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2013 (8) TMI 1118
Issues involved:
The judgment involves the interpretation of provisions of section 154 of the Income-tax Act, 1961 regarding rectification of errors, applicability of section 72A(6) for computation of book profit u/s 115JB, and whether the assessee can claim set off of losses relating to a firm.
Rectification u/s 154:
The Assessing Officer issued a notice u/s 154 of the Act to rectify the book profit computation u/s 115JB due to the loss of the firm not being allowed. The assessee contended that as per Sec. 72A(6), losses of the erstwhile firm converted into a company can be set off in the successor company's income. The Assessing Officer passed a rectification order adding the firm's losses to the book profit.
Debatable issue and CIT(A) decision:
The CIT(A) held that the rectification order was not in accordance with the law as the issue was debatable, citing relevant case laws. The CIT(A) observed that the accumulated loss and unabsorbed depreciation of the firm, now part of the company's accounts, were correctly considered for book profit u/s 115JB under section 72A(vi) r.w.s. 47(xiii).
Revenue's appeal and Tribunal decision:
The revenue appealed the CIT(A)'s decision, arguing that the action u/s 154 was lawful and the firm's losses should not be allowed for book profit u/s 115JB. The Tribunal upheld the CIT(A)'s decision, stating that the issue was debatable and could not be rectified u/s 154. The Tribunal dismissed the revenue's grounds and upheld the CIT(A)'s order.
Conclusion:
The Tribunal dismissed the revenue's appeal and the assessee's Cross-Objection (C.O.), admitting the C.O. due to a two-day delay but ultimately dismissing it as infructuous. Both the revenue's appeal and the C.O. were dismissed, upholding the CIT(A)'s decision regarding the rectification u/s 154 and the computation of book profit u/s 115JB.
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2013 (8) TMI 1117
Issues Involved:
1. Deletion of addition on account of premium amortization expenses.
2. Deletion of addition on account of disallowance of Special Long Term Finance Fund expenses claimed u/s 36(1)(viii).
3. Deletion of addition on account of reclassification of capital gains as business income.
Summary:
1. Deletion of Addition on Account of Premium Amortization Expenses:
The first issue pertains to the deletion of an addition of Rs. 10,49,919/- made on account of premium amortization expenses. The assessee, a Co-operative Society engaged in banking, claimed these expenses following RBI guidelines, which require amortization of the premium paid on Government Securities over their maturity period. The Assessing Officer (AO) disallowed this claim, arguing that the Income Tax Act does not provide for such amortization. However, the CIT(A) deleted the addition, referencing CBDT Instruction No. 17 of 26.11.2008 and various Tribunal decisions that support the allowability of such expenses u/s 36(1)(vii). The Tribunal upheld the CIT(A)'s decision, dismissing the revenue's ground.
2. Deletion of Addition on Account of Disallowance of Special Long Term Finance Fund Expenses Claimed u/s 36(1)(viii):
The second issue involves the deletion of an addition of Rs. 50,09,000/- related to the disallowance of Special Long Term Finance Fund expenses claimed u/s 36(1)(viii). The AO disallowed the claim, stating that the assessee failed to prove that the amount set aside constituted 20% of the profits derived from eligible business. The CIT(A) found that the assessee had provided the necessary details and computations, which the AO ignored. The CIT(A) concluded that the claim was valid and allowable. The Tribunal upheld this decision, dismissing the revenue's ground.
3. Deletion of Addition on Account of Reclassification of Capital Gains as Business Income:
The third issue concerns the deletion of an addition of Rs. 53,89,699/- made by reclassifying capital gains as business income. The AO argued that the gains from the sale of securities should be treated as business income, given their connection to the banking business. The CIT(A) disagreed, noting that the assessee maintained separate accounts for SLR and non-SLR securities, treating non-SLR securities as investments. The CIT(A) held that gains from these investments should be classified as capital gains. However, the Tribunal noted that the CIT(A) did not consider the Supreme Court decision in the case of Sardar Indra Singh & Sons Ltd. The Tribunal remanded the matter back to the CIT(A) for fresh adjudication in light of the Supreme Court decision.
Conclusion:
The revenue's appeal is partly allowed for statistical purposes, with the first two grounds dismissed and the third ground remanded for further consideration.
