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2014 (4) TMI 1265 - ITAT BANGALORE
Stay petition - HELD THAT:- The main appeal was heard and order was pronounced today i.e., on 11.04.2014. Since the appeal itself has been disposed of, the stay petition has become infructuous and consequently the same is dismissed as infructuous.
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2014 (4) TMI 1264 - KARNATAKA HIGH COURT
Deemed dividend u/s 2(22)(e) - Advance/loan paid - HELD THAT:- Issue decided in favour of assessee as decided in SARVA EQUITY (P.) LTD. [2014 (4) TMI 788 - KARNATAKA HIGH COURT] as held It is only the person whose name is entered in the Register of the shareholders of the Company as the holder of the shares who can be said to be a shareholder qua Company and not the person beneficially entitled to the shares - it is only where a loan is advanced by the Company to the registered shareholder and the other conditions set out in Section 2(22)(e) of the Act are satisfied, that amount of loan would be liable to be regarded as deemed dividend - Decided against revenue.
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2014 (4) TMI 1263 - ANDHRA PRADESH HIGH COURT
Documents determine title and ownership to land - title of goods - Sale of land - presumption of title to properties - eviction proceedings - What documents constitute title for lands? - HELD THAT:- Under BSO-15, both assessed and unassessed lands are available for assignment and the lands which are classified as 'poramboke' and 'reserved lands'-assessed and unassessed, are not available for assignment. All arable lands are assessed. There may be cases where, after assessment of land, a ryot may have left it uncultivated for one or more Faslies. In such cases, the lands are shown as 'waste' in the records. However, in the RSR, the word 'waste' is not generally used and it only contains a column 'whether the land is assessed or unassessed'. In case of 'unassessed waste' as assignment is permissible, the entry in revenue record describing the land as 'unassessed waste' cannot be treated as conclusive, an assignment may have been made and not recorded or in the absence of such assignment, the same may be under the cultivation of ryots. Therefore, there cannot be a presumption that all waste lands, assessed, or unassessed, continue to be vested in the Government. When a dispute in this regard arises, such disputes need to be settled based on the patta, if produced by the claimants, and in its absence, based on the relevant revenue record.
Thus, the assessed and unassessed waste lands do not fall within the expression of 'poramboke' or 'reserved' which are generally used for communal purposes. Para-4(ii) of BSO-15 prohibited assignment of various categories of lands. These lands are therefore vested in the Government and no one can claim right over the same unless there is evidence to show that these lands are subsequently converted into assessed waste lands and assignments have been granted. While there is a presumption that all porambokes and lands reserved for communal purposes vest in the Government, no such presumption arises in respect of waste lands, assessed or unassessed.
Whether the entries in the revenue records constitute conclusive proof of title and if not, whether they have evidentiary value in determination of title? - HELD THAT:- The following record could be held to constitute the core revenue record in Andhra area prior to the integration of the revenue record of both areas: Diglot or A-Register, Ledger/Chitta constituting settlement record, No. 2 Account, otherwise known as Adangal/Annual Settlement of occupation and cultivation, No. 3 Account which reflects changes in respect of land held by way of transfer by sale, relinquishment etc., and the Register of Holdings maintained under BSO-31 and No. 10 Account which is an individual chitta or personal ledger of each cultivator - In Telangana area, Sethwar Register, Supplementary Sethwar, Wasool Baqui Register, Khasra Pahani (prepared under the Land Census 1954 under the provisions of the A.P. (Telangana Area) Tenancy and Agricultural Lands Act, 1950), Pahani, Chowfasla and Faisal Patti constitute the core revenue record.
Whether multiple registered sale transactions reflecting long standing possession give rise to a presumption of title to the property? - HELD THAT:- The presumption envisaged under Section 6 of the 1971 Act is evidently based on the principle contained in Section 35 of the Evidence Act, 1872 -
Whether the entries in Resurvey and Resettlement Register (RSR) and Town Survey Land Register (TSLR) are conclusive in determining title? - HELD THAT:- The entry in the TSLR does not constitute conclusive proof of one's title.
Whether eviction proceedings under the 1905 Act can be initiated when there is a bonafide title dispute? - HELD THAT:- The settled legal position therefore emanating from the above noted Judgments is that where there is a bonafide dispute regarding title of a person over the lands other than public roads, streets, bridges or the bed of the sea, or the like, summary proceedings under the 1905 Act cannot be initiated and that in all such cases, the Government which claims title shall approach the competent Civil Court for declaring its title.
Petition disposed off.
