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2017 (1) TMI 1832
Validity of additions based on valuation report - Referring the matter to DVO without first rejecting the books of account - Whether ITAT erred in holding that the books of account has to be rejected before referring to the D.V.O. u/s 142A? - HELD THAT:- A similar question has already been decided by this Court against Revenue in M/s Sahyog Jan Kalyan Samiti, Kanpur) decided [2016 (9) TMI 1668 - ALLAHABAD HIGH COURT]following Supreme Court judgment in Sargam Cinema [2009 (10) TMI 569 - SC ORDER] wherein held Matter could not refer to the Departmental Valuation Officer without the books of account being rejected. Decided in favour of assessee.
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2017 (1) TMI 1831
Revision u/s 263 - CIT found Default in assessment completed u/s 153A - CIT directed the Assessing Officer to pass fresh assessment order as it is clear negligence of the AO ignoring the material document found and seized, which become the base for invoking the provisions of section 263 - HELD THAT:- As relied on by assessee in the case of Shri V.R. Venkatachalam v. ACIT (2015 (7) TMI 736 - ITAT CHENNAI), it was a fact that the AO proposed that the assessment completed u/s 153A be revised u/s 263 as the AO could not examine the issues due to paucity of time. After invoking of jurisdiction u/s 263 CIT directed the AO to pass fresh assessment order which was completed under section 153A r.w.s. 143(3) of the Act though there was no incriminating materials found during the course of search under section 132 of the Act. Therefore, after considering the entire facts of the case, and when the ld. CIT himself agreed that findings for assessment year 2006-07 having cascading effect on the subsequent assessment years i.e., from 2007-08 to 2012-13, the Tribunal annulled the orders passed u/s 263 of the Act and allowed the appeals of the assessee.
The above case relied on by the ld. Counsel for the assessee has no application to the facts of the present case because, in the present case, the ld. PCIT has independently, on verification of assessment records found that the information contained in the seized document which was seized during the course of search under section 132 of the Act has been omitted by the Assessing Officer while framing the assessment under section 143(3) r.w.s. 153A of the Act dated 15.03.2014.
Thus PCIT has rightly invoked the provisions of section 263 of the Act and directed the Assessing Officer to redo the assessment. We find no infirmity in the order passed by the ld. PCIT and accordingly, the ground raised by the assessee is dismissed.
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2017 (1) TMI 1830
Deduction u/s. 80IA - Assessee company a developer OR contractor - As argued assessee company has not made an agreement with Central or State Government, local authorities or any other statutory body for the purpose of developing infrastructure facility as required under the law and relied on the CBDT circular no. 717 issued in August, 1995, and came to a conclusion that due to financial, managerial hardship of the Government by applying commercial principles in operation of infrastructure facilities for massive expansion and qualitative improvement in infrastructure of the company - HELD THAT:- AO main contention that the assessee is only the contractor and not a developer but the person who develops the infrastructure facilities pursuant to contract with the State Government shall be considered as developer. We found the co-ordinate bench decision of East Coast Constructions [2011 (9) TMI 1091 - ITAT CHENNAI] and BT Patil [2013 (11) TMI 197 - ITAT PUNE] and Om Metal Infra Projects (2008 (12) TMI 744 - ITAT JAIPUR) and ABG Heavy Industries Ltd. [2010 (2) TMI 108 - BOMBAY HIGH COURT] has considered similar activities performed by the assessee company is developing infrastructure i.e., conceptualization of designs, Level of investment should be considered to be called as developer.
We found that the assessee company undertakes the entire responsibility from concept to Commissioning of developing the entire facility. Based on customer specifications, conceives the designs and technical plans, chooses the technology required for treatment of the effluents and executes the project through a skilled team of more than 250 - 300 engineers. The work performed includes the basic design of the plant, detailed engineering, procurement of equipment and components, delivery of supplies at site, civil construction of the structure, installation of equipment at site, interfacing through piping and cables, testing and commissioning and subsequent O&M.
