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2008 (6) TMI 595
Powers conferred on CIT u/s 263 - sundry credits not proved to be genuine - Whether the Tribunal has erred in law in quashing the order passed by CIT u/s 263 and is there any illegality in the order of the CIT directing the AO to make assessment de novo after giving the opportunity to the assessee? - HELD THAT:- In our opinion the word ‘erroneous’ used in the section includes the expression ‘erroneous in law’ as well as ‘erroneous in fact’. When the CIT was satisfied that the sundry credits were not duly verified, it rightly found that the AO has erred in accepting the huge sundry credits.
As far as the requirement of ‘prejudicial to the interest of revenue’ is concerned if the amount shown on sundry credits is not found verified and becomes part of the taxable income, the interest of the revenue is certainly prejudicially affected. As such, in our opinion, both the conditions were fulfilled in the present case and the CIT had committed no error of law in passing the order.
We do not agree with the reasons given by the ITAT for quashing the order passed by CIT that heavens would have not fallen if one more opportunity was given to the assessee before passing the order. The question of giving further opportunity would have arisen only when the assessee would have sought further date to give the reply. In a casual manner ITAT has mentioned that loans were confirmed by the AO, but it has not given any details as a court of fact that what amount was got confirmed by which document.
Therefore, we are of the view that the ITAT has erred in law in quashing the order passed by CIT u/s 263, and we find that there is no illegality in the order passed by CIT directing the AO to make de novo assessment. Accordingly the question of law stands answered in favour of revenue and the appeal is allowed. The impugned judgment and order passed by ITAT, is hereby set aside.
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2008 (6) TMI 594
... ... ... ... ..... he brief facts of the case are that the AO has made a disallowance in respect of SFT sales (counter sales) against convertible foreign exchange amounting to ₹ 66,96,039. The learned CIT(A) reversed the order of the AO by relying upon the decision of Tribunal Jaipur Bench in the case of S. Kasliwal & Co. vs. Asstt. CIT 36 Tax World 173 (Jp). 21. We have heard the rival contentions and perused the facts of the case. We concur with the views of the learned CIT(A) in view of the consistent decisions taken by this Bench and also the case referred by the learned CIT(A) and also the decision of Hon'ble Supreme Court of India in the case of CIT vs. Silver & Arts Palace (2003) 180 CTR (SC) 309 (2003) 259 ITR 684(SC). Therefore, we find no infirmity in the order of the learned CIT(A) who has rightly reversed the order of the AO on the issue. Thus ground No. 2 of the Revenue is dismissed. 22. In the result the appeal of the Revenue in ITA No. 815/Jp/2007 is dismissed.
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2008 (6) TMI 593
Deduction u/s 10B - CIT(A) - Disallowance on telecommunication expenses.
Deduction u/s 10B - CIT(A), excluded expenses incurred in foreign currency for providing software development services outside India from the 'export turnover - HELD THAT:- On the issue of exclusion of expenses incurred in foreign currency towards payments to the assessee's personnel deputed outside India , it was explained that the expenses were incurred in connection with development of software and services provided by the assessee outside India. Therefore, it is not excludible from the gross export turnover in arriving at the export turnover for computing deduction u/s 10B - The ld counsel for the assessee further explained that this is so because, the assessee is not engaged in the business of providing technical services outside India as contemplated in Explanation 2 to Sec.10B(8) of the Act.
The issue raised by the assessee is squarely covered by the order of this Tribunal in the case of M/s. Infosys Technologies Ltd., vs. JCIT [2007 (10) TMI 627 - ITAT BANGALORE] ''held that the appellant company was not involved in the business of providing technical services outside India in connection with the development of computer software and directed to compute the figures of export turnover and total turnover relevant for the application of the formula in sub-section 3 of the 80HHE, no exclusion be made of any expenditure incurred in foreign currency other than those already done by the appellant company.''
Applying the same, we direct the AO to grant relief to the assessee as indicated.
