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2012 (2) TMI 663
Issues Involved:
1. Entitlement to pension for service as President, State Consumer Disputes Redressal Commission.
2. Maintainability of appeal by the Accountant General.
3. State Government's power to issue executive orders for pension in absence of specific rules.
Summary:
1. Entitlement to Pension for Service as President, State Consumer Disputes Redressal Commission:
The respondent, a former Judge of the Madhya Pradesh High Court, served as President of the State Consumer Disputes Redressal Commission. The High Court determined that the service rendered by the respondent as President was pensionable based on an office order dated April 5, 2002, issued by the State Government. The Supreme Court examined whether the respondent was entitled to pension from the State for his service as President, considering the absence of specific statutory provisions or rules under the Consumer Protection Act, 1986 (1986 Act) and the Madhya Pradesh Consumer Protection Rules, 1987 (State Rules).
The Court referred to the case of Justice P. Venugopal v. Union of India, emphasizing that a High Court Judge is entitled to pensionary benefits only under the High Court Judges (Salaries and Conditions of Service) Act, 1954 (1954 Act) and not otherwise. It was held that the respondent's different services could not be clubbed for pension computation. However, the Court acknowledged the State Government's power to issue executive orders to fill gaps in the rules, provided such orders are not inconsistent with statutory provisions or existing rules.
2. Maintainability of Appeal by the Accountant General:
The respondent argued that the appeal by the Accountant General was not maintainable as he was not an "aggrieved person." The Supreme Court rejected this argument, stating that the Accountant General, as an arm of the Comptroller and Auditor General, has the authority to monitor and control activities related to audit, accounts, and entitlement functions, including pension authorization. Therefore, the appeal was maintainable.
3. State Government's Power to Issue Executive Orders for Pension in Absence of Specific Rules:
The Court examined whether the State Government could issue an executive order making the service of the President, State Commission pensionable in the absence of specific rules. It was held that the executive power of the State, under Article 162 of the Constitution, extends to matters where the Legislature has the power to make laws. The Court concluded that the State Government could issue executive orders to fill gaps in the rules, provided such orders are not inconsistent with statutory provisions or existing rules.
Judgment:
The Supreme Court upheld the High Court's decision that the respondent was entitled to pension from the State Government for his service as President, State Commission, as per the terms and conditions of the appointment. The appeal by the Accountant General was dismissed. However, in a separate judgment, another judge disagreed, emphasizing the need for specific rules to grant pension and the inadmissibility of clubbing different services for pension computation. The matter was directed to be placed before the Chief Justice for assignment to an appropriate bench due to the divergence of opinion.
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2012 (2) TMI 662
Issues involved: Petition under Section 36 of the Arbitration and Conciliation Act, 1996 seeking precept issuance and transfer of execution petition to the Court of the learned District Judge, Bangalore, Karnataka.
Summary:
1. The petition under Section 36 of the Arbitration and Conciliation Act, 1996 sought the issuance of a precept to the Court of the learned District Judge, Bangalore, Karnataka where the assets/properties of the Judgment Debtors are located. The alternative prayer was for a direction to transfer the execution petition to the same Court in Bangalore, Karnataka.
2. As per the Award dated 10th October 2011, the Judgment Debtors were liable to pay the Decree Holder a specific sum along with interest and costs. The JDs and their assets were situated in Bangalore, Karnataka.
3. The Court discussed the execution of the Award as a decree under the Act, citing the case of Daelim Industrial Co. Ltd. v. Numaligarh Refinery Ltd. The Court clarified that the territorial jurisdiction for execution is determined by the location of the JD or their property. It was emphasized that the Court disposing of an application under Section 34 of the Act does not pass a decree, as the Award itself is executable as a decree.
4. The High Court of Madras's decision in Kotak Mahindra Bank Ltd. v. Sivakama Sundari S. Narayana S.B. Murthy was referenced, stating that in the absence of specific provisions, no executing Court can demand or order transmission of the decree.
5. Based on the above legal principles, the Court declined the prayer in the petition and advised the Decree Holder to approach the competent Court in Bangalore, Karnataka for the execution of the Award in accordance with the law.
6. The petition was disposed of accordingly.
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2012 (2) TMI 661
Issues involved: Appeal against order of Commissioner of Income-tax regarding taxability of Non-Compete Fee received by the assessee for assessment year 2002-03.
Summary:
The appeal was filed by the assessee against the order of the Commissioner of Income-tax, Chennai, regarding the taxability of Non-Compete Fee received from a company. The assessee, an individual, had entered into an agreement with another company to receive a Non-Compete Fee over a period of 10 years. The Assessing Officer initially accepted the fee as a capital receipt, but the Commissioner issued a notice u/s 263 to tax the amount as revenue receipt. The dispute revolved around whether the fee should be taxed as per the amended provisions of section 28(va) of the Income Tax Act, 1961.
The Assessing Officer had conducted necessary enquiries and concluded that the Non-Compete Fee was a capital receipt, considering the specific circumstances and the provisions of section 28(va). The Commissioner, however, held that the assessment order was erroneous and prejudicial to the Revenue's interests, directing the Assessing Officer to tax the amount. The assessee argued that the Commissioner's order was based on a difference of opinion and should be set aside.
