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Showing 81 to 100 of 935 Records
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2013 (6) TMI 862
Issues Involved: The judgment involves issues related to interference with the award on three specific matters - swapping usage of crane, overrun charges, and interest.
Interference with Award on Overrun Charges:
The Arbitrator's award was challenged due to the deduction of sums on two counts - crane-hire charges and overrun charge. The learned Judge found that overrun charges could not be claimed or awarded as per the agreement's Clause 9. The tribunal erred in entertaining this claim, leading to the decision being set aside.
Swapping Usage of Crane:
Regarding the swapping usage of the crane, it was observed that there was no specific bar in the agreement for claiming hire charges for the third unit. The tribunal did not address this legal issue properly, and the facility of the crane was extended without proper notice of charges. The deduction of crane charges for unit No. III was deemed erroneous, and the appellant was entitled to a refund of these charges.
Interest Issue:
The issue of interest was debated, with the respondent relying on a prohibitory clause against payment of interest. Reference was made to various legal precedents, including a Constitution Bench decision and a Division Bench decision. The power of the Arbitrator to award interest, both pendente lite and on judgment, was upheld based on the Code of Civil Procedure and relevant court decisions. The judgment differed with the learned Judge on the issue of interest, affirming the Arbitrator's decision on pendente lite interest and interest on judgment.
Conclusion:
The appeal succeeded in part, with the decision on overrun charges being affirmed, and the award on interest being upheld. The judgment was modified accordingly, and the appeal was disposed of without any order as to costs.
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2013 (6) TMI 861
Issues involved: Disallowance u/s 14A read with Rule 8D, Addition u/s 41(1), Disallowance of sales promotion expenses.
Disallowance u/s 14A read with Rule 8D: The assessee's appeal challenged the disallowance of Rs. 7,28,066 u/s 14A of the Income Tax Act, 1961 read with Rule 8D. The contention was that the borrowed money was not used for investment in exempt assets. However, the assessee had previously submitted a computation of Rule 8D to the Assessing Officer. The Tribunal found that both Section 14A and Rule 8D were applicable, and since there was no claim made regarding the borrowed money before the authorities, the appeal was rejected.
Addition u/s 41(1): The appeal contested the addition of Rs. 20,56,607 u/s 41(1) of the Act. The assessee argued that the amount had already been offered as income in a subsequent year and assessed accordingly. The Tribunal acknowledged that the same liability cannot be ceased twice and directed the matter to be verified by the Assessing Officer to ensure no double assessment. The issue was restored to the AO for further examination.
Disallowance of sales promotion expenses: The appeal challenged the disallowance of sales promotion expenses amounting to Rs. 18,47,838. The Assessing Officer disallowed the entire sum after discussing a gift amounting to Rs. 11,52,260. The Tribunal upheld the disallowance of gifts to the extent of Rs. 11,52,260 as personal in nature. However, it directed the AO to provide a detailed explanation for the remaining disallowed amount of Rs. 6,95,578. The appeal was deemed to be partly allowed, and the AO was instructed to pass a speaking order on the remaining expenses.
Decision pronounced in the open Court on 14th June, 2013.
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2013 (6) TMI 860
Issues Involved:
1. Allegations of oppression and mismanagement.
2. Validity and effect of resignations of directors.
3. Compliance with Memorandum of Understanding (MoU).
4. Procedural defaults and their implications.
5. Maintainability of the company petition.
Summary:
1. Allegations of Oppression and Mismanagement:
The petitioner alleged that the respondents oppressed the petitioner and mismanaged the affairs of the R-1-company by non-filing balance sheets and annual returns since 2004, not filing Form 32 for the appointment of three directors on 1st April 2008, making further allotments to dilute the petitioner's shareholding during the pendency of the petition, and stating the wrong address of the registered office. The petitioner infused Rs. 1,25,16,000 into the company and contended that R-2 and R-3 resigned as directors on 16th September 2008, but continued to act in their capacity, which was illegal.
