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Showing 61 to 80 of 1590 Records
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2016 (8) TMI 1535 - MADRAS HIGH COURT
Jurisdiction of this Court to try the suit as the contract of carriage - Principal-agent relationship - existence of contract between the plaintiff and the defendant or not - Section 230 of the Indian Contract Act, 1872 - HELD THAT:- As per the three presumptions listed under Section 230 to the exception to the rule that an agent, who acts on behalf of the principal is not personally liable, the presumption to support a contract to the contrary would be whether contract is made by a agent for the sale or purchase of goods for a merchant residing abroad or whether the agent does not disclose the name of the principal and lastly when the principal though discloses cannot be sued - Here in this case, the respondent/defendant signed the document in the capacity as an agent and also disclosed the principal by mentioning in the document itself as a destination agent. Thus, the respondent/defendant disclosed its principal as freightcan Global Inc NJ 00837.
In the present case, there is no privity of contract between the plaintiff and the defendant, as the defendant signed in the bill of lading only as an agent of the Freightcan Global Inc. In Ex. A.7, the defendant is not shown in any capacity, except signing the bill on behalf of Freightcan Global Inc and Freightcan Global Inc alone is shown as destination agent. Therefore, existence of any contract between the plaintiff and the defendant does not arise at all.
The learned trial Judge has rightly dismissed the suit and this Court do not find any reason to interfere with the Judgment and Decree of the trial Court - appeal suit dismissed.
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2016 (8) TMI 1534 - SUPREME COURT
Existence of contact between the parties or not - Respondent No. 3 M/s. Zip Code and Respondent No. 4 Hoegh Lines/American President Lines Limited appears to have proceeded ex parte as they failed to turn up in response to the notices sent to them - agent-principal relationship or not - Section 230 of the Indian Contract Act, 1872 - HELD THAT:- Admittedly, the goods in question were handed over by the Appellants to Respondent No. 1 as pleaded. But there is neither any pleading nor proof that the Appellants paid any sum for transportation or any other service to Respondent No. 1 at the time the goods were handed over to it or subsequent there to. It has been shown on behalf of Respondent No. 1 that Respondent No. 1 was simply an agent of the buyer with whom the Appellants had entered into contract. It is nobody's case that the goods were lost in transit. Rather it is a case where it has come on record that the consignment was received by Respondent No. 3 Zip Code Inc, a part of Coronet Group Inc.
Since Respondent No. 1 was simply acting as an agent of Coronet Group Inc, as such, in view of Section 230 of the Indian Contract Act, 1872 it cannot be held personally liable to enforce the contract entered between its principal and the Appellants. This Court, in its order dated September 10, 2009, has accepted the plea of Respondent No. 1 that Respondent No. 1 is not a consignee, but only an agent of the intermediate consignee - Respondent No, 3 Zip Code Inc, which is subsidiary to Coronet Group Inc, the consignee named in the cargo slips, is the only party which can be held liable for taking delivery without depositing the price of the goods with the Bank.
Appeal dismissed.
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2016 (8) TMI 1533 - KERALA HIGH COURT
Constitution of appeal suit - first defendant is personally bound by the contract or not - Exception (1) to Section 230 of the Indian Contract Act, 1872 - HELD THAT:- The trial court though has not admitted the foreign judgment in evidence has curiously enough held that the same was obtained by fraud and hence not binding on the plaintiff The reason for holding so is that the period of the letter of credit was extended solely to facilitate the second defendant to obtain an order from court. An order was obtained from the Commercial Court Records of Marseille by the second defendant before the expiry of the extended period of the letter of credit.
Thus utmost care and caution should be exercised while holding that a foreign judgment was procured by fraud which would otherwise operate as an estoppel against the plaintiff. There cannot be a retrial of the issue on merits unless the foreign judgment is dislodged for weighty reasons which are wholly absent - The decree passed against defendants 2 and 3 cannot be put into execution now since more than two decades have rolled on and they are also not parties to the appeal suit. Defendants 1, 4 and 5 if now found liable are bound to be indemnified by the second defendant as the consequence of a lawful act done by an Agent under Section 222 of the Act. It will be unjust to make the second defendant vulnerable to such liability without being afforded an opportunity to contest the suit on merits after remand. The question as to whether the first defendant is an Agent of the second defendant or only an intermediary broker entitled to commission is also an ancillary issue.
Neither can we accede to the request of the plaintiff to grant a decree for money in entirety as against defendants 1, 4 and 5 also in this appeal suit. Nor can we countenance the plea that there is no embargo for a decree to be passed against defendants 1, 4 and 5 in conformity with the decree passed against defendants 2 and 3 - thus, the Appeal Suit is not properly constituted impleading all the parties to the suit and therefore liable to be dismissed as incompetent in the circumstances.
