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Showing 141 to 160 of 1912 Records
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2016 (12) TMI 1776
Valuation - job-work - stock transfer basis - Rule 8 of Central Excise Valuation Rules, 2000 - HELD THAT:- The appellant supplied the bulk detergent powder to their job worker but at the same time they are selling the same product to independent buyers, i.e. Hindustan Lever Ltd. on principal to principal basis. In the transaction of job work, the valuation is governed by Rule 8 in a case where no sale price is available and entire transaction is under job work only.
However, in a case where the same goods is sold by the assessee on principal to principal basis then instead of valuation of Rule 8, the sale price to the independent buyer will apply.
Appeal dismissed - decided against Revenue.
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2016 (12) TMI 1775
Penalty u/s 271(1)(c) - claim made on account of deduction u/s 80P(2)(a)(i) and denial of provision made for overdue interest - HELD THAT:- In the present case, the assessee neither concealed the income nor filed inaccurate particulars. The assessee has only made a claim. According to the assessee, it is eligible for deduction under section 80P(2)(a)(i) and filed return of income by disclosing all the facts. AO denied the claim, which was confirmed by the Commissioner of Income Tax (Appeals).
This is not automatically amounting to neither concealment of income nor filing of inaccurate particulars. Hon'ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT] held that a mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars.
Provision of overdue interest - It is not the case of the Commissioner of Income Tax (Appeals) that the assessee neither concealed the income nor filed inaccurate particulars. The case of the assessee is that he made a provision on sticky loans by following the RBI guidelines by filing all the details before the Assessing Officer. Once, the assessee filed all the details in his return of income and made a provision, if the Assessing Officer has denied the provision made by the assessee, it cannot be said that the provision made by the assessee is neither concealment nor filing inaccurate particulars of income. It is only a legal claim made by the assessee. This aspect has already been considered while dealing with section 80P(2)(a)(i) (supra) and by following the judgment of the Hon'ble Supreme Court, the penalty levied by the Assessing Officer is to be cancelled - it is not a fit case for imposing penalty under section 271(1)(c) - Decided in favour of assessee.
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2016 (12) TMI 1774
Negative remarks against the individuals in the newspapers based on statement of authority after search - Whether impugned publications make out a case for offence under the aforesaid provisions of the Indian Penal Code?
HELD THAT:- Admitted position in law is that in those cases where the accused is residing at a place beyond the area in which the Magistrate exercises his jurisdiction, it is mandatory on the part of the Magistrate to conduct an enquiry or investigation before issuing the process. Section 202 of the Code of Criminal Procedure was amended in the year by the Code of Criminal Procedure (Amendment) Act, 2005, with effect from 22nd June, 2006 by adding the words 'and shall, in a case where the accused is residing at a place beyond the area in which he exercises his jurisdiction'. There is a vital purpose or objective behind this amendment, namely, to ward off false complaints against such persons residing at a far off places in order to save them from unnecessary harassment. Thus, the amended provision casts an obligation on the Magistrate to conduct enquiry or direct investigation before issuing the process, so that false complaints are filtered and rejected.
The amended provision casts an obligation on the Magistrate to apply his mind carefully and satisfy himself that the allegations in the complaint, when considered along with the statements recorded or the enquiry conducted thereon, would prima facie constitute the offence for which the complaint is filed.
Appeal allowed.
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2016 (12) TMI 1773
Oppression and mismanagement - non-implementation of the MOU dated 18.03.2009 and two addendums attached with it dated 13.03.2010 and 26.03.2010 - whether in the facts and circumstances of this case the dispute raised in the company petition filed u/s. 397, 398, 402 and 403 of the Companies Act could be referred to arbitration on the basis of identical reliefs having been claimed?
HELD THAT:- The law on the subject is fairly well settled - In the case of Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya [2003 (4) TMI 435 - SUPREME COURT] Hon'ble the Supreme Court has, inter alia observed that The Court has to apply its mind to the condition contemplated under section 89 CPC and even if application under section 8 of the Act is rejected, the Court is required to follow the procedure prescribed under the said section.
The company petition is nothing else but a dressed up petition and is not covered by the provision of chapter 6 of the Companies Act, 1956. Merely by modifying the prayer or using different expression in various paras of the petition prefacing it with the allegations of 'oppression and mismanagement' a petition would not assume the character of a petition u/s. 397, 398 and 402 of the Companies Act - The arbitration proceedings are pending before the arbitrator and the matters concerning all the allegations based on MOU and the two addendums. The reliefs which have been claimed in the petition can be claimed and granted by the Arbitrator.
On the excuse and pretext of 'oppression and mismanagement' the petitioner cannot be given a colour of a dispute of 'oppression and mismanagement'. Therefore we do not find any substance in the arguments of the counsel for the non applicant-petitioner that the company petition is aimed at only preventing the 'oppression and mismanagement'.
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2016 (12) TMI 1772
Deemed dividend addition u/s 2(22)(e) - assessee is a Director and having more than 10% share holding in M/s.Shree Velu Builders (P) Ltd., a company in which public are not substantially interested was having accumulated profits of ₹ 84,51,787/- as on 31.03.2007 and it has transferred the flat constructed by the company valued at ₹ 38 lakhs to the assessee. After transfer of the flat of ₹ 38 lakhs, the outstanding balance in the current account maintained by the assessee was at ₹ 32,25,049/-(Dr.), which means that the assessee owe the company an amount of ₹ 32,25,049/- as at the end of the year.