Disallowance on telecommunication expenses - HELD THAT:- The issue raised by the assessee is squarely covered by in the decision of Bharat Earth Movers Ltd.[2004 (3) TMI 761 - KARNATAKA HIGH COURT] ''held that Consequently, it follows that if the export turnover does not have the elements of sales tax or excise duty, the total turnover should also not have the said inputs. In the circumstances, to include excise duty and sales tax and excise duty not form part of export turnover, would be illogical and arbitrary. we direct the AO to exclude the expenditure incurred in foreign currency by the assessee from the total turnover. It is ordered accordingly - Applying the same, we direct the AO to grant relief to the assessee as indicated.
In the result, the appeals filed by the assessee are partly allowed to the extent stated above.
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2008 (6) TMI 592
Eligibility of deduction u/s 10A - profits of the business - clubbing of loss from Non-STPI Unit with the profit of the STPI Unit - business of software and information system - Expenditure reduced from the export turnover - Set off against the profit of the STPI Unit.
Eligibility of deduction u/s 10A - profits of the business - clubbing of loss from Non-STPI Unit with the profit of the STPI Unit - business of software and information system - Non-STPI Unit with its head office in Bangalore consisting of four foreign branches - HELD THAT:- Tribunal decision in the case of Tata Elxsi Ltd. vs. ACIT [2007 (10) TMI 630 - ITAT BANGLORE] and I-Gate Global Solutions Ltd. vs. ACIT [2007 (11) TMI 444 - ITAT BANGALORE] relied upon by the learned counsel were on similar facts and situation wherein it has been held that when there is no unabsorbed depreciation or unabsorbed loss in respect of STPI Unit and the profits and gains of the same would be exempt u/s 10A were to be without setting off of the loss of the other divisions or the setting off of carry forward losses of other divisions. The Tribunal held that the exemption u/s 10A to STPI unit and consequently to allow carry forward of such losses and depreciation of non-STPI Unit were separate - AO had taken recourse to consider this clubbing on the basis of finding relating to the separate units interlinked by way of receipts, coupling and deriving costs. The learned CIT(A) thereafter did not take cognizance of the said finding but considered the assessee's agitation by relying on the intention of the legislation for granting deduction u/s 10A only to export income and not other income. These facts have not been controverted.
We are inclined to hold that the law is very clear regarding incomes not taxable under Chapter III in the Income Tax Act which only relates to incomes forming part of total income for consideration in the spirit of the legislation has to be considered when the assessee has been able to establish the income of the STPI Unit as was available to the AO remains undisputed. This ground by the assessee, therefore, stands allowed as covered by the decision of the ITAT, Bangalore Bench in Tata Elxsi Ltd. vs. ACIT [2007 (10) TMI 630 - ITAT BANGLORE] on similar facts and circumstances.
Expenditure reduced from the export turnover - HELD THAT:- The learned counsel did not argue the amount of expenditure on account of foreign travel and lease line charges as not pertaining to export of software as considered and definite in sub-clause (iv) to Expln. 2 to sub-section 8 of Section 10A. Therefore, this ground stands partly allowed to the extent that the expenditure that has been reduced from the export turnover has to be reduced from the total turnover as well for the purpose of quantifying the profits of the STPI Unit available under section 10A. In other words ground No. 2 stands dismissed and ground No. 3 stands allowed as covered by the decision of the ITAT, Bangalore Bench in cases mentioned above.
Set off against the profit of the STPI Unit - HELD THAT:- As section 10A falls under Chapter III being income exempt from tax to be excluded in determining the total income and procedural computation of taxable income as provided in the I.T. Return Format requires income or loss from eligible business u/s 10A be excluded while computing the income from business. This method of computation should be followed consistently in accordance with the provisions of the I.T. Act and profits of the non-STPI Unit cannot be clubbed to the STPI Unit profit going by the same principle, the loss for the non-STPI Unit cannot be set off against the profit of the STPI Unit. Therefore, we direct the AO to consider the carry forward business loss and unabsorbed depreciation of the Non-STPI unit in accordance with the provisions of the Income Tax Act, 1961 after computing deduction 10A deduction based on the income of the STPI Unit which is the eligible profit under the said section.
In the result the appeal of assessee stands partly allowed.