2. Validity and Effect of Resignations of Directors:
The petitioner argued that R-2 and R-3's resignations were effective from 16th September 2008, and any acts done by them post-resignation were null and void. The court referred to precedents stating that acceptance of resignation is unnecessary if the resignation is tendered in writing and intended to take effect immediately. The court held that R-2 and R-3 were no longer directors from 16th September 2008, and all acts done by them post-resignation were ab initio void and invalid.
3. Compliance with Memorandum of Understanding (MoU):
The respondents contended that the petition was based on an MoU, which lapsed due to non-fulfillment of obligations by the petitioner. The petitioner argued that the MoU was acted upon by giving 50.57% shares and appointing three directors from the petitioner's group. The court noted that the respondents failed to show that the MoU had lapsed and held that the company was bound by the terms of the MoU that had been acted upon.
4. Procedural Defaults and Their Implications:
The respondents argued that non-filing of returns and forms with the Registrar of Companies (RoC) was a procedural defect that could be rectified. The court held that non-filing of statutory forms and returns, resulting in the denial of shareholders' rights, was an oppressive act and revealed mismanagement.
5. Maintainability of the Company Petition:
The respondents argued that the petition was not maintainable as no case for winding up was pleaded. The court held that the justification for winding up could be considered only after examining the merits of the case. The court found that the petitioner succeeded in making out a case for winding up but held that winding up would be unfairly prejudicial to the petitioner.
Conclusion:
The court directed the R-1-company to file Form 32 for the appointment of three directors from the petitioner's group and to hold a Board meeting to appoint two more directors from the respondents' group. The newly constituted Board was directed to consider changing the registered office of the company. The petition was disposed of with all interim orders vacated and no orders as to cost.
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2013 (6) TMI 859
Issues Involved:
1. Winding up of the respondent company u/s 433(e), (f) and 436 read with section 434 of the Companies Act, 1956.
2. Validity of e-mails as acknowledgements of debt under Section 18 of the Limitation Act, 1963.
Summary:
Issue 1: Winding up of the respondent company u/s 433(e), (f) and 436 read with section 434 of the Companies Act, 1956.
The petitioner, a licensed Custom House Agent and IATA accredited international freight forwarding agent, sought the winding up of the respondent company, engaged in manufacturing and distributing industrial machines, due to non-payment of debt amounting to Rs. 4,39,313/-. The petitioner provided services from September to November 2008 and raised invoices which remained unpaid. Despite multiple correspondences and assurances from the respondent to settle the dues, the payment was not made, leading to the filing of the winding-up petition. The court facilitated reconciliation of accounts, and the respondent admitted to owing Rs. 4,20,562/-, yet failed to make the payment. Consequently, the court admitted the petition and allowed the petitioner to advertise the hearing date.
Issue 2: Validity of e-mails as acknowledgements of debt under Section 18 of the Limitation Act, 1963.
The respondent contended that the debt was time-barred and that the e-mails acknowledging the debt did not meet the criteria of Section 18 of the Limitation Act, 1963, as they were not signed. The court examined whether e-mails could constitute valid acknowledgements of debt. It was noted that Section 18 does not specify a particular form for acknowledgements and that the Information Technology Act, 2000 provides legal recognition for electronic records and communications. The court held that e-mails, being electronic records, satisfy the requirements of Section 18 when they indicate an admission of liability. The court concluded that the e-mails from the respondent to the petitioner constituted valid acknowledgements of debt, thus resetting the limitation period and making the debt recoverable.
The court's decision emphasized the legal recognition of electronic communications and their equivalence to traditional paper-based documents in acknowledging debts.
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2013 (6) TMI 858
Issues involved: Appeal against deletion of penalties u/s 271D and 271E of the Income Tax Act, 1961.
Penalty u/s 271D - Issue Details:
The Revenue alleged that the assessee received a loan of Rs. 10,00,000 in cash, violating Section 269SS of the Act. The Revenue's case was based on a blank signed cheque found in possession of another individual. The assessee denied receiving any loan and provided evidence to support his claim. The CIT(A) accepted the assessee's plea, stating that the Revenue failed to establish the default. The Revenue argued that the cheque found indicated the loan transaction, but the assessee's denial and lack of concrete evidence supported the deletion of penalties. The Tribunal affirmed the CIT(A)'s decision, noting the lack of evidence proving the loan transaction.
