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2011 (10) TMI 623
Non granting registration u/s 12AA - Held that:- The legal position on the issue becomes crystallized that at the time of consideration of registration, it is not a sine qua non that the Trust must have started its activities. In case the Trust has started its activities, the ld. CIT can examine them as has been envisaged in the Act. This above conclusion is safeguarded by sub-clause(3) incorporated in section 12AA vide which if after granting registration it is found by the ld. CIT that the activities of the Trust are not carried out in furtherance of its charitable objects, he can cancel the registration granted to the Trust. So, when these provisions are read in conjunction, and a harmonious interpretation is given to them, we find that the view taken by the Co-ordinate Benches in numerous successive cases, some of which we have mentioned herein above, is very logical, and the same we are bound to follow.
Accordingly, we cannot sustain the order of ld. DIT(E) in refusing to grant registration and consequent refusal to grant approval u/s 80G of the Act. No fruitful purpose will be served by restoring the issue to the file of ld. DIT(E). Consequently, we set aside the finding of the DIT(E) and direct him to grant registration u/s 12AA and also to grant approval u/s 80G to the assessee-Trust.
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2011 (10) TMI 622
Issues involved:
1. Interpretation of Section 10B of the Income Tax Act, 1961 for claiming exemption.
2. Treatment of conversion of Domestic Tariff Area (DTA) Unit into Export Orient Unit (EOU) for deduction u/s 10B.
3. Addition of RS.93,29,573 on account of low GP from transactions with associated parties.
Interpretation of Section 10B:
The case involved the benefit of Section 10B of the Income Tax Act, 1961 to the respondent assessee unit, which was previously receiving deductions under Section 80HHC. The Assessing Officer contended that the assessee did not fulfill the conditions for claiming benefits under Section 10B, specifically condition no.(iii) regarding the transfer of machinery or plant previously used for any purpose. The issue was appealed by the assessee, and the CIT(Appeals) granted the benefit. The Tribunal, relying on CBDT circulars and a decision of the Punjab and Haryana High Court, dismissed the appeal, leading to the current appeal.
Conversion of DTA Unit into EOU:
The Assessing Officer argued that the conversion of the assessee into an EOU from an existing export unit did not fulfill the conditions of Section 10B. However, the Tribunal, supported by a circular issued by CBDT, clarified that an undertaking set up in a domestic tariff area, subsequently approved as a 100% EOU, is eligible for deduction under Section 10B. The Tribunal's decision was upheld, stating that the assessee was entitled to the benefit under Section 10B, and the circular was binding upon the Department.
Addition on Account of Low GP:
Regarding the addition of RS.93,29,573 on account of low GP from transactions with associated parties, the Tribunal deleted the addition, emphasizing that the assessee failed to discharge its onus of declaring low profit due to non-availability of deduction from export profit. The Tribunal's decision was based on the fact that the sole buyer and shareholders were the same, and the assessee had a motive to declare low profit.
In conclusion, the High Court upheld the Tribunal's decision, stating that the issue was correctly decided in favor of the assessee based on the interpretation of Section 10B and relevant circulars. Therefore, the Tax Appeal was dismissed, and no question of law arose in this case.
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2011 (10) TMI 621
Issues involved:
The judgment involves the issue of whether an aircraft co-owned by the assessee company is liable to wealth-tax under section 2(ea)(iv) of the Wealth-tax Act, 1957, and if the aircraft was acquired for non-commercial purpose.
Details of the judgment:
1. Background and Assessing Officer's Decision:
The Assessing Officer noted the company owned an aircraft, valued at Rs. 3,52,77,744, in its Balance sheet. The assessee contended that the aircraft was used for business purposes and should not be considered an asset for wealth-tax. However, the Assessing Officer disagreed, stating that the aircraft was not exclusively used for business purposes, resulting in the inclusion of its value in the total wealth assessment.