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2008 (6) TMI 590
... ... ... ... ..... granted by the learned CIT, Karnal under s. 12AA. We feel so because in these cases also, learned CIT(A) has not given basis to hold as to how the expenses on repairs of roads and building is for charitable purposes. Since, this is the main issue along with the issue regarding status of the assessees as directed by the Tribunal vide order dt. 14th March, 2005, for which the matter has to go back to the AO, we feel that the AO should make de novo assessment in all these cases and should decide afresh other issues also, such as whether this expense on repair is capital or revenue, the issue regarding sale of shops, set off of brought forward losses and unabsorbed depreciation etc. The AO should frame de novo assessment orders in these cases after considering all aspects and after providing adequate opportunity of being heard to the assessees. 22. In the result, all these nine appeals of the Revenue as well as three appeals of the assessee stand allowed for statistical purpose.
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2008 (6) TMI 589
... ... ... ... ..... o;s relatives in whose name credits were shown in the account. Want of source of fund affects the genuineness of the transaction and unless source is proved, the loan creditors cannot be said to have discharged the duty of proving that the loans shown in the accounts were genuinely advanced by them to the assessee. The Tribunal also noticed that no proof was produced regarding repayment of loan credits. Section 269(ss) of the Act provides for payment and repayment of loans in excess of ₹ 20,000 through account payee cheques. There is no proof produced before the Tribunal to show that loans taken were through account payee cheques or were repaid through such instruments in accordance with statutory provisions. In the circumstances, we find no ground to interfere with the order of the Tribunal. There is no scope for entertaining additional evidence at this distance of time in this Court in appeal proceedings under section 260A of the Act. We therefore dismiss the appeal.
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2008 (6) TMI 588
... ... ... ... ..... made out to show that the trip is personal or capital in nature. In the present case, no business purpose could be brought on record regarding visit to Hong Kong and, therefore, this judgment also is not applicable in the present case. We, therefore, uphold the order of the ld.CIT(A) regarding part disallowance of foreign travel expenses. Regarding domestic travel expenses of ₹ 36,012, we find that the details are appearing on page 9 of the paper book. As per these details, expenses were incurred for Mumbai visit and Chandigarh visit. Nothing is brought on record by the ld.A.R. of the assessee to show that these visits were for business purpose and hence we feel that no interference is called for in the order of ld.CIT(A) on this issue also. Therefore, ground no.3 and 4 of the assessee are rejected. 14. In the result, the appeal by the assessee stands partly allowed, where as the appeal by the Revenue stands dismissed. Order pronounced in the Open Court on 20.06.2008.
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2008 (6) TMI 587
Trading addition - Deduction u/s. 10BA.
Trading addition - Assessee contended that the AO had erred in making trading addition on ad hoc basis in the years under consideration sum in AY 2004-05 and in AY 2005-06, and the same was rightly deleted by the learned CIT(A) for both the years - HELD THAT:- We find no reason or basis to interfere with the decision taken by learned CIT(A) more particularly when ld DRe has placed reliance on the order of the AO without pointing out any error in well reasoned decision reached by him - The learned CIT(A) has considered the nature of business activity, market conditions, quality of raw material used, and the fact that the AO laid no material on record to suggest that there has been any suppression of income nor that the assessee carried any activity outside the books - We also find from the remand report given by the assessing authority in appeal before learned GIT(A) that he had deputed the Ward Inspector to verify the records of the assessee and reportedly found no discrepancy or inconsistency in the business transaction of the assessee. Finding no merit in the ground in appeal for both the years, the same stands rejected. For parity of reasons and as the facts and law are same in all other appeals on the ground of Revenue in those appeals also stands rejected.