Penalty u/s 271E - Issue Details:
The second appeal pertained to the penalty under Section 271E for the alleged repayment of the loan. Since the first appeal established no proof of the loan receipt, the question of penalty for repayment did not arise. The Tribunal upheld the CIT(A)'s decision to delete the penalty under Section 271E as well. Both appeals by the Revenue were dismissed, concluding that there was insufficient evidence to support the penalties imposed.
Judgment Summary:
The Appellate Tribunal ITAT Pune dismissed the Revenue's appeals against the deletion of penalties u/s 271D and 271E of the Income Tax Act, 1961. The Revenue failed to establish the loan transactions, leading to the deletion of penalties by the CIT(A) and subsequent affirmation by the Tribunal. The appeals were dismissed on 20th June, 2013.
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2013 (6) TMI 857
Issues involved:
The appeal concerns the computation of capital gains, the treatment of income arising from the sale of assets, and the addition of balancing charges on the sale of fixed assets.
Computation of Capital Gains:
The appellant contested the AO's computation of capital gains under the head "Profit & Gains of Business or Profession" instead of "capital gain." The appellant argued that the valuation done by the DVO was erroneous and excessive, and no substitution of consideration was warranted. The AO was faulted for not reducing the sale consideration by the cost of acquisition and transfer expenses.
Income from Sale of Assets:
The AO estimated and computed the income from the alleged sale of furniture and fixtures under "Profit and Gains of Business or Profession." The appellant argued against this treatment, stating that no such action was justified.
Balancing Charges on Sale of Fixed Assets:
The AO made an addition as balancing charge on the sale of fixed assets u/s 41(2) of the Act. The appellant contended that no such addition was warranted.
The Tribunal noted that the assessment order lacked detailed reasoning on the objections raised by the assessee under section 50C(2) of the Act. The addition of Rs. 3 lacs for the sale of furniture and fixtures was made without proper discussion. The Tribunal found the CIT (A) order to be lacking in addressing the objections raised by the assessee. Consequently, all grounds raised by the assessee were remanded to the AO for fresh adjudication, emphasizing the need for a speaking order as per section 250(6) of the Act. The AO was directed to consider the written objections of the assessee and provide a reasonable opportunity for a hearing before making any additions in the assessment. As a result, the appeal of the assessee was allowed for statistical purposes.
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2013 (6) TMI 856
Issues Involved:1. Nature of surplus assets taken over by the assessee company on amalgamation. 2. Whether the assets taken over on amalgamation can be considered as income arising from business or exercise of profession. Summary:Issue 1: Nature of Surplus Assets Taken Over by the Assessee Company on AmalgamationThe Assessing Officer challenged the CIT(A)'s decision that the surplus assets taken over by the assessee company on amalgamation were non-business receipts. The Tribunal referenced a prior decision in the case of ITO, Ward-7(3), Kolkata vs. Shreyans Investments (P) Ltd., where it was held that the capital reserve of the amalgamating company, shown in the books of the assessee, could not be considered as income u/s 28(iv) as 'business income'. The Tribunal emphasized that Section 28(iv) requires the benefit or perquisite to arise from business or profession, and must be a revenue receipt. The distinction between capital and revenue receipts is crucial, and capital receipts are inherently outside the scope of income chargeable to tax unless specifically included under provisions like Section 2(24)(vi). Issue 2: Whether the Assets Taken Over on Amalgamation Can Be Considered as Income Arising from Business or Exercise of ProfessionThe Tribunal noted that the amalgamation was a process of corporate reconstruction aimed at pooling resources and assets, approved by the Hon'ble jurisdictional High Court. The benefit, if any, derived from amalgamation was in the capital field and not of an income nature. The Tribunal held that the enhancement of capital reserve due to amalgamation could only be construed as a benefit in the capital field, not revenue. The onus was on the Assessing Officer to demonstrate that the benefit was in the revenue field, which was not done. The Tribunal upheld the CIT(A)'s conclusion that the amalgamation was not an adventure in the nature of trade and was a capital account transaction. Conclusion:The Tribunal found no reason to deviate from the coordinate Bench's view and upheld the CIT(A)'s decision, dismissing the Revenue's appeal. Order:The appeal filed by the Revenue is dismissed. Order pronounced in the open Court on 24th day of June, 2013.
