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2012 (3) TMI 571
Issues Involved:
1. Whether the annual value of the property should be considered nil as per the provisions of sec. 23(1) of the I.T Act.
2. Whether the municipal valuation should be disregarded in the calculation of annual value.
3. Whether the cost of acquisition of the entire property should be adopted for the purpose of annual value without excluding the cost related to the unexploited land.
Summary:
Issue 1: Annual Value of Property u/s 23(1)
The primary grievance of the assessee was the addition made by the AO and confirmed by the CIT(A) regarding the annual letting value of the house property, which remained vacant during the year under consideration. The assessee argued that the property was vacant due to the economic slowdown and hence, the annual value should be nil as per sec. 23(1)(a). However, the AO determined the annual value at Rs. 18,75,000/- and after allowing a deduction u/s 24, brought Rs. 13,12,850/- to tax as income from house property. The CIT(A) upheld this addition, stating that the annual value should be the sum for which the property might reasonably be expected to be let from year to year, irrespective of actual income received.
Issue 2: Municipal Valuation
The CIT(A) observed that the municipal valuation should be disregarded in calculating the annual value. The AO had used the cost method to determine the annual value, which was confirmed by the CIT(A) as reasonable.
Issue 3: Cost of Acquisition and Unexploited Land
The assessee contended that the cost of acquisition for the entire property should not include the cost related to the unexploited land. However, the CIT(A) did not exclude the cost related to the unexploited land while determining the annual value.
Tribunal's Decision:
The Tribunal noted that a similar issue had been adjudicated in the case of Smt. Shakuntala Devi Vs. DDIT, where it was held that if a property is held with an intention to let out and efforts are made to let it out, it could be considered as a let-out property under sec. 23(1)(c). Since the facts of the present case were similar, the Tribunal decided in favor of the assessee, setting aside the order of the CIT(A) and deleting the addition made by the AO.
Conclusion:
The appeal of the assessee was allowed, and the addition made by the AO and sustained by the CIT(A) was deleted. The Tribunal followed the precedent set in the case of Smt. Shakuntala Devi, determining that the annual value should be nil if the property was intended to be let out but remained vacant.
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2012 (3) TMI 570
Transaction in F & 0 prior to 25.1.2006 to be treated as non speculation transaction - Additions made on account of F&O - Held that:- We uphold the grievance of the assessee and hold that the derivate transactions, entered into by the assessee at the recognized stock exchanges even prior to the date of notification in the relevant previous year, are to be treated as covered by the exclusion clause set out in section 43(5)(d).
Assessing Officer has to consider the composite transaction. The first appellate authority was wrong in his finding on applicability of explanation to section 43(5). Thus, we vacate this finding.
As the nature of business has to be understood in the proper perspective considering the business strategy of the assessee and as the composite transactions of both NSE and BSE have to be taken into account, we set aside the matter to the file of Assessing Officer for adjudication afresh in accordance with law. This ground is, thus, allowed for statistical purposes.
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2012 (3) TMI 569
The Gujarat High Court's judgment in 2012 (3) TMI 569 stated that the appeal would not survive due to the order passed in Criminal Misc. Application No. 15303 of 2011. The appeal was disposed of accordingly.
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2012 (3) TMI 568
Penalty levied under Section 271(1)(c) - Held that:- Additions made by the Assessing Officer were based on estimation only. A fact or allegation based on estimation cannot be said to be correct only, it can be incorrect also. Therefore, in the facts and circumstances of the case, penalty was wrongly levied by the Assessing Officer. The basis for levying penalty in the present case is only estimation, which is purely a question of fact and there is a concurrent finding of fact recorded by first appellate authority as well as the appellate Tribunal both.
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2012 (3) TMI 567
The Supreme Court granted the appellant four weeks to file the statement of case, failing which the appeal will be dismissed. The respondent must also file their statement of case within four weeks from the date the appellant's statement is served on them.
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2012 (3) TMI 566
Issues Involved:
1. Cancellation of registration u/s 12AA(3) of the Income Tax Act, 1961.
2. Allegation of non-genuine charitable activities.
3. Allegation of appropriation of benefits by the Trust's Governing Body.
4. Principles of natural justice and opportunity to explain.
Summary:
Issue 1: Cancellation of registration u/s 12AA(3) of the Income Tax Act, 1961
The appeal challenges the order by CIT (Central), Ludhiana, dated 31st January 2008, canceling the Trust's registration u/s 12AA(1)(b)(i). The CIT's decision was based on findings from a search conducted on 7th September 2005, which revealed unexplained assets and incriminating documents. The CIT concluded that the Trust's activities were not aligned with its charitable objectives and initiated proceedings u/s 12AA(3), resulting in the cancellation of the registration.