Appeal suit is dismissed.
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2016 (8) TMI 1532 - ITAT PUNE
Exemption u/s 11 - assessability of Voluntary Corpus Donations received by the assessee during the year under consideration - registration under section 12A - HELD THAT:- The year under appeal is assessment year 2011-12, wherein the order of assessment under section 143(3) of the Act was passed on 16.12.2013 i.e. after the date of filing the application for registration under section 12A of the Act on 12.11.2013. On the date when the application for registration was moved u/s 12A of the Act, the assessment proceedings relating to instant assessment year were pending. Admittedly, the objects and activities of trust remains the same i.e. running of an old age home and there is no change in that.
Whether the assessee since has been granted registration under section 12A of the Act in lieu of application moved on 12.11.2013, on which date the assessment proceedings were pending, then whether the assessee is entitled to the claim of exemption under sections 11 and 12 of the Act? - The answer to the same is yes, in view of proviso inserted under section 12A(2) of the Act. The proviso very clearly provides that in case the assessment proceedings were pending and the assessee has been granted registration under section 12A of the Act, then the provisions of sections 11 and 12 of the Act would apply to such income derived from any property under the trust, of any assessment year, for which the assessment proceedings were pending. Applying the said ratio to the facts of the present case, we hold that the assessee is entitled to the aforesaid claim.
We find support from the ratios laid down by Kolkata Bench of Tribunal in Sree Sree Ramkrishna Samity Vs. DCIT [2015 (11) TMI 119 - ITAT KOLKATA] and Shree Bhanushali Mitra Mandal Trust Vs. ITO [2016 (4) TMI 578 - ITAT AHMEDABAD]
Departmental Representative for the Revenue on the other hand, has placed reliance on the ratio laid down by Cochin Bench of Tribunal in Al-Madeena Charitable Trust Vs. ACIT [1999 (11) TMI 104 - ITAT COCHIN] wherein the said trust was engaged in the business of printing newspaper and it was held that it had not carried out any charitable activities and hence, it was held to be not entitled to the benefit of section 11 of the Act in respect of income as well as its voluntary contributions received towards corpus - in the facts of the present case, the assessee has received the corpus donations and has utilized the amount for purchase of land to the extent which has been referred to by the CIT(A) and in the totality of the above said facts and circumstances of the case, we find no merit in the orders passed by the authorities below and reversing the same, we hold that the assessee is entitled to the claim of deduction under sections 11 and 12 of the Act. The grounds of appeal raised by the assessee are thus, allowed.
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2016 (8) TMI 1531 - ITAT BANGALORE
Condonation of delay - a delay of 338 days in filing these appeals - assessee has explained that he is busy in looking after the agriculture activity as well as was concentrating the Board Examination of his child - HELD THAT:- As far as the reasons explained for monitoring the agriculture activity is concerned it is pertinent to note that the assessee is doing the business of coffee commission agent in the name and style of M/s. JNC Coffee Links and has explained the source of deposits in the Bank as the amount received from the purchasers of the Coffee and it was used for payment to seller of the coffee. Once the assessee is claiming his main and dominant activity as business of commission agent of coffee then the explanation for delay due to looking after agriculture activity is contrary to the explanation furnished by the assessee for the amount deposited in the Bank account.
As regards the time devoted to the study of child for preparing the Board Examination, it is manifest from the record that the assessee has not explained when did the Board Examination of his child take place as there is an inordinate delay of 338 days and the assessee has filed these appeals after around one year from the date of receipt of the order. Therefore if the Board Examination was over in the academic year 2014-15, then after the academic year was over this explanation of the assessee is bogus and vague even if he academic year of the child was 2015-16 then the delay upto 22.4.2016 for almost one year cannot be attributed for preparation of the Board Examination.
It is not a case of an ordinary delay of a month or a couple of months so that the reason explained by the assessee can be considered as a reasonable cause. Accordingly, in the facts and circumstances of the case when the assessee has given a vague explanation for cause of delay without specifying the definite cause or time period during which the assessee was constrained to devote his time in those activities as stated in the application for condonation of delay then the reasons explained by the assessee cannot be accepted as reasonable cause being contrary to the facts on record. Appeals of the assessee are dismissed.