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2013 (8) TMI 1116
Issues Involved:
1. Disallowance of Claim of Depreciation Allowance.
2. Disallowance of claim for payment made to Members.
3. Disallowance of contribution to Urban Bank Credit Equalisation Fund.
4. Payment of Education Fund.
5. Levy of Surcharge and Interest u/s 234B.
Summary:
1. Disallowance of Claim of Depreciation Allowance:
The assessee claimed depreciation of Rs. 55 lacs on diminution in the value of securities held as Available for Sale (AFS). The AO disallowed this, considering it a contingent liability u/s 37 of the Act. The CIT(A) directed the AO to verify the cost and market price of the securities and allow depreciation as per CBDT Instruction No.17/2008. The Tribunal upheld this direction, allowing the appeal for statistical purposes.
2. Disallowance of claim for payment made to Members:
The AO disallowed Rs. 3,33,088/- spent on members' welfare, considering it not wholly and exclusively for business purposes u/s 37. The CIT(A) upheld this, noting the expenditure was not from the current year's income. The Tribunal reversed this decision, citing Gujarat High Court rulings that such expenditures are for business purposes, and allowed the appeal.
3. Disallowance of contribution to Urban Bank Credit Equalisation Fund:
The AO disallowed Rs. 5,20,609/- contributed to the Urban Bank Credit Equalisation Fund, as it was not debited to the profit & loss account. The CIT(A) upheld this. The Tribunal reversed the decision, noting the contribution was mandated by section 115G of the Gujarat Co-operative Societies Act, and allowed the appeal.
4. Payment of Education Fund:
The AO added Rs. 3,00,000/- for the education fund to the income, as it was not debited to the profit & loss account. The CIT(A) upheld this. The Tribunal reversed the decision, referencing similar cases decided by the Gujarat High Court in favor of the assessee, and allowed the appeal.
5. Levy of Surcharge and Interest u/s 234B:
The Tribunal directed the AO to decide on the levy of surcharge and interest u/s 234B in accordance with the law, as it is consequential.
Conclusion:
The appeal of the assessee is partly allowed for statistical purposes.
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2013 (8) TMI 1115
Issues Involved:
1. Legality of reference made by the Assessing Officer u/s 55A to the DVO.
2. Correctness of Valuation arrived at by DVO.
Summary:
Legality of Reference Made by the Assessing Officer u/s 55A to the DVO:
The assessee challenged the reference made by the Assessing Officer u/s 131(1)(d), contending that there is a separate provision for reference to the valuation officer u/s 55A. The Tribunal held that as per provisions of Section 55A, when the Assessing Officer finds that the value of the asset as claimed by the assessee is at variance with its fair market value, the Assessing Officer may refer the valuation of the capital asset to a DVO. Since the Assessing Officer was computing capital gains, issuing a commission u/s 131(1)(d) to the DVO for ascertaining the fair market value u/s 55A was justified. The Tribunal found no infirmity in the reference made to the Valuation Officer u/s 55A and dismissed the legal ground raised by the ld. Authorized Representative.
Correctness of Valuation Arrived at by DVO:
The Tribunal noted that the correctness of valuation by the DVO is a question of fact. The DVO has to estimate the fair market value of assets as on the date of transfer, considering the advantages and disadvantages attached to the property. The Tribunal observed that the valuation arrived at by the Stamp Duty Authority was excessive, and the Assessing Officer rightly made a reference to the Valuation Officer u/s 55A. The Tribunal considered the adverse factors affecting the fair market value of the land, including the proposed road reducing the usable area, acquisition proceedings, and the fact that the transaction was more of a family settlement rather than a commercial sale. The Tribunal directed the Assessing Officer to reduce the valuation arrived at by the DVO by 20% and recompute the gain accordingly, dividing it equally between both assessees.
Conclusion:
The Tribunal allowed the appeals in part, directing the Assessing Officer to reduce the valuation by 20% and recompute the gain, considering the adverse factors affecting the fair market value of the land. The gain so computed is to be divided equally between both assessees.
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2013 (8) TMI 1114
Issues Involved: Restoration of appeal dismissed by Tribunal due to non-appearance and delay in filing Restoration Petition.
Issue 1: Restoration of Appeal
The assessee's appeal was dismissed by the Tribunal through an ex-parte order on the ground of non-prosecution. The Tribunal allowed the assessee to move for recalling the order if sufficient reasons for non-appearance were shown. The Restoration Petition was filed by the assessee stating reasons for non-appearance, including the transfer of the case from Delhi to Chennai without consent, resulting in lack of notice receipt. The assessee affirmed changes in address causing non-receipt of notice. The Tribunal noted a delay of one year and eight months in filing the petition, beyond the four-year limitation period. The assessee attributed the delay to not receiving the Tribunal order in time due to the case transfer.