Thus assessee has demonstrated the investments of the company in project from the assessment year 200-03 to 2007-08 consisting of Receivables, margin money with the bank, and Bank guarantees for performance guarantee. These financial aspects prove that the assessee company has funded finances in infrastructure and execution of projects. We are of the opinion that the assessee has complied the conditions u/s. 80IA(4) of the Act and demonstrated the funding of the projects with financial statements. Decided in favour of assessee.
Forex exchange loss - Whether foreign currency is held as a capital asset or as fixed capital such profit or loss would be of capital nature? - HELD THAT:- We find the loss due to forex exchange difference as on the date of balance sheet is expenditure falls u/s. 37(1) of the Act. The outstanding liability relating to the import of raw material based on closing rate of foreign exchange and if any difference by loss or gain arising on conversion liability should be routed through profit and loss account. Hence, we do not find any infirmity in the order of the CIT(A) and upheld the same and dismiss the ground of the Revenue. In the result, the Revenue appeal is dismissed.
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2017 (1) TMI 1829
Interference with the process issued against the accused Respondents on the private complaint filed by the wife of the deceased Bapu Nivrutti Gund - Probity of evidence - HELD THAT:- The High Court in the impugned judgment seems to have embarked on a virtual trial of the case though it was entertaining an application Under Section 482 Code of Criminal Procedure/Article 227 of the Constitution of India for quashing of the order taking cognizance and the complaint as a whole. The probity of the evidence tendered by the complainant's witnesses prior to issuance of process was even gone into by the High Court.
Having regard to the settled principles of law, the approach of the High Court not considered to be correct in law. At the stage at which the case was poised for consideration, it was beyond the jurisdiction of the High Court to have embarked upon the exercise that was undertaken. As the same appears to be in clear excess of jurisdiction, the order of the High Court is set aside and it is directed that the complaint proceedings against the accused Respondents be continued from the stage where the same was interdicted.
The order of High Court set aside - appeal allowed.
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2017 (1) TMI 1828
Applicability of provisions of Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act, 2013 - land is acquired under the provisions of KIAD Act - HELD THAT:- The entire move on the part of the Appellants was bonafide one, though there was an accidental slip on their part that insofar as Respondents are concerned, no consent to the amount of compensation fixed was given by them. It appears that the Appellants-authorities did not proceed further to determine the compensation in respect of Respondents' land as they nurtured a bonafide belief that with the fixation of compensation as per the Minutes dated 9th September, 2005 all the land owners, including the Respondents, had agreed with the same and, therefore, no further exercise was required. Had the Appellants-authorities been more careful, they would have noticed that insofar as Respondents herein are concerned, they are not the consenting parties. In that event, they could have brought them on board with other land owners by taking their specific consent as well or proceeded further Under Section 29(3) of the KIAD Act.
Taking these factors into consideration, the learned Single Judge vide his judgment dated 9th November, 2012 permitted the Appellants to proceed on the basis of the Gazette notification dated 15th June, 2005 acquiring the land and determine the compensation by making an award in this behalf. By this process, Appellants were allowed to proceed afresh to determine the compensation Under Section 29(2) of the KIAD Act by reaching an agreement with the Respondents, and failing which to refer the case to the Deputy Commissioner Under Section 29(2) for determination of the amount of compensation. The learned Single Judge, by adopting this course of action, specifically rejected the contention of the Respondents herein to quash the proceedings.
The Division Bench of the High Court by the impugned judgment, however, has quashed the acquisition proceedings itself holding that they have lapsed. For this purpose, the High Court has taken aid of Section 24 of the New LA Act - This approach of the High Court is found to be totally erroneous. In the first instance, matter is not properly appreciated by ignoring the important aspects mentioned in para 24 above. Secondly, effect of non-applicability of Section 11A of the Old LA Act is not rightly understood.
