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2012 (6) TMI 853
Issues Involved:
1. Whether a company can re-agitate the merits of the claim at the post-admission stage of a creditor's winding-up petition.
2. Whether the company can offer to furnish security at the post-advertisement stage and seek a direction that the claim be relegated to a suit.
Summary:
Issue 1: Re-agitation of Merits at Post-Admission Stage
The primary question was whether a company can re-agitate the merits of the claim and contest the same at the post-admission stage of a creditor's winding-up petition. The court held that a company cannot, at the post-advertisement stage, disturb or unsettle the finality of a finding as to the indisputable nature of a debt rendered at the admission stage of a creditor's winding-up petition. The judgments in both Khaitan Paper and SRC Steel instruct thus. SRC Steel lays down that even though the decision at the admission stage is final as between the company and the petitioning-creditor, others connected with the company who come in after advertisements may question the finding and the court may not feel constrained that it is bound by the finding. The judgment in Khaitan Paper is restricted only to the finality of the issue as between the company and the petitioning-creditor.
Issue 2: Offering Security at Post-Advertisement Stage
The ancillary issue was whether the company can offer to furnish security at the post-advertisement stage and seek a direction that the claim be relegated to a suit. The court concluded that it is no longer open to the company to offer security or for the court to accept it. Security is offered or directed to be furnished where the adjudication as to the claim is not immediately made and the adjudication is postponed till a regular action in furtherance of the claim is brought by the petitioning creditor. Once a creditor's winding-up petition is admitted, the adjudication of the claim must necessarily have been made and the debt found to be due and owing to the creditor. In such a situation there is no question of any security being furnished since the security is invariably in respect of an unassessed claim, but upon a creditor's winding-up petition being admitted in this court the assessment would already have been made upholding all or a part of the claim.
Conclusion:
The company, Baljit Securities Ltd., is directed to be wound up in accordance with the provisions of the Companies Act, 1956. The official liquidator shall take possession and control of all books, records, assets, documents, and transactions of the company now in liquidation. The petitioner will cause a gist of this order to be published in the same newspapers where the petition had been advertised. The order of winding-up will not take effect if the company immediately pays off the entire amount owing from it to the petitioner in terms of the order of admission. The company has a second chance to ward off its liquidation since no other creditor of the company has applied at the post-advertisement stage when the matter has assumed a representative capacity.
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2012 (6) TMI 852
Issues Involved:
1. Authority to Issue Summons
2. Retrospective Amendment and Creation of Offence
3. Competency of Officer and Validity of Summons
4. Continuing Offence and Procedural Defect
Summary:
1. Authority to Issue Summons:
The Petitioner challenged the order dated 15th January 2008, summoning them for offences u/s 174/175 IPC, and sought quashing of the criminal complaint. The Petitioner contended that the summons issued u/s 108 of the Customs Act from 13th July 2006 to 10th July 2007 were not issued by a person duly authorized by the Central Government. The authorization was given only on 20th February 2008, and thus, the Petitioner argued that no offence u/s 174/175 IPC was made out.
2. Retrospective Amendment and Creation of Offence:
The Petitioner argued that the retrospective amendment to Section 108(1) of the Customs Act could not create an offence with retrospective effect, violating Article 20 of the Constitution of India. The Respondent countered that the amendment in the Finance Act, 2008, retrospectively amending Section 108(1) of the Act, empowered the officer to issue summons, and thus, the Petitioner could be prosecuted for non-compliance.
3. Competency of Officer and Validity of Summons:
The Court noted that when the summons were issued, the officer was not authorized to do so. The retrospective amendment could not create an offence for non-compliance of summons issued by an unauthorized officer. The Court cited precedents, including Shiam Lal Vs. Emperor and Khota Ram and Ors. Vs. Emperor, to emphasize that an act or omission is not punishable unless it was an offence at the time it was committed.
4. Continuing Offence and Procedural Defect:
The Respondent argued that the offence was a continuing one, as the Petitioner had not complied with the summons till date. The Court rejected this, stating that a summon to appear is issued for a particular date and is not a continuous mandate. The Court also held that a procedural defect could not be cured retrospectively to create a substantive offence.