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2014 (4) TMI 1262 - ITAT PUNE
Undisclosed income - assessee has earned on-money on sale of units in its project Pride Purple, which was not disclosed in the regular account books - HELD THAT:- On-money receipt reflected in the seized material on sale of unit to Mrs. Fatima Moiz Fakruddin & others, has been offered for taxation by the assessee. Therefore, nothing much can turn by adjudicating as to whether or not the notings on the seized paper no.56 of Bundle No.2 reflect receipt of on-money from Mrs. Fatima Moiz Fakruddin. So however, the dispute starts from the fact that the Assessing Officer has presumed on the basis of the said seized material that assessee must have earned on-money on sale of all the units sold in the project. Factually speaking, there is no dispute that other than page no.56 of Bundle No.2 and to some extent loose paper no.20, there is no other material seized or found in the course of search or otherwise, which would show that assessee has received on-money on sale of units in the impugned project. The Assessing Officer adopted the rate of ₹ 4,000/- per sq.ft., as reflected in seized paper no.56, and applied it to sales of all the units and computed the impugned addition.
We do not find that the assessee has admitted to a modus operandi of receiving sale consideration outside the books of account. It is also emerging from record that the Revenue has also not led any credible and cogent material or evidence to demonstrate that any modus operandi of receiving sale consideration outside the account books was being carried out by the assessee regularly, except in relation to one instance of sale to Mrs. Fatima Moiz Fakruddin. Therefore, under these circumstances it would not be justified for the Revenue to extrapolate receipt of on-money for the sale of other units in the project and accordingly there is no justification for the addition made on this count. - Decided in favour of assessee.
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2014 (4) TMI 1261 - ITAT CHANDIGARH
Addition u/s 14A r.w.r. 8D - disallowance of expenses being attributable to the earning of exempt income - CIT (Appeals) restricted the said disallowance to ₹ 1 lac as the provisions of Rule 8D of the Income Tax Rules were not applicable to the concerned year - HELD THAT:- We find merit in the submissions made by the assessee that in view of non application of the provisions of Rule 8-D of the Income Tax Rules to the concerned assessment year, there is no merit in disallowance made by AO on the surmises that the assessee had borrowed funds in one hand and had invested in tax free assets on the other hand.
We uphold the order of the CIT (Appeals) in disallowing ₹ 1 lac on account of administrative expenses as being attributable to the earning of tax free income. Similar disallowance of ₹ 1 lac in assessee’s hands was made in the preceding year and the order of the Tribunal has been upheld by the Hon'ble Punjab & Haryana High Court in CIT-I, Ludhiana Vs. M/s Vardhman Textiles[2013 (7) TMI 1127 - PUNJAB AND HARYANA HIGH COURT] Following the same we uphold the order of the CIT (Appeals) and dismiss the grounds of appeal raised by the Revenue.
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2014 (4) TMI 1260 - ITAT CHANDIGARH
Characterization of income - Income from interest against the inter corporate deposit - Business income or income from other sources - HELD THAT:- Giving the surplus money on interest has no relation with the business of the assessee. In any case the Hon'ble Delhi High Court in case of CIT Vs. Shri Ram Honda Power Equip [2007 (1) TMI 86 - HIGH COURT, DELHI] has clearly observed that when the surplus funds are borrowed from the bank or other entity then interest earned thereon can only be categorized as income from other sources. Therefore we find nothing wrong with the order of the Ld. CIT (A) and confirm the same. Accordingly this ground is rejected.
Deduction u/s 80IB - HELD THAT:- Interest Interest income is not eligible for deduction because Hon'ble Supreme Court in case of Pandian Chemicals Ltd Vs. CIT [2003 (4) TMI 3 - SUPREME COURT]
Provision written back - Most of these items pertain to expenditure earlier provided and now written back. This means that profit was reduced in the earlier years and now the same has gone up, therefore this is part of the Revenue receipts relating to business hence on these items the assessee should be allowed deduction.
Sundry Balance written back - From details it is not clear whether these balances pertain to the Revenue account or capital account. Therefore we set aside the order of the Ld. CIT(A) and remit the matter back to the file of Assessing officer for re-examining of the issue. If the balance have been written back on account of Revenue receipts then deduction may be allowed otherwise in accordance with the provisions of the Act.
Misc Receipts - As far as Duty Drawback is concerned the Ld. D.R. for the Revenue is right in pointing out that this item is not eligible for deduction in view of the decision of Hon'ble Supreme Court in case of Liberty India Vs. CIT [2009 (8) TMI 63 - SUPREME COURT] . In that case it was clearly held that Duty Drawback benefits did not form part of the profit for the purpose of deduction u/s 801A/801B, therefore following this decision we hold that no deduction is eligible on DDB
Rebate and discount and sale of samples - both receipts are of the nature of Revenue and are related to normal business of the assessee, therefore on these two items the assessee is eligible to deduction. Accordingly we set aside the order of the Ld. CIT (A) and direct the Assessing officer to allow deduction u/s 801B on these two items.
Deducting deduction u/s 80HHC AO has reduced deduction u/s 80IB - This issue is squarely covered against the assessee.