Having regard to the aforesaid raison d'etre for non-application of the Old LA Act, on the parity of reasoning, provision of Section 24(2) of the New LA Act making Section 11A of the Old LA Act would, obviously, be not applicable.
The view taken by the learned Single Judge was correct in law which should not have been interfered with by the Division Bench in the impugned judgment. It is significant to state that insofar as direction of the Single Judge is concerned that was accepted by the Appellants herein, as the Appellants did not challenge the same. It is the Respondents which had filed the intra court appeal. Thus, Appellants by their aforesaid conduct, are satisfied with the order of the learned Single Judge in directing them to determine the compensation.
The direction passed by the Single Judge with a direction to the Appellants authorities to fix the compensation in accordance with the provisions of Section 29 of the KIAD Act, restored - appeal allowed.
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2017 (1) TMI 1827
Maintainability of appeal against an interlocutory order - Whether the proviso to Section 2(1) of the Act, 2006 is an absolute bar to entertain an appeal against an interlocutory order without considering the scope of the order and without considering whether the interlocutory order has decided the rights of the parties and has an element of finality attached to it? - HELD THAT:- Even an interlocutory order may be final in certain respects. In Madhu Limaye [1977 (10) TMI 111 - SUPREME COURT], the Apex Court held that it is neither advisable nor possible to make a catalogue of orders to demonstrate which kinds of orders would be merely, purely or simply interlocutory and which kinds of orders would be final. However, examples are given of one or two orders which may be interim in nature and do not bring the entire proceedings to a closure but decide matters of moment and have an element of finality attached to them. A writ Court, by way of interim relief may grant admission to the petitioner in a medical college. This order virtually amounts to allowing the writ petition and could be termed as an order having an element of finality attached to it. On the other hand, the order refusing to grant interim relief would be an interlocutory order - Another example would be where an order of demolition is challenged in a writ petition in which demolition is to take place in a day or two. If the writ Court does not grant an order of stay, the said petition would virtually become infructuous. This order can also be termed to have an element of finality attached to it.
The proviso to Section 2(1) of the Chhattisgarh High Court (Appeal to Division Bench) Act, 2006 bars appeals against those interim orders which are totally interlocutory in nature, do not decide matters of moment and do not have an element of finality attached to them. Conversely, if the order vitally affects rights of the parties having bearing on the final adjudication of the case, then even though the order is interim, it cannot be termed as interlocutory order and an appeal would lie. An appeal would also lie against those orders which cannot be undone at the time of final hearing and which have an element of finality attached to them. The orders, effect of which cannot be undone at the time of final hearing, cannot be termed to be interlocutory orders and in such eventuality, an appeal would lie against such orders.
Appeal disposed off.
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2017 (1) TMI 1826
As assessee seeks to withdraw the present appeal. The department has no objection. Consequently, the present appeal is dismissed as withdrawn.
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2017 (1) TMI 1825
TP Adjustment - selection of MAM - whether CIT(A) erred in by deleting the entire addition on account of transfer pricing by without going to merits of case and facts and ignored the TPO’s contention submitted through remand report and the directions of Hon’ble ITAT that the Arms Length price of international transactions of the appellant should be determined at entity level by following TNM method? - HELD THAT:- When this appeal came up for hearing, learned representatives fairly agreed that this appeal is ill-conceived inasmuch as the impugned order only gives effect to the Tribunal’s order which is already in appeal before the Hon’ble High Court. The grievance before us is thus clearly misplaced. Appeal dismissed.
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2017 (1) TMI 1824
Classification of services - Business Auxiliary Services or Courier Service? - consideration received by the appellant for co-loading service for business associates/franchise in connection with delivery of consignments - HELD THAT:- The findings of the Original Authority regarding tax liability of the appellant under Business Auxiliary Services, is devoid of any legal merit. He mentioned the clarification dated 31.10.1996 is for Courier Services. Business Auxiliary Services was brought to tax net thereafter only and hence, the appellants are liable to tax.