Deduction u/s. 10BA - CIT(A) directed the AO to allow deduction u/s. 10BA on account of DEPB and DDB receipts ignoring the fact that DEPB and DDB are not derived from export of eligible articles or things - HELD THAT:- In the assessee's case before us the AO has accepted the fact that exemption provisions contained u/s. 10BA of the Act are applicable to the assessee. The same were, therefore, to be interpreted liberally for granting deduction in terms of sub-s. (4) unless the amount of profit arising from credit of DEPB and DDB was taken away expressly - The judgment rendered by apex Court in CIT v. Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME COURT] is a judgment that relates to deduction u/s. 80HHC in relation to total turnover as to whether excise duty, sales-tax, commissions, interest, rent, etc. partake the character of turnover. In the present case in appeal before us, the amount of profit of DEPB/DDB has specifically been included as profits and gains of business and as already found the amount thereof will not enter in the turnover of the business of the undertaking - Ld DR appearing on behalf of Revenue did not point out any such provision u/s. 10BA of the Act which could permit the Revenue to take away the amount of profit of DEPB/DDB from the profits of business of the undertaking. He however, did make a reference to cl. (i) of s. 28 to say that profits and gains of the business are distinct from profits on DDB in cl. (iiic) and profits on DEPB in cl. (iiid) , but by that position, we find it difficult to accept that the exemption that is sought to be granted u/s. 10BA of the Act has been taken away expressly - It is settled law that an exemption is to be granted unless it is expressly taken away and a reference to this principle may be had from the judgment rendered by apex Court in Adityapur Industrial Area Development Authority v. Union of India [2006 (5) TMI 61 - SUPREME COURT] - We hold that the amount of credit on account of DEPB/DDB has to be included as profits of the business of the undertaking for the purpose of s. 10BA(4) of the Act and the said amount of credit of DEPB or DDB will not enter into the total turnover or export turnover of the undertaking for the purpose of calculating profits derived from business of undertaking of the assessee within the meaning of sub-s. (4) and for allowing deduction to the respondent in terms of subs. (1) of s. 10BA of the Act in the two appeals in and for parity of reasons also in the appeals by Revenue and where facts and law are identical - The conclusion reached by learned CIT(A) to allow deduction, therefore, needs no interference. Finding no merit in the grounds in appeals by Revenue, the same stand rejected.
In the result all the appeals of the Revenue stand dismissed.
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2008 (6) TMI 586
Depreciation claimed on Cost of labour work for site development, Civil work control room and Internal road development - Windmil 100 per cent depreciation - transformer upto DP structure - whether a building can be treated as a plant - HELD THAT:- The Hon'ble Supreme Court in the case of Indian Hotels Co. Ltd. vs. ITO [2000 (8) TMI 5 - SUPREME COURT] with the approval "A statute cannot always be construed with the dictionary in one hand and the statute in the other. Regard must also be had to the scheme, context and to the legislative history of the provision".
In Karnataka Power Corporation [2000 (7) TMI 72 - SUPREME COURT] Hon'ble Supreme Court has given a clear observation that the question whether a building can be treated as a plant, basically is a question of fact and where it is found as fact that a building has been so planned and constructed as to serve the assessee special technical requirements, it will qualify to be treated as a plant for the purpose of investment allowance.
For interpreting the scheme of depreciation as prescribed u/s. 32 it is not necessary that we should adopt a judge-sense meaning, which is sometimes artificial and imprecise in application by giving a meaning altogether different from the statutory provisions. The scheme of s. 32 unequivocally leads to the conclusion that on one hand "plant" and on the other hand "machinery" are to be treated as separate for the purpose of allowance of depreciation. Moreover, how one can ignore the block of assets as prescribed in the table of rates for the purpose of allowance of depreciation in Appendix I of IT Rules.
As per this Appendix Part 'A' contains building in a separate head, furniture and fittings in another head and machinery and plant in a different head by prescribing different rates of depreciations. The scientific reason is often discussed as the period of diminution for tangible assets. If the period of diminution or wear-tear is very fast than higher rate of depreciation is granted. Naturally the speed with which a machinery gets discarded due to wear and tear, the buildings do not get wear and tear so fast. On this basis, as well, we cannot hold that building of control room, internal roads etc. being civil construction work in nature are not at par with the "windmill" as far as the period of diminution is concerned.
Moreover sometimes to promote a particular activity the statute provides certain incentives in the shape of higher depreciation. We have to keep in mind such an intention of the legislature as well. However no such intention has ever been expressed in the legislature to provide higher rate of depreciation in respect of structure surrounding the windmill. Rather the Appendix and the depreciation schedule has categorically worded that "windmills and any specially designed devices which run on wind mills" are qualified for 100 per cent rate of depreciation.