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2016 (8) TMI 1530 - ITAT MUMBAI
Disallowance u/s 14A - HELD THAT:- As before us the stand of the assessee is that so far as assessment year 2004-05 is concerned it is squarely covered by the decision from Hon’ble Bombay High Court in CIT vs. India Advantage Securities Ltd. [2012 (11) TMI 458 - ITAT, MUMBAI]. Since, the assessee received dividend on shares and mutual fund units acquired and held as stock in trade and since the assessee itself disallowed a sum suo moto as expenditure attributable to the earning income.
The issue is squarely covered by the decision from Hon'ble jurisdictional High Court in CIT vs India Advantage Securities Ltd.(supra), therefore, the disallowance u/s 14A r.w.r 8D is not required to be made and therefore, cannot be sustained in view of the foregoing decision. Accordingly, the order of the Ld. Commissioner of Income Tax (Appeal) is set-aside and Ld. Assessing Officer is directed to delete the addition made u/s 14A r.w.r 8D of the rules. Appeals of the assessee are allowed.
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2016 (8) TMI 1529 - DELHI HIGH COURT
Seeking release of goods - allegation is that revenue/customs authority had not issued show cause notice under the Customs Act within the mandatory time limit - HELD THAT:- The operative portion of the judgment is SAI INCORPORATION VERSUS THE PRINCIPAL COMMISSIONER OF CUSTOMS (IMPORT) & ANR. [2016 (6) TMI 350 - DELHI HIGH COURT] is unequivocal and clarifies that all statutory options and discretion vested with the customs authorities are available to them including the option to proceed under Section 124(3). In the circumstances, the only finding of the Court was the failure to issue show cause notice within the time stipulated by law meaning that the goods were to be unconditionally released. There was no question of the revenue, therefore, from being precluded from using its power to bring to assessment the entire quantum, and classifying them for the purposes of customs duty or seeking to recover the correct amount due.
The impugned order of 16-6-2016 is hereby set aside. It is open to the respondents to proceed in accordance with law and assess the entire quantum, both in respect of their correct classification as well as pass any orders of penalty and/or confiscation - Petition disposed off.
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2016 (8) TMI 1528 - ITAT AHMEDABAD
LTCG computation - Reference to DVO for ascertaining the fair market value as on 1.4.1981 - whether CIT(A) has erred in law and on facts on reducing the LTCG by rejecting the valuation report of the Departmental Valuation Cell and adopting the Valuation Report of the Regd. Valuer? - HELD THAT:- We find that the issue is squarely covered by the case of GAURANGINIBEN S. SHODHAN INDL. [2014 (2) TMI 78 - GUJARAT HIGH COURT] prior to the amendment in section 55A with effect from 1.7.2012 in a case, the value of the asset claimed by the assessee is in accordance with the estimate made by the Registered Valuer, if the Assessing Officer was of the opinion that the value so claimed was less than its fair market value as on 1.4.1981. It would not be the case of the Assessing Officer that the value of the asset shown as on 1.4.1981 was less than the fair market value. Such clause, therefore, as it stood at the relevant time, had no application to the valuation as on 1.4.1981. Thus we confirm the relief granted by the learned CIT(A) and decline to interfere in the matter. - Decided against revenue.
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2016 (8) TMI 1527 - ALLAHABAD HIGH COURT
Revaluation of 21 sugar mills, which have been sold, afresh by an independent agency for the purpose of proceeding with disinvestment - HELD THAT:- If we record a finding in respect of disposal of the application, then we find that such disposal of an application will lead to the decision virtually on merit. Therefore, this Court is of the opinion that petitions should be heard and disposed of finally. Apart from it, a coordinate Bench of this Court presided over by Hon'ble the Chief Justice in HIMANSHU SONKAR [P. I. L.] VERSUS STATE OF U.P. THRU. PRIN. SECY. SUGAR & CANE DEVT. & 30 ORS. [2014 (12) TMI 1369 - ALLAHABAD HIGH COURT] has passed the order to the effect that the parties are directed to complete their pleadings by 12.01.2015 so the hearing before the assigned Bench granted roster, can proceed with the final hearing in the matter.
In the case of KUSHUM LATA VERSUS UNION OF INDIA (UOI) AND ORS. [2006 (7) TMI 729 - SUPREME COURT], the apex Court while dealing with the issue of maintainability of the Public Interest Litigation, laying down the principles for maintainability of the Public Interest Litigation provided certain guidelines and norms which have been laid by the Court from time to time and thereafter held that the person who has filed the petition though he was a tenderer and was questioning the legality of the auction being a party, the High Court was right in dismissing the writ petition.
The judicial propriety demands that we should not indulge into a field which is not otherwise permissible under law. The judicial discipline would be to relegate the parties to the apex Court where the Special Leave Petition is pending for adjudication in accordance with law. But so far the question of entertaining these writ petitions at this stage in the present facts and circumstances of the case is concerned, we do not find appropriate to adjudicate the issue on merit.
