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2014 (11) TMI 1285 - RAJASTHAN HIGH COURT
Penalty u/s 271B - audit report u/s 44AB has been filed after sufficient long time - transfer of cases from Bharatpur to Jaipur - as argued jurisdiction over the case was with the IT Department, Bharatpur and unilaterally it was transferred to the office of the Dy. CIT, Central Circle-2, Jaipur and before passing of the order neither the assessee received any intimation nor any notice from the office of the authority so as to come to the conclusion that the jurisdiction over the case stood shifted/transferred
HELD THAT:- It would be appropriate to deal with the submission of the counsel that the AO at Bharatpur on account of change of jurisdiction did not accept the return of income or the audit report when presented immediately after completion of the audit of accounts as well as return of income but what was contended, no tangible evidence or material either in the shape of an affidavit or otherwise of the person who claimed that he had presented the return of income along with audit report before the AO at Bharatpur was placed or refusal by the officer at Bharatpur. In our view, mere justification as alleged without any supporting evidence, is no explanation and the Tribunal had rightly rejected the same.
Turnover as per audit report and the turnover as noticed by the AO in the penalty order is not supported with cogent material on record. This discrepancy, when noticed, was expressed to the counsel for the assessee on the earlier date of hearing and specifically observed in the order-sheet of 13th Feb., 2014 but even after lapse of about 8 months on the date of final hearing, counsel for the assessee was unable to clarify the correct figures or the discrepancy noticed. However, ultimately insofar as imposition of penalty is concerned, the Act provides that it is minimum to the extent of Rs. 1 lac which ultimately has been imposed by the AO and sustained by the Tribunal.
Though the assessee has tried to challenge that there was no information about transfer of cases from Bharatpur to Jaipur and S. 127 provides that notice is required to be served to the assessee but it can safely be observed that the assessee neither challenged the transfer of cases from Bharatpur to Jaipur office nor raised issue of jurisdiction at the time of transfer of cases rather the assessee submitted to the jurisdiction of the Dy. CIT, Central Circle-2, Jaipur and not only filed the return of Income but the audit report also, though belatedly and appeared regularly before the Dy. CIT, Central Circle-2, Jaipur in the regular assessment proceedings and submitted to its jurisdiction without even uttering a word assailing the same before any authority.
The Kerala High Court in the case of K. Ravindranathan Nair [2008 (3) TMI 412 - KERALA HIGH COURT] has held that if there is an acceptable explanation, then penalty could have been avoided whereas in the absence of any evidence adduced by the appellant at least before the Tribunal, the minimum penalty imposed under S. 271B for admitted delay for filing audit report was upheld.
Thus Tribunal has rightly sustained the penalty u/s 271B - Decided in favour of revenue.
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2014 (11) TMI 1284 - BOMBAY HIGH COURT
Valid and legal execution of will or not - Defendants Nos. 1 and 2 have caveatable interests in the estate of the deceased or not? - entitlement to oppose the grant of probate in view of having received and accepted the bequest under the will dated 21st August, 1997 - Will was executed by exercising undue influence or not?
Whether the Petitioner has proved that the will dated 21st August, 1997 was legally and validly executed? - Whether Defendants Nos. 1 and 2 have caveatable interests in the estate of the deceased? - Whether the Defendant Nos. 1 and 2 are entitled to oppose the grant of probate in view of their having received and accepted the bequest under the will dated 21st August, 1997? - HELD THAT:- It is a well-settled principle that a person who accepts a benefit under an instrument must accept it in its entirety. He cannot accept the benefit and repudiate its other provisions - His acceptance of the benefit is a renunciation of every right inconsistent with the provisions of that instrument. This is a rule based on the well-known principle of approbation and reprobation. No one may affirm and disaffirm the same transaction, i.e., affirming it to the extent of the benefit received and disavowing it to the extent that it prejudices.
The Defendants have accepted benefits under Vivien’s will. Under Section 187 and 188, the Defendants have made their election; and, in any case, their right to elect and their waiver of the inquiry into the circumstances attendant to that election must now be presumed and held against them. These are specific legacies (the jewellery and the bequest of Rs.2 lakhs to their son), ones to which they had no entitlement on intestacy. Their own entitlement was under the Will itself, and only under the Will. The Defendants, by their own actions, accepted and are bound by the terms of the Will. They cannot simultaneously repudiate it. In addition, there is also the express acceptance of it under the writing Ex.P-5.
An attesting witness, PW2, has deposed to it, as has the Petitioner, who identified Vivien’s signature. The challenge to the will fails.
Whether the Defendants prove that the Will was executed by exercising undue influence? - HELD THAT:- No question arises of the Defendants having proved any undue influence; their challenge to the will is obliterated by their acceptance of legacies under it. The entire defence is fruitless and impermissible.
The suit succeeds, and is decreed.
