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2014 (8) TMI 1145
Maintainability of application filed under Section 110(1B) of the Customs Act - Held that: - since the Learned MM has passed the impugned order dated 1-8-2013 following the decision of this Court in Directorate of Revenue Intelligence v. State [2013 (2) TMI 812 - DELHI HIGH COURT] in which the decision of Learned Single Judge in Department of Customs v. Parvinder Kaur [2000 (8) TMI 1119 - DELHI HIGH COURT] has been discussed and distinguished, there is no ground to interfere with the impugned order dated 1-8-2013, which is in consonance with the legal position laid down by this Court in Directorate of Revenue Intelligence v. State.
Petition dismissed.
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2014 (8) TMI 1144
Penalty under section 271(1) (c) - furnishing inaccurate particulars for treating the sales tax subsidy/exemption as capital receipt instead of revenue receipt - tax was paid on the basis of book profits determined under Section 115JB - Held that:- The issue relating to levy of penalty under Section 271(1)(c) where tax was paid on the basis of book profits determined under Section 115JB of the Act was considered by the Delhi High Court in CIT vs. Nalwa Sons Investments Limited, (2010) 327 ITR 543. It was held that where the book profits were determined under section 115JB of the Act any amount of expenses claimed would not render the assessee liable to penalty under section 271(1) (c) of the Act on account of false claim of expenses. - Decided in favour of assessee.
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2014 (8) TMI 1143
Entitled to exemption of income u/s 11 and 12 - proof of charitable activities - letting out the school building - Held that:- The co-ordinate Bench in the case of the assessee, for Assessment Year 1994-95 has held that the assessee is entitled to exemption u/s 11 & 12 of the Act. It was held that letting out the school building was aimed at providing assistance in imparting education, which is undisputably for a charitable object. - Decided in favour of assessee
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2014 (8) TMI 1142
Addition of penalty levied by Stock Exchange being VSAT/lease line charges - CIT-A deleted the addition - Held that:- An identical issue was before the Jurisdictional High Court in the case of CIT Vs Angel Capital and Debit Marketing [2014 (5) TMI 584 - BOMBAY HIGH COURT] wherein held that in so far as VSAT and Lease Line charges paid by the assessee are concerned, they do not have any element of income therefore deducting tax while making such payments do not arise and in so far as the penalty levied by the Stock Exchange on account of irregularities committed by the assessee’s clients, such payments were not on account of any infraction of law and hence allowable as business expenditure. It was held that in such a case Explanation to Sec. 37 would not apply.
Addition of provision for loss on mark to market on derivative - Held that:- An identical issue came up for hearing in the case of group company of the assessee namely M/s. ECL Finance Ltd. [2013 (1) TMI 783 - ITAT MUMBAI] allowing the assessee appeal.
Disallowance u/s. 14A r.w. Rule 8D - assessee has suo motu disallowed ₹ 59.60 lakhs - Held that:- AO has computed the disallowance by applying Rule 8D and while doing so, the AO has considered the value of stock-in-trade shares and securities as investments. Further, the AO has considered the total investment instead of investment on which dividend income was earned which makes the assessment order erroneous and further the First Appellate Authority order is also erroneous as he has confirmed the findings of the AO. Considering the financials of the assessee in totality the suo motu disallowance made by the assessee should suffice the mandate of provision of Sec. 14A of the Act. No further disallowance is required. We, accordingly, set aside the findings of the Ld. CIT(A) and direct the AO to delete the disallowance made u/s. 14A of the Act read with Rule 8D. First grievance of the assessee is allowed.
Disallowance of bad debts - Held that:- The fact that the liability to pay the brokerage may arise at a point in time anterior to the liability to pay the value of the shares transacted would not make any material difference to the position. Both constitute a part of the debt which arises from the very same transaction involving the sale or, as the case may be, purchase of shares. Since both form a component part of the debt, the requirements of section 36(2)(i) are fulfilled where a part thereof is taken into account in computing the income of the assessee. The assessee was entitled to deduction by way of bad debts under section 36(1)(vii) r.w.s. 36(2) in respect of the amount which could not be recovered from its clients in respect of transactions effected by him on behalf of his clients. See case of Shreyas Morakia [2012 (3) TMI 103 - BOMBAY HIGH COURT ]. - Decided in favour of assessee.