Petition dismissed.
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2016 (8) TMI 1526 - ITAT CHENNAI
Valuation of closing stock - assessee was valuing the closing stock at the cost or realizable value whichever is less - HELD THAT:- This Bench of the Tribunal in the case of M/s Rm.K. Visvanatha Pillai & Sons [2016 (6) TMI 1415 - ITAT CHENNAI] has examined this issue elaborately and found that the assessee was valuing the closing stock at the cost or realizable value whichever is less regularly. If the stock was remained unsold for one year, the assessee estimated the realizable value at 25% of the cost and the if the same was remained unsold for two years, the asse estimated the realizable value at 50% of the cost. In case the stock remained unsold for more than three years, the assessee estimated the same at ₹ 100/- or the net realizable value whichever is less. It is not in dispute that the assessee is engaged in the business of readymade garments and textiles. Admittedly, fashion in textile is changing day by day in the textile industry and the assessee is required to keep the stock in tune with the changing fashion and technology. If the fashion is changed old fashion may not be liked by the customers who are coming to the showroom.
Tribunal disbelieved the claim of the assessee on the ground that the reduction of value method was not followed year by year. This Tribunal found that there is no consistency method followed by the assessee for valuing the closing stock. This Tribunal has not taken into consideration the change in fashion and technology in the textile industry. The method of valuation adopted by the assessee continuously for years together was also not brought to the notice of the Bench. When the nature of business and change of fashion were not considered, this Tribunal is of the considered opinion that the finding of the Tribunal in the case of Shri N. Viswanath [2015 (9) TMI 907 - ITAT CHENNAI] may not be applicable to the facts of this case.
In the case of M/s Rm. K. Visvanatha Pillai & Sons, this Tribunal examined the facts elaborately with regard to the nature of the business and the method of accounting followed by the assessee and found that the assessee has rightly valued the closing stock. Therefore, by following the order of this Tribunal in the case of M/s Rm. K.Visvanatha Pillai & Sons(supra), the addition made by the Assessing Officer towards valuation of closing stock is deleted.
Disallowance of contribution towards LIC gratuity fund - HELD THAT:- The contribution was made to gratuity fund of LIC. It is not in dispute that the amount paid cannot be got back by the assessee.The money has gone out of the hands irrecoverably. Therefore, as held by the Apex Court in the case of Textool Company Ltd. [2009 (9) TMI 66 - SUPREME COURT] the claim made by the assessee is allowable since admittedly, the payment was made by the assessee. Therefore, the orders of the lower authorities are set aside and the addition made by the Assessing Officer is deleted.
Disallowance of depreciation on additions to fixed assets - HELD THAT:- When the assessee filed the details of the plant and machinery, this Tribunal is of the considered opinion that there is no reason for disallowing the claim of depreciation. It is not in dispute that the plant and machinery, air conditioner, electrical equipment are eligible for depreciation. The assessee claimed depreciation only @ 7.5%. The rate of depreciation claimed by the assessee is not in dispute. In those circumstances, disallowing the claim of the assessee is not justified. Accordingly, the orders of the lower authorities are set aside and the addition made by the Assessing Officer is deleted.
Addition on account of purchases included in closing stock but not accounted - assessee has not received the original invoices from the vendors. Therefore, the same was not accounted in the purchase account as on 31.3.2008. After receipt of invoices from the vendors, the same were accounted in the subsequent year - When the assessee came to know this defect, a revised return was filed immediately including the entire purchases made in the assessment year 2008-09. Consequently, the purchases accounted for assessment year 2009-10 were also reduced - HELD THAT:- When the assessee has entered the purchases in the books of account and placed material evidence for receipt of goods physically, this Tribunal is of the considered opinion that the Assessing Officer is not justified in rejecting the claim of the assessee on the basis of the gross profit ratio. Gross profit cannot be a fixed figure for every year. The gross profit may vary depending upon various circumstances. When the assessee was maintaining books of account, this Tribunal is of the considered opinion that the gross profit reflected in the books of account has to be taken into consideration. If the gross profit goes down after considering the purchases to the extent of ₹ 1,11,30,290/-, this Tribunal is of the considered opinion that merely because the gross profit gone down, that cannot be a reason for making the addition. It is normal practice in textile business that the goods will be dispatched immediately on placing orders and the invoices will be set subsequently.