2. Appeal before Commissioner of Wealth-tax (Appeals):
In the appeal, the assessee reiterated that the aircraft was used for business purposes and cited a Tribunal decision in a similar case. The Commissioner of Wealth-tax (Appeals) upheld the inclusion of the aircraft as an asset, stating it was not exclusively used for business purposes during the relevant year.
3. Arguments before ITAT:
The assessee argued that the aircraft's use for business purposes, as evidenced by allowed depreciation, qualified as commercial use under section 2(ea)(iv). The Revenue contended that personal use disallowance in income-tax proceedings negated exclusive business use.
4. ITAT Decision:
ITAT considered the definition of 'commercial purposes' under section 2(ea)(iv) and referred to a Tribunal decision supporting the assessee's position. It concluded that the aircraft, treated as a business asset and used for business with allowed depreciation, met the criteria for commercial use, excluding it from wealth-tax. The Revenue's argument based on personal use disallowance was rejected.
5. Outcome:
The ITAT set aside the Commissioner of Wealth-tax (Appeals) order, directing the exclusion of the aircraft value from the assessee's net wealth. The alternative plea regarding share application money deduction was deemed academic and not adjudicated upon.
In conclusion, the appeal of the assessee was allowed, and the judgment was pronounced on October 21, 2011.
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2011 (10) TMI 620
Issues involved: Appeal against order u/s 115JB of the Income-tax Act, 1961 for the assessment year 2006-2007.
Summary:
The appeal was filed by the assessee against the order of the Commissioner of Income Tax -III, Coimbatore, regarding liability of Minimum Alternate Tax (MAT) u/s 115JB of the Income-tax Act, 1961. The main contention was whether the company is liable for MAT in the year it ceases to be a sick industrial company as per section 3(1)(o) of the Act.
The Commissioner argued that the company was not a sick industrial company for the relevant year as its net wealth exceeded accumulated losses, and the Board for Industrial and Financial Reconstruction (BIFR) had discharged it from being a sick industrial company. Therefore, the company was not eligible for MAT exemption u/s 115JB of the Act.
The assessee contended that as per clause (vii) to Explanation (1) of sub-section (2) of section 115JB, profits of a sick industrial company can be reduced from book profit until the net worth equals or exceeds accumulated losses. The Assessing Officer allowed this deduction for the relevant year.
The Tribunal noted that the company was a sick industrial company until the assessment year in question when its net worth equaled or exceeded accumulated losses. The deduction under clause (vii) was permissible until the year in which the net worth became positive for a sick company. Therefore, the Tribunal held that the Commissioner was not justified in denying the deduction to the assessee and allowed the appeal.
In conclusion, the Tribunal set aside the Commissioner's order and allowed the appeal of the assessee regarding MAT liability u/s 115JB of the Income-tax Act, 1961 for the assessment year 2006-2007.
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2011 (10) TMI 619
Issues Involved:
1. Deduction under Section 80HHE after claiming deduction under Section 10B for AY 2003-04.
2. Foreign exchange fluctuation gain on EEFC account for deduction under Section 10B for AY 2005-06.
3. Exclusion of telecommunication expenditure from export turnover for AY 2005-06.
4. Exclusion of expenditure in foreign currency from export turnover for AY 2005-06.
5. Exclusion of telecommunication and foreign currency expenses from total turnover for AY 2005-06.
6. Pro rata division of telecommunication charges between export sales and local sales for AY 2005-06.
Summary:
1. Deduction under Section 80HHE after claiming deduction under Section 10B for AY 2003-04:
The assessee claimed a 90% deduction u/s 10B and sought a 10% deduction u/s 80HHE for the remaining profits. Both the AO and CIT(A) denied this, citing decisions from co-ordinate Benches. However, the Tribunal referenced the case of Covansys (India) Pvt. Ltd., where it was held that simultaneous deductions under Sections 10B and 80HHE are permissible. The Tribunal concluded that the assessee is entitled to claim deductions under both sections.