After considering the submissions, the Tribunal found that the Assessing Officer had applied his mind and made a conscious decision regarding the taxability of the Non-Compete Fee. The genuineness of the agreement and the amount received were not in dispute. Referring to the Supreme Court's decision in a similar case, the Tribunal held that the fee was a capital receipt for the assessment year 2002-03 and could not be taxed under the amended provisions of section 28(va). The Tribunal quashed the Commissioner's order u/s 263, stating that it was based on a mere difference of opinion and allowed the appeal of the assessee.
The Tribunal pronounced the order on 24/02/2012.
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2012 (2) TMI 660
Issues Involved:1. Whether the non-compete fee of Rs. 6.00 crores was a revenue receipt or a capital receipt. Summary:Issue 1: Non-Compete Fee - Revenue vs. Capital ReceiptThe Revenue filed an appeal against the order of the CIT(A) XII, Chennai, which treated the non-compete fee of Rs. 6.00 crores received by the assessee from M/s. Citadel Aurobindo Biotech Ltd. as a capital receipt, contrary to the Assessing Officer's treatment of it as a revenue receipt. The Revenue argued that similar cases involving non-compete fees from the same company had been restored to the CIT(A) for fresh adjudication, citing the cases of DCIT v. Shri M. Ranjan Rao and ACIT vs. Shri P. Rajendra Rao. The assessee did not object to this submission. After considering the rival submissions and reviewing the lower authorities' orders, the Tribunal noted that in the case of Shri M. Ranjan Rao, the facts were identical, and the matter had been restored to the CIT(A) for fresh adjudication. The Tribunal quoted the detailed reasoning from the case of ACIT v. Shri P. Rajendra Rao, where it was concluded that the non-compete fee could either be treated as taxable capital gains or as salary, depending on the nature of the agreement and the relationship between the parties. The Tribunal observed that the CIT(A) had accepted the assessee's plea that the non-compete fee did not fall within the inclusive definition of income u/s 2(24) of the Income Tax Act and that there was no employer-employee relationship between the assessee and CABL. The CIT(A) also applied the real income theory, noting that only Rs. 20 lakhs had been received out of the Rs. 4 crores agreed upon, and the balance was not recoverable as the company had become defunct. However, the Tribunal found procedural violations as the Assessing Officer was not confronted with new material submitted at the first appeal stage, violating Rule 46A of the I.T. Rules. Consequently, the Tribunal set aside the CIT(A)'s order and restored the matter to the CIT(A) for fresh adjudication, following the directions given in the case of ACIT v. Shri P. Rajendra Rao. The appeal of the Revenue was allowed for statistical purposes, and the CIT(A) was directed to provide a reasonable opportunity of hearing to both parties before adjudicating the issue afresh. Order pronounced at the close of the hearing in the presence of the parties on 15.02.2012.
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2012 (2) TMI 659
Power of CIT to cancel registration of trust u/s 12AA(3) - Assessee trust has received “capitation fees” in the garbs of donations from and on behalf of the students for giving them admission. CIT cancelled the registration granted to assessee trust in the year 2000 by invoking the provisions of s.12AA(3). The assessee’s contention is that the powers conferred on the ld. C.I.T. u/s. 12AA(3) did not extend to cancellation of registration granted u/s. 12A. - HELD THAT:- There was no power vested with the Commissioner to cancel or withdraw the registration granted to the assessee u/s 12A(a) in the year 2000. This power came to be incorporated by way of amendment introduced by the Finance Act, 2010, with effect from June 1, 2010. Thus, the impugned order of ld. C.I.T. vacated and as a corollary thereto, the registration granted to the assessee-trust u/s. 12A of the Act stands restored.
Decision in the case of DIT (EXEMPTIONS) VERSUS MOOL CHAND KHAIRATI RAM TRUST [2011 (4) TMI 563 - DELHI HIGH COURT], relied upon.
Decision in favour of Assessee.
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2012 (2) TMI 658
Issues: Seizure of cash under Section 132A, application for release of seized cash under Section 132B, contention regarding ownership of cash, rejection of application for release, pending investigation by revenue authorities.
Seizure of Cash under Section 132A:
The petitioner, a cash management services provider, had &8377; 1,18,87,490 seized from their van by the Election Squad and Police in Chennai. The cash was subsequently transferred to the Assessing Officer in New Delhi under Section 132A. The petitioner claimed the cash belonged to 11 clients of the Royal Bank of Scotland and was to be deposited in the bank.
Application for Release of Seized Cash under Section 132B:
The petitioner filed an application under the first proviso of Section 132B for the release of the seized cash, stating they had already paid the equivalent amount to the Royal Bank of Scotland. They argued that the cash did not belong to them but to the 11 different parties, as detailed in Annexure-A.
Contention Regarding Ownership of Cash:
The petitioner maintained that the cash seized was not their undisclosed income but belonged to the 11 parties. They sought the release of the cash based on the provisions of Section 132B, which allow for the release of assets if the nature and source of acquisition are explained to the satisfaction of the Assessing Officer.
Rejection of Application for Release:
The Assessing Officer rejected the petitioner's application for release, citing the ongoing investigation into the ownership and source of the seized cash. The court declined to interfere with this decision, stating that directing release at this stage would be premature and could prejudge the outcome of the investigation.