Issue 2: Condonation of Delay
Referring to a similar case, the Tribunal considered the delay condonable as it was beyond the petitioner's control. The Tribunal cited the Bhilai Engineering Corporation Ltd. case where delay was condoned due to reasons not attributable to the assessee. The Tribunal found valid reasons for the delay in filing the Restoration Petition, such as the transfer of the case from Delhi to Chennai without the assessee's knowledge. The delay was deemed beyond the petitioner's control, leading to the condonation of the delay in filing the petition.
Issue 3: Decision
The Tribunal, based on the reasons provided by the assessee and the precedent set in the Bhilai Engineering Corporation Ltd. case, decided to recall the ex-parte order and restore the appeal for fresh hearing and disposal. The Registry was directed to schedule a hearing date and issue a notice. Consequently, the petition filed by the assessee was allowed, and the order was pronounced in an open court on the 23rd of August, 2013 in Chennai.
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2013 (8) TMI 1113
Issues Involved:
The judgment involves the issue of taxability of capital gain arising from the sale of mutual fund units under the Indo-Swiss tax treaty.
Summary:
Issue 1: Taxability of Capital Gain under Indo-Swiss Tax Treaty
The appeal by the revenue concerns the taxability of capital gain from the sale of mutual fund units for the assessment year 2004-05. The assessee, a non-resident individual, claimed the benefit of the Double Tax Avoidance Agreement (DTAA) between India and Switzerland, arguing that the capital gain was taxable only in Switzerland u/s Article 13(6) of the tax treaty. The Assessing Officer (AO) contended that the gain was effectively from the alienation of shares of Indian companies and thus taxable in India u/s Article 13(5) (b). The Commissioner of Income Tax (Appeals) [CIT(A)] held that mutual funds were distinct from shares of Indian companies, relying on the judgment of the Hon'ble Supreme Court in the Apollo Tyres Ltd. case, and concluded that the capital gain was not taxable in India. The Tribunal upheld the CIT(A)'s decision, stating that units of mutual funds cannot be considered as shares, and therefore, the provisions of Article 13(6) applied, rendering the capital gain not taxable in India.
Decision:
The Tribunal dismissed the revenue's appeal, affirming that the capital gain from the sale of mutual fund units was not taxable in India under the provisions of the Indo-Swiss tax treaty.
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2013 (8) TMI 1112
Issues involved: Appeal by Revenue and Cross-Objection by assessee against order of CIT(A) for Assessment Year 2010-11 regarding filing of voyage final returns u/s 172(3) without paying freight tax.
Summary:
1. The appeal by Revenue and Cross-Objection by the assessee were against the order of CIT(A) for the Assessment Year 2010-11. The agent filed various voyage final returns u/s 172(3) without paying freight tax. The Assessing Officer passed an order u/s 172(4) working out income and tax payable. The assessee contended that the order u/s 172(4) should be quashed as the Principal had filed a return u/s 139. The ld CIT(A) quashed the assessment, stating that the assessee had opted for assessment u/s 172(7) by filing a return u/s 139, establishing it was in regular shipping business. The Revenue appealed on grounds including the assessee being assessable u/s 172(7) and availability of DTAA benefits.
2. The assessee filed Cross-objections, challenging the AO's objections and raising various grounds related to the assessment. The Revenue argued that the assessee never raised the issue of filing a return u/s 139 before the AO. The ld CIT(A) annulled the assessment after considering the legal issue raised. The ITAT upheld the view taken by the ld CIT(A) based on previous decisions. The Revenue's appeal was dismissed, and the Cross-objections were deemed infructuous and dismissed as well.
3. The ITAT noted that the facts were similar to a previous case where the order u/s 172(4) was quashed, and the jurisdictional AO was directed to verify and take necessary action u/s 172(7) to ensure proper assessment. The appeal of the Revenue was dismissed, and the Cross-objections were also dismissed as infructuous, as they supported the ld CIT(A)'s order.
4. In conclusion, the appeal by Revenue and Cross-objections by the assessee were dismissed based on the findings and observations made during the proceedings.
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2013 (8) TMI 1111
Issues Involved:
1. Validity of the certificates/reports issued by the Commissioner of Central Excise.
2. Legality of the demand notice issued by the Assistant Commissioner of Central Excise.
3. Compliance with principles of natural justice by the Investment Appraisal Committee (IAC).
Summary:
Issue 1: Validity of Certificates/Reports Issued by the Commissioner of Central Excise
The petitioner challenged four certificates/reports dated 31-12-2012 issued by the Commissioner of Central Excise, which declared the petitioner's claim of Rs. 18,66,86,576.29 as inadmissible as investment. The petitioner argued that the IAC did not assign reasons for its findings and did not provide any notice or opportunity to be heard before making its decision. The court noted that the IAC must provide reasons for rejecting investments and must follow principles of natural justice, as established in Dharampal Satyapal Ltd. vs. Union of India & Ors. [2010 (1) GLT 744].