2. Foreign exchange fluctuation gain on EEFC account for deduction under Section 10B for AY 2005-06:
The Tribunal upheld the decision from the assessee's own case for AY 2004-05, stating that gains from EEFC account conversion do not have a direct nexus with export transactions and thus are not eligible for deduction u/s 10B.
3. Exclusion of telecommunication expenditure from export turnover for AY 2005-06:
The Tribunal referred to the definition of "export turnover" in Section 10B and concluded that telecommunication charges attributable to the delivery of computer software outside India must be excluded from export turnover. This was consistent with the decision in the assessee's own case for AY 2004-05.
4. Exclusion of expenditure in foreign currency from export turnover for AY 2005-06:
The Tribunal found that the expenses incurred in foreign currency were for technical services rendered outside India and thus should be excluded from export turnover, supporting the AO and CIT(A)'s view.
5. Exclusion of telecommunication and foreign currency expenses from total turnover for AY 2005-06:
The Tribunal upheld the CIT(A)'s decision to exclude these expenses from total turnover, aligning with the Special Bench decision in Sak Soft Ltd., which mandates that whatever is excluded from export turnover must also be excluded from total turnover.
6. Pro rata division of telecommunication charges between export sales and local sales for AY 2005-06:
The Tribunal agreed with the Revenue that there were no local sales, and thus, the CIT(A)'s direction for pro rata division of telecommunication charges was unwarranted.
Conclusion:
- The appeal of the assessee for AY 2003-04 is allowed.
- The appeal of the assessee for AY 2005-06 is dismissed.
- The appeal of the Revenue for AY 2005-06 is partly allowed.
The order was pronounced in the Court on 14th October, 2011.
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2011 (10) TMI 618
Sale of land - addition by treating the sale of agricultural land to be capital asset u/s 2(14)(iii)(b) on the ground that it was within the distance of 8 kms from Municipal limits and thereby levying short term capital gains tax on the same - Held that:- In the remand report, the Assessing Officer submitted that as per the report received by him from the Divisional Engineer, Highways Department, Coimbatore, the agricultural land in question was 8.112 kms away from the municipal limits of Coimbatore municipality. In view of this, the ld. CIT(A) deleted the addition by observing that agricultural land in question was not a capital asset. Before us, the ld. D.R. could not point out any error in the order of the ld. CIT(A). In the absence of any material brought before us to show that agricultural land in question was a capital asset within the meaning of section 2(14) of the Act, we do not find any good reason to interfere with the order of the ld. CIT(A). It is confirmed. Ground of appeal of the department is dismissed.
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2011 (10) TMI 617
TDS u/s 195 - Intelsat has made available technical knowledge/know-how/skill/experience to the assessee in respect of tracking, telemetry and command support of the satellite launched by the assessee - whether such services would squarely fall within the definition of ancillary services as definrd in the DTAA between India and USA? - whether the service rendered by a non-resident is a technical service? - Held that:- By virtue of cl. 7 of the Protocol, even though such a benefit is not available under DTAA with France the beneficial clause in the DTAA entered into by India with the USA applies in respect to the DTAA with France. Therefore, unless the technical knowledge, experience, skill, know-how or processes are transferred to the assessee, the liability to tax does not arise. The said favourable clauses in the DTAA read with protocol override the provisions of the IT Act in the matter of ascertainment of chargeability to income-tax and ascertainment of total income to the extent of inconsistency with the terms of DTAC.
In the instant case, it is not in dispute that the remuneration is only for the services rendered on a foreign soil. In lieu of consideration paid, the foreign company has not made available any technical knowledge to the assessee nor any technical knowledge is transferred to the assessee and therefore, the income derived out of rendering technical services is not liable to tax. If there is no liability to pay tax by a non-resident, there is no obligation cast on the assessee to deduct tax at source.
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2011 (10) TMI 616
Transfer pricing adjustments - analysis undertaken by the appellant to determine arm’s length price for its international transactions pertaining to provisions of software development services to the AE - applying transfer pricing provisions to the appellant which enjoys tax holiday u/s 10B - selection of comparable.