HELD THAT:- The amount of ₹ 31,57,569/- is outstanding as a loan/advance being the amount excess drawn in the current account, which is nothing but a loan/advance because of the transfer of the company asset to the assessee. Though, the amount paid is not in cash, the asset of the company (money’s worth) was transferred to the assessee resulting into reduction of the assets of the company and the ultimate result is outstanding as a loan from the assessee. Therefore, the transfer of assets which resulted in a advance/loan is held to be payment by the company to the assessee and falls within the four corners of the deemed dividend as per the provisions of the Sec. 2(22)(e) of the Income Tax Act . See KANTILAL MANILAL AND OTHERS VERSUS COMMISSIONER OF INCOME-TAX, BOMBAY NORTH, KUTCH AND SAURASHTRA, AHMEDABAD [1960 (11) TMI 11 - SUPREME COURT]
Dividend need not be distributed in money; it may be distributed by delivery of property or right having monetary value. The resolution, it is true, did not purport to distribute the right amongst the shareholders as dividend. It did not also take the form of a resolution for distribution of dividend; it took the form of distribution of a right which had a monetary value. But by the form of the resolution sanctioning the distribution, the true character of the resolution could not be altered. Payment made to the assessee by the company is rightly brought to tax by the AO as deemed dividend and the addition made by the AO is confirmed. - Decided against assessee.
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2016 (12) TMI 1771
Accrual of income - income recognition - recognizing the notional interest income on outstanding debts when the interest is the subject matter of a decree before the Court - Addition on account of interest accrued on outstanding debt - assessee acquired the right of suit as per assignment deed and was entitled to recover the debt along with interest and cost of suit as per the deed of assignment of right - interest on debt which was receivable by Bank of Baroda, was now receivable to the assessee and as the assessee is following the mercantile system of accounting the assessee was required to offer interest income on debts on accrual basis - HELD THAT:- There is no dispute on the facts about the assessee acquiring the debts from the Bank of Baroda for a sum of ₹ 84,97,400/- with the borrowed funds, the loan creditors have not paid interest income to either bank or to the assessee, assessee has not recognised the income for all the assessment years under consideration etc. The legal issue i.e. to be decided on the right to recover the interest income by the assessee during the pendency of suit in Bombay City Civil Court.
As examined the interpretation of the said section and the relevant explanation is already incorporated in the above paras of this order. We have considered the cited judgment of the Hon‟ble jurisdictional High Court in the case of Maharashtra State Financial Corporation Ltd [2005 (7) TMI 80 - BOMBAY HIGH COURT] . Also considered the reasoning given by the CIT (A) in paras 4.1.4 and 4.1.5 of his order. Considering the above, we are of the opinion, the conclusion drawn by the CIT (A) is fair and reasonable and it does not call for any interference. Accordingly, relevant grounds raised by the Revenue in all the four appeals are dismissed.
Disallowance u/s 14A - as per CIT- A disallowance need to be limited to the dividend i.e. exempted income - HELD THAT:- CIT (A) discussed the issue at length and decided the issue. Therefore, in our view, the order of the CIT (A) is fair and reasonable and it does not call for any interference. Accordingly, relevant ground raised by the Revenue dismissed.
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2016 (12) TMI 1770
Grant of subsidy for promotion of industrial sick units - Rajasthan Investment Promotional Scheme - principle of promissory estoppel and legitimate expectation - HELD THAT:- In the scheme RIPS 2003 introduced by the State of Rajasthan vide notification dated 28.7.2003 the said scheme was amended vide notification dated 2.12.2005 whereby sub-clauses (vi) and (vii) were inserted in clause 7 of the RIPS, 2003, but subsequently, the said provision was deleted just after five months vide notification dated 28.4.2006, but SLSC granted entitlement certificate to the petitioner-respondent Shree Cement Company Ltd. granting subsidy upto 75% for both the units situated in Pali and Bhiwadi. In the SLSC all the higher authorities of the government were present and after due application of mind issued eligibility certificate in favour of the petitioner-respondent Shree Cement Company Ltd. even after deletion of amendment vide orders dated 29.7.2006 and 27.6.2007. It is worthwhile to observe that in the writ petition although notification dated 28.4.2006 was challenged, but the said prayer was not pressed by the respondent company.
The learned Single Judge has committed an error while holding that petitioner-respondent Shree Cement Company Ltd. has vested right by virtue of principle of promissory estoppel and legitimate expectation to get subsidy upto 75% on the basis of entitlement certificate issued by the SLSC because the State Government is framing scheme from time to time to grant certain benefits and concession in the form of subsidy to the industrial development, but here in this case, upon perusal of entire record, it is obvious that till deletion of provision vide notification dated 28.4.2006, none of the eligibility conditions were fulfilled by the respondent Company but ignoring those facts, the SLSC issued entitlement certificate on 29.6.2006 and 28.7.2007 much after the deletion of the provision by way of notification dated 28.4.2006.
Specific provision has been incorporated under clause 13 of the RIPS, 2003 to check the action and orders of SLSC while exercising revisional power, therefore, it cannot be said that any error was committed by the Principal Secretary, Finance of State Government to quash the orders passed by the SLSC, therefore, the judgment impugned in this appeal is not sustainable in law.
Appeal allowed.