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2013 (6) TMI 855
Issues involved: Assessment of penalty u/s 271(1)(c) for disallowance of deferred revenue expenditure claimed as revenue expenditure.
Summary:
The Department filed an appeal against the order of CIT(A) regarding the disallowance of deferred revenue expenditure claimed as revenue expenditure by the assessee for A.Y. 2008-09. The AO initiated penalty proceedings for various additions, including the disallowance of deferred revenue expenditure. The CIT(A) deleted the penalty related to this disallowance. The Department's grounds of appeal questioned the treatment of the expenditure as revenue in nature and the admission that the E-Business activities had not commenced by a certain date.
The assessee had deducted an amount for the development of a website for E-Business, claiming it as deferred revenue expenditure. The AO considered it capital expenditure as it was for software development and disallowed the claim. The CIT(A) observed that the assessee disclosed the expenditure details in the audited balance sheet, indicating no inaccurate particulars furnished. The CIT(A) noted the difference of opinion on the nature of the expenditure and held that no penalty u/s 271(1)(c) was warranted.
The AO's reliance on the definition of computer software for disallowance was deemed debatable by the CIT(A), as the claim was based on a reasonable belief of being allowable as revenue expenditure. The Tribunal upheld the CIT(A)'s decision, emphasizing the bona fide belief of the assessee and the debatable nature of the issue. The Department's appeal was dismissed.
In conclusion, the penalty u/s 271(1)(c) for disallowance of deferred revenue expenditure claimed as revenue expenditure was deleted by the CIT(A) and upheld by the Tribunal, citing the reasonable belief of the assessee and the debatable nature of the expenditure's classification.
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2013 (6) TMI 854
Issues involved:
The appeal concerns the deletion of an addition made on the grounds of treating advances received from a sister concern as deemed dividend u/s 2(22)(e) of the Act.
Summary:
Issue 1: Addition made on account of treating advances as deemed dividend u/s 2(22)(e) of the Act
The assessee, engaged in refining soya oil and DOC, declared nil income and was issued a notice u/s 142(1) of the Act regarding advances received from a sister concern. The Assessing Officer noted significant payments from the sister concern to the assessee and raised concerns about treating accumulated profit as deemed dividend u/s 2(22)(e) of the Act. The assessee contended that the payments were part of normal business transactions and not loans or advances. The CIT(A) concluded that the advances did not qualify as deemed dividend u/s 2(22)(e) as they were routine business transactions. The Tribunal upheld this decision, emphasizing that the advances were trade advances and not subject to section 2(22)(e) of the Act. Citing relevant case law, the Tribunal highlighted that commercial transactions like these do not fall within the ambit of deemed dividend. Therefore, the Revenue's appeal was dismissed for lacking merit.
In conclusion, the Tribunal ruled in favor of the assessee, holding that the advances received from the sister concern were not deemed dividend u/s 2(22)(e) of the Act, as they were part of regular business transactions and did not constitute loans or advances requiring repayment. The decision was supported by legal precedents emphasizing the distinction between commercial transactions and deemed dividends.
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2013 (6) TMI 853
Issues Involved:
1. Taxability of capital subsidy as revenue receipt.
2. Disallowance of commission and incentive expenses.
Summary:
Issue 1: Taxability of Capital Subsidy
The assessee, a Private Limited Company engaged in manufacturing industrial explosives, disclosed a net loss of Rs. 6,36,502/- for the Assessment Year 2005-2006. The Assessing Officer (A.O.) completed the assessment u/s 143(3) determining total income at Rs. 21,46,400/-, adding Rs. 5 lakhs as revenue receipt from the subsidy received by the assessee. The First Appellate Authority upheld this addition. The Tribunal found that the subsidy was sanctioned as "capital subsidy" for a "new unit" and noted that the scheme under which the subsidy was received was not examined by the Revenue authorities. The Tribunal set aside this issue to the file of the A.O. for fresh adjudication after examining the investment subsidy scheme, thus allowing the ground for statistical purposes.
