimed by the assessee.
3. Interpretation of agreements and transactions in relation to tax liability and deductions.
Analysis:
1. The respondent, a liquor manufacturer, collected amounts from dealers towards doubtful tax liability. The assessing authority treated these collections as additional sale price subject to tax. The Commissioner upheld this, but the Tribunal ruled in favor of the assessee, deeming the amounts refundable and not taxable income. The Tribunal also approved the enhanced lease rent agreement, dismissing the state's appeal for partial deduction.
2. The state appealed regarding the tax liability for the collected amounts and the validity of the enhanced lease rent agreement. The Tribunal found the collected amounts refundable and not taxable income, contrary to the assessing authority's view. It also upheld the legitimacy of the enhanced rent agreement, rejecting the state's claim for partial deduction.
3. The Tribunal considered evidence that the collected amounts were refunded to dealers, concluding they were not taxable income. It also accepted the enhanced rent agreement as legitimate, denying the state's request for partial deduction. The Tribunal's decisions were based on the nature of the transactions and agreements, leading to the dismissal of the state's appeals and reference requests.
4. The petitioner cited legal precedents to support the contention that amounts collected towards tax liability, if refunded, do not attract tax liability. The Tribunal's findings aligned with this argument, emphasizing the refundability of the collected amounts as a key factor in determining tax liability. The Tribunal's decisions were consistent with legal principles and precedents, leading to a favorable outcome for the assessee.
5. The Tribunal's analysis of the transactions and agreements involved in the case, along with the evidence presented, supported the assessee's position regarding the tax liability and deductions claimed. The Tribunal's thorough examination of the facts and legal principles guided its decisions in favor of the assessee, resulting in the dismissal of the state's appeals and the reference requests.
6. In conclusion, the Tribunal's rulings on the sales tax liability, refundability of collected amounts, and validity of the enhanced lease rent agreement were based on sound legal reasoning and factual evidence. The Tribunal's decisions favored the assessee, highlighting the importance of transactional nature and refundability in determining tax liability. The state's appeals and reference requests were dismissed, affirming the Tribunal's judgments in favor of the assessee.
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2008 (10) TMI 656
Issues Involved:
1. Penalty under Section 158BFA(2) for undisclosed income.
2. Enhancement of income by CIT(A) and its implications on penalty.
3. Comparison of provisions under Section 271(1)(c) and Section 158BFA(2).
4. Jurisdiction to levy penalty on enhanced income.
5. Validity of explanation provided by the assessee for undisclosed income.
Detailed Analysis:
1. Penalty under Section 158BFA(2) for Undisclosed Income:
The assessee filed a return declaring undisclosed income of Rs. 2,40,000, but the block assessment determined undisclosed income of Rs. 22,86,595. The Assessing Officer initiated penalty proceedings under Section 158BFA(2) for the difference in income. The CIT(A) reduced the penalty amount, and the Tribunal confirmed the undisclosed sales figure of Rs. 67,53,842, applying a gross profit rate of 13%.
2. Enhancement of Income by CIT(A) and Its Implications on Penalty:
The CIT(A) enhanced the income by treating the entire sales of Rs. 6,48,766 as undisclosed income and applied a rate of Rs. 40 per box for unaccounted sales, reducing the total undisclosed sales to Rs. 67,53,842. The Tribunal upheld this enhancement and confirmed the addition of Rs. 6,48,766 as undisclosed sales. The CIT(A) deleted the penalty of Rs. 5,51,451, as it was an enhancement made during the appellate proceedings without a directive for penalty initiation.
3. Comparison of Provisions under Section 271(1)(c) and Section 158BFA(2):
The CIT(A) compared the penalty provisions under Section 271(1)(c) and Section 158BFA(2), noting that the latter does not require the Assessing Officer's satisfaction before initiating penalty. Section 158BFA(2) mandates penalty on the difference between declared and assessed undisclosed income, whereas Section 271(1)(c) involves concealed income or inaccurate particulars in regular returns.