Pending Investigation by Revenue Authorities:
The court emphasized the need for the revenue authorities to conduct the investigation expeditiously and reach a conclusion regarding the ownership and tax implications of the seized cash. The writ petition was dismissed with the expectation that the inquiry would be completed within the specified time frame as per the Act.
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2012 (2) TMI 657
Issues Involved:
1. Validity of the complaint u/s 494 IPC and 494 r/w 109 IPC.
2. Jurisdiction of the Judicial Magistrate, Bhavani.
3. Compliance with Section 7 of the Hindu Marriage Act.
4. Allegations of abuse of process of court.
5. Delay in filing the complaint.
6. Role of petitioners 3 to 11 in Crl.O.P.No.777 of 2008 and petitioners 1 and 2 in Crl.O.P.No.36039 of 2007.
Summary:
1. Validity of the complaint u/s 494 IPC and 494 r/w 109 IPC:
The complaint was filed by the respondent alleging that the first accused committed an offense punishable u/s 494 IPC and the other accused u/s 494 r/w 109 IPC. The Judicial Magistrate took cognizance, examined the complainant and witnesses, and issued process u/s 203 r/w 204 Cr.P.C. The petitioners sought to quash the complaint on various grounds, including the lack of necessary averments to attract the penal provisions.
2. Jurisdiction of the Judicial Magistrate, Bhavani:
The petitioners contended that the choice of Bhavani as the place for filing the complaint indicated an abuse of process. However, the court held that the complainant had the option to choose the jurisdiction as per Section 182(2) Cr.P.C., and the choice of Bhavani could not be faulted.
3. Compliance with Section 7 of the Hindu Marriage Act:
The petitioners argued that the complaint did not disclose the completion of marriage formalities as per Section 7 of the Hindu Marriage Act. The court noted that Section 7-A, introduced by the Tamil Nadu Amendment, provides for the validity of marriages performed with simple ceremonies like garlanding or tying a thali, which was sufficient to proceed with the case.
4. Allegations of abuse of process of court:
The petitioners claimed that the complaint was filed to coerce the first accused to withdraw the divorce petition. The court rejected this contention, stating that the mere fact that a divorce petition preceded the complaint did not prove the complaint was false or an abuse of process.
5. Delay in filing the complaint:
The petitioners argued that the complaint should be dismissed due to a delay of nearly one month after the alleged occurrence. The court held that the delay did not bar the complaint unless it was barred by limitation, and the delicate nature of the relationships involved justified the delay.
6. Role of petitioners 3 to 11 in Crl.O.P.No.777 of 2008 and petitioners 1 and 2 in Crl.O.P.No.36039 of 2007:
The petitioners contended that they were merely attendees of the second marriage and did not attract the penal provisions. The court found that the complaint and statements indicated their active participation and knowledge of the subsisting marriage, warranting the proceedings.
Conclusion:
The court dismissed both petitions, finding sufficient grounds for proceeding with the case and rejecting the contentions of the petitioners regarding jurisdiction, compliance with marriage formalities, abuse of process, delay, and the role of the accused.
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2012 (2) TMI 656
Issues Involved:
1. Validity of auction notices for extraction of minor minerals.
2. Allegations of illegal mining in Haryana, Rajasthan, and Uttar Pradesh.
3. Compliance with Environmental Impact Assessment (EIA) Notification, 2006.
4. Environmental impact of mining activities.
5. Recommendations by Ministry of Environment and Forests (MoEF) and Ministry of Mines.
Issue-wise Details:
1. Validity of Auction Notices:
The Department of Mines and Geology, Government of Haryana issued auction notices on 3.6.2011 and 8.8.2011 for the extraction of minor minerals in various districts. The validity of these auction notices is under challenge due to concerns over environmental degradation and the breaking of homogeneous areas into pieces of less than 5 hectares to circumvent EIA requirements.
2. Allegations of Illegal Mining:
The Supreme Court directed the Central Empowered Committee (CEC) to inspect alleged illegal mining in Uttar Pradesh, Rajasthan, and Haryana. The CEC's report, submitted on 4.1.2012, failed to address the serious illegal and unrestricted mining activities and their environmental impact.
3. Compliance with EIA Notification, 2006:
The court examined whether the auction notices violated the EIA Notification dated 14.9.2006 by breaking homogeneous areas into smaller plots to avoid environmental clearance. The MoEF's affidavit emphasized that mining areas should not be fragmented to circumvent the EIA Notification.
4. Environmental Impact of Mining Activities:
The court expressed deep concern over the environmental degradation caused by sand mining, particularly in river beds. The adverse effects include erosion, pollution, destruction of habitats, and threats to biodiversity. The necessity of a proper environmental assessment plan was highlighted.
5. Recommendations by MoEF and Ministry of Mines:
The MoEF's report of March 2010 and the Model Rules, 2010, issued by the Ministry of Mines, recommended strict regulatory measures for mining minor minerals. Key recommendations included:
- Minimum size of mine lease should be 5 hectares.
- Minimum lease period should be 5 years.
- Cluster approach for small mines.
- Mandatory mine plans for minor minerals.
- Creation of a separate corpus for reclamation and rehabilitation.
- Hydro-geological reports for mining below the groundwater table.
- Specific guidelines for river bed mining.