Since the civil work of control room, the site development and the internal road development are not specially designed devices hence in our considered opinion, as per the discussion made herein above, are not entitled for 100 per cent depreciation. The claim in this regard is disallowed.
Depreciation on "transformer upto DP structure" - The appellant had paid a sum for the purpose of supplying of electrical items like transformer upto DP structure, internal line upto metering. The said payment was made to Suzlon Developers (P) Ltd. This gadget is for transmission of electrical power generated upto sub-station of MSEB at site. In our humble opinion the electrical energy so produced by the wind mill is a waste if it is not transmitted to MSEB sub-station. The function of such unit is that the electricity so generated is required to be transferred and transmitted to cable line upto sub-station, where the actual units so generated are stored and metered.
Since this is the function of transformer upto DP structure, hence ought to be held as an integral part of the windmill. The other reasons such as the period during which a machinery gets depreciated, as discussed hereinabove, does also apply in case of this machinery. Since we have held so, therefore, the appellant is consequently entitled for higher rate of depreciation as prescribed in IT Rules.
In the result, as per the grounds of appeal the claim of depreciation in respect Cost of labour work for site development, Civil work control room and Internal road development are rejected and claim of depreciation in respect of item Transformer upto DP structure is allowed. Resultantly, this appeal is partly allowed.
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2008 (6) TMI 585
... ... ... ... ..... n the statutorily prescribed time-limit is not merely a procedural matter, the effect of which is washed off by the participation of the assessee in the proceedings or by the fact that subsequently sufficient opportunity of being heard was granted to the assessee. We may add that this part of the order will not be applicable after coming into force of the provisions contained in s. 292BB. Thus, it is held that the assessment was not valid. 12. Since, we have decided the primary ground in favour of the assessee, leading to the cancellation of the assessment, it is not necessary for us to decide other grounds regarding merits of the addition. Thus, income determined finally under s. 143(1)(a) of the Act has to be taken as the total income of the assessee for fastening the tax liability on it. It also follows that the appeal of the Revenue does not survive. 13. In the result, the appeal of the assessee is allowed on preliminary ground and the appeal of the Revenue is dismissed.
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2008 (6) TMI 584
... ... ... ... ..... urely amount to manufacture". 4. On a very careful consideration of the issue, we find that the Respondents received duty paid MS angles, rods, channels, plates, etc. and the activity carried out by them amounts merely to drilling of holes and cutting them and these are sent to the various parties for manufacture of towers. In our view, the process undertaken by the Respondents do not amount to manufacture as the MS rods, plates, angles, etc. remain the same even after the process have been carried out. Therefore, there is no new manufacturing process involved. In our view the impugned order of the Commissioner (Appeal) is legal and proper. There is no merit in the Revenue's appeals and the same are rejected." We do not find any reason to take a different view from the findings already recorded as in the above case. Respectively, following the ratio thereof, the impugned order is upheld and this revenue appeal is rejected. Pronounced and dictated in open court.
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2008 (6) TMI 583
Interpretation of statutes - TDS u/s 194LA - interest levied for non-compliance - seeking to cover Payments made by way of compensation on acquisition of certain immovable property - Whether meaning of ‘agricultural land’ as found in the definition of ‘capital asset’ u/s 2(14) is imported for the purpose of section 194LA - non-remitting deduction at source at 10 per cent of the compensation distributed to the owners of agricultural land whose land had been acquired - petitioner-authority had distributed compensation payment in favour of the owners who had owned certain agricultural lands which had been acquired by the authority -
HELD THAT:- A proper reading and understanding of section 194LA leaves one with no ambiguity or misunderstanding about the object and scope of this section. It is very clear that obligation cast on a person distributing compensation is only in respect of payment for immovable property. Such immovable property does not include agricultural land and such agricultural land may be located in any place including in an urban agglomeration and the meaning of ‘agricultural land’ as given in section 2(14) of the Act is not imported for the purpose of section 194LA of the Act.