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2016 (12) TMI 1769
Assessment u/s 153A - order passed on a date beyond the prescribed limit u/s 153B(1)(a) - HELD THAT:- As per the assessment order, the date of the assessment order is 28.3.2013 but there is no evidence before us that the order has been passed by the Assessing Officer after expiry of limitation. We find that the Assessing Officer had passed the order in time but it was dispatched on later date but it does not mean that the order is passed after the period of limitation, therefore, we dismiss this ground.
Addition on account of share application money received by the assessee - whether incriminating material in respect of share application money was found or seized during the course of search under s.132? - HELD THAT:- We allow the present appeal filed by the assessee for the assessment year 2007-08 on the issue of section 153A r.w.s. section 143(3) of the I.T. Act wherein it has been held that in absence of any incriminating documents found and seized during the course of search, the Assessing Officer is not justified in making the additions in non-abated assessment while passing the order u/s 153A r.w.s. 143(3) of the Act. Thus, we hold the making of addition in non-abated assessment for the A.Y. 2007-08 as void ab initio. Consequently, the addition made in the present assessment order passed u/s 153A/143(3) for the assessment years 2007-08 is deleted.
Addition of share application money - HELD THAT:- Assessee has complied with all the information which was desired by the Assessing Officer to be submitted. Therefore, we are of the view that no addition is called for as we have already held in Anant Steel P. Ltd. vs. ACIT [2015 (11) TMI 1758 - ITAT INDORE] following the judgment of Lovely Export (SC), that if at all the Assessing Officer is not satisfied with the genuineness of transaction, then the Assessing Officer is at liberty to make the addition in hands of that co. In decision of Hon'ble Delhi High Court in the case of Principal CIT vs. Softline Creations P. Ltd. [2016 (9) TMI 255 - DELHI HIGH COURT] it has been held that assessee has duly discharged burden of proof by providing necessary information and inability to produce share applicants could not lead to an adverse inference - ground of the appeal of the assessee is allowed.
Rejection of books of account - excess stock found - HELD THAT:- Finding of excess stock during the course of search by itself suggest that books of accounts of the assessee were not correct and complete and these were not reliable. Moreover, we find that assessee co. and its directors have also surrendered ₹ 5 crores as additional income, therefore, it was the base for rejection of book results. Therefore, we are of the view that Assessing Officer and learned CIT(A) are justified in rejecting the book results for the assessment year 2011-12. The assessee has relied upon many decisions during the course of hearing but the facts of all these cases are altogether different. Therefore, we endorse the action of the Assessing Officer and learned CIT(A) regarding rejecting the book results u/s 145(3)
Estimating the G.P. @ 1.25% of the total turnover - CIT(A)’s action in reducing the g.p. addition on sale of gold bullion and silver bullion - HELD THAT:- In absence of any incriminating documents, there is absolutely no justification for making any estimation of g.p. in respect of assessment year 2010-11, for which, rejection of books of accounts has not been upheld by us. Accordingly, we hold that there was no justification in the AO’s action as well as in the learned CIT(A)’s action in estimating g.p. on sales for the assessment year 2010-11. However, for assessment year 2011-12, we have upheld the rejection of books of accounts and therefore, we hold that considering the facts and circumstances of the assessee’s case, it would be just and fair to estimate g.p. on sale of gold bullion and silver bullion @0.30% as against 0.29% shown by the assessee in its books of accounts.
Enhancing the income of the assessee by suo-mottu estimating the sales of the assessee 20% higher than that shown in the audited books of account - HELD THAT:- As during the course of the search proceedings, not a single incriminating document or loose paper was found from which the unaccounted trading of bullion by the assessee could get established. We have also observed that the assessee had maintained stock register and such stock register was duly produced before the Assessing Officer. We also observed that the Revenue Authorities have not brought on record any single instance of any sales having been made at a rate lower than the then prevailing market rate. If the sale is not found to have been made at the rate below than the market rate, any allegation regarding manipulation in the cash memos without any basis has no legs to stand. We thus find no substance in the action of the learned CIT(A) in enhancing the sales of the assessee on ad-hoc basis by 20% of the sales shown in the audited accounts
Suppression of commodity trading income - Excess claim of transaction charges - HELD THAT:- the transaction charges have no direct nexus with the commodity trading income for the reason that such charges are invariably required to be paid at a fixed rate by a dealer/broker in the forward commodity market to the respective commodity exchanges irrespective of the outcome of the transactions. So, even for losses, one would be required to pay the transaction charges. Further, the commodity forward transactions are speculative in the nature and net result of transactions for one year cannot be compared with that of the other year. We find that except making the guess work, the learned CIT(A) has not brought on record any material for his presumption of suppression of commodity trading income. In such circumstances, there was no reason for the learned CIT(A) to estimate the income of the assessee for the assessment year 2010-11 on the basis of transaction charges vis-a-vis commodity income shown by the assessee for the immediately preceding assessment year i.e. 2009-10. Thus, there was no justification for making an enhancement of ₹ 56,47,000/- in the assessee’s income on account of commodity trading income for the assessment year 2010-11 and of ₹ 1,92,52,243/- for assessment year 2011-12. We also find no justification in the learned CIT(A)’s action in making an enhancement of ₹ 47,47,254/- in the assessee’s income on account of excess claim of transaction charges.