4. Jurisdiction to Levy Penalty on Enhanced Income:
The Tribunal clarified that only the CIT(A) could direct the levy of penalty on enhanced income discovered during appellate proceedings. The Assessing Officer's jurisdiction is limited to additions proposed during the assessment. The Tribunal referred to precedents where the appellate authority's findings on concealed income restricted the Assessing Officer's jurisdiction to impose penalties.
5. Validity of Explanation Provided by the Assessee for Undisclosed Income:
The assessee's explanations for the valuation of boxes and unaccounted sales were found unsatisfactory. The Tribunal noted that the basis for valuing the boxes was not substantiated, and the explanation lacked reasonableness and bona fide. The Tribunal upheld the penalty on the undisclosed income determined by the Assessing Officer and confirmed by the CIT(A).
Conclusion:
The Tribunal dismissed both the assessee's and the Department's appeals, upholding the CIT(A)'s decision to delete the penalty on the enhanced amount and confirming the penalty on the undisclosed income determined by the Assessing Officer. The Tribunal emphasized the distinct jurisdictions of the Assessing Officer and CIT(A) in directing penalties under Section 158BFA(2).
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2008 (10) TMI 655
The Bombay High Court upheld the Tribunal's decision that buy back of lease equipments and granting lease to boards were not sham transactions for tax evasion purposes. The Tribunal found no collusion when dealing with a statutory body, leading to the dismissal of any legal questions.
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2008 (10) TMI 654
Issues involved: Determination of nature of transactions u/s 194C of the I.T. Act, 1961.
The High Court of Delhi, in the case concerning the asst. yr. 2003-04, addressed the issue of whether the transactions between the assessee and its suppliers constituted a works contract or sale of goods simplicitor u/s 194C of the I.T. Act, 1961. The court highlighted that if the transactions were deemed to be works contracts, tax deduction at source would have been necessary under s. 194C, leading to potential consequences for the assessee-in-default as per s. 201(1) and liability for interest u/s 201A. Both the CIT(A) and the Tribunal found that the dealings were on a principal-to-principal basis and not in the nature of works contracts, thereby relieving the assessee from the obligations under s. 194C.
The Tribunal specifically observed that the case primarily involved a contract for the sale of packing material, distinguishing it from the precedent set by the Supreme Court in the case of State of Tamil Nadu v. Anandam Viswanathan. Consequently, the Tribunal concluded that s. 194C would not be applicable due to the transactions not falling within the ambit of works contracts. The court also cited similar decisions in cases such as CIT v. Dabur India Ltd and CIT v. Reebok India Co., supporting the stance that the provisions of s. 194C were not triggered in the present scenario.
Ultimately, the High Court determined that no substantial question of law merited consideration in this case and subsequently dismissed the appeal, affirming the findings of the lower authorities regarding the nature of transactions between the assessee and its suppliers.
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2008 (10) TMI 653
Challenged the Order passes u/s 263 - erroneous and prejudicial to the interests of revenue - Profit and Loss - HELD THAT:- From the records, it is seen that the AO had called for several details from the assessee relating to aforesaid loss. The assessee had filed necessary details enclosing with letters dated 11-11-2005 and 10-2-2006. Along with letter dated 11-10-2005 the assessee had enclosed balance-sheet as on March 31,2003 and Profit and Loss account for the year ending 31-3-2003. While dealing u/s 263 of the Act, the learned CIT was of the view that as there were no details available regarding discontinued operation loss at ₹ 18,15,85,000/- he proceeded in the matter u/s 263.
The issue relating to allowability of ₹ 10.67 crores has been discussed by the learned CIT(A) and the facts in that issue are also similar to the present issue which was subject matter of order u/s 263 passed by the learned CIT, Further, From the order of the learned CIT, It is seen that the learned CIT himself had occasion to deal with the entire facts and the details. We had occasion to go through the details filed by the assessee before the AO. We have also seen details of Wipro Net Division in the Profit and Loss Account for the period ending 31-3-2003 which was enclosed with Setter dated 11-11-2005 send by the assessee.
Considering this factual matrix, we are of the view that the order passed by the AO is not erroneous and prejudicial to the interests of revenue as held by the learned CIT. We, therefore, quash the order of the learned CIT dated 26.9.2007 passed u/s 263 of the act. Thus, we restore the order of the AO on this issue. It is ordered accordingly.