The Original Authority failed in giving reasons as to what type of service has been rendered by the appellant to service recipient on behalf of the client. As per the details available and the submissions made by the appellant, it is clear that appellants have arrangements with other Courier Agencies to help them out in transport and delivery of articles, goods etc. The appellant is not dealing with any customer directly and receiving any consideration from the customer. In fact, the arrangement between the appellants and other Courier Agencies is two party arrangements with no role for the customer in such arrangement.
There are no merit in the impugned order and accordingly same is set aside - appeal allowed.
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2017 (1) TMI 1823
Estimation of income - bogus/unverifiable purchases - rejection of books of accounts - HELD THAT:- AO had applied 25% gross profit rate on unverified purchases which has been confirmed by the ld. CIT(A) which was the subject matter of appeal before the Coordinate Bench who has set aside the issue relating to estimation of profits and restored the matter back to the file of the AO to decide the same afresh.
From the perusal of records, it is also noted that the provisions of Section 153(2A) of the Act were not brought to the notice of this Tribunal. We accordingly recall the order passed by the Coordinate Bench of this Tribunal [2015 (5) TMI 1253 - ITAT JAIPUR] and direct the Registry to fix the matter for fresh hearing in due course.
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2017 (1) TMI 1822
Nature of loss - Foreign Fluctuation loss - contracts which remained unsettled and unexpired till the end of the relevant Financial Year - notional loss OR actual loss - AO treated it as notional loss and not actual loss on the ground that forward contract in respect of impugned loss were outstanding as on 31/03/2009 and remained unsettled and therefore loss was not crystallized as on 31/03/2009 - CIT(A) accepted the claim of the assessee - HELD THAT:- No error in the conclusion by CIT(A) as placing the reliance upon the decision of CIT vs. Woodward Governor India (P) Ltd. [2007 (4) TMI 118 - DELHI HIGH COURT] which clinches the issue.
Gains on the similar transactions were returned in the earlier AY 2007-08 which has been merrily accepted by the Revenue. Therefore, the Department ought not to have taken a different stand in similar circumstances in the subsequent year.
While “mark to market” (MTM) refers to losses computed as on a particular date with reference to prevailing Exchange rates in respect of contracts that have not matured and are open contracts, such loss are required to be taken cognizance of. We concur with the view of the CIT(A) that the loss incurred is a real loss and not mere a notional loss of provisional nature. In the ultimate analysis there is no revenue effect and only concerns the timing of taxation of loss/profit. Accordingly, we decline to interfere with the order of the CIT(A).
Addition of interest expenses - advance to certain parties for raw-material - as per AO business expediency for such advances have not been established and treated the advance given by the assessee as non-business purpose and invoked the provisions of section 36(1)(iii) - CIT(A) deleted the addition - HELD THAT:- We do not find any infirmity in the action of the CIT(A) in deleting the disallowance of interest. With the assistance of the Ld.AR, we note that the interest-free own funds is far more in excess vis-à-vis interest-free advance. In these facts, it is difficult to draw presumption adverse to the assessee. We therefore decline to interfere with the order of the CIT(A) in respect of ground No.2 as well. Accordingly, the appeal of the Revenue is dismissed.
Delayed Employees’ Contribution to PF/ESIC - CIT(A) allowed claim of assessee - HELD THAT:- We take a note of the fact that the payment on account of Employees’ Contribution to PF has been actually made before the due date of filing of the albeit with some delay. CIT(A) after taking note of the legislative amendment and judicial pronouncements on the issue accepted the plea of the assessee and reversed the disallowance made by the AO correctly. Decided in favour of assessee.