Deduction u/s 80HHC - HELD THAT:- As far as items of sundry balances is concerned, nature of the amount written back has not been examined by the Assessing officer and was not available before us, therefore we set aside the order of the Ld. CIT (A) and remit the matter back to the file of Assessing officer with a direction to first examine the nature of items and then decide the issue. As far as provision no longer required is concerned, we have already seen the nature of these items while adjudicating ground no. 2 and find that these items relate to provision written back on account of various expenses which were no longer required. These items have got nothing to do with the items provided in clause (baa) of sub-sec (4c) of Sec 80HHC and therefore they should not be reduced. As far as misc receipts are concerned, rebate and discount and sale of samples cannot be reduced but the DDB has to be reduced but same is required to be added again to the profits u/s sub -sec (3) of Sec 80HHC and Assessing officer should decide the issue considering these observations.
Total turnover while computing deduction - We find the decision in case of CIT Vs. Bicycle Wheels (India) [2010 (10) TMI 496 - PUNJAB AND HARYANA HIGH COURT] relate to inclusion of sale of scrap in the total turnover. Hon'ble High Court held that scrap is to be included in the total turnover. So this case has not relevance to the case of the see. However, at the same time we agree that various items can be included in the total turnover only if they have some sale element. Since nature of the items has not been discussed in the detail, we set aside the order of the Ld. CIT(A) and remit the matter back to the file of Assessing officer with a direction to first ascertain the nature of the items and then given appropriate treatment in accordance with law.
Exclusion of 90% of the gross interest from the profits for the purpose of computing deduction u/s 80HHC - HELD THAT:- As relying on M/S ACG ASSOCIATED CAPSULES PVT. LTD [2012 (2) TMI 101 - SUPREME COURT] only net interest has to be reduced from the aside the computing deduction u/s 80HHC, therefore we set profits for order of the Ld. CIT (A) and direct the Assessing officer to reduce net interest from the profits for computing deduction u/s 80HHC.
Duty Drawback which has been reduced @ 90% of the profits should be again added back to the profits in terms of Sec 80HHC (3) - Assessing officer is directed to add written back amount of Duty Drawback as per Sec 80HHC(3) to the profits before computing deduction.
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2014 (4) TMI 1259 - ITAT AMRITSAR
Penalty u/s 271(1)(c) - assessee has declared additional income in response to notice u/s 153A and thereafter voluntarily revised return before the completion of the assessment u/s 153A - HELD THAT:- In the present case, the assessee has submitted the explanation with regard to the additional income of ₹ 71,00,000/- offered from business. The assessee was confronted with the chart containing the detail of properties alongwith sources of investment thereof. Once the assessee has offered explanation, which has been accepted by the A.O. and the assessee having paid taxes and interest thereon then there is no ground of penalty. See A.N. ANNAMALAISAMY (HUF) [2013 (2) TMI 734 - ITAT CHENNAI] - CIT(A) is not justified in confirming the penalty levied by the Assessing Officer - Decided in favour of assessee.
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2014 (4) TMI 1257 - SUPREME COURT
Delegation of authorities - determination of leases granted by the Kolkata Port Trust to the petitioners - main contention is that the ejectment notice issued by the Land Manager is illegal and without jurisdiction as he is not competent to issue such ejectment notices - HELD THAT:- The power that is delegated to the Chairman as per Resolution No. 82 is the power to terminate a lease. The decision to terminate has been taken by the Chairman only and there is no dispute in that regard. In implementation of the decision thus taken by the Chairman to terminate the leases, the Chairman has authorized the Land Manager to issue the ejectment notices. The issuance of such notices is a mere ministerial act for the implementation of a decision already taken by the Chairman as delegated by the Board. The Chairman having duly authorized the Land Manager in that regard, it cannot be said that the ejectment notice issued by the Land Manager is without jurisdiction. It is not a case of sub-delegation. It is merely a ministerial exercise of issuance of a notice in implementation of the decision, as per the specific authorization in that regard.
Admittedly, in the case of the petitioners, the lease deed has been executed by the Land Manager. The execution of the lease deed is as per the decision by the competent authority. If that be so, the lease can be terminated by the same authority who executed the lease deed, after a decision has been made in that regard by the competent authority.
There is no legal infirmity in the impugned notices issued by the Land Manager of the Kolkata Port Trust - The power is exercised only as duly authorized by the Chairman. The Land Manager is also otherwise competent to issue notices after due decision has been taken in that regard by the competent authority since he is the one who executed the lease deed. There is no merit in these Petitions.
SLP dismissed.
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2014 (4) TMI 1256 - SUPREME COURT
Continuation as Lokayukta after 15.03.2012 - constitutional validity of the Uttar Pradesh Lokayukta and Up-Lokayuktas (Amendment) Act, 2012 - HELD THAT:- The State of U.P. has brought an Act called the U.P. Lokayukta and Up-Lokayuktas Act, 1975 (U.P. Act 42 of 1975). The said Act was enacted in order to make provision for appointment and functions of certain authorities for the investigation on grievances and elections against Ministers, legislators and other public servants in certain cases. The Act came into force on 12.07.1977.