In the result, the appeal filed by the assessee is allowed.
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2008 (10) TMI 652
Issues Involved:
The judgment involves issues related to taxation of income from shipping business in India by a non-resident company through its agent, and the taxability of inland haulage charges.
Taxation of Income from Shipping Business:
The non-resident company, engaged in the business of shipping in India through its agent, declared gross receipts from shipping business. The Assessing Officer disallowed benefits in respect of freight of cargo transported through feeder vessels, estimating profits assessable in India. The CIT(A) held that such activity falls within the operation of ships in international traffic and is not taxable in India. The revenue appealed against this decision.
Assessment of Agent as Representative Assessee:
The Assessing Officer also assessed the agent company as a representative assessee. The CIT(A) held that the agent cannot be assessed as a representative assessee. The revenue appealed against this order as well.
Judgment Details:
The Tribunal considered legal issues arising from the appeals. Referring to a previous decision, it held that the non-resident company is entitled to benefits under the treaty for income from transportation of cargo through feeder vessels. The Tribunal also ruled in favor of the non-resident regarding the taxability of inland haulage charges, following a previous decision. The matter was remitted to the Assessing Officer for verification of factual discrepancies. The order of the CIT(A) regarding one appeal was modified, while the order in the other appeal was upheld. The appeals of the revenue were dismissed, subject to the observations made.
Conclusion:
The Tribunal's judgment favored the non-resident company on legal issues related to taxation of income from shipping business and the taxability of inland haulage charges. The matter was remitted for verification of factual discrepancies, and the orders of the CIT(A) were modified and upheld accordingly.
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2008 (10) TMI 651
Removed of the appellant from service - Application filled u/s 55 of the Madhya Pradesh Co- operative Societies Act, 1960 (Act) - barred by limitation - Power of the Registrar, authority or jurisdiction to entertain such dispute - Manager of a Co-operative Bank involved in Financial irregularities - Principle of Res Judicata - concession made on behalf of the Bank - It was also submitted that had it been contended before the Registrar that the application was not within the period of limitation prescribed by law, the appellant could have satisfied the authority or would have taken other steps, but he was deprived by the concession on behalf of the Bank. It has caused serious prejudice to the appellant and the Bank cannot be allowed to `blow hot and cold' by taking inconsistent pleas and by raising `technical' defence of limitation.
HELD THAT:- Admittedly, the order of removal was passed by the Bank against the appellant on April 29, 1982. Even the first petition u/s 55 of the Act was filed by the appellant/applicant on June 30, 1982, i.e. after two months which was time- barred. The High Court considered the first petition filed by the appellant herein before the Registrar, but even that petition was barred by time. The High Court was, therefore, right in dismissing the writ petition holding that the application filed by the applicant was not within the period of limitation prescribed by Section 55 of the Act.
The ld counsel for the respondent-Bank rightly submitted that the plea raised by the appellant has no force. It was submitted that there was no concession by the Bank. Relying on Zimni, the counsel submitted that on July 06, 1993, i.e. the day on which the concession was said to have been made, the Presiding Officer was not present as he was on a tour. No proceeding took place on that day. It was, therefore, factually incorrect to state that a concession was made on behalf of the Bank and it did not object that the application was barred by time.
But even otherwise, according to the counsel, if the application was not within the period of limitation, the so-called concession would neither bind the Bank nor invest jurisdiction or power in the authority to entertain such application which was barred by limitation. In other words, according to the counsel, the concession was against the provision of law, which would not bind the Bank.
In our opinion, the appellant is right in submitting that the Tribunal was not justified in holding that the application filed by the appellant was barred by res judicata. It is clear from the facts that the application was filed by the appellant to Joint Registrar, Raipur. It was pending. Meanwhile, however, District Bastar had its own Registry and hence, an application was submitted to District Registrar, Bastar. The application preferred by the appellant to the Joint Registrar, Raipur, in the circumstances, became infructuous. It was not decided on merits.
Section 55 allows an aggrieved party to approach the Registrar within a period of thirty days. There is no provision analogous to Section 5 of the Limitation act, 1963 allowing the Registrar to condone delay if "sufficient cause" is shown. In view of this fact, in our opinion, the contention of the ld counsel for the Bank is well founded that the application submitted by the appellant was barred by time.