Issue 2: Allegation of non-genuine charitable activities
The CIT found that the Trust made cash payments to doctors outside the books of account, totaling Rs. 45,66,372/-. Statements from the Trust's accountant and principal confirmed these payments. However, these statements were later retracted, and affidavits were filed denying the cash payments. The Tribunal, in its order dated 30th October 2009, upheld the deletion of the addition made by the CIT(A), stating that the retracted statements and affidavits from doctors negated the evidence of unexplained expenditure.
Issue 3: Allegation of appropriation of benefits by the Trust's Governing Body
The CIT noted discrepancies in the cash found during the search, with actual cash being significantly less than recorded in the books. This led to the conclusion that the Trust's trustees were manipulating accounts for personal gain. However, the Tribunal found that the excess cash was accounted for in the Trust's audited accounts and tax returns, and no adverse inference was drawn by the Assessing Officer. The Tribunal confirmed the deletion of additions made in the hands of the trustees, supporting the Trust's claim that the cash belonged to it.
Issue 4: Principles of natural justice and opportunity to explain
The assessee argued that the CIT's conclusions were drawn without proper application of mind and solely based on the Assessing Officer's findings for A.Y. 2006-07. The Tribunal noted that the CIT, after canceling the registration, granted a new registration on 23rd May 2008, acknowledging the genuineness of the Trust's activities. This contradiction supported the assessee's claim that the cancellation was unjustified.
Conclusion:
The Tribunal found that the reasons for canceling the registration did not hold, as the Tribunal had already upheld the deletion of the additions. The CIT's subsequent order granting registration further validated the Trust's genuine charitable activities. Therefore, the Tribunal quashed the CIT's order canceling the registration and allowed the appeal filed by the assessee. The order was pronounced in the open court on 23.03.2012.
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2012 (3) TMI 565
Issues involved:
The judgment addresses various legal questions including the treatment of share issue expenses, addition made by the Assessing Officer u/s. 40A(9), reduction of certain incomes from business profits for deduction u/s. 32AB, entitlement to deduction for enhanced liability under the Drug Price Control order, and taxation of write back amounts for specific assessment years.
Issue A: Share issue expenses
The Revenue questioned the justification of the Tribunal in holding that share issue expenses are attributable to acquisition of assets and hence eligible for depreciation and investment allowance. The Tribunal's decision was based on the nexus between share issue expenses and investment in Plant & Machinery. The Revenue argued that the expenses were incurred to comply with FERA provisions, not for acquiring assets. The Tribunal's view was supported by legal precedent, and it was held that no substantial question of law would arise.
Issue B: Addition u/s. 40A(9)
The Assessing Officer added the entire reimbursement/payment made by the assessee company to Glaxo Sports Club under Section 40A(9). However, the Commissioner (Appeals) found that the expenses were routine staff welfare expenditure and not covered by the said section. The Tribunal agreed, noting that the payments were reimbursement for actual staff sports activities expenses, not fixed contributions. Citing legal precedent, the Tribunal upheld the Commissioner's decision, leading to the dismissal of the appeal.
Issue C: Reduction of certain incomes for deduction u/s. 32AB
The Tribunal held that dividend, interest, rent, and profit on sale of assets should not be reduced from business profits for the purpose of deduction u/s. 32AB of the Income Tax Act. This decision was in line with a previous judgment, and it was stated that no substantial question of law would arise in this regard.
Issue D: Deduction for enhanced liability under the Drug Price Control order
The Tribunal ruled that the assessee was entitled to a deduction for an enhanced liability payment under the Drug Price Control order, despite non-compliance with section 43B provisions. The Tribunal's decision was final, and it was held that no substantial question of law would arise concerning this matter.
Issue E: Taxation of write back amounts
The Tribunal accepted the Assessee's case regarding revised demands made by the Government of India, leading to upward revisions for the relevant assessment years. Consequently, the Tribunal confirmed the decision not to write back certain amounts for specific assessment years. This finding did not give rise to any substantial question of law, resulting in the dismissal of the appeal without costs.