Enhancement of the salary - addition based on loose paper found in search - HELD THAT:- Loose paper is in the form of P & L account of one of the several commodity divisions of the assessee i.e. of MCX division and that too, for the period from 01.4.2010 to the date of search i.e. 25.11.2010. Similarly, the loose paper inventorised was also in respect of monthly salary paid in one of the divisions. The learned CIT(A) misdirected himself that the salary stated was in respect of entire divisions whereas it was only one of the divisions. We find that the assessee has filed the complete details of salary paid to various staff members and the entire salary was paid through account payee cheques. DR could not controvert such fact by brining any contrary material on record. We also find that during the course of assessment proceedings, the assessee had produced all the books of account and other records before the Assessing Officer and the Assessing Officer had not found any discrepancy in the salary payments recorded by the assessee in its books of account. Subject enhancement is a result of misinterpretation of the documents found during the course of search without considering that such documents were pertaining only in respect of one of the divisions and were containing the details for the part of the year only and therefore, the same are not comparable with the consolidated details for the whole year. No addition to be made.
Addition disbelieving the loss incurred by the assessee on account of sale of surplus stock of gold bullion found during the course of search - HELD THAT:- AO, without bringing any concrete material on record, presumed that the sale of gold bullion was deliberately shown by the assessee on such date at which the gold rate was low as compared to the rate of previous couple of days and the assessee has shown to have sold the excess stock on 28-01-2011 for booking loss of ₹ 7,40,297/- on sale of unaccounted investment. We have already held that no evidence found as regard to suppression of any sale. In such circumstances, we are of the view that the ld. CIT(A) was justified in deleting the entire addition holding that the AO failed to prove that sale bills of bullion were bogus. Even before us, no contrary material has been brought on record by the Revenue to controvert the findings of the ld. CIT(A).
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2016 (12) TMI 1768
Territorial Jurisdiction - Termination of contractual services with the respondent no.2 - non-service of termination order to petitioner - whether merely because the Government of India has issued its letter dated 27.10.2015 at Delhi would this ipso facto give territorial jurisdiction to this Court although this letter has not been communicated to the petitioner at Delhi and has in fact been communicated to the petitioner at Goa in terms of the subsequent letter dated 28.10.2015? - Held that:- A Constitution Bench of the Supreme Court way back in the year 1963 in the judgment in the case of Bachhittar Singh Vs. The State of Punjab [1962 (3) TMI 84 - SUPREME COURT OF INDIA] has held that orders passed in Government files unless communicated would not give a legal right to a person. The ratio of the judgment of the Supreme Court in the case of Bachhittar Singh has been consistently followed thereafter and it is the law of the land.
A cause of action in law means that an enforceable right in law accrues. When a right accrues simultaneously a liability also arises against a person. If an enforceable right arises only on communication of the order, then, a cause of action arises and is complete only when the communication of the order to the person concerned is complete. Without such communication of an order to the concerned person, the cause of action is not complete for filing of a case in a court of law.
This Court has no territorial jurisdiction and the writ petition is therefore dismissed
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2016 (12) TMI 1767
Benefit of substantial expansion u/s 80IC(2) denied - CIT(A) restricting deduction to 25% instead of 100% claimed by the appellant in the sixth year of operation of new industrial undertaking - HELD THAT:- In the present case, it is noticed that the CIT(A) denied the claim of the assessee by following the decision of M/s Hycron Electronics (2015 (6) TMI 725 - ITAT CHANDIGARH) where in held as s entitled to only 25% of deduction during the present year because the assessee has already availed the period of full deduction @ 100% in the earlier five years
The facts above are similar to the facts of the assessee’s case. No valid ground to interfere with the findings given by the ld. CIT(A) and accordingly, do not see any merit in this appeal of the assessee. - Decided in favour of revenue
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2016 (12) TMI 1766
Best judgement adjustment - transactions noted in the bill-book seized - Held that:- Assessee has neither pleaded nor established any justifiable reason for his not entering in the accounts the transactions noted in the bill-book seized. In such a situation, it was not possible for the Sales Tax Officer to find out precisely the suppressed turnover; he could only estimate it based on the material before him.
Abdulai disapproves of an approach that insists on the assessing authority's having material before him to prove the exact turnover suppressed. If it were insisted upon, there would be no "best-judgment" assessment. The assessee cannot be permitted to take advantage of his own illegal acts, for it is his duty to place all facts truthfully before the assessing authority. If he fails to do his duty, he cannot be allowed to call upon the assessing authority to prove what turnover he had suppressed, which fact is within his personal knowledge. AO's task in finding out the escaped turnover was by no means easy. In estimating any escaped turnover, Abdulai acknowledges, inevitably there is going to be some guess- work. The assessing authority while making the "best-judgment" assessment no doubt should conclude rationally and unbiased. If the AO's estimate is bona fide and rational, that there is no good proof to support that estimate is immaterial. Prima facie, the assessing authority is the best judge of the situation; it is his "best-judgment" and not of anyone else's.
No court could substitute its "best-judgment" for that of the assessing authority. The courts should first see, Abdulai asserts, whether the accounts maintained by the assessee were rightly rejected as unreliable. If they conclude that they were rightly rejected, the next question is whether the basis adopted in estimating the turnover has a reasonable nexus with the estimate made. If the basis adopted is held to be relevant, even though the courts may think that it is not the most appropriate basis, the assessing authority's estimate cannot be disturbed.