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2014 (8) TMI 1141
Addition of Wealth on account of the cash found during the course of search - Held that:- A similar issue came up in Shri Nagurao Malku Gadge Versus The Wealth Tax Officer Ward 21 (3) (4) Mumbai [2011 (11) TMI 806 - ITAT MUMBAI ] there was a cash seizure from the assessee by the Crime branch of Mumbai Police. The Tribunal found that the said cash seized was directed to be kept in fixed deposit account with State Bank of India and therefore it cannot be considered as cash in hand for the purpose of the computation of net wealth.
We find that part of the cash seized has been adjusted against the tax dues of Shri Ravi Kiran Aggarwal and M/s. Orbit Corporation Ltd. The balance cash is kept in the PD account of the Commissioner of Income Tax, therefore the same cannot be considered as “cash in hand” in the hands of the assessee for the purpose of the computation of net wealth of the assessee. We, accordingly direct the AO to delete the addition of wealth confirmed by the CWT(A). - Decided in favour of assessee.
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2014 (8) TMI 1140
Reopening of assessment - full and true disclosure of all material facts - change in share holding pattern of the assessee company provisions of sec.79 - Held that:- In the present case, as the facts narrated in the original assessment order regarding change of share holding pattern which has been acknowledged by the AO in Para 2 of its Order dated 24.03.2006 it is obvious that all the necessary facts were disclosed by the assessee. In the reasons recorded for reopening, the AO acknowledges this position but proceeds with his satisfaction on the ground that applicability of Sec.79 was not examined by the Assessing Officer.
As stated above after disclosing all the material evidences, it was not for the assessee to lead the AO as to what inferences could be drawn by him as this work falls in the domain of the AO. It is undisputed that the assessee had disclosed all the material facts relevant for the assessment. As per proviso to Sec.147, the AO could not exercise jurisdiction to reopen the assessment after lapse of four years. CIT(A) was justified in holding that the Assessing Officer lacked jurisdiction to reopen the assessment proceedings by virtue of operation of 1st proviso to Sec.147 and accordingly reopening was rightly held as not valid. - Decided against revenue.
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2014 (8) TMI 1139
Deemed dividend u/s 2(22)(e) - dividend distribution tax and prior period expenses - Held that:- If the AO himself had admitted in the remand report that capital subsidy was not be considered a part of the accumulate profit, then why has he filed an appeal especially when the FAA has endorsed his view. The stand taken by the AO in the ground of appeal is beyond our comprehension. Initially he held that necessary documents were not produced by the assessee.
In our opinion his stand at that point of time could be held to be justifiable. But, after admitting a particular position in the remand report about the non-inclusion of capital subsidy out of accumulated profit for the purpose of calculating deemed dividend, he should not accepted the decision of the FAA and should not have filed the appeal. FAA had directed the AO to recomputed the accumulated profit after lying down certain principles. In our opinion direction given by him are as per the provisions of law. He has rightly held that Income tax paid, propose dividend distribution tax and prior period expenses cannot be considered for determining accumulated profits. - Decided against revenue.
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2014 (8) TMI 1138
Application before appropriate forum - Held that:- In view of the order passed by the learned Sessions Judge, Mr. B.M. Gupta, learned advocate for the applicant does not press this petition. Mr. Gupta submits that the applicant would approach the investigating officer.
It is expected that if any such application is filed, the same shall be looked into by the investigating officer in accordance with law as expeditiously as possible.
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2014 (8) TMI 1137
Addition u/s 14A - sufficiency of own funds - Held that:- We find that assessee has sufficient own capital which does not bear any interest. Assessee had capital amounting to ₹ 222 crores and investment made by the assessee were only ₹ 35 crores. The ld. CIT(A) himself accepted that assessee is having sufficient own funds as capital as compared to investments yielding exempt income. In these circumstances we hold that since the assessee has sufficient own capital to make investment for earning exempt income no portion of interest from borrowed capital should be allocated to earn exempt income in this case. Accordingly this appeal of the assessee is partly allowed.
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2014 (8) TMI 1136
Reasons for reopening of the assessment u/s.147 - non disposing of the objections - Held that:- In this case, we find that the order disposing of the objections refers to and relies upon investigation carried out by Sales Tax department, the information put up by Sales Tax department on it's website and the affidavit cum declaration filed by the defaulting parties with the Sales Tax authorities. None of the above facts were even remotely adverted to in the grounds recorded for reopening the assessment. It is settled position in law that the validity of reopening of an assessment can only be tested by the reasons recorded at the time of issuing the notice for reopening an assessment. These grounds for reopening of assessment can neither be substituted and / or supplemented. The reopening of assessment will either stand or fall only upon the reasons recorded before issuing the impugned notice. Thus the order disposing of the objection relying on facts which were not a part of the reasons recorded makes the same unsustainable in law.