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2012 (3) TMI 564
Issues Involved:
1. Applicability of Rajasthan Prisoners Release on Parole Rules, 1958 in cases under NDPS Act.
2. Necessity of depositing fine before consideration of parole application.
Summary:
Issue 1: Applicability of Rajasthan Prisoners Release on Parole Rules, 1958 in cases under NDPS Act
The court examined whether the Rajasthan Prisoners Release on Parole Rules, 1958 (Parole Rules, 1958) apply to convicts under the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act). Rule 1(c) of the Parole Rules, 1958 specifies that these rules do not apply to persons sentenced for an offence against any law relating to a matter to which the executive power of the Union of India extends. Instead, such persons are governed by the Central Rules made under the Notification of the Government of India, Ministry of Home Affairs No.40/32/55-Judl.I dated 9th November, 1955. The court concluded that the Parole Rules, 1958 are not applicable to persons convicted under the NDPS Act, and such cases must be dealt with according to the Central Rules of 1955.
Issue 2: Necessity of depositing fine before consideration of parole application
The court addressed whether it is necessary for a convict to deposit the fine imposed before their parole application is considered. It was argued that there is no provision under the Parole Rules, 1958 mandating the deposit of fine before considering a parole application. The court held that deposit of fine cannot be a condition precedent for the consideration of a parole application. Parole is not a suspension of sentence, and during the parole period, the sentence continues to run. The court found that the decision in Shiv Shanker Teli's case, which required the deposit of fine before considering parole, was per incuriam and not in accordance with law. Therefore, a convict is entitled to be considered for parole without the necessity of depositing the fine.
Conclusion:
1. The Rajasthan Prisoners Release on Parole Rules, 1958 are not applicable to convicts under the NDPS Act. Such cases must be dealt with according to the Central Rules of 1955.
2. Deposit of fine is not a condition precedent for the consideration of a parole application. The convict is entitled to be considered for parole without the necessity of depositing the fine.
The matter was directed to be placed before the Single Bench for orders on the parole petition, and a copy of the order was to be sent to relevant authorities for information.
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2012 (3) TMI 563
Issues involved: Stay petition for waiver of pre-deposit of service tax liability, interest, and penalty u/s 78 of the Finance Act, 1994 due to non-disclosure of correct gross value for services rendered.
Summary:
The appellant filed a stay petition seeking waiver of pre-deposit of an amount confirmed as service tax liability, interest, and penalty u/s 78 of the Finance Act, 1994. The appellant had not disclosed the correct gross value for services rendered, specifically not including the value of free material supplied by service receivers during the period 10-9-2004 to 30-9-2008.
The appellant's counsel argued that the entire demand is time-barred and that the cost of free materials should not be included in the valuation. They claimed to have correctly disclosed the value of amounts received for services rendered, including miscellaneous materials, and sought the benefit of abatement of 67% u/s Notification No. 15/2004-S.T.
The departmental representative supported the findings of the authorities, emphasizing the inclusion of free supplies in service tax valuation rules from 14-5-2006. The Tribunal noted that the limitation plea may not apply for the periods 2006-07 and 2007-08, as the appellant should have been aware of the law. However, a detailed examination of the issue was deemed necessary at the final disposal of the appeal.
The Tribunal concluded that the appellant had not established a case for complete waiver of the amounts involved. In the absence of a plea of financial hardship, the appellant was directed to deposit a specified amount within four weeks, with further compliance due by a specified date. Upon compliance, the application for waiver of pre-deposit of the remaining amounts was allowed, and recovery stayed pending appeal disposal.
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2012 (3) TMI 562
Issues involved:
The appeal filed by the assessee against the order passed by the Ld. CIT(A)-I, Agra for the Assessment Year 2007-08. The main issue raised by the assessee is the disallowance of `24,96,000/- u/s 40(a)(ia) of the Income Tax Act, 1961.
Details of the Judgment:
Applicability of Section 194-C and 194-I:
The assessee derived income from plying passenger vehicles and had taken contracts for providing and operating passenger vehicles on hire basis. The Assessing Officer disallowed the claim of `24,96,000/- under section 40(a)(ia) of the Act, stating that the assessee was liable to deduct tax u/s 194C but failed to do so. Additionally, the Assessing Officer viewed that section 194-I is applicable due to the amended provision from 13.07.2006. The CIT(A) confirmed the disallowance under section 40(a)(ia) based on section 194-I. However, the Tribunal found that section 194-I was wrongly applied as it does not cover vehicle hire charges. The order of the I.T.A.T. in a similar case supported the assessee's position, leading to the deletion of the demand and interest. The Tribunal held that section 194-I was not applicable to vehicle hire charges, and thus, the addition made by the Assessing Officer was deleted, resulting in no disallowance under section 40(a)(ia).