To us, the High Court was right in observing that the Tribunal was in error in allowing the appeal and dismissing the claim of the appellant on the ground of res judicata. The High Court, therefore, considered the said question independently and held that the Bank was right in submitting that the appellant had not approached the Registrar within the period prescribed by law and his application was liable to be dismissed.
So far as the prayer by the appellant that he has sufficiently suffered and should be re-instated in service without back wages also cannot be accepted. The appellant was holding position of trust and was Manager of a Bank. The charges leveled against him were serious in nature concerning misappropriation of money. It is true that the amount was not big and it was also repaid and the Bank has not suffered. But even then the Manager of a Co-operative Bank was involved in financial irregularities. The Bank was satisfied that he should not be retained in service and passed an order of removal.
We, therefore, see no infirmity even in the final decision taken by the Bank which deserves interference by this Court.
Appeal deserves to be dismissed and is dismissed, however, without any order as to costs.
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2008 (10) TMI 650
Issues Involved:
1. Constitutional validity of Section 2(3) and (5) of the Prevention of Terrorism (Repeal) Act, 2004.
2. Interpretation of Section 2(3) of the Prevention of Terrorism (Repeal) Act, 2004 in relation to Section 321 of the Code of Criminal Procedure, 1973.
3. Whether the provisions of Section 2(3) and (5) of the Repealing Act encroach upon judicial power and violate the separation of powers doctrine.
Detailed Analysis:
1. Constitutional Validity of Section 2(3) and (5) of the Prevention of Terrorism (Repeal) Act, 2004:
The Supreme Court upheld the constitutional validity of Section 2(3) and (5) of the Repealing Act. The Court noted that Parliament has the exclusive competence to legislate on terrorism, which falls under Entry 1 of List I of the Seventh Schedule to the Constitution. The Court emphasized the presumption in favor of the constitutionality of an enactment and the burden on the challenger to prove a clear transgression of constitutional principles. The Court also reiterated that a law made by Parliament can be struck down only on grounds of lack of legislative competence or violation of fundamental rights guaranteed under Part-III of the Constitution. The Court concluded that the Repealing Act, including Section 2(3) and (5), is valid and constitutional.
2. Interpretation of Section 2(3) of the Prevention of Terrorism (Repeal) Act, 2004 in Relation to Section 321 of the Code of Criminal Procedure, 1973:
The Supreme Court held that Section 2(3) of the Repealing Act does not require compliance with Section 321 of the Code of Criminal Procedure (CrPC) for the withdrawal of cases. The Court observed that the clear legislative intent of Section 2(3) is that when the Review Committee opines that there is no prima facie case for proceeding against the accused, such cases, even if cognizance has been taken by the court, shall be deemed to have been withdrawn without any further action. The Court emphasized that bringing Section 321 CrPC into play would render the provision in Section 2(3) that the cases shall be deemed to be withdrawn nugatory. The Court concluded that the High Court erred in assuming that the decision of the Madras High Court, approved by the Supreme Court with reference to Section 60(4) to (7) of POTA, would apply to Section 2(3) of the Repealing Act.
3. Encroachment upon Judicial Power and Violation of the Separation of Powers Doctrine:
The Supreme Court addressed the concern that Section 2(3) and (5) of the Repealing Act might encroach upon judicial power and violate the separation of powers doctrine. The Court noted that judicial review is an essential feature of the Constitution and forms part of its basic structure. The Court emphasized that while the Review Committee's decision to withdraw cases is final, it is subject to judicial review under Article 226 of the Constitution. The Court concluded that the availability of judicial review under Article 226 is a sufficient safeguard against any misuse or abuse of power by the Review Committee. The Court held that the Repealing Act does not violate the principle of separation of powers, as it does not strip the higher judiciary of its power of judicial review.