When the assessee received the invoices subsequently, the same ought to have been entered in the books of account during the year under consideration. Unfortunately, that was not done. However, after realizing the mistake, the assessee has recorded the same in the books of account and filed a revised return. Consequently, the assessee has also made a claim in assessment year 2009-10 to reduce the so called purchases which were wrongly entered. When this is the position, this Tribunal is of the considered opinion that the Assessing Officer ought to have accepted the revised return filed by the assessee. In view of the above, we are unable to uphold he orders of the authorities below. Accordingly, the orders of the lower authorities are set aside and the addition made by the Assessing Officer is deleted.
Disallowance of lease commitment charges and donations - HELD THAT:- As relying on case of M/s Rm.K. Visvanatha Pillai & Sons [2016 (6) TMI 1415 - ITAT CHENNAI] both lease commitment charges and donations is to be allowed as revenue expenditure.
Addition on account of stock discrepancy - HELD THAT:- AO appears to have found that the items could not be verified due to various factors but has not pointed out any single fact which prevented him from verifying or tracking the system to find out how the stock purchased by the assessee travelled from the date of purchase till the date of sale. Moreover the unsold stock for more than one year, two years and three years as the case may be, is available in the stock which was not reflected in the physical inventory taken by the Revenue authorities. The Assessing Officer himself admits that he could not identify the stock with reference to by number provided by the assessee. If the Assessing Officer could not identify the stock with reference to by-number allotted by the assessee, this Tribunal is of the considered opinion that the inventory taken by the Revenue may not reflect the correct position of closing stock.
When the assessee is maintaining stocks systematically by allocating by-number and also providing a system of tracking through the computer, this Tribunal is of the considered opinion that the authorities below ought to have examined the method adopted by the assessee in a detailed manner and an opportunity shall be given to the assessee to explain how the method works. However, without considering all these factors, the Assessing Officer simply came to the conclusion that there was a discrepancy. This Tribunal is of the considered opinion that the discrepancy was due to stocks remain unsold for more than one year and the assessee valued the same at the net realizable value or cost whichever is less, therefore, the CIT(A) is not justified in confirming the addition made by the Assessing Officer.
Disallowance of expenses towards renovation of the building - assessee incurred the expenditure for interior decoration, temporary wooden partition, flooring etc. - HELD THAT:- On identical set of facts, in the case of assessee’s group concern, M/s Rm. K. Visvanatha Pillai & Sons [2016 (6) TMI 1415 - ITAT CHENNAI] found that the similar expenditure is revenue in nature. Assessee appeal allowed.
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2016 (8) TMI 1525 - ITAT MUMBAI
Depreciation on Patent expenses which were capitalised in the books by the appellant - HELD THAT:- As pursuant to the recharacterisation of the patent expenses as “Capital expenditure” by the A.O, the assessee company as a result thereof was entitled towards depreciation on the “Block of assets- Patents”, i.e not only as regards the capitalized value of the “Patent expenses” pertaining to the year under consideration, but also as on the Opening W.D.V of those pertaining to the preceding years, to the extent the same had been capitalised in the said preceding years. We thus restore the issue to the file of the A.O with a direction that the entitlement of the assessee company towards deprecation on the capitalized value of the “Patent expenses” be computed
Summarily acceptance of the Opening W.D.V of “Patent expenses” by the A.O while framing the assessment in the hands of the assessee company for A.Y. 2009-10, does not inspire much confidence, therefore as a word of caution the A.O is directed to work out the Op. W.D.V of the “Block-Patent expenses” as on 01/04/2009 after making necessary verifications to his satisfaction, and only on being convinced that no part of the said “Patent expenses” had in the said preceding years been allowed as a “revenue expenditure” in the hands of the assessee company, therein rework the entitlement of the assessee company towards deprecation on “Block of assets- Patent expenses” - Assessee ground allowed for statistical purposes.
Disallowance of deduction U/s 35(2AB) - entitlement of the assessee company as regards weighted deduction u/s 35(2AB) - HELD THAT:- As find ourselves to be in agreement with the Ld. A.R and are of the considered view that as the aforesaid expenses had been incurred by the assessee company on the scientific research pertaining to its business of manufacturing pharmaceutical formulations (not being expenditure in the nature of cost of any land or building) on in-house research and development facility approved by the prescribed authority, therefore the same in the absence of any fact which could go to prove that the said claim of expenditure by the assessee company on rent and repairs does not pertain to the R &D premises, or the professional and legal charges has no nexus with the scientific research of the assessee company, thus stands duly eligible for claim of weighted deduction u/s 35(2AB) of the “Act”. Thus in light of our aforesaid observations, the disallowance
Addition on account of bogus purchases - HELD THAT:- As submitted by the Ld. A.R that the purchases of ₹ 13,04,375/- (supra) made by the assessee company towards purchase of “fixed assets”, inadvertently had been capitalized under the head “Factory building”, in support of which contention the Ld. A.R has taken us through the relevant extracts of SAP placed on record, wherein the said transactions as claimed hereinabove, stood reflected. We have perused the facts of the case and the material furnished before us, and are of the considered opinion that the lower authorities had hushed through the matter and on the basis of premature findings therein made an addition of ₹ 13,04,375/-(supra) in the hands of the assessee company. Thus taking an overall view of the issue under consideration, we in all fairness herein restore the matter to the file of the A.O for verifying the aforesaid claim of the assessee company that the purchases under consideration had been capitalized under the head “factory building”, and in case if the said contention of the assessee company is found to be in order, therein direct the A.O to restrict the addition upto the amount of the corresponding depreciation so claimed on the said capitalized value.