Conclusion:
The Court quashed the criminal complaint No. 8/1 of 2008 u/s 174/175 IPC and the order dated 15th January 2008 summoning the Petitioner, as the officer was not authorized to issue the summons at the relevant time. The Petition was disposed of accordingly.
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2012 (6) TMI 851
Issues involved: Challenge to impugned orders of Ld. CIT (A) u/s.132 of Act for alleged household expenses addition.
Controversy in Assessment Years 2007-08 and 2008-09:
The appeals were filed challenging the addition of Rs. 1,50,000/- made by the A.O. for alleged household expenses, sustained at 30% by Ld. C.I.T.(A).
Facts and Observations:
- Search and seizure action u/s.132 of Act on 05.03.2009 in the cases of Jai Corp Group.
- A.O. observed the group's substantial land purchase through the assessee.
- Assessee's return declared total income of Rs. 1,50,426/- with no undisclosed income.
- A.O. made an addition of Rs. 1,50,000/- to total income based on family status.
- Ld. CIT (A) sustained 30% addition ad-hoc and deleted 70% addition.
Judicial Analysis and Decision:
- Ld. Counsel withdrew ground no.1 in both appeals.
- Lack of evidence on family size, monthly expenditure, and status led to deletion of 30% addition.
- Judicial propriety required justification for any addition, leading to deletion of Ld. CIT (A)'s sustained addition.
- Ground no.2 allowed, and Ground no.3 deemed consequential.
- Both appeals of the assessee were allowed.
Conclusion:
The addition of Rs. 1,50,000/- for alleged household expenses was deleted in both assessment years, and the appeals of the assessee were allowed.
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2012 (6) TMI 850
Issues involved: Revenue appeal against CIT (A) order allowing business expenses, treatment of income from bad debts and miscellaneous income, addition on account of gratuity write back.
Business Expenses:
The Revenue challenged the allowance of business expenses amounting to Rs. 28,33,628/- despite the absence of any business activity due to SEBI's debarment order. The AO contended that since the assessee was prohibited from conducting business, the claimed expenditure should not be allowed.
Income Treatment:
The Revenue disputed the CIT (A)'s classification of income from bad debts and miscellaneous income as business income instead of "income from other sources." The AO had taxed these amounts under the head "income from other sources" without providing a rationale.
Gratuity Write Back:
The Revenue objected to the deletion of the addition on account of gratuity write back at Rs. 2,29,929/- as "income from other sources." The CIT (A) allowed this based on the absence of verification regarding the earlier allowance of this expenditure.
The assessee, a Member of Stock Exchange, Mumbai, was barred from undertaking new business activities by SEBI. The AO disallowed the claimed business expenditure and taxed other income as "income from other sources." The assessee argued that the business was only suspended, not closed, citing precedents. The CIT (A) upheld the assessee's contentions, allowing the expenditure and treating certain income as business income under section 41(1).
The ITAT Mumbai upheld the CIT (A)'s decision, noting that the business was temporarily suspended, not closed, during the assessment year. The Tribunal dismissed the Revenue's appeal, emphasizing that the bad debts and miscellaneous income should be considered as business income, not "income from other sources." The treatment of gratuity write back was also upheld, as it was not allowed as expenditure in earlier years.
In conclusion, the ITAT Mumbai dismissed the Revenue's appeal, affirming the CIT (A)'s order.
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2012 (6) TMI 849
Issues involved: Revenue appeal against CIT (A) order regarding allowance of business expenses, treatment of income from bad debts and miscellaneous income, and addition on account of gratuity write back.
Business Expenses:
The Revenue contended that business expenses of `.28,33,628/- should not be allowed as there was no business in existence during the year due to SEBI's debarment order. The AO disallowed the expenditure claimed toward business expenses. However, the CIT (A) allowed the expenditure, stating that there was only a temporary suspension of business and no actual closure or discontinuation. The Tribunal upheld the CIT (A) decision, noting that the business was ultimately closed after SEBI orders were upheld by judicial authorities. The suspension of business was considered temporary for the assessment year in question.