Issue 2: Legality of the Demand Notice Issued by the Assistant Commissioner of Central Excise
The demand notice dated 26-10-2013, issued based on the IAC's findings, directed the petitioner to pay excise duty of Rs. 18,66,86,576.29 along with interest. The court found that since the IAC's decision was made without following due process, the demand notice was also unsustainable. The court set aside the impugned demand notice and remanded the matter to the IAC for reconsideration in accordance with the law.
Issue 3: Compliance with Principles of Natural Justice by the IAC
The court emphasized that the IAC must give notice to the petitioner specifying reasons for any tentative findings and allow the petitioner to show cause. The IAC's failure to provide such notice and opportunity to be heard was a violation of principles of natural justice. The court reiterated that the IAC must follow the directions laid down in the Dharampal Satyapal Ltd. case and ensure fair opportunity for the petitioner to present their case.
Conclusion:
The court set aside the impugned certificates/reports and the demand notice, remanding the matter to the IAC for reconsideration in compliance with the principles of natural justice and the relevant legal provisions. The court directed the IAC to complete the exercise within three months and act in accordance with the directions given by the Tripura High Court in a similar case. The writ petition was disposed of with no order as to costs.
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2013 (8) TMI 1110
Issues involved: Appeal by Revenue challenging deletion of penalty u/s 271(1)(c) for A.Y. 2005-06 and 2006-07 based on disallowance u/s 35(2AB) of IT Act.
Summary:
The Revenue appealed against the deletion of penalties imposed on the assessee for A.Y. 2005-06 and 2006-07 under Section 271(1)(c) of the IT Act, relating to disallowance u/s 35(2AB). The AO disallowed the claim as the assessee failed to produce the prescribed certificate u/s 35(2AB) during assessment proceedings. The Revenue argued that the claim was not made as per law, constituting inaccurate particulars. However, the CIT(A) upheld the assessee's position, citing precedents where voluntary disclosure and payment of tax precluded penalty imposition. The Tribunal approved the CIT(A)'s decision, dismissing the Revenue's appeals for both assessment years.
In A.Y. 2004-05, the assessee claimed deduction u/s 35(2AB) for Scientific Research and Development expenses based on certificates from the Ministry of Science and Technology. The claim was disallowed due to lack of prescribed certificate, not for inaccurate particulars. The CIT(A) referenced legal precedents where voluntary disclosure and tax payment prevented penalty imposition. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeals for both A.Y. 2005-06 and 2006-07.
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2013 (8) TMI 1108
Issues involved: Determination of nature of income for taxation, existence of permanent establishment under Double Taxation Avoidance Agreement, levy of interest under Section 234B and C of the Income Tax Act.
Nature of income for taxation: The main issue in this case was whether the income earned by the assessee should be classified as business income or fee for technical services, which also included the question of the applicable rate of tax. The High Court framed a substantial question of law to address this issue.
Permanent establishment under DTAA: Another key issue was whether the assessee had a permanent establishment in India as per Article 5 of the Double Taxation Avoidance Agreement between India and Singapore. The Income Tax Appellate Tribunal's decision on this matter was under scrutiny.
Levy of interest under Section 234B and C: The Revenue raised a question regarding the levy of interest under Section 234B and C of the Income Tax Act, 1961. The Court noted that a similar issue had been decided against the Revenue in a previous case, and the decision was pending reconsideration with a reserved judgment. The Court did not frame a substantial question of law regarding the deletion of interest under these sections but allowed the Revenue to raise it at the final hearing if a favorable decision was obtained.
Conclusion: The High Court admitted the cross appeals filed by the Revenue and the assessee arising from a common order. The Court granted liberty to the parties to file necessary papers/documents within a specified timeframe and directed the case to be categorized as a Regular Matter for further proceedings.
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2013 (8) TMI 1107
Issues Involved:
1. Restriction of exemption claimed u/s 10(23G) of the Income Tax Act.
2. Denial of exemption claimed u/s 10(33) of the Income Tax Act.
3. Taxability of interest and penal interest on Non-Performing Assets (NPA) up to 31.03.1998.
Summary:
1. Restriction of exemption claimed u/s 10(23G):
The primary issue was whether the exemption under section 10(23G) should be allowed on a gross or net basis. The AO restricted the exemption on a net basis after deducting the cost of borrowings. The CIT(A) upheld the AO's decision. The ITAT found that the assessee, being a public financial institution and not a banking company, had substantial own funds, and the entire costs were embedded in the total expenses. Therefore, the exemption should be allowed on a gross basis. The grounds concerning exemption u/s 10(23G) were allowed in favor of the assessee.