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2014 (11) TMI 1283 - ITAT MUMBAI
Delay in filling appeal late by 11 days - Disallowance on account of interest expenses - HELD THAT:- In our considered opinion, the assessee does not stand to benefit by lodging an appeal late and when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. We, accordingly condone the delay for both the years.
A careful perusal of the order of the Ld. CIT(A) shows that he has followed the decision in the case of Hitesh S. Mehta [2013 (10) TMI 1065 - ITAT MUMBAI] son of the assessee for A.Y. 2005-06In the case of Hitesh S. Mehta, we find that the Tribunal has restored this issue to the file of the Ld. CIT(A) to adjudicate afresh along with the adjudication of the other ground pertaining to the rejection/reliability of the books of account. Since the Ld. CIT(A) has followed his own decision in the case of Hitesh S. Mehta, respectfully following the findings of the Tribunal in the case of Hitesh S. Mehta as mentioned hereinabove, the issue is restored to the file of the Ld. CIT(A) to be decided afresh in the line of the directions given in the case of Hitesh S. Mehta. Appeals filed by the assessee is treated as partly allowed for statistical purpose.
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2014 (11) TMI 1282 - SUPREME COURT
Cheating - dishonest preparation of an agreement for sale of her lands - HELD THAT:- The order of the High Court is not in accordance with law and in the facts of the case no interference should have been made with the investigation by the Police by quashing the FIR.
The High Court was not justified in interfering with the Police investigation and quashing the FIR. This is not at all a rare case. Without thorough investigation, it is not possible or proper to hold whether allegations made by the complainant are true or not. Hence the investigation should, have been allowed to continue so that on filing of the report Under Section 173 Code of Criminal Procedure the affected party could pursue its remedy against the report in accordance with law. Keeping in view the fact that the criminal case was at the stage of investigation by the Police the High Court was not justified in holding that the investigation of the impugned FIR is totally unwarranted and that the same would amount to gross abuse of the process of court.
The impugned order of the High Court under appeal is set aside. The appeal stands allowed.
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2014 (11) TMI 1281 - MADRAS HIGH COURT
Prosecution is time barred or not - Violation of Section 100 of the Companies Act, 1956 - liability for punishment under Section 629(A) of the Companies Act - whether the prosecution in the instant case is barred by limitation under Section 468 of the Code of Criminal Procedure? - HELD THAT:- As per Section 470 of Cr.P.C., as stated in paragraph 6 of the counter, the period spent on stay order has to be excluded while computing the period of limitation. In this case, the stay was ordered on 23.10.2003 and it was vacated on 27.04.2005. This period has to be necessarily excluded while computing the period of limitation. But after 27.04.2005, the complaint was not filed within six months, the reason stated is that some time was taken to complete the investigation and to get permission from the Central Government.
The consent or sanction as has been referred to in sub-clause 3 of Section 470 of Cr.P.C. relates to consent or sanction which is obtained under the Statute itself. Here in this case, to prosecute a person for offence punishable under Section 629(A) of the Companies Act, neither any consent nor any sanction from the Central Government is required. It may be true that on the administrative side permission is obtained from the Central Government to launch prosecution, but that permission cannot be equated to a consent or sanction to be obtained statutorily as referred to under sub-section 3 of Section 470 of the Cr.P.C. Therefore, this period cannot be excluded at all from the period of limitation. If it is done, obviously the complaint is barred by limitation because the complaint was not launched within six months atleast from 27.04.2005, the day when stay order was vacated.
Admittedly the complaint was launched only in the year 2006, thus the prosecution is barred by limitation. Therefore, the proceedings is liable to be quashed.
Petition allowed.
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2014 (11) TMI 1280 - ITAT CHANDIGARH
Deduction u/s 80IC - CIT(A) held that deduction allowable on the total gross profit without reducing the remuneration and interest payable to the partners - HELD THAT:- deduction under various provisions of this Chapter are allowable only if the income of the nature on which deduction is claimed has been included in the total income and further deduction has to be allowed on the basis of above gross total income. Gross total income has itself been defined in Sec 80B which clearly shows that deduction can be allowed on that income which is computed in accordance with the provisions of the Act before allowing deduction under Chapter VIA. Under Income-tax Act the income has to be computed under various heads as per the provisions of a particular head. Before allowing deduction u/s 80IC the income has to be computed as per the provisions of Sections 32 to 43 of the Act.
This position has been confirmed by the Hon'ble Supreme Court in case of CIT V. Kotagiri Industrial Co-operative Tea Factory Ltd. [1997 (3) TMI 1 - SUPREME COURT]
Above position has been followed later on in various decisions by the Hon'ble Supreme Court like H.H. Sir Rama Verma [1993 (11) TMI 2 - SUPREME COURT] and Motilal Pesticides (I) Pvt Ltd. [2000 (2) TMI 9 - SUPREME COURT]
Therefore it becomes clear that deduction could have been allowed only after computing the income under a particular head. In this case the income in the hands of the a firm was computed in terms of Sec 28 to 43D and Sec 40(b) in respect of allowance of interest and salary falls between these two provisions and therefore full effect has to be given to this provisions also.