Income from Bad Debts and Miscellaneous Income:
The Revenue argued that income from bad debts written back and miscellaneous income should be treated as "income from other sources" instead of business income, as there was no business in existence during the year. The AO had taxed these amounts under "income from other sources" without providing a reason. The CIT (A) analyzed the nature of the income and concluded that they should be taxed as business income under section 41(1) of the Income Tax Act. The Tribunal agreed with the CIT (A) decision, stating that just because these amounts were shown as "other income" in the company's account, they could not be categorized as "income from other sources."
Gratuity Write Back:
The Revenue challenged the deletion of the addition on account of gratuity write back at `.2,29,929/- as "income from other sources" by the CIT (A). The CIT (A) observed that the gratuity amount was not allowed as expenditure in earlier years, so the write back of the same should not be considered as income. The Tribunal upheld the CIT (A) decision, stating that the provisions of section 41(1) were not applicable to the facts of the case regarding the gratuity amount.
Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT (A) order regarding the allowance of business expenses, treatment of income from bad debts and miscellaneous income, and addition on account of gratuity write back. The Tribunal found no reason to interfere with the CIT (A) decisions, as there was only a temporary suspension of business and the income in question should be taxed as business income under section 41(1) of the Income Tax Act.
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2012 (6) TMI 848
Issues involved:
The interpretation of section 2(ea) of the Wealth Tax Act, 1957 regarding the inclusion of properties used for commercial purposes as assets and the applicability of exemptions under the Act.
Summary:
Issue 1: Interpretation of Section 2(ea) of the Wealth Tax Act, 1957
The appellant-revenue challenged the Tribunal's order regarding the inclusion of a property in Worli, Mumbai for wealth tax assessment. The property was initially valued at a lower amount in the return but was reassessed at a higher value due to rental income. The Commissioner (Appeals) upheld the inclusion of the property for wealth tax, while the Tribunal ruled that as the property generated income under "income from house property," it was not a non-productive commercial asset. The appellant argued that the property, being let out and generating income, fell within the definition of "assets" under section 2(ea) of the Act.
Issue 2: Applicability of Exemptions under the Wealth Tax Act
The respondent-assessee contended that the subject property, being rented out, was exempt from wealth tax under section 2(ea)(i)(5) of the Act. The court examined the pre- and post-amendment versions of section 2(ea) and noted that properties used for commercial purposes were not considered assets before 01.04.1997. However, post-amendment, commercial properties not used exclusively for business purposes were brought under the ambit of the Act. The court clarified that the subject property, being let out commercially, was rightly included as an asset for wealth tax assessment.
Conclusion:
The court allowed the appeal, quashing the Tribunal's order and remitting the matter back to the Tribunal for valuation of the subject property. The court clarified that the issue of exemptions under sub-clause (5) of clause (i) of section 2(ea) did not arise in this case.
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2012 (6) TMI 847
Issues involved: Interpretation of legal provisions u/s 36(1)(vii) of the Income-tax Act, 1961 regarding bad debts and whether the debt must be established as irrecoverable or if it is enough to be written off in the accounts of the assessee.
Summary:
1. The Appellate Tribunal ITAT Ahmedabad considered a Miscellaneous Application filed by the assessee against the Tribunal's order dated 02.03.2012 in a case for the assessment year 2004-05. The Revenue had filed an appeal against the order of CIT(A)-V, Baroda, raising six grounds of appeal. The assessee raised specific grounds related to the interpretation of legal provisions regarding bad debts u/s 36(1)(vii) of the Income-tax Act, 1961.
2. The assessee argued that the Tribunal's order did not consider the Supreme Court decision in the case of T.R.F. Ltd. Vs. CIT (2010) regarding the requirement to establish irrecoverability of debt pre and post-April 1, 1989. The Tribunal remitted the matter to the Assessing Officer for further examination as it was not determined whether the bad debt was actually written off in the accounts of the assessee.
3. The counsel for the assessee contended that post-April 1, 1989, it is sufficient for the assessee to write off the debt as irrecoverable in the books of account, without the need to establish irrecoverability. The Tribunal decided to recall the impugned order to consider the legal position on bad debts in light of the Supreme Court decision, specifically focusing on ground no.4 of the appeal.
4. Ultimately, the Miscellaneous Application was allowed, and the Tribunal directed a reexamination of the issue in the interest of justice based on the legal interpretation of bad debts as per the Supreme Court decision.