Appeal of the assessee company is partly allowed.
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2016 (8) TMI 1524 - SUPREME COURT
Depreciation on toll road - whether ITAT was justified in deleting addition on account of depreciation on toll road ? - HELD THAT:- Leave granted.
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2016 (8) TMI 1523 - MADRAS HIGH COURT
Deduction u/s 80 IA - Unabsorbed depreciation of the earlier years before the first year or claim, which has already been absorbed, should not be notionally carried forward and taken into consideration for computation of deduction u/s.80 IA - HELD THAT:- Similar to the facts and circumstances of the case, while adverting to the substantial questions of law raised and after considering the judgment of the Hon'ble Apex Court in Liberty India vs. CIT [2009 (8) TMI 63 - SUPREME COURT] and the judgment of the Rajasthan High Court in CIT vs. Mewar Oil & General Mills Ltd. [2003 (10) TMI 12 - RAJASTHAN HIGH COURT], a Hon'ble Division Bench of this Court in Velayudhaswamy Spinning Mills Pvt. Ltd.'s case [2010 (3) TMI 860 - MADRAS HIGH COURT]held that once the losses and other deductions are set off against the income of the assessee in the previous year, it should not be re-opened again, for the purpose of computation of current year income, under Sections 80-I and 80-IA of the Act. Questions of law raised are answered against the Revenue and in favour of the assessee and the instant appeal deserves to be dismissed.
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2016 (8) TMI 1522 - ITAT JAIPUR
Disallowance of interest expenditure - assessee has not carried out any business activity and the payment of interest on the loan taken for paying of earlier loan is thus not for the purposes of business - HELD THAT:- AO has accepted that the loans old or new have been taken for the purpose of business. This fact has neither been denied nor contradicted anywhere in the assessment order. Since this is an established fact that the real estate business is always carried out on the basis of loans from various agencies and their utilization is exclusively to expand the business without in any way leading to the fact that any stoppage or a lull period would hamper the construction work. Even if, for argument sake, the findings of the Ld. AO are considered that there was no business due to stay order of the court, thus it cannot be said that the repair works, construction of passage and other allied and facility items did not continue during this period also as the stay order was purely for constructing new units and extension of the existing units.
It is proved that business of the assessee was not discontinued rather temporarily stayed under the order of the Hon’ble Court which has been revived now by vacation of stay with effect from settlement reached between parties.
The suspension or discontinuation of one of the activities of business out of several such activities does not disentitle the taxpayer from deduction of interest or other expenditure incidental to the business. All the business activities taken together constitutes the business undertaking as one and so long the same remains under the common management with common resource employment and common establishment and control it cannot be said that the business activity is separate and distinct. The appellant continued its business in the relevant assessment year and the business was neither closed nor discontinued nor it had ever ceased to be functional during the previous year relevant to the assessment year under appeal.
Thus we direct the AO to delete the disallowance of interest expenditure. Thus the appeal of the assessee is allowed.
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2016 (8) TMI 1521 - ITAT MUMBAI
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Assessee made certain investment with an object of acquiring controlling stake in a group concern and not for earning any income out of investment, Assessing Officer was not justified in invoking provisions of section 14A, read with Rule 8D in order to disallow a part of incidental dividend income earned on said investment.
Similarly in Rainy Investments Pvt. Ltd. [2013 (1) TMI 961 - ITAT MUMBAI] has held that share application money cannot be regarded as an investment in shares, or an asset yielding tax-free income, and neither is it capable of yielding any tax-free income, thus no disallowance can be made u/s 14A. In the present case as per the working of the average value of tax free investment under rule 8D submitted by the assessee, the assessee had made investment of ₹ 13,73,00,000/-. Assessing Officer should not have included the share application money while working out the average value of investment under Rule 8D. Therefore, the Ld. CIT(A) has rightly issued the direction to the A.O to exclude share application money of ₹ 13,73,00,000/- for the purpose of computation of disallowance of u/s 14A.