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2011 (10) TMI 615
Issues involved:
The issues involved in this case are related to the eligibility of separate units of the assessee business to claim deduction u/s 80IB and the authority of the CIT(A) to direct the Assessing Officer to examine the eligibility of units within the prescribed time period u/s 80I(3).
Eligibility of separate units for deduction u/s 80IB:
The Appellate Tribunal noted that the CIT(A) allowed the claim of deduction u/s 80IB based on the Tribunal's order in the assessee's own case for the Assessment Years 2004-05 and 2005-06. The Tribunal highlighted that in previous decisions, it was established that treating each unit as independent for availing deduction u/s 80IB was justified. The Tribunal referenced a case involving a sister concern of the assessee where similar treatment was allowed, emphasizing that no new unit was introduced in the impugned assessment years to warrant a different approach. Therefore, the Tribunal decided in favor of the assessee, following precedent and finding no merit in the Revenue's appeals.
Authority of CIT(A) to direct examination of units:
The revenue raised concerns regarding the CIT(A) directing the Assessing Officer to examine whether the eligible units were within the reasonable time period prescribed u/s 80I(3). The revenue argued that this direction amounted to setting aside the order and exceeded the powers of the CIT(A). However, the Tribunal did not find merit in this argument and proceeded to dismiss the appeal of the revenue.
In conclusion, the Appellate Tribunal upheld the decision in favor of the assessee based on previous rulings and dismissed the revenue's appeal.
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2011 (10) TMI 614
Revision u/s 263 - order passed by the AO erroneous or prejudicial to the interest of revenue - C.I.T holding that receipt of share capital was not properly investigated - non entitled to the credit u/s. 88E while determining tax liability U/s. 115JB
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2011 (10) TMI 613
Issues involved: The judgment involves the following issues:
1. Whether PF and ESI paid within the grace period allowed under the respective enactment are allowable as deduction.
2. Whether PF and ESI, being employees' contribution, paid before the due date of filing of the return u/s 139 is allowable as a deduction.
3. Disallowance u/s 14A read with rule 8D of the Act.
Issue 1 - PF and ESI Contribution within Grace Period: The Tribunal allowed the deduction of employees' contribution of PF paid within the grace period based on precedents from various High Courts, including the Hon'ble Delhi High Court and Madras High Court. The Tribunal held that such contributions are allowable as deductions.
Issue 2 - PF and ESI Contribution before Due Date: The Tribunal ruled in favor of the assessee regarding the allowability of employees' contribution to PF and ESI, which was paid before the due date of filing the return u/s 139 of the Act. Citing previous Tribunal orders and legal precedents, the Tribunal held that if employees' contributions are paid before the due date for filing the return of income, they are to be allowed as deductions in the computation of income.
Issue 3 - Disallowance u/s 14A: The Tribunal addressed the disallowance u/s 14A, specifically focusing on interest income and expenses. It reversed the decision of the CIT(A) and directed the Assessing Officer to work out the disallowance on a reasonable basis, not under rule 8D, as Rule 8D is not retrospective. The Tribunal further held that no part of the interest expenditure should be disallowed under section 14A as the assessee had made investments only out of surplus funds, supported by financial data and legal precedents.
Separate Judgement: The Tribunal allowed the appeals in part, deleting the disallowance of interest made u/s 14A and directing the Assessing Officer to disallow only 5% of the dividend income earned u/s 14A. The judgment was pronounced on October 14, 2011.
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2011 (10) TMI 612
Issues involved: Appeals against penalty levied u/s 271E and u/s 271D of the Income Tax Act, 1961 for the assessment year 2005-06.
Issue 1: Penalty u/s 271E
The assessee's appeal was against the confirmation of a penalty of Rs. 5,29,83,400 imposed by the Addl. CIT, Central Range-6 u/s 271E. The Assessing Officer found a violation of section 269T as an amount was repaid without an account payee cheque or draft. The assessee argued that similar cases were decided in their favor by the Tribunal. The ITAT held that the payment was made through a journal entry and not in violation of section 269T. Relying on previous decisions, the ITAT directed the AO to delete the penalty under section 271E.