2. Denial of exemption claimed u/s 10(33):
The assessee claimed an exemption of Rs. 22,96,96,605/- for dividend income u/s 10(33). The AO denied the exemption, stating that it should be allowed on a net basis after deducting expenses incurred to earn the dividend. The CIT(A) sustained the AO's order. The ITAT found that the assessee had substantial free funds and investments were made from these funds. Following the same logic as in the previous ground, the ITAT allowed the exemption on a gross basis. The ground of appeal was allowed in favor of the assessee.
3. Taxability of interest and penal interest on NPA up to 31.03.1998:
The AO included interest and penal interest on NPA up to 31.03.1998 as taxable income for the current year. The CIT(A) upheld this decision. The ITAT noted that the assessee was not liable to file returns or pay tax up to 31.03.1999. Following the Supreme Court's judgment in UCO Bank vs CIT, the ITAT held that interest on sticky loans pertaining to earlier years could not be taxed. The ITAT directed the AO to delete the interest and penal interest on NPA up to 31.03.1999 amounting to Rs. 50,89,66,421/-. The ground of appeal was allowed in favor of the assessee.
Conclusion:
The appeals for the assessment years 2000-01, 2001-02, and 2002-03 were allowed in favor of the assessee. The ITAT directed the AO to grant exemptions u/s 10(23G) and 10(33) on a gross basis and to delete the interest and penal interest on NPA up to 31.03.1999.
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2013 (8) TMI 1106
Issues Involved:
1. Obligation to deduct tax at source on medical reimbursements.
2. Obligation to deduct tax at source on meal vouchers (Sodexho coupons).
Summary:
1. Obligation to deduct tax at source on medical reimbursements:
The assessee, M/s. Cisco Systems Asia Services, Bangalore, was found not to have deducted tax at source on medical reimbursements up to Rs. 15,000 each paid to its employees during a survey u/s.133A(1). The Assessing Officer (AO) considered the assessee as an "Assessee in default" u/s.201(1) for not treating the medical reimbursements as part of the taxable salary. The AO also levied interest u/s.201(1A) on the tax not deducted. The CIT(A) cancelled the AO's order, holding that the amount paid as reimbursement ought to be considered as perquisite and relied on CBDT Circular No.603 dated 6.6.1991. The Tribunal upheld the CIT(A)'s order, stating that the exemption in respect of medical expenditure is considered after verifying the details and evidence furnished by the employees. The Tribunal cited several judicial precedents to support the view that no tax can be recovered from the employer on account of short deduction of tax at source under section 192 if a bona fide estimate of salary taxable in the hands of the employee is made by the employer.
2. Obligation to deduct tax at source on meal vouchers (Sodexho coupons):
The AO disallowed the claim for meal vouchers (Sodexho coupons) provided to employees, suspecting misuse as the identity of users could not be verified. The CIT(A) overturned the AO's decision, stating that these benefits are provided as welfare measures aimed at ensuring better productivity from employees and are well within the ambit of the provisions of the IT Act. The CIT(A) relied on the ITAT, Ahmedabad Bench's decision in the case of Cadila Healthcare Ltd., which held that meal vouchers used at specified eating joints or outlets do not attract TDS u/s.192. The Tribunal upheld the CIT(A)'s order, dismissing the Revenue's appeal on this issue.
Conclusion:
Both appeals filed by the Revenue were dismissed. The Tribunal upheld the CIT(A)'s decisions, confirming that the assessee was not in default for not deducting tax at source on medical reimbursements and meal vouchers. The order was pronounced in the open court on 08.08.2013.
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2013 (8) TMI 1105
Issues involved:
The judgment involves challenges to the impugned common judgment and order of the Income Tax Appellate Tribunal for three appeals related to Assessment Years 2007-08, 2008-09, and 2009-2010, all concerning the treatment of expenditure on purchase of tools and instruments.
Assessment Year 2007-08 (Tax Appeal No.506 of 2013):
The Tribunal dismissed the Revenue's appeal against the deletion of capital expenditure on tools and instruments debited to Profit & Loss account, treating them as consumable items. The Assessing Officer considered the items as part of plant and machinery, leading to a dispute resolved in favor of the assessee by the Tribunal.
Assessment Year 2008-09 (Tax Appeal No.505 of 2013):
The Tribunal allowed the assessee's appeal, overturning the addition made by the Assessing Officer for disallowing revenue expenses claimed in Profit & Loss account for the purchase of tools and instruments.