The authority functioning under the Act has obviously gone wrong by quoting artificial meaning of ‘agricultural land’ as contained in section 2(14) of the Act, defining capital asset. The definition of capital asset is given for the purpose of indicating that the transfer of capital asset if has resulted in some gain and becomes capital gain, it is an income taxable as income includes capital gains.
When statutory provision is so very clear, it is rather surprising that the authority functioning under the Act has misread this provision and emphatically enforced the provision in a way not provided under the section itself and further threatened the petitioner with the possibility of mulcting with penalty u/s 271(1) of the Act.
It is also surprising that the Commissioner before whom the revision petition was taken, could not see the scope content and meaning of section 194LA of the Act which is as clear as a day light and allowed further proceedings against the complaining petitioner.
Therefore, this writ petition is allowed. The impugned order passed by the Income-tax Officer is hereby quashed in this petition itself and there is no further need for the petitioner to pursue the revision petition u/s 264 of the Act.
Petitioner awarded cost of ₹ 10,000 against the respondents. Rule made absolute.
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2008 (6) TMI 582
... ... ... ... ..... the Tribunal held that Chapter 2 to Chapter 33 was not applicable for classifying the goods in that case under Chapter 33. 9. HSN Explanatory Notes to Chapter 33 were same before and after 28.02.05. Moreover entries under Chapter 15 relating to coconut oil in the HSN and Central Excise Tariff after 28.02.2005 are also identical. Therefore, the decision of the Tribunal in the above case interpreting the scope of Chapter 15.13 and 33.05 of Central Excise Tariff applies to the corresponding entries even after 28.02.2005. The above ratio of the decision of the Tribunal therefore squarely applies to the present case also. We find that the impugned order is not consistent with the Tribunal s reading of the Tariff entries and HSN Notes relating to the relevant entries of Chapters 15 and 33 of the first schedule to the CETA, 1985. 10. In the result, we set aside the impugned order and allow the appeal filed by M/s. Madhan Agro Industries (P) Ltd. (Decision pronounced in open court)
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2008 (6) TMI 581
... ... ... ... ..... fficer has power to take action in respect of those assessment years. Therefore, we are of the view that the meaning and scope of ‘date of conclusion of proceedings’ under clause (iv) of the Explanation to the section 245A(b) is that the proceedings for assessment can be said to be pending before an Assessing Officer in respect of those assessment years only for which the Assessing Officer can still take action/initiate the proceedings under the Act. (iv) Fourth issue Yes. Whole of the application need not be declared ‘invalid’ if proceedings for assessment are pending before the Assessing Officer for some of the years and not for other years. The settlement application can be proceeded with for those years for which proceedings for assessment are pending before the Assessing Officer. In view of the answers given to the issues, mentioned above, we decide that the settlement application shall not be declared ‘invalid’. In favour of assessee
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2008 (6) TMI 580
... ... ... ... ..... ew of the quantum of demands, if any, after hearing the assessee.” 7. From the above it is very clear that the remand proceeding were limited to redetermine the classification and thereafter to work out the duty demand, if any. In view of this, the Commissioner could not have gone into the aspect of the brand name and has rightly not gone into it. Once CESTAT order was not challenged by Revenue, it has attained finality and in remand proceedings order passed, cannot be challenged on the ground that Tribunal’s remand order itself was erroneous as has been done in the present case. As rightly pointed out by the ld. Advocate for the respondents, the issue is squarely covered by the decisions of Allahabad High Court in Geep Industrial Syndicate Ltd. case and by Kerala High Court in Punalur Paper Mills Ltd. case (cited supra). In view of this, we find no merits in the Revenue’s appeal and accordingly dismiss the same. (Pronounced in open Court on 25-6-2008)
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2008 (6) TMI 579
... ... ... ... ..... in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white collar crimes with a permissive eye unmindful of the damage done to the National Economy and National Interest.” K.T. Dharanendrah v. R.T. Authority AIR 1987 SC 1321. 13. In M/s Leatherage, Kanpur (supra), the facts were different than what they are in the present case, inasmuch as, there was plenty of material on record to show that the directors had made bonafide efforts to realise the debt, which is not the situation in the present case. 14. For the aforesaid reasons, reliance placed by the appellant on the decisions of the two member Bench of the Tribunal in M/s Leatherage, Kanpur (supra) as also the decision in 253 ITR 749, is wholly misplaced. The Tribunal was perfectly justified in not applying the ratio of the aforesaid decisions in the facts of this case. 15. For the aforesaid reasons, the appeal is dismissed with costs of ₹ 10,000/-.