Conclusion:
The Supreme Court directed all States, Union Territories, MoEF, and the Ministry of Mines to implement the recommendations within six months and submit compliance reports. It ordered that leases of minor minerals, including renewals for areas less than five hectares, be granted only after obtaining environmental clearance from MoEF. The court emphasized the need for a comprehensive mining plan to address environmental concerns and ensure sustainable mining practices.
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2012 (2) TMI 655
Issues Involved:1. Objections to the arbitration award u/s 30 & 33 of the Arbitration Act, 1940. 2. Jurisdiction of the Arbitrator to award pendente lite interest in light of contractual provisions. Summary:1. Objections to the Arbitration Award u/s 30 & 33 of the Arbitration Act, 1940:The Union of India challenged the orders dated 5.4.2010 by the learned Single Judge in CS(OS) 122/2009, which was a petition u/s 14 & 17 of the Arbitration Act, 1940 filed by the respondent for making the award passed by the Arbitrator as a rule of the Court. The appellant had filed objections u/s 30 & 33 of the Arbitration Act, 1940. Specific objections were raised concerning Claims No. 1, 2, 5, 6, and 8. The objections to Claims No. 1, 2, 5, and 6 were rejected, while the objection to Claim No. 8 was sustained, reducing the awarded amount to Rs. 1,75,000/-. The appellant did not dispute this part of the order during arguments, focusing instead on the award of pendente lite interest by the Arbitrator. 2. Jurisdiction of the Arbitrator to Award Pendente Lite Interest:The appellant argued that the Arbitrator could not award interest on the awarded amount due to Section 16(2) of the General Conditions of Contract (GCC). However, the learned Single Judge held that the Arbitrator had the jurisdiction to award interest despite the contractual provision. Various judgments were considered, leading to the matter being referred to a Larger Bench due to conflicting views. The Larger Bench examined the issue, noting that the Supreme Court in G.C. Roy (1992) 1 SCC 508 and N.C. Budharaj 2001 (2) SCC 721 had established that an Arbitrator could award pendente lite interest unless explicitly prohibited by the contract. The Supreme Court's recent judgment in Union of India Vs. Krafters Engineering and Leasing Private Ltd. (2011) 7 SCC 279 reiterated that if the agreement is silent on interest, the Arbitrator has discretion to award it. However, if the contract explicitly prohibits interest, the Arbitrator cannot grant it. Clause 16(2) of the GCC in this case clearly stipulated that no interest would be payable on amounts due under the contract. Therefore, the Arbitrator had no power to award pendente lite interest, and the learned Single Judge's order on this aspect was set aside. The appeal was disposed of accordingly, with no order as to costs.
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2012 (2) TMI 654
Issues Involved:
1. Assessment of agency commission paid to M/s Mozambique Holdings Ltd.
2. Disallowance of Rs. 1,63,066 on the ground of diversion of interest-bearing funds for non-business purposes.
Summary:
1. Assessment of Agency Commission Paid to M/s Mozambique Holdings Ltd:
The first issue pertains to the assessment of agency commission paid to M/s Mozambique Holdings Ltd. The assessee filed a return disclosing a total income of Rs. 62,46,320, but the assessing officer determined the total income at Rs. 4,90,77,670. The assessee maintained books on a mercantile system and entered into an agreement with M/s Mozambique Holdings Ltd for marketing support to win a contract for constructing 800 borewells. The commission was paid in foreign currency outside India, and the foreign company had no permanent establishment in India. The assessing officer disallowed the claim on the ground that the commission was only a provision and not paid. The Commissioner of Income-tax(A) confirmed the disallowance on the ground that tax was not deducted u/s 195 of the Act. The Tribunal found that since the assessee followed the mercantile system, the liability for agency commission should be allowed as a deduction. The Tribunal also noted that the payment was for marketing support, not consultancy services, and since the foreign company had no permanent establishment in India, the income was not taxable in India. Therefore, the assessee was not required to deduct tax at the time of payment. The Tribunal relied on the judgment of the Apex Court in G.E. Technology Centre Pvt Ltd vs Commissioner of Income-tax (2010) 327 ITR 457 (SC) and the Delhi High Court's decision in EON Technology Services (2012) 246 CTR (Del) 40. Consequently, the addition of Rs. 4,26,26,195 was deleted.
2. Disallowance of Rs. 1,63,066 on the Ground of Diversion of Interest-Bearing Funds for Non-Business Purposes:
The second issue involves the disallowance of Rs. 1,63,066 on the ground that the assessee diverted interest-bearing funds for non-business purposes. The assessee claimed it had sufficient funds in the form of share capital, reserves, surplus, and interest-free advances from another director. The assessee argued that no amount was advanced from the loan borrowed and that it had sufficient own funds in the bank account. The Tribunal noted that the lower authorities had not examined the availability of interest-free funds in light of the Supreme Court's judgment in Munjal Sales Corporation 298 ITR 298 (SC). Therefore, the Tribunal set aside the order of the lower authority and remitted the issue back to the assessing officer to reexamine the matter in light of the Supreme Court's judgment and decide the issue in accordance with the law after giving an opportunity of hearing to the assessee.
Conclusion:
The appeal of the assessee was allowed for statistical purposes, and the order was pronounced in the open court on February 29, 2012.