Assessment Year 2009-2010 (Tax Appeal No.507 of 2013):
The Tribunal upheld the assessee's version, setting aside the order of CIT(Appeals) which confirmed the disallowance of expenditure on purchase of tools and instruments, treating them as revenue expenditures.
The Assessing Officer treated the tools and instruments as capital expenditure, but the CIT(Appeals) and Tribunal considered them as revenue expenditure based on the method of accounting adopted by the assessee. The Tribunal noted the short lifespan of the items and the method of consumption during manufacturing operations, leading to the conclusion that they should be treated as revenue expenditures.
The Tribunal's decision was based on the change in the method of accounting by the assessee, which was not disputed by the Department. The consumption of tools and equipments was rightly treated as revenue expenditure, supported by the judgment of the Punjab and Haryana High Court in a similar case. The Tribunal committed no error in its decision, and no substantial question of law arises in the appeals.
Therefore, the Tax Appeals were dismissed, upholding the Tribunal's decision on the treatment of expenditure on purchase of tools and instruments as revenue expenditures.
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2013 (8) TMI 1104
Issues Involved:
1. Condonation of delay in filing the petition.
2. Acquittal of respondents u/s 489A/489B/489C/489D/34 IPC.
3. Obligation of Special Cell officials to maintain a register of arrival and departure.
4. Discrepancies in the testimonies of police officials regarding the timing of FIR registration.
5. Use of private vehicles in conducting the raid.
6. Recovery and printing of fake Indian currency notes (FICN).
7. Allegation of tampering with the case property.
8. Non-joining of public witnesses during the search and raid.
Summary:
Condonation of Delay:
The court allowed the application for condonation of 173 days' delay in filing the petition for leave to appeal, stating, "For the reasons stated in the application, the same is allowed. Delay in filing the present leave to appeal is condoned."
Acquittal of Respondents:
The State filed a leave to appeal u/s 378(1) of the Code of Criminal Procedure against the acquittal of the respondents of all charges u/s 489A/489B/489C/489D/34 IPC. The trial court had acquitted the respondents based on the prosecution's failure to involve any independent witness or respectable persons of the locality.
Obligation to Maintain Register:
The trial court observed that all police officials, irrespective of their rank, are bound to record their arrival and departure in the register as per Punjab Police Rules, 1934. The members of the raiding party did not make any entry, leading the court to conclude that it is possible to manage the rojnamcha register.
Discrepancies in Testimonies:
There were material contradictions in the testimonies of police officials regarding the timing of FIR registration. The court noted, "The above mentioned discrepancies are inconsistent to the case of prosecution and, therefore, cannot be relied upon."
Use of Private Vehicles:
The trial court found the use of private vehicles for the raid suspicious as no special reason was provided, and no log book was maintained. The court stated, "The testimonies of the police official witnesses are dissatisfactory with regard to this circumstance also."
Recovery and Printing of FICN:
The prosecution failed to show how FICN were printed on both sides by the respondent Om Prakash. The court noted, "This further weakens the case of the prosecution as rightly considered by the trial court."
Tampering with Case Property:
The yellow coloured envelopes in which FICN were recovered were missing when the case property was opened before the trial court. The court held, "There is a possibility of tampering with the case property in the instant case."
Non-joining of Public Witnesses:
The court emphasized the mandatory duty u/s 100(4) of the Code of Criminal Procedure to call independent and respectable inhabitants during searches. The court agreed with the trial court that the efforts made by the police to involve public witnesses were not genuine and sincere.
Conclusion:
The court concluded that leave to appeal should be granted only in exceptional cases where the judgment under appeal is found to be perverse. The court stated, "We do not find any reasons for interference in the present case. Accordingly, no grounds are made out and the petition for leave to appeal stands dismissed."
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2013 (8) TMI 1103
Issues Involved:
1. Rectification of Tribunal's Order
2. Set-off of Unabsorbed Depreciation
3. Power of Tribunal to Review its Own Order
Summary:
1. Rectification of Tribunal's Order:
The assessee filed a Miscellaneous Application (MA) seeking rectification of the Tribunal's order dated 16/11/2012. The assessee argued that the Tribunal's order contained mistakes apparent from the record, particularly regarding the set-off of unabsorbed depreciation. The Tribunal, however, found that the arguments presented by the assessee were misconceived and that the Tribunal had no power to review its own order. The Tribunal emphasized that statutory authority cannot exercise the power of review unless expressly conferred, and the scope of review does not extend to re-hearing the case on merit.