There can be no dispute with regard to the submissions of the Revenue that an assessment which has been processed under Sec.143(1) of the Act can be reopened as held by the Supreme Court in Assistant Commissioner of Income-tax V Rajesh Jhaveri (2007 (5) TMI 197 - SUPREME Court). However even when an assessment which had been earlier processed under Sec.143(1) of the Act, the jurisdictional requirement for reopening an Assessment is that the Assessing Officer must have reason to believe that income chargeable to tax has escaped assessment, must be satisfied. Besides where the proviso to Section 147 of the Act is invoked, the additional requirement viz. failure to disclose fully and truly all facts necessary for assessment should also be satisfied. Therefore, the aforesaid decision relied upon by the Revenue does not address the grievance of the petitioner.
The order disposing of the objections is beyond the reasons recorded for reopening the assessment, we set aside the order dated 23 July 2014, disposing of the objections. We direct the Assessing Officer to dispose of the objections of the petitioner dated 23 July 2014 to the impugned notice dated 21 March 2014 afresh keeping in mind the reasons, recorded for issuing the impugned notice.
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2014 (8) TMI 1135
Deemed dividend addition u/s 2(22)(e) - Held that:- We find that the issues are covered by the judgment of this Court delivered in CIT, Kolkata-III, Kolkata vs. M/s. Baljit Securities Pvt. Ltd. (2013 (6) TMI 793 - CALCUTTA HIGH COURT) in which it was held the definition of ‘dividend’ has been enlarged by a legal fiction which does not extend to ‘shareholder’. In this case, the respondent assessee is not a shareholder of M/s. Pataka Industries Ltd. - Decided in favour of assessee.
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2014 (8) TMI 1134
Construction and interpretation of essentially two provisions of the Code - Section 372 - Section 378 - whether the complainant in a complaint case for an offence punishable under Section 138 of the Act of 1881 is a victim as defined under Section 2(wa) of the Code, as amended by Act No.5 of 2009? - Held that: - the term 'victim' found in the proviso to Section 372 Cr.P.C shall not include a victim who is a complainant in a complaint case and that the term ?victim? used in the said proviso shall be confined to the victims in cases instituted otherwise than on a complaint.
In the case on hand, the criminal case was instituted on the file of the trial Court on a complaint made by the respondent/ complainant. In fact, the offence is a non-cognizable offence and hence there can be no other mode of institution of the criminal case than by preferring a complaint to the Magistrate. The offence alleged is one punishable under Section 138 of the Negotiable Instruments Act, 1881 - As the case ended in acquittal before the trial Court, the remedy available to the respondent herein (complainant) was to approach this Court (High Court) under Section 378 (4) within the period stipulated in Section 378 (5) seeking Special Leave to file an appeal against acquittal.
Appeal allowed.
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2014 (8) TMI 1133
TDS u/s 194C OR 194J - Uplinking and Band Width Services and Air Time service charges - Held that:- As relying on the case Sristi Television [2013 (12) TMI 1655 - ITAT KOLKATA] we agree with the ld. CIT(Appeals) that no technical services were involved in payment of carriage charges made by the assessee for broadcasting of the programmes produced by the assessee. The assessee produced various types of programmes/serials and news and these were telecasted/broadcasted through Multi System Operators. Payments in this regard were made as carriage charges for which payment of tax was deductible under section 194C of the Income Tax Act. As per definition of technical services given in Explanation to Section 9 of the Act, the deductee should have rendered managerial, technical or consultancy services. In this case, we find that there is no such finding of the Assessing Officer. The deductee has only telecasted the programmes produced by the assessee. Telecasting on the programme was covered under section 194C of the Act. - Decided against revenue
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2014 (8) TMI 1132
Relief clause by way of amendments seeked - VPM group now seeks by way of amendments to add brief background of the Maheshwari family in the petition - Held that:- Having carefully examined the entire schedule of amendment, have no doubt that facts stated therein were within the knowledge of the VPM group prior to the filing of the petition. They have failed to prove that despite due diligence the same could not be brought on record in the original petition. Further, ignorance by a party and/or advocate in spite of knowledge cannot be a matter of due diligence as held in the above decision. It is of further of the view that the degree of prejudice to the other side by the proposed amendment is greater than one at the pre-trial stage.