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2012 (2) TMI 653
No show cause notice was issued either to the appellant No.1 or to the National Multi Commodity Exchange of India Limited–respondent No.3 - Held that:- In absence of any show cause to appellant No.1 as well as the respondent No.3–NMC, the impugned Order dated 23rd July, 2011, passed by the respondent No.1 is contrary to the principle of natural justice and no action could be taken either against appellant No.1 or respondent No.3. NMC in pursuance of the impugned order passed by the respondent No.1 – Commission and the same deserves to be quashed and set aside so that a fresh order/decision may be passed by the respondent No.1-Commission on the points raised by the appellants No. 1 and 2 as well as respondent No.3, after issuing a show cause notice, inviting objections and also after considering the objections and after affording opportunity of hearing to all necessary parties.
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2012 (2) TMI 652
Issues Involved:
1. Validity of Reassessment Proceedings.
2. Deletion of Addition u/s 68 of the Income-tax Act.
Summary:
1. Validity of Reassessment Proceedings:
The revenue challenged the CIT (A)'s decision on the initiation of reassessment proceedings. The DR argued that the assessee did not make full and true disclosures, justifying the reopening under section 148 based on information from the Investigation Wing about accommodation entries. The DR cited multiple case laws to support the validity of the reopening. The AR countered that the Assessing Officer (AO) did not apply independent judgment and relied on borrowed satisfaction, which is not permissible. The Tribunal concluded that since there was no original assessment u/s 143(3), there was no change of opinion. The information from the Investigation Wing was deemed sufficient to justify reopening. The Tribunal allowed the revenue's appeal on this issue, holding that the reassessment proceedings were sustainable in law.
2. Deletion of Addition u/s 68 of the Income-tax Act:
The revenue contested the deletion of Rs. 36 lacs added by the AO as bogus cash credits u/s 68. The DR argued that the assessee failed to provide supporting proof for the sale of stock and the parties involved. The AR provided evidence of the sale of shares through M/s. Batra Investments, including audited balance sheets, bank statements, and ledger accounts. The Tribunal found that the assessee had adequately explained the credits, which represented the sale proceeds of shares held as opening stock. The Tribunal cited previous ITAT decisions where similar transactions were held genuine. The Tribunal upheld the CIT (A)'s decision to delete the addition, confirming that the transactions were genuine and the revenue failed to prove otherwise.
Conclusion:
The Tribunal partly allowed the revenue's appeal, validating the reassessment proceedings but upholding the deletion of the addition u/s 68. The order was pronounced in open court on February 29, 2012.
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2012 (2) TMI 651
Issues Involved:
1. Genuineness of the objects and activities of the appellant trust.
2. Control of the trust by one family.
3. Financial control and transfer of assets by trustees.
4. Compensation for transferred leased assets.
5. Valuation of donated land.
6. Profit percentage and corpus increase.
7. Source of donations and their genuineness.
Summary:
1. Genuineness of the objects and activities of the appellant trust:
The CIT denied registration u/s 12AA(1)(b)(ii) on grounds questioning the genuineness of the trust's activities. The tribunal noted that the trust's objects, listed in the trust deed, were charitable in nature and there was no evidence to suggest otherwise. The trust deed explicitly stated that the trust and trustees would be subject to sections 2(15), 11, 12, 12A, 13, 80(G) of the Income Tax Act, 1961.
2. Control of the trust by one family:
The CIT's objection that the trust was controlled by one family was dismissed by the tribunal, stating that it is common for charitable trusts to be managed by family members. The tribunal emphasized that unless there is evidence of misuse or personal benefit, this factor alone cannot justify denial of registration.
3. Financial control and transfer of assets by trustees:
The CIT raised concerns about the trustees' power to transfer assets. The tribunal noted that the trust deed had been amended to ensure that such powers were vested in the Board of Trustees rather than individual trustees, thus addressing the CIT's concerns.
4. Compensation for transferred leased assets:
The tribunal addressed the CIT's concern regarding the return of leased assets without compensation by noting that the trust deed had been amended to ensure suitable compensation would be taken for any construction or new building erected on leased land.
5. Valuation of donated land:
The CIT objected to the valuation of donated land at Rs. 1 crore. The tribunal clarified that the valuation was based on circle rates and the trust only paid registration fees, not the full amount. The tribunal found no irregularity in this aspect.
6. Profit percentage and corpus increase:
The CIT cited the trust's profit percentage and increase in corpus as reasons for denial. The tribunal found these factors irrelevant for registration purposes, stating that they could be examined during assessment proceedings. The tribunal noted that the CIT did not provide specific discrepancies in these factors.
7. Source of donations and their genuineness:
The CIT questioned the genuineness of donations from agriculturists. The tribunal found no material evidence to suggest irregularities in the trust's activities or accounts. The tribunal emphasized that the trust was running three educational institutions, which was accepted by the ACIT.
Conclusion:
The tribunal directed the CIT to grant registration to the assessee trust, noting that the objections raised were either addressed through amendments to the trust deed or were irrelevant for the purpose of registration. The tribunal also highlighted that the CIT has the power u/s 12AA(3) to cancel registration if the trust's activities are later found to be non-genuine. The appeal was allowed.
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2012 (2) TMI 650
Issues Involved:
1. Levy of penalty u/s 271D and 271E of the Income-tax Act, 1961.
2. Validity of penalty proceedings initiated during assessment year 2007-08 for transactions related to assessment year 2005-06.