Issue 2: Disallowance of Commission and Incentive Expenses
The A.O. disallowed Rs. 22,82,903/- claimed as commission and incentive expenses, arguing that such expenses were unjustified as all sales were made to a Government Enterprise. The First Appellate Authority upheld this disallowance. The Tribunal noted that the assessee provided names, addresses, and agreements of the commission agents, made payments by cheque, and deducted tax at source. The Tribunal found that the A.O. did not doubt the genuineness of the payments and that the major commission agent, M/s Combined Associates, had a certificate u/s 197(1) issued by the Revenue. The Tribunal held that the assessee discharged its burden of proof and that the disallowance was made on mere surmises. Consequently, the Tribunal allowed the claim of the assessee, thus allowing this ground.
Conclusion:
The appeal by the assessee was allowed in part, with the issue of capital subsidy remanded for fresh adjudication and the disallowance of commission and incentive expenses overturned. The order was pronounced in the Open Court on 28th June, 2013.
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2013 (6) TMI 852
The Appellate Tribunal CESTAT CHENNAI dismissed the appeal due to non-compliance of the stay order. Despite an extension granted, the appellant failed to deposit the required amount, leading to the dismissal.
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2013 (6) TMI 851
Deduction under Section 80IA (4) - whether income of the assessee from the Industrial Park whether to be assessed under the head Income from Business, without going into admissibility of the claim on merits - Held that:- Apex Court reported in COMMR. OF INC. TAX v. COCANADA RADHASWAMI BANK LTD [1965 (4) TMI 11 - SUPREME COURT] held that the head under which income is assessed is not relevant for the purpose of claiming exemption under the Act. When the Revenue had accepted the view of the Commissioner of Income Tax (Appeals) on Section 80IA that the assessee had complied with Section 80IA(4)(iii) of the Act, there remains nothing for an enquiry either as to the nature of the receipt or for that matter the facilities developed to be treated as an industrial park to consider the question of deduction under Section 80IA(4)(iii) of the Act.
When the character of the receipt is not a question to be gone in the matter of considering the claim of deduction under Section 80IA(4)(iii) of the Act, we do not find that any useful purpose would be served for the Revenue to again insist on a decision on the character of the receipt. - Decided in favour of assessee
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2013 (6) TMI 850
The Appellate Tribunal CESTAT Bangalore allowed the appellant's refund claim for CENVAT credit on 'Outdoor Catering Services' and 'Medical Insurance' citing a previous judgment by the Hon'ble High Court of Karnataka. The impugned order was set aside, and the appeal was allowed with consequential relief to the appellant.
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2013 (6) TMI 849
The High Court of Andhra Pradesh dismissed the appeal regarding disallowance under Section 40(a)(ia) and 40A(3) of the Income Tax Act, based on estimate basis, citing a previous court decision. No costs awarded.
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2013 (6) TMI 848
Issues involved: Appeal against DIT(E) order refusing registration u/s 12AA of the Act for the assessee trust.
Issue 1: Dissolution clause in trust deed
The assessee appealed against the refusal of registration under Section 12AA due to the absence of a dissolution clause in the trust deed. The AR argued citing a decision of the Ahmedabad Tribunal in a similar case, which favored the assessee. The Tribunal found in favor of the assessee based on the precedent cited, thereby deciding this issue in favor of the assessee.
Issue 2: Commencement of charitable activities
Another ground for refusal of registration was the alleged failure to start charitable activities by the assessee trust. The AR referenced a judgment of the Hon'ble Gujarat High Court supporting the assessee's position that lack of commenced activities does not invalidate the trust's genuineness. The Tribunal, after considering the arguments, rejected the objection raised by the DIT(E) and ruled in favor of the assessee based on the legal precedent cited.