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2016 (8) TMI 1520 - CALCUTTA HIGH COURT
Prayer for direction to amend Clause 8 part 3 of the scheme by inserting a sentence “subject to compliance of the requirements of the provisions of Section 14 and Section 61 read with Section 64 of the Companies Act, 2013" - HELD THAT:- There is no Clause 8 in the scheme and it was an obvious mistake and accordingly the department was unable to carry out the amendment. The learned Counsel appearing on behalf of the Central Government submits that it should be Clause 4.12(b) and not Clause 8 Part III as wrongly mentioned in the affidavit of the Central Government. Under such circumstances, Clause 8 Part III of the scheme shall be read as Clause 4.12(b) of the scheme of amalgamation.
The department is directed to draw up the scheme as expeditiously as possible - Let it be recorded that this matter was disposed of by an order dated 9th February, 2016.
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2016 (8) TMI 1519 - ITAT MUMBAI
Reopening of assessment - Bogus purchases - information received from the office of the DDIT (Inv) Unit II-1, that the assessee had shown bogus/suspicious purchases from various vendors, who were listed in the web site of sales tax department as hawala dealers - CIT-A upheld the addition of 6% of alleged bogus purchases - HELD THAT:- We found that on the basis of information by the sales tax department regarding bogus suppliers and also keeping in view the reasons recorded by AO for reopening, we do not find any infirmity in the action of AO for reopening of the completed assessment.
Assessee being a trading concern merely sells purchased items at a small mark up to it’s purchases without any further processing. AO has not questioned sales made by the assessee. Most of the sales were made to a government entity. AO has not doubted sales undertaken by the assessee nor rejected books of accounts. However, no comparative chart was placed on record by assessee to substantiate the contention that assessee had earned same margin of profit out of sales of goods purchased from hawala dealers vis-a-vis other regular dealers.
Keeping in view the GP rate and net profit rate shown by the assessee in earlier years vis-a-vis profit rate generally shown by other assessee engaged in similar trade, and also keeping in view the advantage obtained by assessee through purchases from hawala dealer we modify the orders passed by lower authorities and restrict the addition to the extent of 3% of the alleged bogus purchases in place of 10% upheld by AO and 6% upheld by the CIT(A). - Decided partly in favour of assessee.
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2016 (8) TMI 1518 - ITAT CHENNAI
Validity of reopening of assessment - claim u/s.10B was disallowed - main contention of the ld.A.R that the reopening is invalid cannot be accepted because there was no scrutiny assessment earlier for this assessment year and also there is no failure on the part of the assessee to disclose the material facts - A.R pleaded that the re-opening of assessment is without jurisdiction and that fresh application of mind by the AO on similar facts would tantamount to review of own decision and that the amended section u/s.147 does not authorize it - HELD THAT:- AO had jurisdiction to issue notice u/s.148 for bringing to tax income escaping assessment in an intimation under sec.143(1)(a) on the ground that the claim of deduction by the assessee was not acceptable as the conditions for allowance not fulfilled. Failure to take steps u/s.143(3) of the Act will not render the AO powerless to initiate reassessment proceedings when intimation u/s.143(1) has been issued. Being so, we do not find any infirmity in the reopening of assessment for the A.Y. 2006-07. This ground of appeal of the assessee is dismissed.
Deduction u/s.10B - manufacturing activities under section 2(29BA) - as assessee has not discharged the onus of proving that the undertaking was set up without transferring any machinery used for any other purpose earlier Revenue has denied the deduction claimed u/s.10B - HELD THAT:- Assessee-company has not undertaken any manufacturing activity. The assessee has not manufactured any new article or thing distinct from the original raw material. The final product i.e., article or thing cannot be called by any other name than the original name. The assessee has purchased live crab and finally sold the crab in the form of meat. The assessee does only processing activity for the purpose of preservation and marketing the same. The assessee purchased crab from fishermen and sells to the public/customers. Whatever activity is undertaken by the assessee is for only to preserve the product. Whereas the contention of the ld.A.R is that at the time of purchase from the fishermen/agents, it was live crab and it was undergone various manufacturing activities before selling it for human consumption.
After purchase of the live crab it is processed by various treatments which are cleaning, grading, separating, laboratory testing, preserving treatment and packing and labeling. After these treatments, the crab becomes a consumable crab for human consumption. There is no change in the biological component of the crab. It is to be noted that the live crab would have been used in the same manner as the crab meat is used for human consumption. There is no change in the substance using in live crab or using it as by extracting it as meat from the same live crab. The crab meat is crab meat only - live crab would be used for human consumption as crab meat used for human consumption. In other words, input and output is same, which is crab only.