Conclusion:
The Supreme Court upheld the constitutional validity of Section 2(3) and (5) of the Prevention of Terrorism (Repeal) Act, 2004. It clarified that Section 2(3) of the Repealing Act does not require compliance with Section 321 CrPC for the withdrawal of cases and that the Review Committee's decisions are subject to judicial review under Article 226 of the Constitution. The Court concluded that the Repealing Act does not violate the principle of separation of powers. The appeals by the POTA accused were allowed in part, and the appeals by the relatives of victims were disposed of with the liberty to challenge the opinions of the Review Committee.
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2008 (10) TMI 649
Issues involved: The interpretation of sections of the Income-tax Act, 1961 regarding expenses incurred for convertible debentures and preliminary expenses prior to business activity.
Regarding the interpretation of expenses for convertible debentures: The High Court noted that a similar question had been dismissed in a previous case. The Tribunal found that the assessee, engaged in oil-related activities, incurred expenses for exploring oil exploration opportunities through bidding and tenders. The Tribunal considered this expenditure as revenue expenditure, essential for the business operation. It was held that even if the bid was unsuccessful, the expenditure was allowable as revenue. The Court upheld the Tribunal's finding as a factual determination with no legal question arising, thus dismissing the appeal.
Regarding the interpretation of preliminary expenses: The Tribunal found that the assessee, involved in oil extraction activities, incurred substantial expenses for exploring oil exploration opportunities through bidding and tenders. These expenses were considered necessary for the business operation, and even if the bid was unsuccessful, the expenditure was deemed allowable as revenue. The Court upheld the Tribunal's decision, stating it was a factual finding with no legal question, and subsequently dismissed the appeal.
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2008 (10) TMI 648
Issues involved: Appeals against cancellation of penalty u/s 271E of the IT Act, 1961.
ITA No. 359/Bang/2008:
- The assessee, a HUF, deposited funds in wife's name, later repaid by cash.
- Penalty under s. 271E initiated for contravention of s. 269T.
- Assessee argued the transaction was not a deposit or loan, but an adjustment entry.
- Jt. CIT considered HUF and individual as separate entities, imposed penalty.
- CIT(A) cancelled penalty citing technical breach not warranting penalty.
- Revenue appealed questioning imposition of penalty for cash transfer.
The Tribunal noted the assessee's compliance with tax filings over the years and lack of concealment. The source of funds was accounted for, not indicative of black money. Transaction between HUF and individual, being the same person, didn't attract s. 269T. Citing precedent, Tribunal upheld CIT(A)'s decision, dismissing Revenue's appeal.
ITA No. 360/Bang/2008:
- Assessee, a member of HUF, repaid cash to HUF for property purchase.
- Penalty u/s 271E initiated for contravention of s. 269T.
- CIT(A) cancelled penalty based on technical breach not warranting penalty.
- Revenue appealed challenging the penalty cancellation.
Tribunal, following the precedent set in a similar case, upheld the CIT(A)'s decision, stating the cash transfer did not constitute a loan repayment under s. 271E. The appeal by the Revenue was dismissed in this regard.
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2008 (10) TMI 647
Issues Involved:
1. Nature of gain from the sale of equity shares.
2. Validity of evidence for purchase and sale of shares.
3. Period of holding of shares for capital gain classification.
Issue-wise Detailed Analysis:
1. Nature of Gain from the Sale of Equity Shares:
The primary issue in both appeals was the classification of the gain from the sale of equity shares of M/s Ind Swift Ltd. (ISL) amounting to Rs. 3,60,55,777. The assessee claimed this as long-term capital gain, while the Assessing Officer (AO) assessed it as income from undisclosed sources. The CIT(A) concluded the gain was short-term capital gain due to the holding period being less than a year.
2. Validity of Evidence for Purchase and Sale of Shares:
The AO doubted the genuineness of the transactions for several reasons:
- The status of the remaining 63,000 shares was unclear.
- Shares of M/s Mukul Pharmaceutical Co. (P) Ltd. (MPL) and M/s Swift Formulations (P) Ltd. (SFL) were not transferred in the assessee's name until after the merger.
- Brokers involved in the transactions were untraceable.
- Substantial sums were advanced to M/s ISL without a written agreement.