As later on it was decided not to pay salary and interest to the partners - This does not seems to be correct because before the Assessing officer it was admitted that remuneration and interest has not been paid as per the partnership deed. Further there is no evidence for the same and in any case this will not make a difference - As for making deduction under chapter VIA the profits has to be computed specifically as per a particular provision of a particular head of income because of the definition of gross total income u/s 80B(5).
In view of the above clear position the deduction u/s 80IC was allowable only after reducing the interest and remuneration payable to the partners. The Assessing officer has invoked the provisions of section 80IA which are not relevant and the Ld. CIT(A) has decided the issue only on this decision without looking at the specific provisions of the Act and the decision of Hon'ble Supreme Court which are binding on all authorities. Therefore we set aside the order of Ld. CIT(A) and restore that of the Assessing officer (though on a different reasoning). Appeal of the revenue is allowed.
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2014 (11) TMI 1279 - MADRAS HIGH COURT
Time limitation - Non-compliance with the appointment of whole-time Company Secretary - complaint not launched within a period of six months from the date of commission of the offence - HELD THAT:- The consent or sanction as has been referred to in sub-clause 3 of Section 470 of Cr.P.C. relates to consent or sanction which is obtained under the Statute itself. Here in this case, to prosecute a person for offence punishable under Section 383(1A) of the Companies Act, neither any consent nor any sanction from the Central Government is required. It may be true that on the administrative side permission is obtained from the Central Government to launch prosecution, but that permission cannot be equated to a consent or sanction to be obtained statutorily as referred to under sub-section 3 of Section 470 of the Cr.P.C. Therefore, this period cannot be excluded at all from the period of limitation. If it is done, obviously the complaint is barred by limitation because the complaint was not launched within six months atleast from 27.04.2005, the day when stay order was vacated.
Admittedly the complaint was launched only in the year 2006, thus the prosecution is barred by limitation. Therefore, the proceedings is liable to be quashed.
Petition allowed.
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2014 (11) TMI 1278 - ITAT HYDERABAD
Deemed dividend u/s 2(22)(e) - CIT(A) agreed with AO that loan received from the company should be treated as deemed dividend at the hands of assessee, but, he directed AO to restrict the addition to the extent of accumulated profit of the company - as argued assessee is director of the company from which advance was received and was holding more than 10% share, but, other condition of section 2(22)(e) relating to accumulated profit is not satisfied - HELD THAT:- Undisputedly, assessee has received loan of Rs. 2,59,000 from M/s Veteran Properties Pvt. Ltd.. It is also not disputed that assessee is a director in the said company and holds more than 10% of the shares. It is also not in a dispute that the company M/s Veteran Properties Pvt. Ltd. from which assessee received loan is a company in which public are not substantially interested.
As company has shown profit during the year. It is the claim of assessee that profit shown by the company is notional and not real, hence, provisions of section 2(22(e) is not applicable. However, we are unable to accept assessee’s claim.
On a perusal of the P&L a/c for AY 2004-05 it is seen that assessee has shown profit of Rs. 1,79,959.11 before expenditure and tax. It is also evident after claiming deduction towards expenditure, provision for income-tax etc., net surplus available to the assessee is Rs. 98,907.61. Therefore, company has accumulated profit of Rs. 98,907.61. Thus, all the conditions of section 2(22)(e) are satisfied. There is no such distinction in the provisions between real profits and notional profits as sought to be made out by ld. AR.
We agree with the ld. CIT(A) and AO that the loan to the extent of accumulated profit has to be treated as deemed dividend at the hands of the assessee u/s 2(22)(e) of the Act. However, accumulated profit of the company as transferred to reserves and surplus being Rs. 98,907.61 addition u/s 2(22)(e) should be restricted to that amount in stead of Rs. 1,72,959 as directed by ld. CIT(A).
Deemed dividend u/s 2(22)(e) - AO noticed that assessee has shown an outstanding liability from M/s Veteran Properties Pvt. Ltd. wherein assessee is a director and is also holding more than 10% share - CIT(A) assessee submitted that amount is neither loan nor advance but actually represents the outstanding receivable by the company towards sale of a car to assessee - HELD THAT:- CIT(A) directed AO to verify the fact whether the outstanding liability shown represent the amount payable for purchase of vehicle and if it is found to be so, then, not to treat it as deemed dividend u/s 2(22)(e) - In this context, she directed AO to verify registration documents and bank statements of assessee to ascertain whether the said transaction has actually taken place and if assessee’s claim is found to be correct, then, delete the addition made. Having perused the findings of ld. CIT(A), we do not find any serious infirmity in the order of CIT(A).