The finality of the decision of the Speaker and the proceedings of the State Legislature being important privilege of the State Legislature, viz., freedom of speech, debate and proceedings are not to be inquired by the Courts. The “proceeding of the Legislature” includes everything said or done in either House in the transaction of the Parliamentary Business, which in the present case is enactment of the Amendment Act. Further, Article 212 precludes the Courts from interfering with the presentation of a Bill for assent to the Governor on the ground of non-compliance with the procedure for passing Bills, or from otherwise questioning the Bills passed by the House. To put it clear, proceedings inside the Legislature cannot be called into question on the ground that they have not been carried on in accordance with the Rules of Business.
The question whether a Bill is a Money Bill or not can be raised only in the State Legislative Assembly by a member thereof when the Bill is pending in the State Legislature and before it becomes an Act. It is brought to our notice that in the instant case no such question was ever raised by anyone.
Though it is claimed that the Amendment Act could not have been enacted by passing the Bill as a Money Bill because the Act was not enacted by passing the Bill as a Money Bill, as rightly pointed out, there is no such rule that if the Bill in a case of an original Act was not a Money Bill, no subsequent Bill for amendment of the original Act can be a Money Bill. It is brought to our notice that the Act has been amended earlier by the U.P. Lokayukta and Up-Lokayuktas (Amendment) Act, 1988 and the same was enacted by passing the Money Bill. By the said Amendment Act of 1988, Section 5(1) of the Act was amended to provide that the term of the Lokayukta and Up-Lokayukta shall be six years instead of five years.
The decision of the Speaker of the Legislative Assembly that the Bill in question was a Money Bill is final and the said decision cannot be disputed nor can the procedure of the State Legislature be questioned by virtue of Article 212. Further, as noted earlier, Article 252 also shows that under the Constitution the matters of procedure do not render invalid an Act to which assent has been given to by the President or the Governor, as the case may be. Inasmuch as the Bill in question was a Money Bill, the contrary contention by the petitioner against the passing of the said Bill by the Legislative Assembly alone is unacceptable.
It is held that Respondent No. 2 is duly holding the office of Lokayukta, U.P. under a valid law enacted by the competent legislature, viz., the Uttar Pradesh Lokayukta and Up-Lokayuktas Act, 1975 as amended by the Uttar Pradesh Lokayukta and Up-Lokayuktas (Amendment) Act, 2012. However, we direct the State to take all endeavors for selecting the new incumbent for the office of Lokayukta and Up-Lokayuktas as per the provisions of the Act preferably within a period of six months from today.
Petition dismissed.
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2014 (4) TMI 1255 - SUPREME COURT
Whether the amount deposited by the judgment debtor in a decree is to be adjusted first towards interest or towards principal decretal amount?
HELD THAT:- The scope of Order XXI Rule 1 of the CPC is that the judgment debtor is required to pay the decretal amount in one of the modes specified in sub-rule (1) thereof. Sub-rule (2) of Rule 1 provides that once payment is made under subrule (1), it is the duty of the judgment debtor to give notice to the decree-holder through the Court or directly to him by registered post acknowledgement due. Sub-rule (3) of Rule 1 merely indicates that in case money is paid by postal money order or through a bank under clause (a) or clause (b) of sub-rule (1) thereof, certain particulars are required to be accurately incorporated while making such payment. Sub-rules (4) and (5) of Rule 1 states from which date, interest shall cease to run – in case amount is paid under clause (a) or (c) of sub-rule (1), - interest shall cease to run from the date of service of notice as indicated under sub-rule (2); while in case of out of court payment to the decree-holder by way of any of the modes mentioned under clause (b) of sub-rule (1), interest shall cease to run from the date of such payment.
The appellants herein are entitled to the amount awarded by the Executing Court, as the amounts deposited by the judgment debtor fell short of the decretal amount. After such appropriation, the decree-holder is entitled to interest only to the extent of unpaid - principal amount. Hence, interest be calculated on the unpaid principal amount.
We allow the appeal, set aside the impugned judgment passed by the High Court and restore that of the Executing Court dated 18.08.2004 - appeal allowed.
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2014 (4) TMI 1254 - ITAT JODHPUR
Trading addition - action of the AO in adopting percentage completion method and rejection of books of account - HELD THAT:- It is an admitted fact that the Ld. CIT(A) deleted the impugned addition by following the case of M/s. Surya Estate Vs. DCIT [2012 (12) TMI 1189 - ITAT JODHPUR] held that the profit declared on the basis of Project Completion Method is to be accepted and the addition cannot be made on the basis of Percentage Completion Method. - Decided against revenue.