In opinion, the proposed amendments are complex, irrelevant and the same are result of afterthought. Furthermore, the applications are moved with mala fide intention to protract hearing of the petition by the VPM group. In addition to, by way of amendments, the VPM group wants to change the basic structure of the case which is impermissible under law. Therefore, hold, the applications for amendment are not bona fide and, therefore, deserve to be dismissed.
It is pertinent to mention here that the VPM group also sought to place some documents filed along with the application for amendment as annexures thereto, on record which according to the VPM group were discovered after the filing of petition. Insofar as these documents are concerned, in my opinion, to secure ends of justice, such documents may be allowed to be filed with an affidavit separately. If, such documents are filed, the same may be taken into consideration subject to objection, if any, raised by the other side.
To secure ends of justice, in the exercise of power conferred upon the CLB by virtue of regulation 44 of the CLB Regulations grant liberty to VPM group to file the documents supported with an affidavit, which according to the said group were discovered and came to their possession after filing of the petitions. It is made clear that the affidavit shall be strictly confined to the documents only, as directed above. It is further clarified that any fact stated in the affidavit in contravention of this order and/or outside the scope of this order shall not be read by the CLB in the proceedings. T
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2014 (8) TMI 1131
Reopening of assessment u/s.147 - disallowance of claim of depreciation in respect of its cement factory at Gujarat - days of use of asset - Held that:- No justification on the part of the lower authorities for decline of the claim of depreciation when the fact of assessee having used the machinery for trial run was not declined by any of the lower authorities. Even use of machine for one day will entitled the assessee for claim of depreciation. Since it is not clear from the record as to the period for which machinery was actually used by assessee, we direct the AO to verify the period of used and restrict the claim of depreciation to 50%, if he finds that machinery was used for less than 180 days during the year under consideration.
Computation of book profit u/s.115JA - provision made for ECC jobs was directed to be reduced from book profit on the plea that it was ascertained liability - Held that:- While working the book profit u/s.115JA, the AO has added the provision for ECC jobs. We also found that the provision made for ECC jobs was for ascertained liability which was also added by the assessee in the valuation of work-inprogress. Thus, effectively, it was not an item of profit and loss account but was an item of trading account insofar as it was also added in work-in-progress forming the part of trading account. We found that similar additions made in the A.Y.1988-89 was also deleted by the Tribunal in assessee’s own case. Accordingly, we do not find any infirmity in the order of CIT(A) for deleting the addition made on account of provision for ECC jobs.
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2014 (8) TMI 1130
Eligibility for exemption u/s 11 – Violation of section 13(1)(c)(ii) r.w. section 13(3) - Whether the assessee was ineligible for the exemption u/s 11 on the ground that there was contravention of the provisions of Section 13(1)(c)(ii) read with Section 13(3) of the Act – Held that:- Delay condoned. Leave granted.
HC order saying [2014 (3) TMI 760 - DELHI HIGH COURT] assessee committed a violation of the provisions of Section 13(1)(c)(ii) read with Section 13(2) and Section 13(3) of the Act - The trust was accordingly not eligible for the exemption under Section 11 of the Act for both the years - Decided in favour of revenue.
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2014 (8) TMI 1129
Disallowance being marked to market losses on account of exchange rate fluctuation - Held that:- The Hon’ble Supreme Court in the case of Woodward Governor India (2009 (4) TMI 4 - SUPREME COURT) has held that loss suffered by the assessee on account of fluctuation in the rate of foreign exchange as on the date of the balance sheet is an item of expenditure u/s. 37(1) of the Act. Respectfully following the decision of the Hon’ble Supreme Court, the AO is directed to delete the disallowance. Ground No. 1 is accordingly allowed.
Disallowance of expenditure u/s. 14A read with Rule 8D - Held that:- AO has not referred to the balance sheet figures of the assessee. The AO has also not given any findings whether the borrowed funds were also used for making the investments. The AO has also not considered the claim of the assessee that the investments have been made out of own funds. In the interest of justice, in our considered opinion, this issue needs to be readjudicated afresh. We, accordingly set aside this issue to the file of the AO. The AO is directed to show that the assessee has actually incurred certain expenditure for earning the exempt income considering the facts and the figures of the balance sheet of the assessee. The assessee is directed to file necessary details before the AO. This ground of the assessee is allowed for statistical purpose.