Accordingly, we direct the AO to verify the fact as to whether assessee has actually purchased the car from the company as claimed and whether outstanding liability shown represents the outstanding sale consideration to be paid to company towards purchase of car. If assessee’s claim is found to be correct, no addition can be made u/s 2(22)(e) - Decided in favour of assessee.
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2014 (11) TMI 1277 - KARNATAKA HIGH COURT
Deduction u/s 10A - Claim denied by Revenue as production was commenced even before the registration of the SIPI and therefore, they are not entitled to deduction and the unit was acquired on 1.10.2001 and therefore it is a case for reconstruction and therefore, they are not entitled to deduction - Tribunal by looking into the material on record by a considered and reasoned order has categorically recorded a finding that Lara Networks did not have STPI network by the time the unit taken over by the assessee - HELD THAT:- The circular No.1 of 2005 dated 61.2005 by CPDT makes it clear that even if the existing undertaking receives STPI approval, it would still be entitled to deduction under Section 10 A and therefore, it was held that the business of STPI Unit-It was not set up by reconstruction or splitting up. Further it was held though registration was subsequent to the production, that is not a condition which is stipulated in Section 1CA for claiming the benefit of the said deduction and therefore, the assessee is entitled to the said benefit.
In fact, these questions were the subject matter in the case of Commissioner of Income Tax and another - vs - Caritor (India Pvt. Ltd) [2015 (2) TMI 670 - KARNATAKA HIGH COURT] and also in the case of Commissioner of Income Tax and Another - vs - Expert Outsource P. Ltd. [2011 (3) TMI 1428 - KARNATAKA HIGH COURT] where, on interpreting the aforesaid provisions, it was held neither the customs bonding nor STPI registration before production is not a condition precedent.
In that view of the matter, the substantial question of law are answered in favour of the assessee and against the Revenue. There is no merit in this appeal and it is accordingly dismissed. However, while giving effect to these orders, the Assessing Authority also shall give effect to the judgment of this court in the case of Commissioner of Income Tazz - vs - Tata Elsi Ltd & Ors. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] as said judgment is the subject matter of appeal before the Apex Court. However, in the event of the revenue succeeding before Apex Court, then consequential order in terms of Section 260(1)(14) of the Income Tax Act should be passed and given effect to.
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2014 (11) TMI 1276 - ANDHRA PRADESH HIGH COURT
Time Limitation - Recovery of Arrears - Entitlement for suit claim - limitation for recovery of arrears of installments payable by a subscriber of a chit fund company would commence from the date of the first default in the payment of such installments or from the date of termination of the chit agreement? - HELD THAT:- The plea of the appellant is that Article 37 does not apply since the suit is not based either on a promissory note or on a bond. On that basis, they rely upon the residuary clause i.e., Clause 113. There again, the period of three years is to be reckoned from the date on which the right to sue has accrued. If the date on which the third consecutive default in payment of instalments is taken into account, the suit becomes barred by limitation even under that article.
Though it is pleaded that the suit is not based upon promissory note, it is clear that a reference has been made in para 4 of the plaint to the agreement of guarantee dated 05-12-2000 as well as the promissory note of the same date, for a sum of Rs. 92,500/- executed by the respondents herein. Further, in the absence of any promissory note, and the guarantee from respondent Nos. 2 to 9, there would not have been any occasion for the appellant to implead at least respondent Nos. 2 to 6. The 1st respondent alone is party to Ex. A-1. In case, the suit was filed only on Ex. A-1, it ought to have been filed against the 1st respondent alone.
The judgment rendered by the Kerala High Court in Nanoo Sukumaran's case [1977 (6) TMI 108 - KERALA HIGH COURT] perused - Firstly, the judgment is in relation to an enactment of that State. Assuming that the provisions are in pari materia with the Chit Funds Act, we find it difficult to cull out any principle to the effect that the limitation for filing the suits for recovery of amount from a prized subscriber commences from the date on which the chit is concluded. In the instant case itself, the appellant made a mention in the paragraph pertaining to cause of action to 05-12-2000, the date on which the promissory note and the agreements of guarantee were executed and 10-04-2001, the date on which the appellant committed default.
The second appeal dismissed.
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2014 (11) TMI 1275 - ITAT MUMBAI
TP Adjustment - ALP determination of international transaction - allocation of expenses - segment wise account rejected as assessee did not maintain segmental accounts contemporaneously - HELD THAT:- In our opinion the segment wise account submitted by the assessee could not be rejected unless any defect was pointed out in the segmental results shown by the assessee. Moreover, the activities relating to both these transactions are different activities as is observed from the functional analysis described in the above part of this order as one transaction is relating to communication network operation and engineering services and other transaction relates to provision of finance and accounts services, therefore, these transactions are to be evaluated separately for determination of ALP.