Issue 2: Penalty u/s 271D
The appeal was against the confirmation of a penalty of Rs. 3,45,13,627 levied u/s 271D for accepting loans through journal entries, contravening section 269SS. The assessee contended that journal entries did not violate section 269SS. The ITAT noted that previous decisions by the Tribunal supported the assessee's position that journal entries do not breach section 269SS. Consistently with the earlier rulings, the ITAT directed the AO to delete the penalty imposed under section 271D.
Separate Judgement: No separate judgment was delivered by the judges.
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2011 (10) TMI 611
Issues involved:
The judgment involves issues related to deduction under sec. 80HHC of the Act for Duty Entitlement Pass Book (DEPB) receipts/income, validity of proceedings initiated u/s 147 of the Act, deduction under sec. 80HHC on interest income, disallowance of gratuity expenses, addition on account of cessation of liability of creditors, and disallowance of foreign travelling expenses.
Deduction under sec. 80HHC for DEPB receipts/income:
The assessee claimed deduction under sec. 80HHC for DEPB receipts, but the AO reduced the deduction after invoking provisions of sec. 80HHC as amended by the Taxation Laws (Amendment) Act, 2005. The CIT(A) confirmed the AO's action based on the turnover exceeding Rs. 10 crores and other conditions. The Tribunal rejected the grounds raised by the assessee, deciding in favor of the revenue.
Validity of proceedings u/s 147 and deduction under sec. 80HHC on interest income:
The ground challenging the validity of proceedings initiated u/s 147 was rejected as not pressed by the assessee. Similarly, the claim of deduction under sec. 80HHC on interest income was not pressed and stood rejected.
Disallowance of gratuity expenses:
The AO disallowed provision for gratuity expenses under sec. 43B as not actually paid during the year. The CIT(A) upheld the disallowance, but the Tribunal found the issue needing further examination and verification by the AO, restoring the matter for fresh adjudication.
Cessation of liability of creditors and foreign travelling expenses:
The AO treated outstanding liability as income, but the Tribunal deleted the addition as there was no evidence of the liability ceasing. Regarding foreign travelling expenses, the AO disallowed a lump sum amount due to lack of supporting bills. The CIT(A) sustained a disallowance, attributing 5% to personal expenditure. The Tribunal reduced the disallowance to Rs. 1,00,000 considering the lack of details and proportion to turnover.
In conclusion, the appeal for the Assessment Year 2000-01 was dismissed, while for the Assessment Year 2004-05, it was partly allowed.
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2011 (10) TMI 610
Issues Involved:
1. Disallowance of Rs. 90,00,000 for impending union settlement.
2. Disallowance of Rs. 4,89,918 for gift articles as entertainment.
3. Taxability of Rs. 5,05,000 compensation received for breach of contract.
4. Nature of expenditure on production of TV films, promotion films, and medical films.
5. Classification of various expenses as entertainment under Section 37(2).
6. Inclusion of sales tax, trade discount, and margins in total turnover for Section 80HHC deduction.
7. Disallowance of Rs. 1,67,768 for air fare and hotel expenses for foreign visitors.
8. Disallowance of hotel expenses and air fares for foreign visitors under Section 37(2A).
9. Disallowance of Rs. 6,78,816 as excess provision for expenses.
10. Disallowance of Rs. 2,52,152 under Section 43B for unpaid sales tax.
11. Disallowance of Rs. 50,00,000 for premium on redemption of non-convertible debentures.
12. Disallowance of Rs. 1,55,442 against dividend income for administrative expenses under Section 80M.
13. Non-adjudication of additional ground for deduction of Rs. 4,28,696.
14. Exclusion of excise duty from total turnover for Section 80HHC deduction.
15. Valuation of closing stock and proportionate cost of freight.
16. Adhoc disallowance of Rs. 10,00,000 under Rule 6D.
17. Disallowance of Rs. 7,18,148 under Section 37(2A) for foreign visitors.
18. Addition of 10% on foreign travel expenses.
19. Addition to closing stock for unutilized Modvat credit.
20. Computation of deductions under Sections 80I and 80HH.
21. Restriction of disallowance to 2% of dividend income for administrative expenses.
Detailed Analysis:
1. Disallowance of Rs. 90,00,000 for Impending Union Settlement:
The Assessing Officer (AO) disallowed Rs. 90,00,000 debited by the assessee for impending union settlement, terming it as a contingent liability. The CIT(A) upheld this disallowance, noting that the amount was allowed in the subsequent year. The Tribunal observed that no significant development occurred during the year under consideration to justify the provision and upheld the disallowance.
2. Disallowance of Rs. 4,89,918 for Gift Articles as Entertainment:
The AO disallowed Rs. 4,89,918 for gift articles under Rule 6D, treating it as entertainment expenditure under Section 37(2). The CIT(A) confirmed this. The Tribunal noted that the issue was not identical to the earlier years and upheld the disallowance, citing relevant case laws.
3. Taxability of Rs. 5,05,000 Compensation Received for Breach of Contract:
The AO treated Rs. 5,05,000 received as compensation for breach of contract as revenue receipt. The CIT(A) agreed. The Tribunal held that the amount was for allowing the use of technical know-how and sale of products to other parties, thus rightly assessed as revenue income.
4. Nature of Expenditure on Production of TV Films, Promotion Films, and Medical Films:
The AO disallowed these expenditures as capital in nature. The CIT(A) upheld this. The Tribunal, following the jurisdictional High Court's decision in Geoffrey Manners and Co. Ltd., held the expenditure as revenue in nature and allowed it.
5. Classification of Various Expenses as Entertainment under Section 37(2):
The AO disallowed lunch expenses, canteen expenses, conference expenses, and AGM expenses as entertainment. The CIT(A) confirmed this. The Tribunal, following earlier orders, allowed conference and AGM expenses but disallowed Rs. 2,00,000 each for lunch and canteen expenses.
6. Inclusion of Sales Tax, Trade Discount, and Margins in Total Turnover for Section 80HHC Deduction:
The AO included sales tax, trade discount, and margins in the total turnover. The CIT(A) directed the AO to exclude certain items already included in the turnover. The Tribunal, following relevant case laws, directed the exclusion of sales tax and trade discount from the total turnover.
7. Disallowance of Rs. 1,67,768 for Air Fare and Hotel Expenses for Foreign Visitors:
The AO disallowed these expenses as capital in nature. The CIT(A) upheld this. The Tribunal noted that the expenses were for setting up a new project and allowed depreciation as per Section 32.
8. Disallowance of Hotel Expenses and Air Fares for Foreign Visitors under Section 37(2A):
The AO treated Rs. 7,18,148 as entertainment expenditure. The CIT(A) reduced the disallowance by Rs. 1,67,768. The Tribunal followed earlier orders and allowed the expenses as business expenditure.
9. Disallowance of Rs. 6,78,816 as Excess Provision for Expenses:
The AO disallowed the excess provision. The CIT(A) confirmed this. The Tribunal upheld the disallowance but noted that the consequential effect in the subsequent year should be considered to avoid double addition or deduction.
10. Disallowance of Rs. 2,52,152 under Section 43B for Unpaid Sales Tax:
The AO disallowed the unpaid sales tax. The CIT(A) upheld this. The Tribunal confirmed the disallowance, noting that the subsequent year's offering of income is irrelevant for the current assessment year.
11. Disallowance of Rs. 50,00,000 for Premium on Redemption of Non-Convertible Debentures:
The AO disallowed the premium payable. The CIT(A) agreed. The Tribunal allowed the proportionate claim of the premium to be spread over the period of the debentures, following the Supreme Court's decision in Madras Industrial Investment Corpn. Ltd.