3. Consideration of reasonable cause for cash transactions.
Summary:
Issue 1: Levy of Penalty u/s 271D and 271E
The assessee was penalized for accepting and repaying a cash loan of Rs. 2 lakhs from Shri Babu Singh, violating sections 269SS and 269T of the Income-tax Act, 1961. The Assessing Officer (AO) imposed penalties of Rs. 2 lakhs each u/s 271D and 271E, rejecting the assessee's plea that the lender was an agriculturist without a bank account and that the transaction was covered by a surrendered amount during a survey.
Issue 2: Validity of Penalty Proceedings Initiated During Assessment Year 2007-08
The Tribunal examined whether penalty proceedings for assessment year 2005-06 could be initiated during the assessment proceedings for 2007-08. The AO initiated penalty proceedings based on documents found during a survey conducted on 10.01.2007. The Tribunal noted that no reassessment proceedings were initiated for 2005-06, and the penalty proceedings were initiated during the assessment for 2007-08. Citing the Hon'ble Punjab & Haryana High Court's decision in CIT v. Manohar Lal Thakral, the Tribunal held that penalty proceedings could not be initiated for a different assessment year when no proceedings were pending for that year.
Issue 3: Consideration of Reasonable Cause for Cash Transactions
The Tribunal considered the assessee's plea of reasonable cause, noting that the lender was an agriculturist without a bank account. The Tribunal emphasized that penalty imposition is discretionary and must consider relevant circumstances. Following the High Court's decision in CIT v. Manohar Lal Thakral, the Tribunal found no merit in the initiation of penalty proceedings u/s 271D and 271E for assessment year 2005-06 during the assessment for 2007-08.
Conclusion:
The Tribunal deleted the penalties levied u/s 271D and 271E, allowing the assessee's appeals. The judgment underscores the importance of initiating penalty proceedings within the correct assessment year and considering reasonable cause for cash transactions.
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2012 (2) TMI 649
Issues involved: Appeal against order allowing set off of unabsorbed depreciation for A.Y. 2001-02 against "Income from Other Sources" u/s 32(2), 72(2) & 73(3) of the I.T. Act, 1961.
Issue 1: Set off of unabsorbed depreciation against "Income from Other Sources"
The appellant, a Private Limited Company, engaged in the business of manufacture and sale of M.S. Ingots, filed a return declaring Nil income for A.Y. 2009-2010. Following a survey u/s 133A during F.Y. 2008-09, the company surrendered an amount of Rs. 15 lakh in addition to business income, which was shown in the return of income. The Assessing Officer noted that the company set off the income of the year, including the surrendered amount, against brought forward losses of earlier years. The AO questioned the treatment of the surrendered amount as business income and the set off against brought forward depreciation losses. The AO held that the amounts of Rs. 15 lakhs and Rs. 4,94,620/- (interest income) were not eligible for set off against brought forward business depreciation losses as per section 73 of the I.T. Act. The CIT(A) allowed the appeal, citing the decision in the case of CIT vs. Virmani Industries, stating that unabsorbed brought forward depreciation can be set off against current year's income even if it falls under "income from other sources." The department contended that the CIT(A) did not consider the Special Bench decision in the case of DCIT vs. Times of Guaranty (Mum.) (SB), which outlined the legal position of unabsorbed depreciation allowances in different periods.
Issue 2: Legal position of unabsorbed depreciation allowances in different periods
The Special Bench decision summarized the legal position of unadjusted/unabsorbed depreciation allowances in three periods:
- In the first period (upto A.Y. 1996-97), current depreciation could be set off against any income within the same year.
- In the second period (A.Y. 1997-98 to 2001-02), brought forward unadjusted depreciation allowances could be carried forward for set off against any income for a maximum of eight A.Ys. Current depreciation could be set off against business income first and then against any other head of income.
- In the third period (A.Y. 2002-03 onwards), different rules applied for set off of unabsorbed depreciation allowances against various heads of income within specific timeframes.
Conclusion:
The matter was restored to the AO to reexamine the issue of carry forward unabsorbed depreciation in light of the Special Bench decision. The appeal was allowed for statistical purposes.
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2012 (2) TMI 647
Issues involved: Interpretation of u/s 40(a)(ia) of the Income Tax Act, 1961 regarding retrospective application of the amendment made by the Finance Act, 2010.
Summary:
The Appellate Tribunal ITAT Kolkata heard an appeal filed by the Revenue against the order of the Commissioner of Income-tax (Appeals)-XX, Kolkata for the assessment year 2005-06. The main grounds of appeal were related to the interpretation of u/s 40(a)(ia) of the Income Tax Act, 1961. The Revenue contended that the ld. CIT(A.) erred in not accepting the retrospective effect of the amendment made in section 40(a)(ia) by the Finance Act, 2010 from the assessment year 2010-11. The case involved a disallowance of commission payment under section 40(a)(ia) due to non-deduction of TDS within the prescribed time limit.
The assessment was initially completed under section 143(3) on a total income of Rs. 4,18,17,910/-. A notice u/s 154 was served as TDS against commission payment had not been paid within the specified period. The Assessing Officer disallowed Rs. 40,82,089/- as commission payment under section 40(a)(ia). However, the ld. CIT(Appeals) deleted the disallowance based on a previous ITAT decision for the assessment year 2005-06 in a similar case.