If the claim of the assessee is to be rejected then Revenue Authorities are bound to explain that why such claim of the assessee is required to be rejected. No such reason has been given except stating that either the segmental results are unaudited or they have been prepared later on or for the purpose of TP study.
Taking into account these facts and submissions which are supported by the case laws relied upon by Ld. AR, we are of the opinion that it would meet the interest of justice if the matter is restored back to the file of AO/TPO with a direction to re-determine the ALP of these international transaction separately after verifying the segmental results of the assessee. Needless to observe that in the whole process of re-determination of ALP with regard to impugned transactions, the assessee will be provided with reasonable opportunity of hearing and placing evidence on record to support its case.
After re-determination of ALP of the impugned international transaction in the manner described above, Ld. AO/TPO will give appropriate relief as per proviso to section 92C(2) as it is applicable for the year under consideration after giving the assessee a reasonable opportunity of hearing.
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2014 (11) TMI 1274 - ITAT MUMBAI
Disallowance u/s 14A r.w.r. 8D - Whether investment made in partnership firm does not represent “Investment”? - HELD THAT:- AO does not appear to have examined the application of the provisions of sec,. 14A by having regard to the accounts of the assessee. We notice that the assessing officer has asked the assessee to work out the disallowance.
Assessee excluded investment made in partnership firm as it does not represent “Investment”. AO did not examine the above said claim of the assessee and also failed to note the inconsistencies in working out the average value of investments.
All these discussions would show the half hearted approach adopted by the assessing officer and his carelessness in examining the workings furnished by the assessee vis-à-vis the accounts of the assessee company. We also find that the assessee has also failed to explain as to how the provisions of sec. 14A shall not apply to the share income from partnership firms, which consisted of 99.5% of its income.
The assessee has further canvassed the view that the provisions of sec. 14A r.w. Rule 8D should not be applied to Variable expenses, which consisted of expenses incurred directly on the projects undertaken by it. With regard to the Fixed/semi-variable expenses, the assessee submitted that the disallowance may be restricted to 5% of the said expenses. Though the assessee did not give any basis for adopting the above said rate of 5%, yet the Ld CIT(A) has accepted the same.
Both the tax authorities have addressed the issue of disallowance to be made u/s 14A of the Act from the point of view of “dividend income” only. Further the disallowance has been made with reference to Administrative expenses only. As noticed earlier, both the tax authorities have failed to make reference to the accounts of the assessee.Decided against revenue.
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2014 (11) TMI 1273 - BOMBAY HIGH COURT
Grant of leave to defend the suit, conditional upon its depositing only the principal sum - appellant contends that the suit is based only on the loan and not on the cheques and bills of exchange admittedly drawn and accepted by the appellant - whether the loan in the present case falls within the ambit of sections 2(17) and (10) of the Bombay Money Lenders Act? - HELD THAT:- The appellant's contention that the suit is barred by the provisions of the Bombay Money Lenders Act is not well founded. Section 2(9) defines a loan to mean an advance at interest whether of money or in kind, but does not include a loan or advance of the nature stipulated in clauses (a) to (f2) thereof. The above suit is not hit by the Bombay Money Lenders Act in view of clause (f) of section 2(9) of the Bombay Money Lenders Act. In view of clause (f), the loans do not fall within the purview of the Act as they were advances made on the basis of the negotiable instrument as defined in the Negotiable Instruments Act, 1881 viz. the cheques and the bills of exchange.
In the present case, the loans were advanced by the respondents to the appellants on the basis of negotiable instruments other than promissory notes. This is clear from the facts and circumstances of this case especially the manner in which the amounts were advanced and cheques were drawn. The fact that the cheques were forwarded by the appellants to the respondents after the loans were advanced by RTGS transfers makes no difference. The amounts were advanced by the respondents to the appellants and the cheques and the bills of exchange were issued by the appellant to the respondents as a part of one composite agreement. In other words, this agreement was entered into at the same time. This is not a case where the amounts were first advanced and thereafter the parties agreed that the borrower would draw the cheques and bills of exchange and execute the said writings. The entire arrangement was agreed upon at the same time.
There is nothing on record that militates against this view. The appellant has not even pleaded anything to the contrary. It is not the appellant's case that the cheques and the bills of exchange were drawn and the writings were executed independent of the loan pursuant to any understanding arrived at subsequently. It follows therefore that the said loans were made on the basis of the said negotiable instrument viz. the cheques and the bills of exchange drawn by the appellants in favour of and payable to the respondents.