12. Disallowance of Rs. 1,55,442 against Dividend Income for Administrative Expenses under Section 80M:
The AO disallowed 2% of the dividend income for administrative expenses. The CIT(A) upheld this. The Tribunal set aside the issue to the AO for reconsideration in light of relevant case laws.
13. Non-Adjudication of Additional Ground for Deduction of Rs. 4,28,696:
The CIT(A) did not adjudicate the additional ground. The Tribunal noted that the issue requires verification of facts and declined to entertain the ground, dismissing it.
14. Exclusion of Excise Duty from Total Turnover for Section 80HHC Deduction:
The Tribunal admitted the additional ground and set aside the issue to the AO for decision as per law after considering the assessee's contention.
15. Valuation of Closing Stock and Proportionate Cost of Freight:
The Tribunal followed the earlier decision in the assessee's own case and decided the issue in favor of the assessee, against the revenue.
16. Adhoc Disallowance of Rs. 10,00,000 under Rule 6D:
The AO made an adhoc disallowance for conveyance and telephone expenses. The CIT(A) deleted it. The Tribunal, following earlier orders, decided the issue against the revenue.
17. Disallowance of Rs. 7,18,148 under Section 37(2A) for Foreign Visitors:
The Tribunal remanded the issue to the AO to avoid double deduction or addition.
18. Addition of 10% on Foreign Travel Expenses:
The Tribunal, following earlier orders, decided the issue against the revenue.
19. Addition to Closing Stock for Unutilized Modvat Credit:
The Tribunal followed the Supreme Court's decision in Indo Nippo Chemicals and decided the issue against the revenue.
20. Computation of Deductions under Sections 80I and 80HH:
The Tribunal directed the AO to compute the deductions in light of the jurisdictional High Court's decision in Associated Capsules P. Ltd.
21. Restriction of Disallowance to 2% of Dividend Income for Administrative Expenses:
The Tribunal set aside the issue to the AO for reconsideration as per relevant case laws.
Cross Objection:
The cross-objection filed by the assessee was dismissed as infructuous in light of the Tribunal's findings in the appeals.
Conclusion:
The appeals filed by both the assessee and the revenue were partly allowed, and the cross-objection by the assessee was dismissed.
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2011 (10) TMI 609
Issues Involved:
1. Proceedings u/s 144 without adequate opportunities
2. Sustaining additions on account of estimation of income and unexplained cash credit
3. Levy of penalty u/s 271(1)(b) for non-compliance with notices
Summary:
1. Proceedings u/s 144 without adequate opportunities:
The appellant contended that the CIT(A) erred in upholding the AO's action to proceed u/s 144 without granting adequate opportunities for furnishing required details, violating principles of natural justice. However, this ground was not pressed by the appellant's counsel and was dismissed.
2. Sustaining additions on account of estimation of income and unexplained cash credit:
In ITA No. 226/Ahd/2011, the AO added Rs. 50,000 to the assessee's income due to the absence of books of accounts. The CIT(A) reduced this addition to Rs. 25,000, which was confirmed by the Tribunal as no interference was deemed necessary. In ITA No. 228/Ahd/2011, the AO added Rs. 17,500 as unexplained cash credit. The CIT(A) upheld this addition, and the Tribunal confirmed the order, noting that the addition was not seriously pressed by the appellant.
3. Levy of penalty u/s 271(1)(b) for non-compliance with notices:
The AO levied a penalty of Rs. 50,000 for each assessment year due to non-compliance with notices issued u/s 143(2) and 142(1). The CIT(A) confirmed the penalty, stating that the appellant did not provide valid reasons for non-compliance. The Tribunal, however, found that the assessee's consistent contention was that details were provided simultaneously for all group cases, including HUFs, and that the AO did not initiate penalty proceedings in individual cases on similar facts. The Tribunal held that the assessee was under a bona fide belief of compliance and deleted the penalty, setting aside the CIT(A)'s order.
Conclusion:
- ITA Nos. 226/Ahd/2011 and 228/Ahd/2011: Dismissed.