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2014 (4) TMI 1253 - BOMBAY HIGH COURT
Accrual of income - interest which had accrued, but not fallen due or received - HELD THAT:- Identical question and with regard to the same assessee, was raised before this Court in Income tax Appeal No.1621/11. That Appeal of the Revenue was dismissed by this Court in M/S. INDUSLAND BANK LTD. [2013 (2) TMI 893 - BOMBAY HIGH COURT] . The Division Bench followed a judgment and order of this Court in BANK OF BAHRAIN & KUWAIT BSC [2013 (2) TMI 725 - BOMBAY HIGH COURT].
Change in Accounting pattern - HELD THAT:- Matter stands concluded by the Hon'ble Supreme Court in the UNITED COMMERCIAL BANK VERSUS COMMISSIONER OF INCOME-TAX [1999 (9) TMI 4 - SUPREME COURT] has held that banks are following a mercantile system of accounting both for book keeping as well as tax purpose. This is a consistent practice and for more than three decades, that has been accepted by the Revenue. The insistence on a different accounting pattern was held not to be justified. Following the judgment of the Supreme Court question (b) also cannot be termed as substantial question of law.
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2014 (4) TMI 1252 - ITAT AHMEDABAD
Disallowance u/s 14A r.w.r. 8D - whether such expenses were incurred? - nexus between the Investment and Borrowed Fund - HELD THAT:- As far as the year under consideration is concerned, it is worth to mention that the same cannot be decided independently on the prevailing facts. On careful perusal of the balance sheet, it appears that there was increase in other investments as well as in addition to the investment as noted by AO - in the absence of a clear nexus that the internal accruals have been utilized towards impugned investments, it is difficult to believe the assessee’s submission that the internal accruals or assessee’s own funds have been used towards investment. Rather, it appears that the interest bearing borrowings have been utilized because the assessee has not controverted the said allegation. We find no force in this ground of the assessee and the same is hereby dismissed.
Nature of expenses - repairs for water proofing expenses and replacement of corrugated sheets - revenue or capital expenditure - HELD THAT:- Such type of expenditure pertaining to waterproofing and related to corrugated sheets were nothing but Revenue expenditure. It is wrong to presume that an independent asset was created by the assessee.
We are of the view that such type of expenditure pertaining to waterproofing and related to corrugated sheets were nothing but Revenue expenditure. It is wrong to presume that an independent asset was created by the assessee. As relying on own case [2012 (4) TMI 765 - ITAT AHMEDABAD] we hereby reverse the findings of the authorities below and direct to allow the ground of appeal.
Addition of interest on the investment made in the subsidiary company by invoking the provisions of section 36(1) (ii) - CIT-A deleted the addition - HELD THAT:- CIT(A) was not correct in holding that the investment made for purchase of shares of subsidiary company was a legitimate business activity of the assessee. According to us, the assessee is not in the business of finance, but a manufacturer of suitings. The Ld. CIT(A) has erred in holding that no disallowance was made in the past, therefore the Assessing Officer was not justified for the impugned disallowance in the year under consideration. Each year is an independent year. Facts of this year are to be seen independently and not to be governed by the decision taken in the past. AO had noted that the assessee was unable to prove that the own non-interest bearing funds have been utilized. Rather, it was held by the Assessing Officer that the assessee had paid heavy interest on the loans and borrowings. - Decided in favour of Revenue.
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2014 (4) TMI 1250 - ITAT VISAKHAPATNAM
Deduction u/s 80IA on the profits of the power generation unit - HELD THAT:- We are inclined to accept the submissions of assessee for the reason that the cost of steam is what is to be allocated between the power plant and the rice mill. There is no logic in segregating the cost into two parts and allocating the normal loss in the generation of steam at 50-50 and therefore allocating the husk expenses at 15.75% to the power generation plant and 84.25% to the rice mill. Once we come to our conclusion that 10% of the steam is utilized by the power generation plant, then all the cost i.e. attributable and relatable to the generation of steam has to be allocated only on that basis. The cost of steam cannot be segregated into that which is incurred up to a particular point and cost incurred after a particular point. This to our mind is not logical. Thus the allocation made by the assessee to our mind is justified. Hence, we allow this ground of the assessee.
On the issue of administrative expenses, the CIT has applied the decision of the Pune Bench of the Tribunal in the case of Khinvasara inwarsa Investment Pvt. Ltd. Vs. JCIT [2006 (6) TMI 198 - ITAT PUNE-A] while adjudicating the very same issue for the assessment year 2009-10. We direct the assessing officer to adopt the same for the impugned assessment year 2008-09 and allow this ground of the assessee
Allocation of husk @55% to the power plant as made by the assessing officer - HELD THAT:- This issue is covered in favour of the assessee and against the revenue as relying on CONTIMETERS ELECTRICALS PVT. LTD. [2008 (12) TMI 4 - HIGH COURT DELHI] and ACE MULTITAXES SYSTEMS PVT. LTD. [2009 (1) TMI 260 - KARNATAKA HIGH COURT]
Adoption of husk consumption rate - HELD THAT:- CIT(A) held that the assessing officer had not pointed out errors nor rejected the data as per the records maintained by the assessee, before taking up comparable cases such as M/s. Sudha Agro Oils and Gautam Solvents for coming to such conclusions. We find that this conclusion of the Ld. CIT(A) is as per law for the reason that no estimates can be made without rejection of the books of accounts and without pointing out errors in those books of accounts. When the assessee is maintaining detailed records of husk consumption, electricity production, etc., the assessing officer has to point out errors in these records, reject the same and then only go for comparable cases. As the assessing officer has not done the same, CIT(A) is right in his finding.