Separate Judgement: No separate judgment was delivered by the judges in this case.
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2012 (6) TMI 846
Issues involved: Interpretation of provisions of Rule 6 of CENVAT Credit Rules, 2004 post retrospective amendment, waiver of duty, interest, and penalty.
Summary:
The Stay Petition was filed for waiver of duty amounting to Rs. 4,60,28,278, interest, and an equal amount of penalty. The adjudicating authority confirmed the amounts due to the appellant's non-compliance with Rule 6 of CENVAT Credit Rules, 2004, by not maintaining separate accounts and not reversing the CENVAT Credit as required. The appellant argued that they had already reversed a portion of the credit used for both dutiable and exempted products, citing relevant case law to support their claim. The respondent contended that the appellant had not reversed a specific amount post retrospective amendment and had not addressed the interest liability on the reversed amounts.
Upon consideration, the Tribunal found that the main issue revolved around the interpretation of Rule 6 of CENVAT Credit Rules, 2004 post retrospective amendment. While the appellant claimed to have reversed the entire CENVAT Credit attributable to the input services used for both types of products, the adjudicating authority did not accept this claim entirely. It was noted that a certain amount remained unreversed by the appellant, and interest on this amount had not been addressed. The Tribunal acknowledged the relevance of previous case law but emphasized the need for a detailed examination of the legal issues raised by the appellant during the final disposal of the appeal.
As a result, the Tribunal directed the appellant to deposit Rs. 1 lakh within eight weeks and report compliance by a specified date. Upon compliance, the application for waiver of the remaining amounts was allowed, and recovery was stayed pending the appeal's final disposal.
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2012 (6) TMI 845
Issues involved: Interpretation of Rule 10(3) of Cenvat Credit Rules, 2004 and the applicability of limitation period in a tax appeal.
Interpretation of Rule 10(3) of Cenvat Credit Rules, 2004:
The main question in the appeal was whether the CESTAT was correct in allowing the credit transfer by the assessee without transferring the inputs as per Rule 10(3) of Cenvat Credit Rules, 2004. The Tribunal dismissed the appeal based on two grounds: limitation and the ineligibility of the appellants to claim credit transfer under Rule 10(3). The Tribunal noted that the demand was time-barred and that the department had accepted this fact. Additionally, the Tribunal observed that the denial of credit to the assessee was based on the availing of credit on waste and scrap, which was deemed ineligible as input or final product without proper justification.
Applicability of Limitation Period:
Regarding the issue of limitation, the Tribunal found that the demand in question was indeed barred by limitation. The show cause notice was issued to the appellant after a period of three years from the surrender of the license by M/s. GTCL and the grant of new registration to the appellant. The Tribunal emphasized that the Revenue was aware of the relevant facts during the exercise, making the notice issued in 2008 clearly time-barred. Consequently, the Tribunal dismissed the tax appeal solely on the grounds of the demand being time-barred, without delving into the question of credit transfer under Rule 10(3) of the Cenvat Credit Rules, 2004.
Conclusion:
Ultimately, the tax appeal was dismissed by the High Court, affirming the Tribunal's decision that the demand made by the department was time-barred. Therefore, the issue of credit transfer under Rule 10(3) of the Cenvat Credit Rules, 2004 was not considered, and the appeal was solely rejected based on the limitation aspect.
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2012 (6) TMI 844
Issues involved: Challenge to detention order u/s 3(1) of COFEPOSA Act based on subjective satisfaction and consideration of passport custody.
The judgment by the Bombay High Court pertained to a writ petition challenging a detention order u/s 3(1) of the COFEPOSA Act, aimed at preventing the detenue from smuggling goods in the future. The detaining authority's subjective satisfaction was questioned, as it was based on a solitary instance and did not consider the fact that the detenue's passport was already in custody, hindering any future smuggling activities. The petitioner relied on the precedent set by the Apex Court in Gimik Piotr's case to support their arguments.
The Court noted that the detention order was solely based on the subjective satisfaction regarding future smuggling activities u/s 3(1)(i) of the Act. The detaining authority did not consider other grounds for issuing the detention order. The petitioner's argument, supported by the Apex Court's decision in Gimik Piotr's case, was found to be valid, emphasizing that the detaining authority's satisfaction was flawed due to overlooking the passport custody situation.