Unexplained investment - Held that:- The Tribunal has found that, about this investment, the Department has failed to find any corroborative material under Section 69 of the Act. It has also held that the amount in the Registered Sale Deed should be accepted unless countervailing material establishes that the consideration in the Registered Deed is different. The un-signed computer print-out, held the Tribunal, has no evidentiary value. Convinced of the assessee's explanation, the Tribunal has held that the addition made by the Department regarding the alleged investment in Koothparamba property is not justified. This finding has attained finality.
Unexplained investment in 'Mahe' Property - Held that:- The bill-books found during the search pertain to the period from 01.04.2006 to 30.07.2007. From them AO found the total sales to be at ₹ 2.31 crores. Since the assessee had not included the sales in the trading account filed along with the return of income, the AO reassessed the sales backwards in the entire block-period from AY 2002-03.
Estimation of Turnover of Sales-Net Profit-Addition of 5% - Held that:- As has been rightly held by the Tribunal, the assessee could not establish that bill-books accord with the statements of account he submitted to the authorities. Nor has he sustained his defence that the bill-books contained commission transactions, given the tax difference between the State of Kerala and the Union Territory of Pondicherry. Further, important is that any accommodation by way of issuing bills at Mahe to the traders of Kerala for the transactions held only in Kerala is against public policy. The authorities-even if they were to believe the assessee's version-have rightly refused to recognise those illegal transactions. Indeed, emphatic is the judicial dictum of Abdulai that the AO's best-judgment did carry an element of speculation and approximation.
As against the initial turnover of ₹ 2.31 crore, the Tribunal has found it to be ₹ 1,95,49,077 based on the AO's Remand Report. As a result, the Tribunal has sustained the net profit rate at 5% of the turnover. We reckon that the method of calculation and the procedure adopted by the authorities arriving at the undisclosed income has accorded with the statutory mandate under sections 68 to 69C of the Act. We, therefore, find no reason to interfere with the Tribunal's confirming the AO's adopting the undisclosed income @5% on the revised suppressed turnover.
Agricultural income taken as income from other sources - Held that:- CIT (Appeals) has agreed with the AO's findings. The finding is that the assessee has claimed no agricultural income in the return, but showed it in the statement-of-account filed during assessment proceedings. Indeed, the assessee's claim seems to be against the established practice of reckoning income from agricultural activities. Excluding the house, whatever remains of 21 cents may not be, as has been concurrently held, sufficient to generate the income shown by the assessee from agriculture. We, therefore, find no reason to interfere with the concurrent findings entered by both the fora on this aspect - a question of fact.
Interest on Fixed Deposits the assessee had with Gokulam Chit Funds - Held that:- Indisputably, the assessee showed fixed deposits; but, correspondingly, failed to reveal in the returns any interest. Absent any explanation from the assessee, the AO adopted interest @10% per annum. To be more explicit, the assessee showed ₹ 10 lakh fixed deposit from 13-11-2002 to 31-03-2005, and ₹ 5 lakh from 21-01-2003 to 31-03-2009. As noted, he showed no income as interest on those deposits - Given the size of the deposits, it is but inevitable that the assessee ought to have earned some interest on the fixed deposits. As he has failed to show in his returns any income by way of interest, the concurrent finding entered by both the fora reckoning interest at 10% annually is eminently sustainable; so it calls for no interference.
Addition of Interest - Addition of amounts the assessee allegedly lent to other people - Held that:- The assessee lent the money to Mr. Nanu Vaidyar before 01-04-2001. As for the lending to others, too, exact dates are unavailable. So the AO treated the entire ₹ 25,63,500/- as the assessee's unexplained investment during the AY 2004-05. Leaving aside the minor discrepancies in the assessee's explanation about his lending the amounts to various persons, presumably his friends, we may bear in mind that the assessee is a businessman with considerable turnover. For a businessman, having a turnover of a couple of crores, short-term lending to friends- without interest at that-is neither uncommon nor abnormal.
True, the AO's assessment and the adjudicatory authorities' findings are, perhaps, matters of fact. But the facts to fructify into findings need the application of law. If that application of law is flawed, this court can interfere, without causing violence to the established principle of law that there needs no interference on the questions of fact.
Even going by the ratio of Abdulai, we reckon that the AO's findings on this issue are on unsure foundations. The speculative aspect overshadows the aspect of the established business practices. Given the assessee's explanation, we hold that he ought to have been given the benefit of doubt. In other words, there can be no quarrel on the AO's conclusion that ₹ 25,63,500/- is an unexplained investment, but on his calculating interest, we feel that it is without basis. We, therefore, set aside the Tribunal's findings for AY 2004-05 concerning addition of interest; as a result, we allow the assessee's appeal for AY 2004-05. Similarly, the AO's conjecture on the interest component for the AYs 2005-06, 2006-07, and 2007-08- ₹ 2,34,000/-, ₹ 2,34,000/-, and ₹ 1,36,500 respectively-cannot be sustained.
Addition of Interest - Held that:- On the above mentioned amounts, the AO has estimated interest component at ₹ 1,48,000/-. For the reasons weighed with us in disallowing the AO's best-judgment the addition of ₹ 25,63,500/-, we also hold that the addition of interest on those deposits cannot be sustained.