2. Set-off of Unabsorbed Depreciation:
The assessee disputed the order of the Commissioner of Income Tax (CIT) holding that the Assessing Officer's (AO) action to allow the set-off of unabsorbed depreciation for assessment years 1990-97 and 1998-99 was erroneous and prejudicial to the interests of the revenue. The assessee argued that the AO's view was in accordance with a CBDT Circular and a Gujarat High Court judgment. The Tribunal, however, held that the AO had mechanically accepted the assessee's claim without proper enquiry or verification, making the order erroneous. The Tribunal noted that the CIT's revision of the AO's order u/s 263 was justified.
3. Power of Tribunal to Review its Own Order:
The Tribunal reiterated that it does not have the express power to review its own orders. The scope of rectification u/s 254(2) is limited to correcting mistakes apparent from the record and does not extend to recalling the entire order and passing a fresh decision. The Tribunal cited various judgments, including CIT v. Pearl Woolen Mills and CIT v. Hindustan Coca Cola Beverages (P.) Ltd., to support its position that rectification is not equivalent to a review or recall of the order. The Tribunal concluded that the assessee's application was an attempt to re-argue the case, which is beyond the scope of s. 254(2).
Conclusion:
The Tribunal dismissed the MA filed by the assessee, finding no merit in the arguments presented and no mistake apparent on the record that warranted rectification of the Tribunal's order.
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2013 (8) TMI 1102
Issues involved: Rejection of books of account u/s 145(3), estimation of income at 5% of gross receipts, addition of interest credited to P&L A/C.
Rejection of books of account u/s 145(3): The Assessing Officer (A.O.) rejected the books of account of the assessee due to self-prepared vouchers that lacked supporting evidence for expenditures, including labor expenses. The A.O. applied a 6% profit rate on total receipts and calculated a profit of &8377; 24,96,150. The Commissioner of Income Tax (CIT) upheld the rejection of books under Section 145(3) as the labor expenses were non-verifiable, and the profit rate was deemed low at 3.01%. The CIT confirmed the A.O.'s decision, stating that the books were audited based on self-made vouchers without supporting evidence, leading to the rejection u/s 145(3).
Estimation of income at 5% of gross receipts: The CIT reduced the profit rate from 6% to 5%, resulting in a calculated profit of &8377; 20,80,125 instead of the initial &8377; 24,96,150. The CIT found the A.O.'s addition of interest income to be correct, as the interest was already shown in the profit & loss account of the firm. The CIT dismissed the appellant's claim of double addition, stating that the A.O. had appropriately included the interest income in the profit estimation.
Addition of interest credited to P&L A/C: The Tribunal confirmed an addition of &8377; 1,00,000 to cover identified lapses, considering the nature of the business and past history. The Tribunal directed the A.O. to add only &8377; 1,00,000 to the declared income, deleting the balance addition. As the interest income was already disclosed in the profit & loss account, no separate addition was warranted, and the ground related to this issue was allowed.
Conclusion: The appeal was partly allowed, with the Tribunal confirming the rejection of books u/s 145(3) and adjusting the profit rate to 5%. The addition of interest income was upheld to cover identified lapses, with a specific amount added to the declared income. The separate addition for interest income was deemed unnecessary, and the appeal was partially allowed.
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2013 (8) TMI 1101
Issues involved: Appeal challenging validity of revision order u/s 263 for assessment year 2004-05, condonation of delay in filing appeal before Tribunal.
Validity of revision order u/s 263: The assessee filed an appeal challenging the revision order passed by the Ld CIT u/s 263 of the Act for the assessment year 2004-05, which was received 439 days after the order was passed. The assessee sought condonation of the delay, citing reasons such as being under the impression that the appeal lied before CIT Appeals, Trivandrum. However, the Tribunal noted that the assessee, a senior neurosurgeon, did not provide a valid reason for the delay and should have sought proper legal advice. Referring to judicial pronouncements, the Tribunal emphasized that the reasons cited were not considered as a "sufficient cause" for condonation of delay, leading to the dismissal of the appeal.
Condonation of delay: The assessee requested the Tribunal to condone the delay of 439 days in filing the appeal, attributing it to being under the impression that the appeal lied before CIT Appeals, Trivandrum. The Tribunal, considering the background of judicial pronouncements, found the reasons provided by the assessee insufficient to be considered as a "sufficient cause" for condonation of delay. As a result, the appeal was dismissed in limine, as unadmitted.
Conclusion: The Tribunal dismissed the appeal filed by the assessee challenging the revision order passed by the Ld CIT u/s 263 for the assessment year 2004-05, citing the lack of a valid reason for the delay in filing the appeal within the stipulated time frame. The Tribunal referred to judicial pronouncements to emphasize the importance of providing a "sufficient cause" for condonation of delay, ultimately leading to the dismissal of the appeal.