- All other 19 appeals: Allowed, with the penalty u/s 271(1)(b) deleted.
Order pronounced in open Court on 31.10.2011.
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2011 (10) TMI 608
Cash credit - Held that:- As regards cash credits, the substantial issue is already restored to the file of the AO to verify the debit balance and for other two creditors the assessee did not get any proper opportunity of hearing in the matter. The assessment order is framed in the name of the Official Liquidator and despite this point was raised before the learned CIT(A), the claim of the assessee was not properly adjudicated. Considering the history of the assessee undergoing in litigations and further that the assessee has later on revived from winding up and further that assessment order was framed in the name of the Official Liquidator would prove that the assessee did not get fair opportunity of being heard in the matter. Considering Tribunal for assessment year 2000-01 dated 15-10-2010 we set aside the orders of the authorities below and restore all the grounds of appeal to the file of the AO for reconsideration of the issue. The AO shall give reasonable sufficient opportunity of being heard to the assessee.
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2011 (10) TMI 607
The appeal was dismissed by the Appellate Tribunal CESTAT NEW DELHI due to non-compliance with the pre-deposit direction in Stay Order No.796/2011-Ex.
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2011 (10) TMI 606
The High Court of Bombay allowed the Criminal Writ Petition, quashed the detention order dated 23rd December 2010, and directed the release of the detenu Shri Balwinder Singh.
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2011 (10) TMI 605
Addition mentioned in the incriminating documents seized during search operations, particularly, disregarding statement of the assessee recorded under s. 132(4) - Whether, in law, in respect of hundies/promissory notes recovered and seized during the course of search the onus is cast on the AO to prove that the amount shown in such hundies/promissory notes was actually advanced by the assessee ? - Tribunal was justified in upholding CIT(A)'s order whereby the CIT(A) deleted addition - Held that:- The findings recorded by the CIT(A) and affirmed by the Tribunal are based on proper appreciation of facts and are not perverse, being correlated with each and every transaction. Thus, the issue is purely question of facts. No question of law, more so substantial questions of law, as aforestated, arise in the facts of the case.
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2011 (10) TMI 604
Issues Involved:1. Whether the subvention receipt of Rs. 11,22,38,874/- should be treated as a capital receipt or a revenue receipt. Summary:Issue 1: Treatment of Subvention ReceiptThe primary issue for consideration was whether the subvention receipt of Rs. 11,22,38,874/- received by the assessee, a 100% subsidiary of BHW Holding AG Germany, should be treated as a capital receipt or a revenue receipt. The assessee argued that the subvention payment was towards the restoration of its net worth eroded due to losses and was received without any legal or contractual obligation, thus qualifying as a capital receipt. The assessing officer, however, treated it as a revenue receipt, relying on the decision of the Hon'ble Supreme Court in Sahni Steel & Press Work Vs. CIT 228 ITR 253 (SC), which held that grants for the successful running of an established unit should be regarded as revenue receipts. On appeal, the CIT (Appeals) accepted the assessee's contention, noting that the payment was a voluntary grant from the parent company to recoup the losses and restore the net worth, and thus should be treated as a capital receipt. The CIT (Appeals) relied on several judicial precedents, including the decision of the Hon'ble Delhi High Court in Handicrafts & Handloom Export Corporation of India Vs. CIT [1983] 140 ITR 532 (Del), which distinguished between voluntary payments motivated by personal relationships and grants made to assist in carrying on trade. The Tribunal upheld the CIT (Appeals)'s decision, emphasizing that the subvention payment was received by the assessee not as a trader but due to the parent-subsidiary relationship, and was intended to recoup the losses. The Tribunal found that the facts of the case aligned with the principles laid out in the Handicrafts & Handloom Export Corporation of India case and the ITAT decision in Lurgi India Company Ltd. 302 ITR (AT) 67 (Del), where similar subvention payments were treated as capital receipts. Consequently, the appeal filed by the Revenue was dismissed. The order pronounced in the open court on: 14th October, 2011.
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