Fishing Boats - Held that:- We may focus on the additions made by the AO because of estimated income from fishing boats for the AYs 2005-06, 2006-07 2007-08, and 2008-09. Undeniably the seized diary revealed income from fishing boats amounting to ₹ 38,750/-, ₹ 43,900/-, ₹ 32,100/-, and ₹ 8000/- for the years mentioned above. As has been rightly and concurrently observed by the adjudicatory authorities, there was precious little explanation from the assessee. We, therefore, uphold the Tribunal's findings and dismiss the appeal for the AYs 2007-08 & 2008-09.
All issues against the assessee save the addition of amounts the assessee allegedly lent to other people, totaling to ₹ 25,63,500/- and the interest component thereon.
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2016 (12) TMI 1765
Dismissal of appeal by not providing sufficient opportunities to the assessee - denial of principle of natural justice - non speaking order - Held that:- CIT(A) has passed a non-speaking and exparte order, which is not sustainable in the eyes of law. Therefore, in the interest of justice, we set aside the issues in dispute to the file of the CIT(A) to decide the issues in dispute afresh, in accordance with law, after giving adequate opportunity of being heard to the parties and pass a speaking order. However, the Assessee is also directed to fully cooperate with the CIT(A) and produce all the documents before him to substantiate his claim and not to take any unnecessary adjournment. -Assessee appeal stands allowed for statistical purpose.
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2016 (12) TMI 1764
Disallowance of deduction u/s 80IC on the manufacturing activity undertaken by it - Held that:- No change in the fact situation has been brought to our notice by the revenue we are an agreement with the order of the CIT( appeal) in this regard, and uphold the assessee’s claim to deduction under section 80 IC on the manufacturing activity carried out by it in this year also. This ground of appeal raised by the revenue is therefore dismissed.
Deduction u/s 80IC on income from job work more so when the activity been carried out by the assessee was nothing but packaging - Held that:- As decided in 2005-2006, 2007-2008, 2008-2009 and 2011-2012 allowed the claim of deduction under section 80IC of the Act on job work charges. Further deduction u/s 80IC was also allowed on insurance claim received and scrap sale, holding the same to be directly attributable to the activities of the business unit. Appeal filed by the revenue allowed the claim of deduction under section 80IC of the Act both on manufacturing, job work charges, insurance claim and scrap sale.
Deduction u/s 80IC on other income such as scrap sale, insurance claim, foreign exchange fluctuation and credit balance when these incomes were not derived in true sense from the business of the eligible undertaking - Held that:- The assessee’s claim having been allowed from year to year there is no merit in the present ground raised by the revenue vis a vis claim of deduction under section 80IC on scrap sales and insurance claim received by the assessee - the amount received on scrap sale, the credit balance written off of parties, insurance claim received towards material damage during transit is directly attributable to the activities of the industrial unit and hence eligible for deduction under section 80IC of the Act. However, the assessee is not entitled to the deduction claimed under section 80IC of the Act on the misc. income received being refund of security deposit and the insurance claim on machinery repairs. In view thereof we direct the Assessing Officer to recompute the deduction allowable under section 80IC of the Act.
Deduction under section 80 IC on foreign exchange fluctuation received - Held that:- It is not disputed that the foreign exchange fluctuations relate to the export activity carried out by the assessee, the foreign exchange fluctuation earned by the assessee is to be treated as its trading receipts/receipts from the manufacturing activity carried out by it and thereby entitling the assessee to claim deduction under section 80IC on the same. In view of the above we find no infirmity in the order of the CIT(A)allowing the assessee’s claim of deduction under section 80IC on the foreign exchange fluctuation received. In view of the above we hold that the assessee is entitled to claim deduction under section 80IC on scrap sales, insurance claim, credit balances written back and foreign exchange fluctuations earned.
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2016 (12) TMI 1763
Declaration of a generating unit as Commercial Operation Date, "COD" - pre-conditions to be satisfied - date of commissioning - whether the COD for Unit No. 3, which was the first Unit to be commissioned, had been achieved on 31.3.2013?
Held that:- A perusal of the emails exchanged between the parties would show that the parties did not intend to amend by a written agreement any of the provisions of the PPA. Whereas an amendment of the PPA Under Article 18.1 would be bilateral, a waiver of a provision of the PPA would be unilateral Under Article 18.3 - Under Section 62, apart from novation of a contract and rescission of a contract, alteration of a contract is mentioned. Alteration is understood here, in the facts of the present case, in the sense of amendment. It is settled law that an amendment to a contract being in the nature of a modification of the terms of the contract must be read in and become a part of the original contract in order to amount to an alteration Under Section 62 of the Indian Contract Act.
No such thing having occurred on the present facts, it is clear that there is in fact no amendment by written agreement to the PPA.
The relevant Section therefore that would apply on the facts of the present case is Section 63. At this stage, it is important to advert to an argument made by counsel for the Appellants that Article 18.3 only refers to waivers that can expressly be made under various provisions of the agreement and not to Article 6 which, according to learned Counsel, cannot be waived under the PPA. Assuming that such argument is correct, and that Article 18.3 refers only to the mode of carrying out a waiver under the PPA, yet it is clear that Section 63 would operate on the facts of this case. This is for the reason that, when read with Section 1 of the Contract Act, it becomes clear that the PPA is subject to Section 63 of the Contract Act, which would allow a promise to dispense with or remit, wholly or in part, the performance of the promise made to him, and accept instead of it any satisfaction which he thinks fit - It is thus clear that if on facts there is a waiver of a provision of the PPA by one of the parties to the PPA, then Section 63 of the Contract Act will operate in order to give effect to such waiver.