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2013 (8) TMI 1100
Issues involved: Territorial jurisdiction under Section 138 of the Negotiable Instruments Act.
Summary:
The Supreme Court heard a case where the Appellant filed a complaint under Section 138 of the Negotiable Instruments Act against the Respondent for a dishonored cheque. The Respondent challenged the jurisdiction of the Chief Judicial Magistrate, Sopore. The High Court quashed the complaint, stating that Sopore had no jurisdiction. The Supreme Court referred to the case of K. Bhaskaran v. Sankaran Vaidhyan Balan to determine territorial jurisdiction. The Court clarified that any court within the territorial limits where any of the five acts related to the offense under Section 138 were committed could try the case. In this case, as the cheque was presented at UCO Bank in Sopore, the Court in Sopore had jurisdiction. The Respondent cited a different case, but the Court distinguished it as not applicable to the present situation. Consequently, the Supreme Court allowed the appeal, overturned the High Court's decision, and remanded the case to the Chief Judicial Magistrate, Sopore for further proceedings.
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2013 (8) TMI 1099
Issues Involved:1. Validity of jurisdiction assumed u/s 147 by the Assessing Officer on an amalgamated company. 2. Validity of assessment framed on a non-existing entity. Summary:Issue 1: Validity of jurisdiction assumed u/s 147 by the Assessing Officer on an amalgamated company.The assessee contested the jurisdiction assumed by the Assessing Officer (AO) u/s 147, arguing that the notice u/s 148 was issued to M/s Rajesh Marketing Services Pvt. Ltd., which had already merged with M/s Minda Capital Ltd. as per the High Court order dated 29.08.2007, effective from 01.04.2006. The CIT(A) upheld the AO's action, stating that for the relevant assessment year 2004-05, M/s Rajesh Marketing Services Pvt. Ltd. was in existence, and the assessment was framed in the name of Minda Capital Ltd., the amalgamated company. The CIT(A) found the reopening proceedings valid and rejected the assessee's objection. Issue 2: Validity of assessment framed on a non-existing entity.The Tribunal considered the submission that the assessment was framed on a non-existing entity, M/s Rajesh Marketing Services Pvt. Ltd., which had ceased to exist due to amalgamation. The Tribunal referred to the jurisdictional High Court's decision in Spice Infotainment Ltd. vs. CIT, which held that an assessment in the name of a company that has been amalgamated and dissolved is null and void. The Tribunal found that the assessment framed on M/s Rajesh Marketing Services Pvt. Ltd. was a jurisdictional defect and not a procedural irregularity. Consequently, the assessment was declared void-ab-initio. In conclusion, the Tribunal set aside the order of the CIT(A) and held that the assessment was invalid. Other grounds raised by the assessee were deemed academic and not adjudicated. The appeal was partly allowed. Order pronounced in the open court on 23 August, 2013.
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2013 (8) TMI 1098
Issues involved: Appeal against order of CIT(A)-V, Baroda dated 29-10-2012 u/s 250 read with section 143(3) of the Income Tax Act, 1961 for assessment year 2007-08 regarding addition of Rs. 7,17,500/- u/s. 69C towards alleged bogus purchases.
Facts: The assessee, engaged in steel trading, filed return for AY 2007-08 declaring income of Rs. 2,25,352. AO disallowed Rs. 12,73,423 towards bogus purchases from M/s. Bhagyoday Enterprise due to lack of evidence and supplier denial.
AO's Findings: Assessee failed to provide stock details, delivery evidence, and supplier verification. Suppliers denied sales to assessee. AO added disallowed amount to income.
CIT(A) Decision: CIT(A) confirmed addition of Rs. 7,14,500 as unexplained assets and expenditure u/s 69C, and restricted balance addition to 25% of Rs. 5,58,923 as notional profits of bogus purchases.
Appellant's Argument: Assessee appealed CIT(A)'s decision based on ITAT Ahmedabad Bench rulings, seeking deletion of confirmed addition.
Tribunal Decision: Tribunal found merit in appellant's submissions. Citing precedent cases, it held that when stock records tally, purchases cannot be rejected entirely. Tribunal restricted disallowance to 25% of bogus purchases, sustaining Rs. 3,18,355 addition and deleting the rest.
Conclusion: Tribunal allowed the appeal, modifying the addition to Rs. 3,18,355 and deleting the balance. The decision was based on reconciled stock records and legal precedents cited by the appellant.
Judges: SHRI A. MOHAN ALANKAMONY, AM AND SHRI KUL BHARAT, JM
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