Issue 3: Trust meant for specific caste
The DIT(E) refused registration on the basis that the trust was intended for a specific caste, which was deemed impermissible under the Income Tax Act. The counsel for the assessee cited decisions from the Ahmedabad Tribunal in support of the trust's position. The D.R. requested the issue to be sent back to the DIT(E) for a fresh decision considering the legal and factual aspects. The Tribunal, in the interest of justice, directed the issue to be reconsidered by the DIT(E) in light of the cited decisions and the case's specifics, providing the assessee with a fair hearing opportunity. Consequently, the appeal of the assessee was allowed for statistical purposes.
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2013 (6) TMI 847
Issues involved: Appeal against deletion of depreciation claim and whether cess paid under Agricultural Income Tax Act is a business expenditure.
In the present case, the High Court of Calcutta considered an appeal by the Revenue challenging the deletion of depreciation claim by the Income Tax Appellate Tribunal. The issue revolved around whether depreciation could be allowed on assets funded through withdrawals from NABARD. The Revenue contended that as per Section 43(1) of the Act, the actual cost of assets would be nil if funded by any person or authority, thus warranting no claim towards depreciation. The Court noted a change in the law from 1990 and upheld the Tribunal's decision based on the amended provisions of Section 33AB(1) u/s 33AB(4), which deemed the amount utilized for the purchase of certain assets as profits chargeable to income tax.
Regarding the second issue of cess paid under the Agricultural Income Tax Act, the Court referred to a previous judgment and the pending special leave petition in the Supreme Court. It was emphasized that a judgment of a Bench of coordinate strength is binding, and since the Division Bench's judgment had not been set aside, no substantial question of law was found in the appeal. Consequently, the Court dismissed the appeal, affirming the decisions of the Tribunal and the Commissioner of Income Tax (Appeals).
Therefore, the Court's decision was based on the interpretation of relevant legal provisions and precedents, ultimately leading to the dismissal of the appeal by the Revenue.
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2013 (6) TMI 846
Issues involved: The judgment deals with the following substantial questions of law:
1. Whether the Appellate Tribunal was right in deleting the disallowance u/s. 80IB (10) without appreciating the legal relationship between the assessee firm and the end users?
2. Whether the Tribunal was correct in allowing deduction u/s. 80-IB (10) on profit derived from the sale of unutilized FSI?
3. Whether the Tribunal was right in holding that the amended provision is not applicable to the assessee's project approved in 2003?
Issue 1: Disallowance u/s. 80IB (10):
The Court noted that the said question is answered against the Revenue by a previous decision of the Division Bench in the case of CIT v. Radhe Developers [2012] 341 ITR 403 (Guj.). The decision was further confirmed by the Hon'ble Supreme Court, leading to the dismissal of the present Tax Appeal concerning this issue.
Issue 2: Deduction u/s. 80-IB (10) on profit from unutilized FSI:
Regarding this question, it was mentioned that other Tax Appeals are admitted, including Tax Appeal No. 1306 of 2011 and connected appeals, such as Tax Appeal No. 173 of 2012. The present Tax Appeal was admitted specifically for this issue and is to be heard along with the mentioned appeals.
Issue 3: Applicability of amended provision to the project approved in 2003:
The Court pointed out that the Division Bench had already answered this question against the Revenue in the case of Manan Corporation v. Assistant Commissioner of Income Tax, reported in 255 CTR 415 = (2013) 214 Taxmann.com 377 (Guj). As there was no indication of further appeal by the Revenue, the present Tax Appeal was dismissed concerning this issue as well.
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2013 (6) TMI 845
Issues involved: Challenge to impugned order passed by Customs, Excise & Service Tax Appellate Tribunal regarding predeposit amount.
The High Court of Gujarat modified the impugned order passed by the Tribunal, reducing the predeposit amount from Rs. 11 Crores to Rs. 5 Crores. The petitioners were directed to deposit Rs. 4,66,00,000 on or before 10th July 2013. Upon such deposit, the predeposit of the balance amount of duty, interest, and penalty would be waived, and recovery stayed during the appeal's pendency before the Tribunal. The Court clarified that it had not expressed any opinion on the merits of the case. The Tribunal was instructed to consider the appeal on merits without being influenced by the High Court's order. If the specified predeposit amount was not made by the deadline, consequences would follow. The Special Civil Application was disposed of with no costs.