The Appellate Tribunal is wholly incorrect in accepting the case of waiver put forward by learned Counsel for Sasan, and is equally incorrect in absolving the independent engineer for the test certificate given by him on 30.3.2013.
Applicability of Section 125 of the Electricity Act, 2003 - Held that:- We are afraid that we cannot agree. One substantial question of law is whether, when public interest is involved, waiver can at all take place of a right in favour of the generator of electricity under a PPA if the right also has an impact on consumer interest. This substantial question of law has been answered by us in the course of the judgment.
Appeal allowed.
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2016 (12) TMI 1762
CENVAT Credit - input services - service tax paid to avail the advertisement services - Broadcasting Agency services was rendered - denial of credit on the ground of nexus - Held that:- What that is intention of the law is to tax the provision of service. The service provided being identified and relatable to the appellant, there should not be denial of Cenvat credit of the service tax paid on advertisement service availed by it having nexus to its business - credit allowed - appeal allowed - decided in favor of appellant.
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2016 (12) TMI 1761
Application of income u/s. 11(1)(a) - corpus donation u/s. 11(1)(d) - carry forward of deficit on account of excess expenditure and directed the assessing officer to allow carry forward of deficit on account of excess expenditure - corpus donation u/s. 11(1)(d) - Held that:- Issues arising herein stands concluded against the Revenue and in favour of the Assessee by the decision of this Court in CIT v/s. Institute of Banking [2003 (7) TMI 52 - BOMBAY HIGH COURT]. The questions as proposed do not give rise to any substantial questions of law.
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2016 (12) TMI 1760
Disallowing the amortization of premium on Government Securities - Held that:- We find that the very same issued has been considered by the Coordinate Bench of this Tribunal in assessee’s own case (supra) for the Assessment Year 2008-09. Therefore, we set aside the order of the Commissioner of Income Tax (Appeals) and remit the matter back to the file of the AO for fresh adjudication keeping in view the decision of the Coordinate Bench of this Tribunal for the Assessment Year 2008-09. Hence, this ground of appeal raised by the assessee is allowed for statistical purpose.
Disallowing the amortization of loss on account of merger - Held that:- CIT(A) correctly by considering the provisions of the Act disallowed the claim made by the assessee. So far as RBI guidelines with regard to the amortization of losses is concerned, in view of the specific provision provided by section 72AB of the Act, in our opinion, RBI guidelines cannot prevail over the Income Tax Act. We further observed that business losses and unabsorbed depreciation of amalgamating co-operative bank i.e. Bobbili Co-operative bank can be set off against the income of successor co-operative bank i.e. amalgamated co-operative bank (assessee) if the amalgamation is within the meaning of section 72AB. In the present case, the amalgamating company i.e. Bobbili Co-operative bank not filed return of income as required u/s 72AB. Therefore, the claim of the assessee cannot be allowed. We find that the CIT(A) has correctly decided the issue and disallowed the claim of the assessee. The issue involved in this appeal i.e. loss on account of merger has been considered by the Coordinate Bench of this Tribunal in assessee’s own case for the Assessment Year 2008-09 and held that the assessee is not eligible for claim.
Allowance of depreciation by treating the transaction of merger as one of goodwill acquired by the appellant - Held that:- Goodwill means it is an intangible asset that arises as a result of acquisition of one company by another for a premium value. In this case, the assessee has not paid any amount to amalgamating company. The assessee has only taken losses of amalgamating company i.e. Bobbili Co-operative bank. Therefore, the assessee has not acquired any goodwill. The Ld. CIT(A) by considering the entire facts of the case has passed a detailed order by considering the provisions of law.
TDS u/s 194A - Non-deduction of TDS under section 40(a)(ia) - Held that:- no TDS needs to be deducted on interest paid by any cooperative society too members. In this regard, the Bench observed that the provisions of section 2(19) or section 194A(3) of the I.T. Act do not make any distinction between the cooperative societies carrying on banking business or other cooperative societies. Respectfully following the decision of Hon'ble ITAT in assessee's case for Assessment Year 2007-08, the Assessing Officer is directed to delete the impugned disallowance.
Disallowance of provision for deduction in Government securities - Held that:- AO as well as Commissioner of Income Tax (Appeals) gave a categorical finding that the assessee has made a mere provision as per the accounting practice followed by the assessee and that the reliability is not yet crystallized during the assessment year under consideration, therefore, both the authorities below have disallowed the claim of the assessee. Even before us, the assessee is not able to establish that the claim made by the assessee is based on actual payment for the assessment year under consideration. It is also a mere provision made for the purpose of accounting practice followed by the assessee. Under these facts and circumstances of the case, we are of the opinion that the Commissioner of Income Tax (Appeals) has decided the issue correctly, hence, we find no infirmity in the order of the Commissioner of Income Tax (Appeals), which is hereby confirmed and the ground of appeal raised is dismissed.