The Court allowed the petition, emphasizing that the detaining authority's subjective satisfaction was not adequately reasoned and did not consider all relevant factors. The reliance on the detenue's statements and the passport custody alone was insufficient to justify the detention order. The judgment highlighted the importance of proper consideration of all grounds before issuing a detention order u/s 3(1) of the COFEPOSA Act.
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2012 (6) TMI 843
Issues Involved:
1. Compliance with Tribunal's directions.
2. Continuance or revocation of suspension.
Summary:
1. Compliance with Tribunal's Directions:
The Tribunal directed the respondents to convene a Special Review Committee (SRC) to reconsider the suspension of the applicant and pass a speaking order. The applicant contended that the orders dated 12.01.2012 and 03.02.2012 did not comply with the Tribunal's directions, citing non-application of mind, lack of independent view, and non-speaking nature of the orders. The respondents argued that the SRC and Competent Authority had considered the relevant facts and circumstances, including the CBI's views. However, the Tribunal found that the SRC and Competent Authority failed to adequately address the directions and observations of the Tribunal, leading to the quashing of the impugned orders.
2. Continuance or Revocation of Suspension:
The applicant had been under suspension for 12 years due to pending criminal cases. The Tribunal noted that the suspension is not a punishment but a preventive measure. Given the long duration of suspension, the stay of criminal proceedings by the Supreme Court, and the completion of investigations, the Tribunal found no justification for the continued suspension. The Tribunal emphasized the undue hardship caused by prolonged suspension and the financial burden on the public exchequer. Consequently, the Tribunal ordered the revocation of the applicant's suspension and directed his reinstatement in a non-sensitive post, with liberty for the respondents to reconsider suspension if the criminal trial proceedings commence.
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2012 (6) TMI 842
Issues Involved:1. Whether the respondent violated condition 1A of Notification No. 65/2003-CE by not utilizing the entire Cenvat Credit before claiming a cash refund. 2. Whether the adjudicating authority correctly restricted the refund claim of the respondent. 3. Whether the first appellate authority's decision to allow the re-credit of Rs. 3,68,94,217/- and disallow Rs. 60,50,093/- was justified. Summary:Issue 1: Violation of Condition 1A of Notification No. 65/2003-CEThe revenue argued that the respondent violated condition 1A of Notification No. 65/2003-CE dated 06.08.2003 by not utilizing the entire Cenvat Credit available before claiming a cash refund. The respondent contended that various factors prevented them from taking the Cenvat Credit on inputs or capital goods, such as the need for duty-paying documents to accompany the goods, the goods meeting required specifications, and the genuineness of the duty-paying documents being tested. The first appellate authority found that the respondent had complied with the conditions stipulated in the notification and was eligible for the refund. Issue 2: Restriction of Refund Claim by Adjudicating AuthorityThe adjudicating authority restricted the refund claim of the respondent to Rs. 60,50,093/-, arguing that the respondent had taken Cenvat Credit in December 2005 on invoices pertaining to March 2005 to November 2005 and utilized it for payment of duty in December 2005. The first appellate authority found that the respondent had fulfilled all conditions stipulated under Notification No. 39/2001-CE dated 31.07.2001 and was eligible for the full refund of Rs. 4,29,44,310/- paid through PLA. The appellate authority noted that the adjudicating authority's assumption of a closing balance of credit in November 2005 was not justified and not backed by law. Issue 3: Decision of the First Appellate AuthorityThe first appellate authority allowed the re-credit of Rs. 3,68,94,217/- and disallowed Rs. 60,50,093/-, finding that the respondent had complied with the conditions of the notification and was eligible for the refund. The appellate tribunal concurred with the first appellate authority's findings, stating that the grounds of appeal raised by the department did not rebut the detailed findings and only raised technicalities. The tribunal held that the eligibility to avail Cenvat Credit of Rs. 60,50,093/- was not disputed by the revenue, and the objection to the availment of such credit in later months was incorrect. The tribunal concluded that the impugned order was correct, legal, and did not suffer from any infirmity, thereby rejecting the appeal filed by the department. Conclusion:The tribunal upheld the first appellate authority's decision, finding that the respondent had complied with the conditions of Notification No. 65/2003-CE and was eligible for the full refund claimed. The appeal filed by the department was rejected.