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2017 (1) TMI 1821
Calling for entire record of the case - Counsel for the petitioner has contended that this contention has been raised at final stage which is not permissible - HELD THAT:- Taking into consideration the decision of Delhi High Court in the case of UNION OF INDIA THROUGH COMMISSIONER CENTRAL EXCISE COMMISSIONERATE DELHI-II VERSUS M/S. IND METAL EXTRUSIONS PVT. LTD. & ANR. [2013 (1) TMI 225 - DELHI HIGH COURT], it is opined that the view taken by Delhi High Court is required to be accepted and the same is accepted.
The writ petition is dismissed only on preliminary ground.
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2017 (1) TMI 1820
Penalty u/s. 271D and u/s. 271E - assessee company has taken loan in cash on different dates & repaid the same in cash in contravention of section 269SS & 269T - HELD THAT:- We find that the assessee has taken diverse stands at different points of time. In the assessment proceedings, initially the assessee stated that no cash payment has been received. In the penalty proceedings, it was stated that cash payment was received as share application money and was repaid to Loan creditors on rejection of the offer by the Board of Directors. The appellant could not bring any evidence on record to support his claim regarding the amount received from Loan creditors towards share application money and the rejection of the share capital allotment by the Board.
The appellant has also failed to rebut the finding of the authorities below that once, both the depositors were the directors of assessee company, there was no reason to believe that the proposed offer of share capital allotment was withdrawn, for which no evidence is laid on record. The assessee also could not adduce any evidence before us to support its stand that the amount so received from Loan creditors was repaid by way of cheques or the amounts received was mentioned twice by the AO. The cash book submitted was not found authentic, as it was an extract typed on A-4 size paper as mentioned by the CIT(A) in the impugned order.
Thus no justification to interfere with the conclusions of the ld. Authorities below that the appellant has taken loan in contravention of section 269SS and has repaid the same in contravention of section 269T of the Act entailing penalty u/s. 271D and 271E - Decided against assessee.
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2017 (1) TMI 1819
Income taxable in India - income on account of providing corporate guarantee - India and France DTAA - assessee is non-resident company, having two subsidiaries, in India - HELD THAT:- The Tribunal in order [2016 (3) TMI 1096 - ITAT MUMBAI] found that guarantee commission, received by France Company neither accrued in India nor deemed to be accrued in India, therefore, not taxable in India under the Income Tax Act. Furthermore, as per Article-23.3, income can be taxed in India only if arises in India and since, in the instant case, the income arose in France, as the guarantee was given by the assessee, a French company to BNP Paribas, a French Bank, in France, therefore, Article-23.3 has no applicability as income arose out of India. Respectfully, following the decisions of the Tribunal, these grounds of the assessee are allowed.
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2017 (1) TMI 1818
Disallowance u/s 14A r.w.r. 8D - CIT(A) deleted the expenditure on account of interest because the assessee received the interest free fund from India Value Fund - HELD THAT:- CIT(A) has applied the provision of section 14A r.w.r. 8D (111) @ 0.5% on the basis of the finding of the Godrej & Boyce Mfg. Co. Ltd. [2010 (8) TMI 77 - BOMBAY HIGH COURT] on account of administrative and managerial expenses to the tune of Rs.63,250/-. No illegality and infirmity has been seen in the finding of the CIT(A) in question. CIT(A) has passed the order on this issue judiciously and correctly which is not require to be interfere with at this appellate stage. Hence this issue is decided in favour of assessee against the revenue.
Capital receipt - Compensation receipt on termination of contract - AO disallowed the said compensation paid for ASTA and RCA treating the same as capital expenditure within the meaning of section 28(va) - HELD THAT:- CIT(A) has dealt both the transactions separately. The first transaction was in connection with the payment on account of termination of agreement with SIPL. The Assessing Officer dealt the said transaction as capital in nature. The appellant entered into an agreement with SIPL for procuring advertisement from clients. Dispute arose, therefore, the said agreement was terminated in view of the termination. The appellant company paid an amount as compensation. It is to be decided what should be nature of this kind of payments. The CIT(A) dealt the matter in view of the law settled in CIT Vs. Glaxo Laboratories India P. Ltd. [1977 (11) TMI 34 - BOMBAY High Court] wherein such type of transaction was held to be business expenditure. The assessee also relied upon the law settled in J & S (P) Limited [1984 (5) TMI 40 - DELHI HIGH COURT] and Empire Jute Co. Ltd. [1980 (5) TMI 1 - SUPREME COURT] and Alembic Chemical Works [1989 (3) TMI 5 - SUPREME COURT] No authority contrary to the said law has been produced before us. The factual position is quite same which has been dealt by the CIT(A) in question. No doubt in the said circumstances, we are of the view that the CIT(A) has decided the matter judiciously and correctly on this point.