Non-maintenance of separate books of accounts for power generation business - AO was of the view that this would disentitle the assessee for making the claim u/s 80IA - HELD THAT:- It is pointed out that in the assessment year 2009-10 the assessing officer, on the very same set of facts, accepted that books of accounts maintained by the assessee on the ground that they fulfill the requirements of separate books of accounts as the purpose of having separate books of accounts, is to enable the assessing officer to ascertain the profits from power generation business. When this objective is fulfilled and when the assessing officer in the subsequent year holds so, we are of the considered opinion that the finding of the Ld. CIT(A), which is in consonance with circular no.1 of 13 dated 17.1.2013 issued by the CBDT requires to be upheld. Therefore, ground no.9 is dismissed.
No difference in technical specifications of the turbine used by the assessee and Sudha Agro, the learned Counsel submitted that the very method of generation of power by these two entities are different and cannot be compared. It was submitted that in the case of Sudha Agro out of 30 tonnes of steam, 10 tonnes is absorbed in the turbine and out of the balance, part of the steam is passed through condensation unit and the steam condensed to 20 tonnes only before being used in the rice mill. We are unable to comment on this factual differences brought out by assessee. As we have already taken a view that allocation of husk @10% is reasonable, suffice to say that consistent with the view taken on this issue for the earlier assessment year, we allow this ground of the assessee.
Disallowance u/s 40(a)(ia) - HELD THAT:- CIT(A) applied the decision of the Visakhapatnam special bench of the Tribunal in the case of Merilyn Shipping and Transport Vs. ACIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] . This decision has since been suspended and the Hon’ble Kolkata High Court in the case of CIT Vs. Crescent Export Syndicate [2013 (5) TMI 510 - CALCUTTA HIGH COURT] held that the law laid down in the case of Merilyn Shipping and Transport (Supra) is not a good law. Further, it was held that the provisions of S.40(a)(ia) are applicable even when the expenditure is paid during the year and not payable as at the end of previous year.
Disallowance made of certain expenditure - HELD THAT:- Assessee produced the details of payments made to the sundry creditors which were also produced before the AO. In almost all the cases some amount out of the purpose consideration was paid before March and the balance payable was paid in the month of April. AO neither disputed the fact of purchase of paddy nor pointed out any instances of either quantitative difference or rate difference. Test-check made by AO by recording sworn statements of three of the creditors also turned out in favour of the assessee. Under these circumstance AO is not correct in making an adhoc disallowance only because confirmation letters are not produced without finding any other discrepancy either in the purchases or in the names and addresses of the sundry creditors.
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2014 (4) TMI 1249 - ITAT PANAJI
Entitlement for deduction u/s 80P(2)(a)(i) - whether the Assessee is hit by the provisions of Sec. 80P(4) which was introduced in the statute by the Finance Act, 2006 w.e.f. 1.4.2007? - HELD THAT:- Sec. 80P(2)(a)(i) it is apparent that if the co-operative society is engaged in carrying of business of banking or providing credit facilities to its members, the co-operative society is entitled for deduction on whole of the income relating to any one or more of such business. From the reading of Sec. 80P(4) it is apparent that this section denies deduction to a co-operative bank other than a primary agricultural credit society or primary co-operative agricultural and rural development bank. The provisions of Sec. 80P(4) were introduced in the statute by the Finance Act, 2006 w.e.f. 1.4.2007. The explanation to the section defines the co-operative bank and primary agricultural credit society to have the same meaning as assigned to them in Part-V of the Banking Regulation Act, 1949.
It is not the case of either of the parties that the Assessee is a primary co-operative agricultural and rural development bank. It is also not the claim of the Assessee that Assessee is a primary agricultural credit society. If we read both the sections, Sec. 80P(2)(a)(i) and Sec. 80P(4) together, we find that the provisions of Sec. 80P(4) mandates that the provisions of Sec. 80P will not apply to any co-operative bank other than a primary agricultural credit society or primary co-operative agricultural and rural development bank but as per the provisions of Sec. 80P(2)(a)(i), a co-operative society engaged in carrying on the business of banking or providing credit facilities to its members is entitled for deduction. Since the assessee is a primary co-operative bank, therefore in our opinion the assessee is hit by the provision of section 80P(4) and assessee will not be entitled for deduction u/s 80P(2)(a)(i).