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2014 (8) TMI 1128
Interest on delayed refund - Held that: - respondent would consider the petitioner’s claim for interest in accordance with law and within two months from the date of receipt of a copy of this order - petition disposed off.
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2014 (8) TMI 1127
Allowable deduction u/s 36(1)(v) - Payment made by the assessee directly to LIC for group gratuity fund - Held that:- The disallowance has been made by lower authorities holding that the necessary registration of scheme was not obtained by the assessee, in our considered view, the controversy stands squarely covered in favour of the assessee by the Hon'ble Supreme Court judgment in the case of CIT Vs. Textool Co. Ltd. [2009 (9) TMI 66 - SUPREME COURT] wherein the similar payment made by the assessee directly to LIC for group gratuity fund was held to be allowable deduction U/s 36(1)(v) of the Act. We are inclined to hold that the assessee is entitled to deduction of payment of gratuity to the LIC.
Deduction of provision of wage settlement - Amount of payment of arrears of salary - Held that:- There is no dispute on the facts that the amount of payment of arrears of salary in question was made consequent to the 13th wage settlement with all the stake holders. The genuineness of the payment is not challenged. The assessee is governed by regulatory laws of Rajasthan Cooperative Societies Act. The assessee’s liabilities towards wage revision having accrued and cryslatised by way of agreed settlement, the same is an allowable business expenditure as per Income Tax Act. The AS-I and II further supports the accounting done by the assessee in this behalf. Thus we hold that the assessee is eligible for deduction of provision of wage settlement
Addition of bad debts - Liability for PACS - claim of PACS Manager Fund payment as expenditure - Held that:- The learned CIT(A) considered it to be a bad debt for which no reasons are given. In our considered view the PACS payment cannot be held to be a bad debt, therefore, what is relevant for us is the Assessing Officer’s order. The liabilities have been created by statutory rule which assessee is bound to follow. This provision has been created for amicability with the employees and is for the commercial benefit of the assessee bank and is to be held as wholly and exclusively for the purpose of business. In this eventuality, the payment is even otherwise allowable U/s 37 of the Act. Any perceived method of calculation by the Assessing Officer cannot be held as a tool to disallow the assessee’s claim. The revenue’s interest is safeguarded by a fact that if at all there is any mistake in the calculation, the access are short calculation will be given suitable treatment in books of account in subsequent years. This being so in our considered view, the assessee is eligible for claim of PACS Manager Fund payment as expenditure
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2014 (8) TMI 1126
Challenge orders of detention passed against two detenus under Section 3(1) of the COFEPOSA Act, 1974 - permissibility of successive habeas corpus petitions under Article 226 of the Constitution of India and the parameters to be considered by the Writ Court whilst entertaining such petitions - Held that:- As far as the High Courts are concerned, a division bench of the court cannot ordinarily entertain a second petition for the writ of habeas corpus against a detention order when another division bench has already dismissed a challenged to the same detention order unless (i) fresh and new ground of attack against the legality of the detention or custody, which was not available to the Petitioner earlier, has arisen after the decision on the first petition or (ii) a ground, which was available earlier, could not be taken or urged in the earlier petition for some exceptional reason.
As we examine the present petition merits a consideration on the touchstone of the law explained above. The case of the Petitioners is that 25 out of 807 pages of documents supplied to the Petitioners were fully or partly illegible. This ground was certainly available to the Petitioners when the earlier petitions were filed. In fact, in the synopsis to one of the petitions, the ground that illegible documents were given to the detenu was in fact raised. There is absolutely no reason even alleged in the petition – leave aside any exceptional reason – why this ground could not be urged in the earlier petitions. The ground, thus, does not fall within the two exceptions noted above. There is no reason why the ordinary principle of public policy concerning finality to be attached to a decision of the court, should not be applied to the present case.
So also the ground of non-availability of Assay Report was a ground very much available to the detenus when the earlier petitions were filed and there is no reason – much less an exceptional reason – why it could not be urged earlier. No reason is either alleged or established.
As for the subsequent representations to the detaining authority and the Central Government, there being no new ground or fresh material placed before the authorities in the subsequent representations, which was either not available earlier or being available could not be placed due to some exceptional reason, the detaining authority or the government is not bound to consider the new representation and pass separate order disposing of the same.
There is no “changed or new factor” in the present case and “fresh materials” cannot be those that were available earlier and could very well have been brought to the notice of the authorities earlier. No merit in petition.
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