Coming to the transaction in connection with the payment on account of non competing the business of the appellant for another 2½ years - This controversy has also been adjudicated by the CIT(A) on the basis of the finding in case of Guffin Chem P. Ltd. [2011 (3) TMI 6 - SUPREME COURT] The relevant para has been produced above while enumerating the finding of the CIT(A) in which this type of transaction has been dealt as capital receipt. Depreciation has rightly allowed accordingly. We are of the view that the said transaction has also been dealt by the CIT(A) in accordance with law specifically in view of the circumstances when no distinguishable facts and law have been produced before us.
Nature of expenses - treatment of computer software license fees - revenue or capital expenditure - HELD THAT:- It is not in dispute that the revenue has already dealt this issue while deciding the matter in the A.Y.2009-10 in which the said transaction has been treated as revenue expenditure. On the basis of the said decision, the present issue has been decided by the CIT(A) in favour of the assessee in the present A.Y. i.e. 2008-09. Nothing came into the notice that the finding of the CIT(A) for the A.Y.2009-10 on this issue is under challenged or not. - Decided in favour of assessee.
Nature of receipts - interest income - Business income or income from other sources - HELD THAT:- This issue was also there in appellant’s case in A.Y.2007-08 wherein the undersigned held that the interest income earned on FDs made with the bank as margin money for obtaining bank guarantee, etc. was assessable under the head business income. Following the appeal order of A.Y.2007-08, the A.O. is directed to assess the interest income under the head business income.
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2017 (1) TMI 1817
Demand of Differential duty - 100% EOU - clearances to the DTA without authorization - benefit of concessional rate of duty @ 50% under Notification No. 23/2003 denied - HELD THAT:- At the time of clearance of the scrap in DTA the SION norms were not available to the appellants. However, the same has since been fixed by the DGFT vide their letter dated 23.2.2009. The concessional rate of duty @ of 30% envisaged under Notification no. 23/2003 dated 31.3.2003 is available in cases where such scrap has been allowed to be cleared in DTA. The differential duty has been demanded for different periods by Revenue by taking that view that since no norms were available at the time of clearance of the scrap, the same are to be considered as cleared without authorization and hence not entitled to the benefit of the notification. Since the input output norms have since been fixed by the DGFT the benefit of concessional rate for the scrap will be available to the appellants.
It is considered necessary to remand the matter to the original adjudicating authority for verifying the calculation of the quantum of scrap cleared by the appellants during various periods covered under the present appeals - appeal allowed by way of remand.
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2017 (1) TMI 1816
Income taxable in India - bonus payments Pertaining to services rendered in China - tax paid in a Contracting State - methods of elimination of Double taxation u/a 23 - assessee held dual employment one with the original employer at the home country and another with the economic employer at the host entity and accordingly divided the salary compensation in two parts - AO disallowed a portion of the bonus attributing it as compensation for exercising his employment in the home country - DR submitted that the assessee not entitled for benefit of under article 15(1) since the assessee is a non resident and as per Article 23 of the DTAA between India and China allows exemption only to a resident of India - HELD THAT:- As decided in Shri Swaminathan Ravichandran [2016 (8) TMI 1498 - ITAT CHENNAI] in view of the specific condition under Article 23 of the India- China DTAA, the assessee is not eligible to claim relief under article 15(1) since the assessee is non-resident and as per Article 23 of DTAA between India and China allows exemption only to a resident Indian. Under the above facts and circumstances, the assessee is not eligible to claim exemption under section 5(2) of the Income Tax Act .