As gone through the order of this tribunal for the assessment year 2006-07. We noted that this decision will not assist the assessee as there was no section 80P(4) there during the impugned assessment year. This section has been inserted w.e.f. 1.4.2007
Sec. 80P(2)(a)(i) it is apparent that if the co-operative society is engaged in carrying of business of banking or providing credit facilities to its members, the co-operative society is entitled for deduction on whole of the income relating to any one or more of such business.
From the reading of Sec. 80P(4) it is apparent that this section denies deduction to a co-operative bank other than a primary agricultural credit society or primary co-operative agricultural and rural development bank. The provisions of Sec. 80P(4) were introduced in the statute by the Finance Act, 2006 w.e.f. 1.4.2007. The explanation to the section defines the co-operative bank and primary agricultural credit society to have the same meaning as assigned to them in Part-V of the Banking Regulation Act, 1949. It is not the case of either of the parties that the Assessee is a primary co-operative agricultural and rural development bank. It is also not the claim of the Assessee that Assessee is a primary agricultural credit society.
If we read both the sections, Sec. 80P(2)(a)(i) and Sec. 80P(4) together, we find that the provisions of Sec. 80P(4) mandates that the provisions of Sec. 80P will not apply to any co-operative bank other than a primary agricultural credit society or primary co-operative agricultural and rural development bank but as per the provisions of Sec. 80P(2)(a)(i), a co-operative society engaged in carrying on the business of banking or providing credit facilities to its members is entitled for deduction. Since the assessee is a primary co-operative bank, therefore in our opinion the assessee is hit by the provision of section 80P(4) and assessee will not be entitled for deduction u/s 80P(2)(a)(i).
Also gone through the order of this tribunal for the assessment year 2006-07. We noted that this decision will not assist the assessee as there was no section 80P(4) there during the impugned assessment year. This section has been inserted w.e.f. 1.4.2007
Claim of the assessee u/s 80P(2)(a)(i) in respect of interest received by the assessee from Ratnakar Bank. We have already held that since the assessee is hit by the provisions of section 80P(4), therefore, the assessee is not entitled for the deduction u/s 80P(2)(a)(i). Accordingly, we dismiss the ground taken by the assessee in the C.O’s .
Appeals filed by the revenue are allowed.
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2014 (4) TMI 1248 - GUJARAT HIGH COURT
Reopening of assessment u/s 147 - notice u/s 148 on expiry of four years from the end of relevant assessment year - exchange difference on PSCFC and PCFC loans - HELD THAT:- We notice that in the instant case for A.Y 2006-07, the very issue has been raised, though concluded not only in the earlier years, but also, in the original assessment on due scrutiny. In absence of any new tangible material available with the Assessing Officer, on the basis of which he could form his belief that income chargeable to tax has escaped assessment, it is not open to the AO to change his opinion by issuing the notice of re-assessment for the same being impermissible under the law.
Revenue could not point out as to in what manner, there has been a failure on the part of the assessee to disclose such material facts noted hereinabove. The reasons recorded itself also clearly indicates that from the verification of the record and on perusal of balance-sheet, details of exchange difference have been noted, leading to form a belief of escapement of income.
From the very material available and in wake of this discussion, we hold that the belief formed by the Assessing Officer is from the very record of the case, and therefore, the very assumption of the jurisdiction on the part of the AO in this case, where the notice had been issued on expiry of four years' period is not sustainable, and therefore, despite the contention on the part of the Revenue of availability of alternate remedy, the interference at this stage is necessary.
Notice of reopening deserves to be quashed and is hereby quashed therefor. We have recorded the objections raised by the petitioner for absence of deemed approval in accordance with law and though the same has been strongly resisted by the Revenue, if chosen not to opine of this aspect, as on the very first and vital ground, we have quashed the notice for reopening. - Decided in favour of assessee.
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2014 (4) TMI 1247 - ITAT CHENNAI
TDS u/s 195 - non-deduction of tax at source by the assessee on payment of overseas commission - HELD THAT:- Tribunal in DCIT Vs. M/s.Macmillan India Ltd. [2012 (3) TMI 639 - ITAT CHENNAI] shows that the identical issue in the case of the assessee has been decided by the Tribunal in favour of the assessee. Moreover, the Hon’ble Supreme Court of India in the case of GE Technology Centre P. Ltd. Vs. CIT [2010 (9) TMI 7 - SUPREME COURT] has held that mere remittance to non-residents does not automatically make the person liable to deduct tax at source. The duty to deduct tax at source arises only if remittance contains wholly or partly taxable income in India. In view of the well settled law and the facts of the case, the appeal of the Revenue is dismissed being devoid of merit.