Conclusion:
The Tribunal allowed the appeal of the assessee based on the findings that section 194-I was wrongly applied to vehicle hire charges, leading to the deletion of the addition made by the Assessing Officer. Therefore, no disallowance was warranted under section 40(a)(ia) of the Act.
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2012 (3) TMI 560
Issues involved: Appeal against order of Ld. CIT(A) XIV, Ahmedabad for assessment year 2008-09. Addition of Rs. 1,86,95,782/- u/s.2(22) (e) of the Act, admission of additional evidence in violation of Rule 46A, and challenge to the order of the Assessing Officer.
Addition u/s.2(22) (e) of the Act:
The revenue appealed against the deletion of the addition of Rs. 1,86,95,782/- u/s.2(22) (e) of the Act. The Ld. counsel for the assessee argued that the assessee company, not being a shareholder of the loan giver company, cannot attract the provisions of Section 2(22) (e) of the Income tax Act, 1961. It was highlighted that Shri Rashmin Majithia held almost all shares of the loan giver company, Zen Tobacco, and the assessee company did not hold the required shares to fall under Section 2(22) (e).
Decision and Rationale:
After considering the submissions and the Special bench decision in the case of Bhaumik Colour Pvt. Ltd., it was concluded that for Section 2(22) (e) to apply, the receiver of the loan must be a registered as well as beneficial owner of the shares to the required extent of the company providing the loan. Since Shri Rashmin Majithia held 99.99% shares of Zen Tobacco, the assessee company did not hold the necessary shares in Zen Tobacco to trigger Section 2(22) (e). Consequently, the provisions of Section 2(22) (e) were deemed not applicable to the assessee regarding the loan from Zen Tobacco. The order of Ld. CIT(A) was upheld based on this interpretation.
Additional Evidence and Order Challenge:
The revenue also contested the admission of additional evidence by Ld. CIT(A) in violation of Rule 46A and sought to set aside the order of Ld. CIT(A) in favor of the Assessing Officer. However, the Tribunal declined to interfere in the order of Ld. CIT(A) based on the above analysis.
Conclusion:
The appeal of the revenue was dismissed, affirming the decision of Ld. CIT(A) XIV, Ahmedabad for the assessment year 2008-09.
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2012 (3) TMI 559
Entitled to exemption under section 80P(2)(a)(i) - Held that:- We find that the Hon'ble Supreme Court, in the case of CIT vs Ponni Sugars and Chemicals Ltd. reported in [2008 (9) TMI 14 - SUPREME COURT ], has remitted the matter back to the file of the Tribunal for examining the Memorandum of Association, Articles of Association, return of income and status of business indicated in the return of income of the Co-operative society to prove that the respective societies have engaged themselves in carrying on any of the several businesses referred to in sub-section (2) of section 80P of the Act.
In the above facts and circumstances, in our considered opinion, it shall be fair and in the interest of justice to restore the issue back to the file of the Assessing Officer for adjudication afresh after examining the Memorandum of Association, Articles of Association and other relevant documents
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2012 (3) TMI 558
Issues involved: Whether the maturity value of Life Insurance received by the assessee from American Life Insurance Company is exempt u/s 10(10D) of the I T Act or not.
Summary:
Issue 1: The Assessing Officer taxed the maturity value of Life Insurance received by the assessee from American Life Insurance Company on the grounds that the policy was not taken from any Indian Life Insurance Company as per section 2(28BB) of the I T Act.
Issue 2: The CIT(A) confirmed the action of the Assessing Officer, leading to the appeal by the assessee.
Details for Issue 1: The assessee received a sum of US $9441.98 from National Bank of Abu Dhabi, equivalent to Rs. 4,16,200. The Assessing Officer held that provisions of sec. 10(10D) of the I T Act did not apply since the policy was not taken from an Indian Life Insurance Company.
Details for Issue 2: The assessee's representative argued that the amount received from the American Life Insurance Company should be exempt u/s 10(10D) as it falls under the provisions of the clause. The representative also contended that the amount is a capital receipt and not a revenue receipt, hence not taxable.
Analysis: The tribunal considered the provisions of sec. 10(10D) which allow exemption for any sum received under a Life Insurance Policy, without specifying that it must be from an Indian insurance company. The tribunal emphasized that the term 'insurer' was not used in sec. 10(10D), indicating no restriction to Indian insurance companies. Therefore, the tribunal held that the assessee is entitled to deduction u/s 10(10D) for the sum received under the Life Insurance Policy from American Life Insurance Company.