The mere fact that a negotiable instrument is handed over subsequent to the loan being disbursed makes no difference if the loan was made on the basis of the negotiable instrument. Where it is agreed as part of a composite agreement to advance a loan against a negotiable instrument covered by section 2(9)(f), it makes no difference that the negotiable instrument is handed over subsequently.
There is in fact no defence to the suit. Despite the same, the learned Judge has granted leave conditional upon the appellants depositing only the principal sum claimed. The appellant can, therefore, have no grievance against the said order - Appeal dismissed.
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2014 (11) TMI 1272 - ITAT DELHI
Disallowance of interest - assessee could not establish that advance was given for the purpose of the business even when it was paying interest on secured loan taken - CIT-A deleted the addition - HELD THAT:- The assessee was having interest free own funds more than interest free advances - In view of the various case laws relied upon by the ld. AR including the decision in the case of CIT vs. Reliance Utilities [2009 (1) TMI 4 - BOMBAY HIGH COURT] CIT (A) was justified in deleting the addition as investments would be out of the interest-free fund generated or available with the company, if the interest-free funds were sufficient to meet the investments - Decided in favour of assessee.
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2014 (11) TMI 1271 - SUPREME COURT
Non-compliance of Section 313 Code of Criminal Procedure - contention of the Appellant is that since the material evidence Ex-P12 and Ballistic Expert opinion was not put to him in his statement Under Section 313 Code of Criminal Procedure, it must be completely excluded from consideration and barring the same - whether non-compliance of the mandatory provisions of Section 313 Code of Criminal Procedure vitiates the trial and conviction of the Appellant? - HELD THAT:- There are two kinds of examination Under Section 313 Code of Criminal Procedure. The first Under Section 313(1)(a) Code of Criminal Procedure relates to any stage of the inquiry or trial; while the second Under Section 313(1)(b) Code of Criminal Procedure takes place after the prosecution witnesses are examined and before the accused is called upon to enter upon his defence. The former is particular and optional; but the latter is general and mandatory.
The object of Section 313(1)(b) Code of Criminal Procedure is to bring the substance of accusation to the accused to enable the accused to explain each and every circumstance appearing in the evidence against him. The provisions of this section are mandatory and cast a duty on the court to afford an opportunity to the accused to explain each and every circumstance and incriminating evidence against him - The real importance of Section 313 Code of Criminal Procedure lies in that, it imposes a duty on the Court to question the accused properly and fairly so as to bring home to him the exact case he will have to meet and thereby, an opportunity is given to him to explain any such point.
Undoubtedly, the importance of a statement Under Section 313 Code of Criminal Procedure, insofar as the accused is concerned, can hardly be minimised. The statutory provision is based on the rules of natural justice for an accused, who must be made aware of the circumstances being put against him so that he can give a proper explanation to meet that case. If an objection as to Section 313 Code of Criminal Procedure statement is taken at the earliest stage, the Court can make good the defect and record additional statement of the accused as that would be in the interest of all - Any omission on the part of the Court to question the accused on any incriminating circumstance would not ipso facto vitiate the trial, unless some material prejudice is shown to have been caused to the accused. Insofar as non-compliance of mandatory provisions of Section 313 Code of Criminal Procedure, it is an error essentially committed by the learned Sessions Judge. Since justice suffers in the hands of the Court, the same has to be corrected or rectified in the appeal.
This Court has widened the scope of the provisions concerning the examination of the accused after closing prosecution evidence and the explanation offered by the counsel of the accused at the appeal stage was held to be a sufficient substitute for the answers given by the accused himself.
If all relevant questions were not put to accused by the trial court as mandated Under Section 313 Code of Criminal Procedure and where the accused has also shown that prejudice has been caused to him or where prejudice is implicit, whether the appellate court is having the power to remand the case for re-decision from the stage of recording of statement Under Section 313 Code of Criminal Procedure Section 386 Code of Criminal Procedure deals with power of the appellate court? - HELD THAT:- As per Sub-clause (b)(i) of Section 386 Code of Criminal Procedure, the appellate court is having power to order retrial of the case by a court of competent jurisdiction subordinate to such appellate court. Hence, if all the relevant questions were not put to accused by the trial court and when the accused has shown that prejudice was caused to him, the appellate court is having power to remand the case to examine the accused again Under Section 313 Code of Criminal Procedure and may direct remanding the case again for re-trial of the case from that stage of recording of statement Under Section 313 Code of Criminal Procedure and the same cannot be said to be amounting to filling up lacuna in the prosecution case.
In ASRAF ALI VERSUS STATE OF ASSAM [2008 (7) TMI 1081 - SUPREME COURT], this Court has examined the scope and object of examination of accused Under Section 313 Code of Criminal Procedure and in para (24) it was observed that in certain cases when there is perfunctory examination Under Section 313 of the Code, the matter could be remitted to the trial court with a direction to retry from the stage at which the prosecution was closed.