After considering the arguments from both sides and reviewing the relevant material, the Tribunal noted that the issue had already been decided by the ITAT and the jurisdictional High Court. It was held that the amendment in section 40(a)(ia) by the Finance Act, 2010 was remedial and curative in nature, with retrospective application. The tax deducted during the year was paid to the government before the due date for filing the return under section 139(1). The Tribunal followed the decision of the High Court and dismissed the grounds of appeal raised by the Revenue.
Therefore, the appeal filed by the Revenue was dismissed, and the order was pronounced in the Open Court on 29/02/2012.
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2012 (2) TMI 646
Issues Involved:
1. Confirmation of penalty u/s 271(1)(c) despite revised return.
2. Allegation of furnishing inaccurate particulars and concealment of income.
3. Consideration of revised return and computation of income.
4. Acceptance of income based on revised return u/s 143(1)(a).
5. Computation of penalty amount.
6. Consideration of second revised computation of income.
Summary:
1. Confirmation of penalty u/s 271(1)(c) despite revised return:
The learned CIT(A) confirmed the penalty of Rs. 137,180/- u/s 271(1)(c) despite the assessee's claim of revising the return suo-moto on 29.03.1996 and paying taxes, showing bonafide intention.
2. Allegation of furnishing inaccurate particulars and concealment of income:
The CIT(A) found that the assessee furnished inaccurate particulars of income and concealed income without considering the documentary evidence filed by the assessee.
3. Consideration of revised return and computation of income:
The CIT(A) held that the revised return filed on 2.4.1996 was nonest as it was not within the prescribed time limit u/s 139(5). The subsequent revision of computation of income on 27.02.2001 was also considered nonest. The return filed on 10.4.2001 in response to notice u/s 148 was the only valid return.
4. Acceptance of income based on revised return u/s 143(1)(a):
The CIT(A) did not consider the intimation dated 17.03.1997 u/s 143(1)(a) issued by the AO, which accepted the income of Rs. 4,48,870/- based on the revised return filed on 29.03.1996.
5. Computation of penalty amount:
The CIT(A) upheld the penalty amount of Rs. 137,180/- based on the AO's computation, despite the assessee's claim of wrong computation and pending rectification applications u/s 154/155.
6. Consideration of second revised computation of income:
The CIT(A) did not consider the second revised computation of income filed on 27.02.2001 declaring income of Rs. 478,340/- before the issue of notice u/s 148 dated 10.04.2001.
Final Judgment:
The ITAT found that the assessee had disclosed all particulars of income before the issuance of notice u/s 148 and that the revised computation of income was accepted by the AO. The penalty was imposed merely on the basis of revised income offered by the assessee suo-moto. The ITAT vacated the findings of the lower authorities and canceled the penalty levied u/s 271(1)(c). The appeal was partly allowed.
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2012 (2) TMI 645
Issues Involved:
1. Exclusion of telecommunication and insurance expenses from total turnover u/s 10A.
2. Allowability of professional fees u/s 37.
3. Nature of software expenses as capital or revenue.
4. Set off of losses of non-10A units against profits of 10A units.
Summary:
Issue 1: Exclusion of Telecommunication and Insurance Expenses from Total Turnover u/s 10A
The CIT(A) directed the Assessing Officer to exclude telecommunication and insurance expenses amounting to Rs. 86,18,618/- and foreign currency expenses of Rs. 22,03,62,997/- from both the export turnover and the total turnover while computing deduction u/s 10A of the Act. This decision was supported by the judgment of the Hon'ble Karnataka High Court in the assessee's own case, which followed the precedent set in CIT v M/s Tata Elxsi Ltd. & Others. The principle established is that if certain expenses are excluded from the export turnover, they must also be excluded from the total turnover to maintain parity in the formula for computing deductions. Consequently, the revenue's appeal on this ground was dismissed.
Issue 2: Allowability of Professional Fees u/s 37
The CIT(A) allowed the consultancy fees of Rs. 1,55,890/- as a deductible expense u/s 37 of the Act, considering it as incurred for business purposes. However, the Tribunal found that the details of the expenses were not discussed in detail and thus restored the matter to the Assessing Officer for fresh consideration. The revenue's appeal on this ground was allowed for statistical purposes.
Issue 3: Nature of Software Expenses as Capital or Revenue
The assessee's claim that software expenses of Rs. 7,71,400/- and Rs. 70,400/- were revenue in nature was rejected by the CIT(A), who treated them as capital expenses. The Tribunal, referencing the jurisdictional High Court's judgment in CIT v M/s Toyota Kirloskar Motors Pvt. Ltd., and the Special Bench decision in Amway India Enterprises v DCIT, remanded the issue back to the Assessing Officer for a detailed examination. The assessee's appeal on this ground was allowed for statistical purposes.
Issue 4: Set Off of Losses of Non-10A Units Against Profits of 10A Units
The CIT(A) upheld the Assessing Officer's decision to set off losses from non-10A units against the profits of 10A units. However, the Tribunal, following the jurisdictional High Court's judgment in CIT v M/s Axa Business Services Pvt. Ltd., held that deduction u/s 10A should be calculated on a stand-alone basis and that losses from non-10A units cannot be set off against the income of 10A units. The assessee's appeal on this ground was allowed.