The CIT(A) found the purchase and sale of shares genuine based on documentary evidence, including contract notes, bank statements, d-mat accounts, and STT certificates. The Tribunal agreed, stating the AO failed to provide evidence disproving the transactions. The Tribunal emphasized that the mere non-traceability of brokers does not invalidate the transactions, especially since the payments were made via account payee cheques, and the shares were d-mated and sold through the stock exchange.
3. Period of Holding of Shares for Capital Gain Classification:
The Tribunal disagreed with the CIT(A)'s conclusion that the shares were purchased on the date they were credited to the d-mat account (18th Oct., 2004). Instead, it held that the purchase date was 1st Sept., 2003, based on the contract notes and payment dates. This conclusion was supported by CBDT Circular No. 704, which states that the date of purchase is the date of contract notes or payment, not the transfer date. Thus, the Tribunal determined that the gain was correctly classified as long-term capital gain, as the shares were held for more than 12 months.
Conclusion:
The Tribunal allowed the appeal filed by the assessee, recognizing the gain as long-term capital gain, and dismissed the appeal filed by the Revenue. The Tribunal's decision was based on the substantial documentary evidence provided by the assessee and the failure of the AO to disprove the genuineness of the transactions.
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2008 (10) TMI 646
Issues involved: Appeal against orders of CIT(A) for assessment years 2003-04 and 2004-05 regarding exclusion of communication expenses and foreign exchange from export turnover u/s 10A of IT Act.
For assessment year 2003-04: The assessee, engaged in software development, claimed deduction u/s 10A and filed return with taxable income. AO excluded communication charges and foreign exchange from export turnover, resulting in higher total income. CIT(A) upheld AO's decision but directed to reduce expenses from total turnover as well. Revenue appealed, arguing against this direction. Tribunal referred to a previous case and upheld CIT(A)'s decision, rejecting Revenue's grounds.
For assessment year 2004-05: Similar to the previous year, AO reduced internet charges from export turnover, leading to a different eligible deduction amount. CIT(A) upheld AO's decision with a similar direction as in the previous year. Revenue appealed, contesting the direction to exclude expenses from total turnover. Tribunal referred to the same previous case and upheld CIT(A)'s decision, rejecting Revenue's grounds.
Conclusion: Tribunal dismissed Revenue's appeals for both years, following the decision in a previous case and upholding CIT(A)'s orders regarding the exclusion of communication expenses and foreign exchange from export turnover u/s 10A of the IT Act. The assessee's cross-objection for the assessment year 2004-05 was also dismissed as it was not pressed during the hearing.
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2008 (10) TMI 645
Issues involved: Deduction under Section 80-IB claimed by the assessee, allocation of expenses between Parwanoo and non-Parwanoo units.
Deduction under Section 80-IB:
The appeal challenged the order of the Income Tax Appellate Tribunal regarding the deduction under Section 80-IB claimed by the assessee for the assessment year 2001-02. The Tribunal found in favor of the assessee, noting that the Assessing Officer failed to provide evidence of any expenditure being charged in another unit. Separate books of accounts were maintained by the assessee for the Parwanoo and non-Parwanoo units, with identifiable and directly debited expenses. Common expenditures were apportioned based on turnover ratio, a method accepted by the Commissioner of Income Tax (Appeals) after detailed examination. The Tribunal emphasized that no expenditure had been improperly charged between the two units to inflate profits, leading to a higher deduction under Section 80-IB.
Allocation of expenses between units:
The issue before the Tribunal involved the allocation of expenses between the Parwanoo and non-Parwanoo units of the assessee. Both the Commissioner of Income Tax (Appeals) and the Tribunal ruled in favor of the assessee, based on factual findings. The Tribunal highlighted that separate books of accounts were maintained for each unit, ensuring the direct debiting of expenses to the respective units. Common expenditures were divided based on turnover ratio, a method endorsed by the Commissioner of Income Tax (Appeals) after thorough examination. It was noted that no improper allocation of expenses was identified by the department, preventing any artificial inflation of profits in the Parwanoo unit for a higher deduction under Section 80-IB.
Conclusion:
The High Court dismissed the appeal, stating that the findings of the Commissioner of Income Tax (Appeals) and the Tribunal were purely factual, with no substantial question of law warranting consideration.
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