In GANESHMAL JASHRAJ VERSUS GOVERNMENT OF GUJARAT AND ORS. [1979 (10) TMI 232 - SUPREME COURT], after closure of evidence of the prosecution and examination of accused Under Section 313 Code of Criminal Procedure was completed, the accused admitted his guilt presumably as a result of plea bargaining and the accused was convicted. Pointing out that the approach of the trial court was influenced by the admission of guilt made by the accused and that conviction of the accused cannot be sustained, this Court has remanded case to trial court to proceed afresh from the stage of examination Under Section 313 Code of Criminal Procedure.
The objection as to the defective 313 Code of Criminal Procedure statement has not been raised in the trial court or in the High Court and the omission to put the question Under Section 313 Code of Criminal Procedure, and prejudice caused to the accused is raised before this Court for the first time. It was brought to our notice that the Appellant is in custody for about eight years. While the right of the accused to speedy trial is a valuable one, Court has to subserve the interest of justice keeping in view the right of the victim's family and the society at large.
The accused is not entitled for acquittal on the ground of non-compliance of mandatory provisions of Section 313 Code of Criminal Procedure We agree to some extent that the Appellant is prejudiced on account of omission to put the question as to the opinion of Ballistic Expert (Ex-P12) which was relied upon by the trial court as well as by the High Court. Trial court should have been more careful in framing the questions and in ensuring that all material evidence and incriminating circumstances were put to the accused. However, omission on the part of the Court to put questions Under Section 313 Code of Criminal Procedure cannot enure to the benefit of the accused.
The matter is remitted back to the trial court for proceeding with the matter afresh from the stage of recording statement of the accused Under Section 313 Code of Criminal Procedure The trial court shall examine the accused afresh Under Section 313 Code of Criminal Procedure - appeal disposed off.
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2014 (11) TMI 1270 - CESTAT BANGALORE
Default in payment of Central Excise duty beyond the period prescribed under Rule 8(3A) of Central Excise Rules, 2002 - liability of the appellants to pay the duty in cash but the appellants paid by utilizing CENVAT credit - HELD THAT:- The issue is no longer res integra and this Tribunal in the case of SOLAR CHEMFERTS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, THANE-I [2011 (6) TMI 640 - CESTAT, MUMBAI] has already held that in such cases of default, it is not necessary for the appellants to deposit the entire amount utilized as CENVAT credit in cash but it is sufficient if the interest is paid.
The learned counsel agrees to deposit the interest and penalty which may be imposed by this Tribunal. Accordingly, the appellant is directed to calculate the interest and pay the same and also penalty is reduced to Rs. 5,000/-.
Appeal allowed in part.
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2014 (11) TMI 1269 - KARNATAKA HIGH COURT
Violation of principles of natural justice (Audi alteram partem) - Direction u/s 26(1) of the Competition Act, 2002 for investigation into the allegations made by the informants i.e., respondent Nos.1 and 2 herein, and for submission of report - whether opinion formed by the Commission with regard to the existence of a prima facie case, to direct the Director-General to cause an investigation into the matter, calls for interference?
HELD THAT:- The Commission having deliberated, found that there exits a prima facie case and directed the investigation by the Director- General. The finding in Annexure-A being only for the limited purpose of directing investigation into the allegations made in Annexure-C, by the Director-General, shall have no bearing either on the investigator or even on the Commission, at a subsequent stage. When once report of investigation is received, the matter shall have to proceed in accordance with Sub-sections (4) to (8) of S.26 of the Act. Annexure-A having made reference to certain aspects, cannot be said to be perverse or is without any basis and thus, arbitrary to warrant interference under Article 226 of the Constitution.
Non providing of opportunity of hearing while issuing the direction - Principles of natural justice - HELD THAT:- The points raised for consideration has no merit and should fail.
Since the petitioner has further opportunity to raise its objections as against the said report before the Commission, order passed on 23.09.2014, on the memo filed and submissions made by Sri Krishna S.Dixit, that the report dated 30.04.2013 of respondent No.9 shall be kept in abeyance and not to act upon the same, until further orders, is hereby recalled.
Both the legal points raised by the petitioner are covered by the Judgment referred to hereinbefore, this writ petition being devoid of merit is dismissed. Liberty is reserved to the petitioner to file its objections to the report dated 26.04.2013, in view of Sub-section(6) of S.26 of the Act.
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2014 (11) TMI 1268 - ITAT LUCKNOW
Allowability of prior period expenses - recompute the loss for assessment year 2006-07, as these were not allowable - HELD THAT:- CIT(A) examined these facts and has held that prior period expenses are below the line adjustment and are carried to balance sheet but not claimed for income-tax purpose. He accordingly directed the Assessing Officer to verify the same and recompute the loss. Though the Revenue has challenged the order of the ld. CIT(A), but could not point out any infirmity therein, as the assessee has not included the prior period expenses in the computation of income. Therefore, there is no question of disallowance. He, however, referred the matter to the A.O. for re-computation of loss after verification. Therefore, we find no infirmity in the order of the ld. CIT(A) and we accordingly confirm the same.