Conclusion: The tribunal allowed the appeal filed by the assessee, setting aside the orders of the lower authorities regarding the taxation of the maturity value of the Life Insurance Policy.
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2012 (3) TMI 557
Issues Involved:
1. Addition on account of reconciliation difference in the closing stock of natural gas.
2. Disallowance of provision for leave encashment u/s 43B(f).
3. Disallowance u/s 14A of the Income Tax Act.
Summary:
1. Addition on account of reconciliation difference in the closing stock of natural gas:
The assessee declared a total income of Rs. 86,20,06,630/- for A.Y. 2004-05. The Assessing Officer (AO) noticed a reconciliation quantity of 187,47,287 SCM/Kg of natural gas, which was not reflected in sales or closing stock. The assessee explained this as a shortage/loss included in the cost of natural gas. The AO rejected this explanation, stating that the gas stored in pipelines should be accounted for as inventory. The AO computed an addition of Rs. 2,47,61,450/- for this reconciliation difference. The CIT(A) deleted this addition, following the Tribunal's order for A.Ys. 2002-03 & 2004-05. The Tribunal upheld the CIT(A)'s order, noting that the facts were identical to previous years where a 4% loss was considered reasonable.
2. Disallowance of provision for leave encashment u/s 43B(f):
For A.Y. 2006-07, the AO disallowed Rs. 18,20,068/- out of the provision for leave encashment of Rs. 36,84,064/-, citing section 43B(f). The AO noted that only Rs. 4,52,138/- was paid during the year and Rs. 14,11,858/- was paid in the succeeding year, leaving Rs. 18,20,068/- disallowed. The CIT(A) deleted this disallowance, following the Tribunal's order for A.Y. 2005-06, which relied on the Calcutta High Court's decision in Exide Industries Ltd., 292 ITR 470, and the Supreme Court's decision in Bharat Earth Movers, 245 ITR 428. The Tribunal upheld the CIT(A)'s order.
3. Disallowance u/s 14A of the Income Tax Act:
For A.Y. 2006-07, the AO made a disallowance of Rs. 20,93,850/- u/s 14A, based on proportionate interest and administrative expenses. The CIT(A) reduced this disallowance to Rs. 2,66,943/-, following the decision for A.Y. 2007-08, which restricted disallowance to 1% of total exempt income. The Tribunal restored the matter to the AO for quantifying the expenditure in line with the Delhi High Court's observations in Maxopp Investment Ltd. vs. CIT & Others.
Order Pronounced:
The Tribunal upheld the CIT(A)'s orders on the issues of reconciliation difference and leave encashment, while restoring the matter of disallowance u/s 14A to the AO for fresh quantification. The appeals filed by the Revenue were dismissed or allowed for statistical purposes accordingly.
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2012 (3) TMI 556
Issues involved:
1. Disallowance of traveling expenses
2. Disallowance of interest expenditure
Issue 1: Disallowance of traveling expenses
The assessee appealed against the disallowance of traveling expenses amounting to Rs. 2,19,703 made by the Assessing Officer (AO) on the grounds that the expenses were incurred for business purposes. The contention was that the director's wife accompanied him on business trips due to his health conditions. The Commissioner of Income-tax (Appeals) (CIT(A)) upheld the disallowance, stating that the wife's accompanying could not be solely considered for business purposes and personal benefits could not be ignored. The Appellate Tribunal found contradictions in the facts presented and remanded the issue back to the AO for further examination, emphasizing the need for clear evidence to support the disallowance decision.
Issue 2: Disallowance of interest expenditure
The AO disallowed interest expenses amounting to Rs. 21,22,921, claiming that they were not attributable to the business requirements of the assessee company. The disallowance was based on the assumption that borrowed funds had been diverted for non-business purposes. The CIT(A) confirmed the addition, stating that the funding of interest-free loans from borrowed funds was not disputed by the appellant. However, the Appellate Tribunal found that the nexus between interest-bearing loans and interest-free advances was not established. As a result, the Tribunal set aside the CIT(A)'s decision and remanded the matter back to the AO for a fresh adjudication with proper opportunity for the assessee to present their case.
In conclusion, the Appellate Tribunal allowed the appeal for statistical purposes, emphasizing the importance of clear evidence and proper examination in determining the allowability of expenses and interest disallowances in accordance with the Income-tax Act, 1961.
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2012 (3) TMI 555
Issues Involved: Appeal against disallowance of penal interest amounting to 80,64,458/- u/s 37(1) of the Income Tax Act, 1961 for Assessment Year 1994-95.