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2012 (6) TMI 841
Issues involved: Transfer pricing adjustment u/s 92CA of the Income-tax Act, 1961.
Transfer Pricing of Barite Lumps:
- The assessee exported minerals to its Associated Enterprise (AE) and third parties.
- The Transfer Pricing Officer (TPO) found discrepancies in the pricing of sales to AE and non-AEs.
- The Commissioner of Income-tax(Appeals) noted the differences in pricing but considered them justified due to the nature of transactions.
- The TPO's failure to consider the 5% tolerance limit and external price comparisons was highlighted.
- The Commissioner of Income-tax(Appeals) deleted the addition of Rs. 1,84,11,785 relating to Barite Lumps, emphasizing the justifiability of the pricing differences.
Transfer Pricing of Bentonite Powder:
- Discrepancies were found in the pricing of Bentonite Powder sales to a third party and the AE.
- The Commissioner of Income-tax(Appeals) noted the volume disparity and occasional nature of the third-party transaction, justifying the pricing differences.
- The addition of Rs. 20,73,411 was deleted by the Commissioner of Income-tax(Appeals) as the comparison between third-party and AE sales was deemed unjustified.
Judgment:
- The Revenue appealed the deletion of the transfer pricing adjustment for Barite Lumps.
- The Appellate Tribunal agreed with the Commissioner of Income-tax(Appeals) that the disputed addition was unwarranted.
- The Tribunal emphasized the need to consider all risk-taking functions of multinational enterprises, as highlighted by the Supreme Court.
- The appeal filed by the Revenue was dismissed, upholding the Commissioner of Income-tax(Appeals) decision.
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2012 (6) TMI 840
Disallowance u/s 14A r.w.r 8D - Held that:- Whatever case law referred by the assessee in his reply are related to before A.Y.08-09 when Rule 8D was not in existence. No case law was referred by the assessee for nexus is to be established by the A.O. even in disallowance made under Rule 8D of the IT Act, 1962. The A.R. for the assessee has not pointed out any defects in computation of disallowance made under Rule 8D. Thus, we have considered view that ld. CIT(A) has rightly confirmed the disallowance.
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2012 (6) TMI 839
Issues involved: Appeal against direction to allow deduction u/s 10B from income computed u/s 115JB for assessment year 2005-2006.
Summary:
The Revenue appealed against the direction of the CIT(A) to allow deduction u/s 10B from income computed u/s 115JB. The assessee reduced the amount deductible u/s 10B from the computation of book profit u/s 115JB. The Assessing Officer rejected this claim as no claim u/s 10B was made in the normal computation. The CIT(A) accepted the claim, leading to the appeal.
The Explanation 1 to section 115JB provides the mechanism for computing "book profit." It specifies that if the amount eligible for deduction/exemption under certain sections is credited to the profit and loss account, it should be reduced from the profit for computing "book profit." In this case, the Revenue did not dispute that the amount deductible u/s 10B was credited to the profit and loss account. Therefore, the CIT(A) was correct in allowing the deduction u/s 10B. The Tribunal upheld the decision of the CIT(A) and dismissed the appeal.
The appeal was dismissed, and the order was pronounced on June 6, 2012.
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2012 (6) TMI 838
Claim of deduction u/s 80P(2)(a)(i) - Held that:- The direction of the learned CIT is modified and the AO is directed to re-frame the assessment order in accordance with law ignoring the observation of the learned CIT on allowability of deduction u/s 80 P(2) (a) (i) of the Act.
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2012 (6) TMI 837
Cancellation of penalty levied under Section 271(1)(c) - whether the income from sale of stock options is assessable as long term capital gain (as disclosed by the assessee) or short term capital gain (as assessed by the AO) - Held that:- In the assessee’s case, evidently, there is no furnishing of any inaccurate particulars. It is not the case of the Revenue that the assessee has either concealed any fact or has submitted any wrong or incorrect fact. It is only the question of opinion whether the income from sale of stock option is assessable as short term capital gain or as long term capital gain. Thus mere making a claim which is not admissible does not lead to furnishing inaccurate particulars - Decided against revenue.