Thus we are inclined to hold that the assessee is not entitled for exemption under Article 15(1) of the Double Taxation Avoidance Agreement (DTAA) between India and China - Ground raised by the assessee is dismissed.
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2017 (1) TMI 1815
TP Adjustment - sub-contracting cost paid to A.Es - whether should form part of the operating cost of the assessee for determining the arm's length price? - HELD THAT:- DRP in case of assessee’s A.E. (TOIVL) for assessment year 2011-12 and Transfer Pricing Officer’s order in assessee’s case for assessment year 2012- 13, there cannot be any manner of doubt in coming to the conclusion that the sub-contract payment made by the assessee to its A.E. was merely in the nature of pass through cost as the assessee has passed on the work of off-shore drilling operation to its A.Es on back-to-back basis and it has acted merely as an intermediary in obtaining the contract and passing on the same to the A.E. and for which it has been remunerated on cost plus mark-up basis by the A.E.
We hold that sub-contract payment cannot be considered as part of the operating cost of the assessee for determining the arm's length price. Accordingly, we direct the AO to determine the arm's length price of the international transaction relating to the provision of Support service by the assessee to its A.E. after excluding the sub-contracting cost paid to A.E. from its cost base.
In the course of hearing as well as in the written submission, it was submitted by the learned Authorised Representative if the sub-contract cost paid to the A.E. is not included in the cost base, the margin of the assessee would be higher than the margin of comparables considered by the Transfer Pricing Officer himself. Hence, the issue relating to comparables need not be gone into. As we have accepted assessee’s claim in relation to non-inclusion of sub-contract cost paid to the A.E. in the cost base of the assessee, the other issues relating to comparability analysis having become academic in nature, we do not intend to adjudicate them.
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2017 (1) TMI 1814
Benami Transactions - absolute and exclusive owner of the suit property - suit filed by the Plaintiff to declare that the plaintiff is the absolute and exclusive owner of the suit property and for consequential relief for permanent injunction restraining the defendants, their men, agents and servants in any way interfering with the plaintiff's peaceful possession and enjoyment of the suit property and for costs.
FACTs:- The Plaintiff married one Yasodha as his first wife, she died in the year 1979. Thereafter, he married one Vijayalakshmi and Subsequently divorced her in the year 1985. After divorce the first defendant joined with the plaintiff in the year 1986 and they lived jointly as husband and wife. Two sons namely Kalaiarasan and Thellamuthan were born to them. The Plaintiff was a retired Government Servant. Since he was working at the time of purchase of the suit properties, he purchased the same in the name of the first defendant under the Sale Deeds dated 9.11.1994 and 24.10.1994. The properties were purchased in the name of the first defendant for the sentimental reasons
HELD THAT:- Relationship between the parties are admitted. The first defendant is the third wife of the plaintiff. Admittedly the title deeds for the suit properties stands in the name of the first defendant. According to the plaintiff, he had purchased the property in the name of the first defendant. On the other hand, in the Written Statement, it has been alleged that the first defendant purchased the properties out of her own funds, she borrowed money from her parents and sisters. Now the plaintiff filed the suit for declaration of title contrary to the documents of title. So the entire burden is upon the plaintiff to prove that he had purchased the property in the name of the plaintiff. Purchasing the property in the name of the wife and daughter is not covered under the Benami Transaction Prohibition Act. However even in the plaint the plaintiff was reluctant to describe that the first defendant as his wife. Whatever it is the burden is upon the plaintiff to prove his case.
order to prove that the property was purchased by him, he has chosen to file original title deeds Ex.A1 relating to suit Item No.1. The plaintiff is none other than the husband of the first defendant. In the said circumstances, mere possession of document with the husband does not create any inference about the title of the property.