Issue 1: Disallowance of Penal Interest
The appellant, a Government Company providing long term finance for Industrial Projects, appealed against the disallowance of 80,64,458/- on account of penal interest. The Assessing Officer confirmed the addition as the appellant failed to provide evidence that the amount was penal interest. The CIT(A) upheld the decision. The appellant contended that the amount was waived as part of settlement with parties and should be allowed as revenue expenditure u/s 37(1) or as bad debts. The appellant submitted evidence including a journal voucher, highlighting the accounting practice followed consistently. The ITAT noted that the Assessing Officer had allowed a portion of the claim under section 37(1) and found the claim of penal interest similar in nature to the allowed amount. Despite lack of specific details, the ITAT held that the claim of 80,64,458/- was allowable under section 37(1), directing the Assessing Officer to verify any potential double claims or recoveries in subsequent years.
Conclusion:
The ITAT allowed the appeal of the assessee, permitting the claim of 80,64,458/- as allowable under section 37(1) of the Income Tax Act, 1961 for the Assessment Year 1994-95.
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2012 (3) TMI 554
Validity of penalty imposed under section 271(1)(c) - Held that:- The assessee has a very close-relation with the donor as that of father and daughter and the natural love and affection could not be doubted by the Revenue in the case of the assessee. In this case, the assessee has filed an explanation which could not be said to be not bonafide. The material facts of the case were disclosed by the assessee at the time of assessment itself. Merely because the assessee could not prove the credit-worthiness of the donor by filing any documentary evidence, it could not be said that the assessee was guilty of concealment of income or filing of inaccurate particulars of income. The facts of the case may justify the addition made in the hands of the assessee, but are not sufficient to justify the imposition of penalty under Section 271(1)(c) of the Act. We are unable to sustain the reasoning of the CIT(A) that the levy of penalty was mandatory and no discretion, is left with the competent authority. In these facts of the case, we hold that it is not a fit case for levy of penalty under Section 271(1)(c) of the Act which is accordingly cancelled and the grounds of the appeal of the assessee are allowed.
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2012 (3) TMI 553
The Appellate Tribunal ITAT Ahmedabad allowed the assessee's Miscellaneous Application to recall an order dated 08-01-2010 for the Assessment Year 2006-07, specifically to adjudicate Ground no.3 related to TDS liability under sections 201 & 201(1A) of the Act. The order was recalled for the purpose of deciding ground no.3 only. The order was pronounced on 02-03-2012.
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2012 (3) TMI 552
The petitioner filed an appeal and a stay petition against an assessment order. Coercive recovery proceedings were initiated during the pendency of the stay petition. The court directed the respondent to consider and pass orders on the stay petition within one month, and to keep coercive recovery proceedings on hold until then.
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2012 (3) TMI 551
Issues Involved:
The judgment involves the issue of depreciation allowance claimed by the assessee company for windmills installed in the previous year relevant to the assessment year under appeal, based on the date of commissioning of the generators and the actual generation of electricity.
Depreciation Allowance Issue:
The assessee company claimed depreciation allowance for the assessment year 1995-96 on the ground that the windmill generators were commissioned on 31.3.1995, despite electricity generation starting in June 1995. The Assessing Officer initially rejected the claim, stating that electricity generation began after June 10, 1995. However, the Commissioner of Income-tax(Appeals) accepted the claim based on the certificate of commissioning issued by the Tamil Nadu Electricity Board. The Tribunal set aside this decision and remitted the issue back to the Assessing Officer for reconsideration.
Upon reassessment, the Assessing Officer concluded that the windmills were put to use only on 10.6.1995 when electricity generation commenced, thus denying depreciation for the impugned assessment year. The Commissioner of Income-tax(Appeals) reversed this decision, allowing the depreciation claim. The Revenue appealed this decision before the Tribunal for the second time.
The Tribunal considered a similar case decided by the Hon'ble High Court of Madras, where 100% depreciation was allowed based on the commissioning date of windmills. Applying this precedent, the Tribunal upheld the Commissioner of Income-tax(Appeals)'s decision, stating that the commissioning date satisfied the condition for claiming depreciation, regardless of the actual electricity generation date.
In conclusion, the Tribunal dismissed the Revenue's appeal and the assessee's cross objection, affirming the allowance of depreciation based on the commissioning date of the windmill generators.
Separate Judgement by Judges:
No separate judgment was delivered by the judges in this case.
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