Conclusion:
The revenue's appeal was partly allowed for statistical purposes, and the assessee's appeal was partly allowed. The Tribunal directed the Assessing Officer to reconsider certain issues and adhere to the principles laid down by the jurisdictional High Court.
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2012 (2) TMI 644
Issues involved: Appeal filed u/s 10F of Companies Act challenging CLB's order dismissing petition u/s 111A for rectification of share register.
Details of the judgment:
1. Observations of CLB:
- CLB found no case u/s 112 of the Act, deemed certification claim untenable.
- Alleged collusion between Managing Director and petitioner's father.
- Lack of valid transfer endorsement on share certificate.
- Respondent's contention of collusion prima facie established.
- Proxy litigation to remove disqualification of Statutory Auditor.
- Failure to follow normal transfer procedure.
- Respondent's contentions remain unrebutted.
2. Appellant's Submissions:
- Impugned order based on surmises, not addressing relied upon documents.
- Mention of Share Certificate, Share Transfer Form, and shareholder list.
- Original Share Transfer Register not produced by respondent.
- Respondent's evasive response to appellant's request for notice.
3. Respondent's Arguments:
- Appellant's petition filed for collateral purpose by father, previous auditor.
- Allegations of fabricated documents by appellant's father in collusion with previous management.
- Change in management in 2005, loss of documents during office shift.
- Discrepancies in transfer documents pointed out.
- Appellant's father shown as shareholder in contemporaneous shareholder list.
4. Court's Decision:
- Appeal u/s 10F lies on question of law or perverse finding.
- No perversity found in impugned order.
- Lack of transfer number, ledger folio number, and company stamp/seal on documents.
- Legally valid explanation for non-production of original Share Transfer Register.
- Annual returns filed by previous management show appellant's father as shareholder.
- CLB rightly concluded falsity of petitioner's case based on public documents.
- Appeal deemed devoid of merit and dismissed without costs.
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2012 (2) TMI 643
Principle of `failure of justice' - Effect on not committing an accused in terms of Section 193 of the Code of Criminal Procedure (the Code) in cases where charge-sheet is filed u/s 3(1)(x) of the Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Act, 1989 (the Act) and cognizance is directly taken by the Special Judge under the Act - In the instant case neither the Trial Court nor the High Court appears to have kept in view the requirements of sub-section (3) relating to question regarding "failure of justice". Merely because there is any omission, error or irregularity in the matter of according sanction that does not affect the validity of the proceeding unless the Court records the satisfaction that such error, omission or irregularity has resulted in failure of justice. The same also applies to the appellate or revisional Court. The requirement of sub- section (4) about raising the issue, at the earliest stage has not been also considered. Unfortunately the High Court by a practically non-reasoned order, confirmed the order passed by the learned trial judge. The orders are, therefore, indefensible. We set aside the said orders. It would be appropriate to require the trial Court to record findings in terms of Clause (b) of Sub-section (3) and Sub-section (4) of Section 19.
"Per incuriam" are those decisions given in ignorance or forgetfulness of some inconsistent statutory provision or of some authority binding on the court concerned, so that in such cases some part of the decision or some step in the reasoning on which it is based, is found, on that account to be demonstrably wrong."
`Incuria' literally means `carelessness'. In practice per incuriam appears to mean per ignoratium. English courts have developed this principle in relaxation of the rule of stare decisis.
The `quotable in law' is avoided and ignored if it is rendered, `in ignoratium of a statute or other binding authority'
HELD THAT:- No objection was raised at the time of framing of charge or any other relevant time but only propounded after conviction. Under these circumstances, the right of the collective as well as the right of the victim springs to the forefront and then it becomes obligatory on the part of the accused to satisfy the court that there has been failure of justice or prejudice has been caused to him. we come to the irresistible conclusion that the objection relating to non-compliance of Section 193 of the Code, which eventually has resulted in directly entertaining and taking cognizance by the Special Judge under the (Prevention of Atrocities) Act, 1989, does not vitiate the trial and on the said ground alone, the conviction cannot be set aside or there cannot be a direction of retrial and, therefore, the decision rendered in Bhooraji [2001 (8) TMI 1385 - SUPREME COURT] lays down the correct law inasmuch as there is no failure of justice or no prejudice is caused to the accused. The decisions rendered in Moly and Vidyadharan [2004 (3) TMI 767 - SUPREME COURT] have not noted the decision in Bhooraji, a binding precedent, and hence they are per incuriam and further, the law laid down therein, whereby the conviction is set aside or matter is remanded after setting aside the conviction for fresh trial, does not expound the correct proposition of law and, accordingly, they are hereby, to that extent, overruled.
if the failure of justice is not bestowed its due signification in a case of the present nature, every procedural lapse or interdict would be given a privileged place on the pulpit. It would, with unnecessary interpretative dynamism, have the effect potentiality to cause a dent in the criminal justice delivery system and eventually, justice would become illusory like a mirage. It is to be borne in mind that the Legislature deliberately obliterated certain rights conferred on the accused at the committal stage under the new Code. The intendment of the Legislature in the plainest sense is that every stage is not to be treated as vital and it is to be interpreted to subserve the substantive objects of the criminal trial.
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