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2008 (6) TMI 578
Whether a Tribunal established under Section 4 of the Administrative Tribunals Act (for short `the Act') can review its decision on the basis of subsequent order/decision/judgment rendered by a coordinate or larger bench or any superior Court or on the basis of subsequent event/development?
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2008 (6) TMI 576
Assessment on substantive basis - Whether income of Main Trust assessed on a substantive basis and liabilities finally settled under Kar Vivad Samadhan Scheme, 1998 (KVSS) could again be assessed in the hands of corresponding beneficiaries here assessed on a protective basis? - Main Trust had settled the dispute under KVSS - HELD THAT:- We find that Main Trust had settled the dispute under KVSS. This is the dispute which department has originated and is agitating before higher appellate authorities. It was department’s case that income belongs to Main Trust and not to the beneficiaries that is the reason why incomes were assessed substantively in the case of Main Trust and protectively assessed in the case of beneficiaries. When Main Trust settled the disputes under KVSS and paid due taxes, that is the end of the dispute between department and Main Trust as well as Assessees on the taxability of incomes. When in the case of Main Trust where substantive assessments were made, the protective assessments made in other cases viz. beneficiaries of Main Trust should be deleted.
In the present case, issue is of protective assessments and substantive assessments. Protective assessments cannot be continued in the appellate proceedings once substantive assessments become final. In the present case, revenue assessed income in the case of Main Trust on a substantive basis, which was accepted.
The finding of CIT is contrary to the decision of Tribunal which is not permitted. CIT being subordinate authority to the Tribunal cannot take contrary to the decision of Tribunal - When CIT revised order, controversy was already decided by this court in Apex Court in the case of ITO V/s. C.H. Atchaiah [1995 (12) TMI 1 - SUPREME COURT]. The decision of CIT in the revision order is contrary to the above decision of court which cannot be permitted. Reference to the larger bench cannot be ground to revise assessment u/s.263 of I.T. Act. On this ground also we uphold the order of Special Bench of ITAT.
We find that this is the only conclusion that once assessment in the substantive case is final, protective assessment cannot be continued in the case of beneficiaries. When CIT revised order, there exist order of this court dt.30.07.01. Hence, atleast this is one of the views, though we find that this is the only view, revision order u/s.263 is not permissible on jurisdictional ground.
This is the decision of Hon’ble Supreme Court in the cases of Malabar Industries Co. Ltd. V/s CIT[2000 (2) TMI 10 - SUPREME COURT] and G.M. Mittal [2002 (12) TMI 13 - SUPREME COURT]. When the decision of High Court was reversed by Supreme Court on merits, Hon’ble Supreme Court held that revision order cannot be sustained as on the date of revision order, order of High Court did exist. Following the same, we hold that CIT had no jurisdiction to pass revision order u/s.263. On that day, the order of this court dt.30.07.01 did exist. On the contrary, this order has become final.
As regards grant of interest on refund, we find that Tribunal was justified in holding that refund should be granted with interest.
We are in full agreement with the order of Special Bench of Tribunal. We repeat that revenue should not drag the respondents to unnecessary avoidable litigation - we dismiss the appeals filed by revenue except Tax Appeals Nos. 182 and 204 of 2002 with Tax Appeals Nos.27 to 30 of 2004, i.e., the appeals of the assessees in the cases of Janak Pramodbhai Patel, Pramodbhai Kanjibhai Patel HUF, Bharat & Piyush ODFT and C.J. Zala ODFT.