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2014 (4) TMI 1246 - BOMBAY HIGH COURT
Allowability of development expenses incurred on technical knowhow u/s 37 - payment made for providing knowhow to manufacture engines of specific parameters - allowability u/s 35AB - HELD THAT:- Appeal admitted on the following substantial questions of law:
(A) Whether on the facts and in the circumstances of the case and in law the Income Tax Appellate Tribunal was justified in allowing development expenses amounting to ₹ 8,93,56,131/which were incurred on technical knowhow under Section 37 of the Income Tax Act even though such expenditure was covered under Section 35AB of the Income Tax Act ?
(B) Whether on the facts and in the circumstances of the case and in law the Income Tax Appellate Tribunal was justified in remitting to the file of the Assessing Officer the issue concerning allow ability of development expenses amounting to ₹ 10,69,09,754/being payment made for providing knowhow to manufacture engines of specific parameters even though such expenditure is clearly for technical knowhow and was covered under Section 35AB of the Income Tax Act ?
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2014 (4) TMI 1245 - GUJARAT HIGH COURT
Penalty u/s 271(1)(c) - undue deduction under section 35(2AB) in the return of income even though it did not receive the requisite certificate in the Form 3CD from the prescribed authority - penalty proceedings as distinct and separate from the quantum proceedings - HELD THAT:- No indulgence is necessary in the reasonings arrived at by both the CIT(Appeals) and the Tribunal who have rightly held that this is not a question of furnishing inaccurate particulars or concealing income.
In the scrutiny assessment under section 143(3) of the Act, respondent withdrew such claim since it had failed in such challenge before the CIT(Appeals) by then. On a bona fide belief that the letters issued by Ministry of Science and Technology were valid for it to claim deduction under section 35(2AB), if expenses incurred genuinely had been claimed in the return, rejecting the claim may not result into penalty proceedings nor would the withdrawal of claim in scrutiny proceedings in the aforementioned background can be said to be concealment. - Decided against revenue
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2014 (4) TMI 1244 - BOMBAY HIGH COURT
Issuance of necessary directions for clubbing the FIRs filed by some of the respondents together with the FIR filed by the Punjab National Bank - Issuance of necessary directions for treating all the FIRs as a single FIR - principal contention of the applicant is that the applicants did not approach the member banks of the consortium individually for the purpose of obtaining the sanction of the credit facilities.
HELD THAT:- There can be no manner of doubt that in respect of the same set of facts, there can be only one FIR. A second report even if lodged cannot be registered as FIR, particularly when offence has already been registered. It would at the most amount to information being communicated to the police during investigation. In the present case, the FIRs indeed disclose the existence of a conspiracy and the representations being made to the consortium. According to the respondents, each individual works contract, therefore, amounted to individual action of cheating of the concerned member banks of the consortium. We had called for the case diaries of the offences which have been registered and we find that in some of the cases, the investigation is complete. At this stage, it would certainly be a premature exercise to determine if the cheating of all the member banks was pursuant to only one conspiracy and, therefore, there should be only one FIR or the cheating of the individual banks is an individual offence which can be investigated by the police.
The existence of smaller conspiracies pursuant to the larger conspiracy and the inducement of the individual member banks of the consortium to give credit facility would be a matter which would require to be investigated by the police. At this stage, no straitjacket formula can be evolved for determining if it was a single transaction or there were multiple different other transactions whereby the member banks of the consortium were cheated.
As per the procedure of the consortium banking, a core committee was formed and representations, if any, were made to the core committee. The core committee was constituted of the members of the consortium banks. Thus any representation which was made by the applicants to the core committee was a representation which was made to the individual banks of the consortium. The core committee was, in fact, acting for and on behalf of the members of the consortium. It cannot, therefore, be said that the representation was made to the core committee only and was not a representation which was made to the members of the consortium.
Since the representations were made to the core committee which was acting on behalf of each individual bank and, therefore, even if no representation was made to the individual banks, yet it amounted to a representation, though made to the core committee, as a representation made to the individual banks. Even if, therefore, at this stage, it is concluded that there was only one larger conspiracy without there being any smaller conspiracies, yet by virtue of the individual works contract, the individual banks were cheated to the extent of the credit facility offered by them, which would, therefore, amount to a distinct and a separate offence, though individual representation was not made to the member banks individually.
The investigation in respect of all the FIRs is not complete. The case diaries of certain FIRs have been produced before us for our perusal. However, since the charge-sheet has not been filed, according to us, it would be wholly inappropriate to make any reference to the investigation which has been carried out and particularly to the material which has been collected during investigation - it is clear that all the banks have been cheated and have been induced to give financial assistance to the applicants.
Though there is a single conspiracy, yet the act of individually cheating the member banks without there being actually an individual representation would constitute a separate offence and the respondents-banks, therefore, would be justified in lodging individual FIRs. The applicants therefore, are not entitled to the reliefs which the applicants have prayed for in this application.
Application dismissed.
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