Netting of prior period expenses and prior period income - Disallowance be restricted to the net prior period expenses debited to the profit and loss account - HELD THAT:- Revenue has preferred an appeal before the Tribunal with the submission that netting between prior period expenses and prior period income may be permissible, but the net prior period expenses cannot be allowed against current income of the impugned financial year. Therefore, disallowance be restricted to the net prior period expenses debited to the profit and loss account. To this effect, the ld. counsel for the assessee has no objection.
Assessee has further submitted that the entire prior period expenses cannot be disallowed, as it can be set off against the prior period income. If any disallowance is required to be made, it can only be restricted to net prior period expenses debited to the profit and loss account of the current year unless and until it is crystalised in the current year. In this regard, no direction was made by the ld. CIT(A) and the AO has also not looked into this aspect of the matter. We accordingly modify the order of the ld. CIT(A) and restore the matter to the AO with a direction to make necessary verification and if any disallowance is required to be made, it can only be made with respect to the net prior period expenses debited to the profit and loss account of the current year, if it is not crystalised during the impugned financial year.
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2014 (11) TMI 1267 - PUNJAB AND HARYANA HIGH COURT
Levy of penalty - evasion of entry tax - bringing the scrap from out side the State of Punjab from secret passages in order to avoid the payment of tax - offence under Sections 420/120-B IPC and Section 4 of the Punjab Tax Entry of Goods into Local Areas Act, 2000 - HELD THAT:- A perusal of sub Section (7) (a) of Section 51 of the VAT Act lays down the provisions for penalty of 50% of the value of the goods if the vehicle is going without any documents. Under Section 51 (4) of the Act, there is a provision of imposition of penalty of 50% of the value of the goods involved if the driver has failed to deliver within forty eight hours the transit receipt to the Officer Incharge of the check post or information Collection Centre. Sub Section (7) (b) of Section 51 of the VAT Act makes out the provisions of penalty when the vehicle is going without any proper or genuine documents to be 30% of the value of the goods. Provisions under the VAT Act provide for mandatory penalty.
The provisions under Prevention of Corruption Act, 1988 came up for consideration before the Supreme Court in Dilawar Singh's case [2005 (11) TMI 502 - SUPREME COURT] and it was held that a co-accused cannot be summoned under Section 319 Cr.P.C as the Prevention of Corruption Act, 1988 was a special Act.
In the present case, allegations in the FIR is that petitioner had made an attempt by deleting data from pan driver to conceal the total weight in the vehicle so as to evade imposition of VAT Act. The provisions in the VAT Act are sufficient and equipped to deal with the matters where an attempt is made to evade the tax. Thus, the registration of the FIR in such like matters is totally an abuse of process of law.
Petition allowed.
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2014 (11) TMI 1266 - ITAT MUMBAI
Claim for deduction u/s 80IA(4) - HELD THAT:- The Tribunal vide its order [2014 (7) TMI 424 - ITAT MUMBAI] after following the decision of Hon’ble Bombay High Court in the case of CIT vs. ABG Heavy Industries Ltd. [2010 (2) TMI 108 - BOMBAY HIGH COURT] held that the assessee was entitled for claim of deduction u/s 80IA(4) of the Act.
Disallowance u/s 14A - HELD THAT:- Hon’ble jurisdictional High Court in the case of CIT vs. Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] held that if there are funds available, both interest free and overdraft/loans taken, then presumption would arise that investments would be out of the interest free fund generated or available with the company, if, the interest free funds were sufficient to meet the investments. Recently, the Hon’ble Bombay High Court again followed the same principle in the case of HDFC [2014 (8) TMI 119 - BOMBAY HIGH COURT] Applying the proposition of law laid down in the judicial pronouncements, we found that in the instant case case profit was much more than the investment in the joint venture company therefore the disallowance made by the A. O. by invoking the provisions of section 14A of the Act was not justified. Accordingly the A. O. directed to delete the same.
Addition u/s 36(1)(iii) - HELD THAT:- We found that the cash profit of the assessee company that have been earned during the year as reduced by the amount of investment in joint venture company, was in excess to the monies advanced to Chafal as on the cut-off date, therefore it can be safely presumed that advance have been given against profits of the year and not out of interest bearing funds. This view has been supported by the decision of Hon’ble Bombay High Court in the case of Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT]. Fact that no further advance was given during the year and no disallowance was made in the preceding year also supports the case of the assessee. Accordingly we do not find any merit in the action of the A. O. in disallowing the interest u/s 36(1)(iii) of the Act. Appeal of the assessee is allowed
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