Considering that portion of the evidence and in the absence of any documents to show the receipt of money from her parents, this Court has no option except to hold that the first defendant had no sufficient source to purchase the property. Considering the contribution of the plaintiff to purchase the property Ex.A14 passbook was filed by the plaintiff, on the date of Ex A3 24.10.1994 a sum of Rs 27,000 was withdrawn from the plaintiff's savings account through the witness in EX A3 namely Anbumani. Considering all those circumstances this Court finds there are chances of purchasing the property by the plaintiff in the name of the first defendant.
In this case, the plaintiff as well as the defendant executed Mortgage deed and sale deed in order to settle the score between them . The mortgage deeds executed by the plaintiff infavour of some third parties are without any right to execute such mortgage. The sale deed executed in favour of D2 is hit by Lis pendens.
Further, with reference to cause of action, there is no evidence to show that the defendants are tried to disturb the possession of the plaintiff.
Additional issue - Whether the second defendant is the bona fide purchaser for the value? - During the pendency of the suit, the DW2 viz the second defendant has purchased the property Item No.1 on 15.5.2013. This suit was pending from the year 2009. When the suit is pending, there is no question of bonafide purchaser for value. It is clearly hit by lis pendens. She had purchased the property without the original title deed. That itself would create doubt on the second defendant's bonafide. Getting sale deed without perusing the original sale deed which is in possession of the plaintiff and filed in to the Court itself shows that the second defendant is not a bonafide purchaser. Hence this Court answers this Additional Issue against the second defendant.
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2017 (1) TMI 1813
Unrecorded and unexplained transactions - Addition made on the basis of seized loose papers - treatment ot voluntary disclosure made u/s 132(4) - HELD THAT:- When entire entries of seized documents are to be considered, it cannot be taken in part or peace-meal and whole document should be considered as a whole. We find that the seized material, documents were found during the course of search, therefore, the entries recorded thereon whether it is a receipt or expenditure, has to be accepted as genuine.
Therefore, for taxing, the real income is required to be taxed and not the receipts when document contains receipts and expenditure. Therefore, peak of the debit and credit entries of the seized documents is to be considered and set off of carried forward, disclosure or income being taxed either being accounted or unaccounted income is to be allowed. Therefore, to this extent, we find that the findings given by the ld. CIT(A) is justified.
We find support from case of Tirupati Construction [2015 (8) TMI 83 - ITAT AHMEDABAD] relied upon by assessee, wherein it was held that only peak of debit and credit entries of the seized papers/diaries could be assessed in the hands of the assessee and there was no justification for adding the entire receipts side of the seized papers and, accordingly, there is no merit in the grounds of appeal of the Revenue with regard to this issue and, accordingly, dismissed. In the light of these facts, all the grounds of the Revenue are treated as dismissed for all the assessment years under appeal.
Net profit estimation - Taking highest of the adjusted NP ratio - HELD THAT:- CIT(A) has applied uniform net profit rate of 5% for all the assessment years under appeal, which, in our view, is not correct approach as each assessment year is a separate assessment year and net profit rate of the same can be varied for assessment year to assessment year.
We note that net profit ratio @ 5% for adjusted profit and loss account for each of the assessment year cannot be applied while considering net profit rate of on unaccounted sales and expenses resulting into unaccounted transaction. Therefore, the net profit rate for the relevant assessment years under appeal as worked out by the ld. CIT(A) after analyzing transaction from each year would be most appropriate to apply for working out net profit on account of unaccounted sales for the respective assessment years. Therefore, we are of the considered opinion that adjusted net profit rate pertaining to concerned assessment years as worked out by the ld. CIT(A) for each assessment year under appeal would be reasonable to apply while calculating unrecorded profit. Accordingly, the sustainable addition would be worked out after allowing the peak, set off of brought forward balances as allowed by the ld. CIT(A). Directions to compute adjusted net profit ratio.
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