It is well settled law that process of standardization, preservation, grading cannot be treated as manufacture activity or production.
No merit in the argument of the ld.A.R that in earlier assessment year deduction u/s.10B was granted, even in the assessment year under consideration, the same view must be adopted - assessee can be allowed deduction, but the satisfaction of the conditions envisaged in the law could not be said that it was fulfilled merely because it was erroneously allowed deduction in the earlier years. It is a settled position that res judicata is not applicable in the administration of tax laws. No vested right can be held to be created in favour of the assessee merely because of allowance or deduction in the earlier years which is not legally entitled to. In view of the above, we upheld the order of Ld.CIT(A) on denying the deduction u/s.10B Similarly, alternate claim u/s.80IB(11A) of the Act has no merit.- Decided against assessee.
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2016 (8) TMI 1517 - ITAT DELHI
Bogus LTCG - A.O. following the information received from the DDIT (Inv,.) Unit VI(2), Delhi on the issue that the company had introduced share application money from the accommodation entry providers - CIT-A deleted the addition - HELD THAT:- No infirmity in this finding of the First Appellate Authority. AO has made the addition in question on the premise that, this amount of ₹ 35 lakhs was taken to accommodate book entries in the shape of share capital and whereas the actual fact is that these amounts were loans taken by the assessee company. Revenue’s appeal is dismissed.
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2016 (8) TMI 1516 - KERALA HIGH COURT
Benami Transactions - Prohibition of benami transactions - claim of a daughter for her legitimate share in the family property is being stoutly resisted by her brothers aided by their mother for the past about two decades - acquisition intended for the benefit of his wife - HELD THAT:- The presumption can be rebutted by proving that either Surya Narayana Iyer wanted to screen the property from creditors or that he wanted to escape from the land ceiling provisions. Nothing of that sort has even been suggested in evidence and we are totally in the dark as to what prompted Surya Narayana Iyer to purchase the property in the name of his wife. The attempt in evidence was only to show that the seventh defendant had no independent source of income to purchase the property by Exts.A3, A4 and A5 sale deeds. Evidence is let in to show that Surya Narayana Iyer was a Contractor by profession and a bus operator whereas the seventh defendant was only a home maker with no independent source of income. We hasten to add that the source of income to meet the sale consideration is irrelevant in the context of the presumption flowing under Section 3(2) of the Act. It is natural for a person to purchase the property in the name of his wife intended for her benefit which has gained statutory recognition under Section 3(2) of the Act.
The only reason stated by the court below to hold that Exts.A3, A4 and A5 sale deeds were not intended for the benefit of the seventh defendant is the enjoyment of income by others also
The mere fact that the husband was also taking income from the property covered by Exts.A3, A4 and A5 sale deeds does not conclude that the said acquisition was not intended for the benefit of his wife. It is normal for a husband to take the income from the property of his wife and vice versa and nothing more can be attributed to such course of conduct. The sharing of income is insufficient to rebut the statutory presumption which is heavily loaded in favour of the ostensible title holder. We have no hesitation to hold that item Nos.3, 4, 5 and 6 of the plaint 'A' schedule property belongs absolutely to the seventh defendant under Exts.A3, A4 and A5 sale deeds.
The preliminary decree for partition to the extent it declares that the plaintiff has 1/9 shares over item Nos.3, 4, 5 and 6 of the plaint 'A' schedule property is hereby set aside. The preliminary decree for partition in respect of item Nos.1 and 2 of the plaint 'A' schedule property and item Nos.1 to 3 of the plaint 'B' schedule property is confirmed. (No arguments were addressed before us as regards the correctness or otherwise of the decree granted in relation to the plaint 'B' schedule property).
Some of the parties including the seventh defendant have died pending Appeal Suit and their legal heirs have already been brought on record. The parties are at variance as to whether the seventh defendant has executed a registered Will dated 14.9.1994 bequeathing her property in favour of her sons. The genuineness of the Will can be considered in the final decree proceedings dependent on which the share of the seventh defendant can be allotted. The plaintiff will get 1/9 shares over item Nos.3, 4, 5 and 6 of the plaint 'A' schedule property only if the Will is disbelieved and otherwise her share is confined to the items mentioned above.
There is no necessity to pass a supplementary preliminary decree dependent on the finding on the Will as more than 19 years have elapsed since the filing of the suit for partition. It would suffice if the court below passes a composite supplementary preliminary decree and a final decree on a motion made by any of the parties to this Appeal Suit.
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