Amortization of premium paid for acquisition of HTM securities - Held that:- We find in the Assessment Year 2008-09, amortization of premium on government securities has been dissolved by the Assessing Officer on the ground that it is a contingent liability. The Commissioner of Income Tax (Appeals) has confirmed the order of the Assessing Officer. On appeal, ITAT remanded the matter back to the Assessing Officer for fresh consideration. In the year under consideration, the CIT (Appeals) allowed the ground raised by the assessee by following the CBDT instruction No. 17/2008 dated 26/09/2008 and also the decision of the in the case of Rajkot District Co-operative Bank [2014 (3) TMI 110 - GUJARAT HIGH COURT] directed the Assessing Officer to allow this claim. In our opinion, to maintain a consistency, the issue has to be remitted back to the Assessing Officer to consider the factual matrix of the case and decide in accordance with law. We therefore, set aside the order passed by the Commissioner of Income Tax (Appeals) and direct the Assessing Officer to consider the issue afresh
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2016 (12) TMI 1759
Nature of receipt - receipt of grants - Subsidy - capital or revenue receipt - Held that:- The Tribunal has examined the matter at length and has given reasons for reaching conclusions that the subsidy, which was received by the assessee was in the nature of capital subsidy and has been used towards development of capital expenditure as the business of the assessee was to set up waterways.
The Tribunal categorically comes to the conclusion that there was no income to the assessee, which was of revenue in nature and in the absence any accrual of income to the assessee on account of the subsidy grants it could not be said that the assessee was liable to pay any taxes on the same. The other finding recorded by the Tribunal is that the project has not commenced and was incomplete and the money was being utilized towards capital expenses. - Decided in favour of assessee.
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2016 (12) TMI 1758
Transfer pricing adjustment on provisions of ITES - selection/rejection of comparables which we propose to deal with at the outset - computation of RPT - Held that:- Having considered the submissions of the parties, we find that the Tribunal in PTC Software India (P.) Ltd. [2012 (1) TMI 343 - ITAT PUNE] observed the ratio of RPT to total transactions have to be worked out by dividing RPT sales and RPT expenses with total sales and total costs. The aforesaid view expressed by the Tribunal, Pune Bench, was approved by the Hon'ble Jurisdictional High Court in PTC (I) (P.) Ltd. (supra) while holding that RPT has to be considered in the context of total transactions - we restore the issue relating to comparability of the aforesaid company to the Assessing Officer/Transfer Pricing Officer for deciding afresh after working out the RPT.
Companies functionally dissimilar with that of assessee as BPO service provider need to be deselected from final list.
Denial of claim of deduction u/s 10A in respect of Unit-II and Unit-III on the reasoning that they are not new Units, but expansion of earlier Units - Held that:- Tribunal for assessment year 2005-06 [2015 (4) TMI 589 - ITAT MUMBAI], have allowed assessee's claim of deduction under section 10A in respect of Unit-II and Unit-III. The same view was again reiterated by the Tribunal in assessee's own case for assessment year 2010-11. Therefore, respectfully following the consistent view of the Tribunal on the issue in assessee's case as aforesaid, we allow assessee's claim of deduction under section 10A of the Act for the impugned assessment year. - Decided in favour of assessee
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2016 (12) TMI 1757
Quarrying operations carried on without the necessary sanctions and permitsblasting operations carried on for the purpose of the construction of a National Highway - prohibited operation or not - Held that:- There should also be an expert opinion taken as to the extent and capacity of blasting permitted, considering the proximity of the residences and the time and frequency to which it has to be limited. The complaint raised by the petitioners is with respect to the large scale damage caused to the residences of the petitioners as also the pollution occasioned. The damage caused to the buildings is by reason of the blast induced ground vibrations, the intensity of which would depend upon the quantity of explosives used, an assessment of which has not been undertaken by the district administration; by itself or through an expert agency.
There is also air pollution caused by the generation of air pressure and noise, on the actual blasting, as also the debris thrown into the atmosphere when the rock formations are turned into rubble. The activity hence is also one coming within the ambit of The Environment (Protection) Act, 1986 and The Environment (Protection) Rules, 1986 (referred to as EP Act and EP Rules). The standards prescribed by the PCB hence becomes applicable and without a consent to operate there can be no operations of blasting carried on which effectively is deemed to be a "Mine" as defined under the Mines Act and quarrying of minor mineral is carried on under the MMDR Act. The hazardous effect of blasting carried on has to be assessed and the pollution occasioned too, has to be contained.
The 7th respondent would be obliged to carry out the blasting work only with a consent to operate from the PCB. The understanding of the PCB that the requirements would not be applicable to such road widening work is obviously wrong and contrary to the statutory provisions. In such circumstance, the 7th respondent would have to necessarily obtain a mining permit under the KMMC Rules and a Consent to Operate from the PCB so as to carry on the blasting works - It is also to be verified whether the 7th respondent would have to obtain an Environmental Clearance under the Environmental Impact Assessment Notification No. 2006 (SO 1533E) dated 14.09.2006 issued by the Ministry of Environment and Forests and Climate Change; by S.O. No. 141(E) : dtd. 15.01.2016 - The District administration also would have to conduct a study by an expert agency, or the PCB as to the depth and number of holes, their diameter, the quantity of explosive charge used, the influence it has on the impact of the blasts and so on and so forth to regulate the magnitude of the ground vibrations and ensure that no damage is caused to the 'adjacent material' including buildings as has been specified in the Specifications of MOSRT & H; if at all it is permitted as per the specifications issued by the PCB as made applicable by the KMMC Rules.
The 7th respondent would be entitled to approach the appropriate authorities and continue with the work after getting the requisite sanctions - petition allowed.
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