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2012 (6) TMI 836
Whether on the facts and in the circumstances of the case the Tribunal was justified in law in deleting the disallowance under Section 40(a)(ia) read with Section 194C(2) on the ground that the assessee is an individual? - Held that:- We are of the view that this appeal does not require admission for hearing as the applicability of law involved herein is admittedly settled. It is admitted position that the matter relates to the assessment year 2006-07, whereas Section 194C(1) has been made applicable to the individual assessee with effect from 1.6.2007. There is no dispute that the respondent is an individual assessee.
Considering the position of the law, the learned Tribunal has consistently held that Section 194C(1) cannot be made applicable for the assessment year 2006- 07.
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2012 (6) TMI 835
Issues involved: Disallowance u/s. 40(a)(ia) for non-deduction of TDS on rent and disallowance on account of product development expenses affecting the deduction u/s. 10A of the IT Act.
The judgment pertains to an appeal by the Revenue against the order of the CIT(A)-IV, Hyderabad dated 27.12.2011. The main contention raised by the Revenue was regarding the interpretation of exemption u/s. 10A in relation to disallowable payments. The Revenue argued that the language used in section 10A(1) ("derived from") should be interpreted restrictively, not expansively ("attributable to").
In the case at hand, there was a disallowance u/s. 40(a)(ia) of the Act for non-deduction of TDS on rent and another disallowance related to product development expenses. The CIT(A) allowed the assessee's claim and directed the Assessing Officer to consider these amounts for determining the deduction u/s. 10A. The Revenue challenged this decision in the appeal before the tribunal.
The tribunal considered the disallowance u/s. 40(a)(ia) in light of a previous Special Bench order in the case of Merilyn Shipping & Transports. The tribunal held that any disallowance should be treated as income from business and considered for deduction u/s. 10A. Citing a judgment of the Bombay High Court in the case of CIT vs. Gem Plus Jewellery (India) Ltd., the tribunal affirmed that the assessee is entitled to exemption u/s. 10A even with the addition of disallowances, as it results in an increase in the business profit.
Regarding the disallowance related to product development expenses, the tribunal also deemed it as business income for the purpose of determining the deduction u/s. 10A, aligning with the precedent set by the Bombay High Court. Consequently, the tribunal dismissed the Revenue's appeal, upholding the order of the CIT(A).
In conclusion, the tribunal pronounced the order on 21st June 2012, confirming the allowance of deductions u/s. 10A for the disallowable payments in question.
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2012 (6) TMI 834
Issues involved: Appeal against order u/s 250(6) of the Income-tax Act,1961 regarding the nature of the assessee club and the applicability of mutual concern principle.
Nature of the assessee club:
The revenue contended that the club did not fulfill the principle of mutuality as per the decision in the case of Chelmsford Club V CIT 253 ITR 89. However, the CIT(A) allowed relief to the assessee based on the decision of the Hon'ble ITAT Chandigarh in the assessee's own case. The CIT(A) deleted the addition of Rs. 30,58,400, following the decision of the Tribunal in the case of Gymkhana Club, Sector 6, Panchkula. The Tribunal found that the issue was already decided in favor of the assessee in earlier years and maintained consistency by dismissing the Department's appeals. The Tribunal noted that the issue was squarely covered by its previous decision in the assessee's own case, which was not disputed by the Department.
Applicability of mutual concern principle:
The revenue raised concerns about the club's mutual concern status, arguing that the financial and administrative control over the club was in the hands of HUDA, and the society failed to meet the fundamental prerequisite of identity of all mutual concerns. The CIT(A) erred in allowing relief to the assessee based on the decision of the Hon'ble ITAT Chandigarh in the assessee's own case from an earlier year. The Tribunal, however, upheld the CIT(A)'s decision, citing consistency with its previous rulings in the assessee's case and dismissing the revenue's appeal.
Conclusion:
The Tribunal dismissed the revenue's appeal, following its previous decisions in the assessee's case and maintaining consistency in its rulings. The order dated 29.01.2008 passed by the Tribunal in a related case was enclosed for reference. The appeal of the revenue was ultimately dismissed, upholding the decision of the CIT(A) regarding the nature of the assessee club and the application of the mutual concern principle.
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9911796707