Erroneous and prejudicial order revised by CIT u/s.263 - whether the same income can be assessed in the case of Ambica Trust as well as in the case of respondent beneficiaries - HELD THAT:- We find that section 4 of the I.T. Act is clear. Charge is on the income and charge is only once. The same income cannot be taxed in the hands of two different persons. We fully agree with the Tribunal’s finding that under the theory of double taxation also if the income is assessed in the case of trustees, it cannot be again assessed in the case of respondent beneficiaries – vice versa. If assessed in the case of respondent beneficiaries, it cannot be taxed in the case of representative assessees. Therefore, the same income which has been assessed in the case of trust/trustees, again it cannot be assessed in the case of beneficiaries.
We also agree with the Tribunal that interest u/s.244A should be granted on refund of tax. If on giving effect to the appellate order, refund is due that has to be granted with interest.
We find that view taken by A.O. was correct and hence CIT has no jurisdiction to revise the assessment. Mr. Soparkar has also submitted that questions raised before this court were pertaining to KVSS which do not arise from the order of Tribunal. Tribunal has allowed the appeal on the first principle about taxation on representative assessees and not on implications of KVSS. We agree that Tribunal has allowed the appeal on first principle and not of KVSS.
In the result, we confirm the order of Tribunal and dismiss the appeal filed by the revenue.
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2008 (6) TMI 575
... ... ... ... ..... al course of business. Citation is directed to be published in the newspapers Times of India and Navbharat Times for 4.8.2007. The aforesaid order, except the order relating to the injunction granted as aforesaid which shall come into force forthwith, shall remain in abeyance for a period of two weeks from today to enable the the respondent-company to pay the outstanding debts to the petitioner as quantified on 6.9.2006 ( of US 125,750) with interest 12 p.a. from 6.9.2006 onwards till payment, after granting adjustment for the amount paid after 6.9.2006 from time to time within two weeks. In case the aforesaid amount is paid, in full, this order shall stand vacated. If the entire amount is not paid within two weeks, the order shall be complied forthwith in its entirety. In that event, the petitioner is authorised to take steps in co-ordination with the official liquidator for publication of the citation. 19. For further proceedings list before the regular bench on 18.8.2008.
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2008 (6) TMI 574
Unaccounted transaction - between partners and/or persons connected - searched u/s. 132 - Validity of notice issued u/s 158BC - warrant of authorisation - ascertaining whether there was any material with the respondent authority to even prima facie come to the conclusion that an entity by the name of M/s Jalaram Theatre existed as a partnership firm.
HELD THAT:- In the present case, from the record of the respondent authority and the facts which have come on record of this petition it becomes apparent that the prerequisite conditions empowering the AO to exercise the powers for issuing notice u/. 158BC of the Act are not fulfilled. During course of hearing reliance had been placed on a draft document relating to proposed sale of property known as Jalaram Theatre for a sum to submit that the said document was unearthed during course of survey leading to belief that there was unaccounted transaction in property. The said document, on a bare perusal, cannot assist the case of the respondent. Firstly, the said document is not signed by anybody, neither the sellers nor the purchasers. The document reflects proposed transaction of an immovable property.
The law enjoins every person to compulsorily register a document involving transfer of immovable property valued at more than ₹ 100 and hence in absence of any other corroborating evidence that such a transaction took place between the parties the Court is not expected to raise a presumption that a transaction took place in violation of the law of the land.
However, apart from the fact that there are eight purchasers and six sellers and none of the parties have appended their signatures to the document, what is most material is the fact that the vendors are the six petitioners who are described to be co-owners of the immovable property. Thus, even if for the sake of argument the document in question is treated as a relevant piece of evidence only for the purpose of initiating proceedings, even then no entity by the name of M/s Jalaram Theatre, a partnership firm, is mentioned in the document belying the claim of the respondent authorities to the contrary. The document supports the stand of the petitioners that the petitioners are co-owners and are deriving rental income from the property which has duly been reflected in their respective returns of income.
Therefore, it is apparent that the action of the respondent authority in issuing impugned notice u/s. 158BC of the Act, cannot be sustained. Accordingly, the said notice u/s. 158BC of the Act, is hereby quashed.
The petition is allowed accordingly. Rule made absolute. There shall be no order as to costs.
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