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2013 (6) TMI 844
Issues involved:
The appeal by the Revenue under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal (ITA) for assessment year 2001-02 raises questions regarding allocation of expenditure u/s. 14A, disallowance of expenditure on community development, recomputation of deduction u/s. 80IA, set off of deduction u/s. 80IA against gross total income, and applicability of Section 115JB of the Act.
Allocation of Expenditure u/s. 14A:
The Tribunal's decision in the respondent's own case for assessment year 1999-2000 concluded against the revenue, and the Counsel for the revenue failed to challenge the Tribunal's orders for the relevant years. Hence, the Court declined to entertain questions related to the allocation of expenditure u/s. 14A.
Disallowance of Expenditure on Community Development:
Similar to the previous issue, the Tribunal's decision in the respondent's favor for assessment year 1999-2000 was cited, and the Counsel for the revenue could not provide any valid reason to challenge the Tribunal's conclusion. Therefore, the Court did not entertain the question regarding the disallowance of expenditure on community development.
Recomputation of Deduction u/s. 80IA:
The Tribunal's order for assessment year 2000-01 favored the respondent, and the revenue did not challenge this decision. The Court, after considering the lack of response from the revenue department and the absence of any appeal notices, declined to entertain the question related to the recomputation of deduction u/s. 80IA.
Set Off of Deduction u/s. 80IA:
The issue was found to be covered by previous judgments of the Court in other cases, and as the matter was concluded in favor of the respondent, the Court did not entertain the question regarding the set off of deduction u/s. 80IA against gross total income.
Applicability of Section 115JB:
The appeal was admitted only in respect of the question concerning the applicability of Section 115JB of the Act. The Court decided to hear this issue along with other pending appeals on a similar question of law, indicating that further deliberation is required on this specific matter.
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2013 (6) TMI 843
Issues Involved:
1. Disallowance of interest expenditure u/s 14A and 36(1)(iii) of the Income Tax Act, 1961.
2. Claim of deduction u/s 80-IA(4) of the Income Tax Act, 1961.
Summary:
Issue 1: Disallowance of Interest Expenditure u/s 14A and 36(1)(iii)
The assessee, engaged in the construction and development business, filed a return for the assessment year 2005-06. During assessment, the Assessing Officer (AO) disallowed interest expenditure of Rs. 54,92,463/- on the grounds that interest-free advances were made to sister concerns, invoking Sections 14A and 36(1)(iii) of the Act. The CIT(A) restored the matter to the AO for re-examination following directions from earlier years. Both the assessee and the Revenue appealed against this decision.
The Tribunal noted the assessee's claim of having sufficient interest-free funds to cover the advances and directed the Department to verify this claim. The Tribunal concluded that the disallowance under Section 14A was incorrect as the advances were not related to exempt income. Instead, the matter was considered under Section 36(1)(iii). The Tribunal found that the assessee had sufficient interest-free funds to cover the advances and that the advances were not made out of borrowed funds. Therefore, the disallowance of interest expenditure by the AO was deemed untenable, and the addition of Rs. 54,92,463/- was directed to be deleted.
Issue 2: Claim of Deduction u/s 80-IA(4)
The assessee's claim for deduction u/s 80-IA(4) amounting to Rs. 1,43,62,694/- for profits from a windmill was denied by the AO, citing the withdrawal of a similar claim in the previous year and non-compliance with Section 80-IA(5). The CIT(A) upheld this decision. The assessee argued that the initial assessment year for the deduction should be 2004-05 when the claim was first made, and that past losses should not be carried forward for set-off against current profits.
The Tribunal referred to precedents, including decisions from the Pune Bench and the Hon'ble Madras High Court, supporting the assessee's interpretation. The Tribunal set aside the CIT(A)'s order and directed the AO to re-examine the claim in light of these precedents, allowing the assessee a reasonable opportunity to present its case.
Conclusion:
The appeal of the assessee was partly allowed, directing the deletion of the disallowed interest expenditure and remanding the deduction claim u/s 80-IA for re-examination. The appeals of the Revenue were dismissed.
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