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2011 (1) TMI 1409
Issues involved: Determination of taxability of amount received under caption 'contribution to common amenities' u/s principles of mutuality.
The appellate tribunal, ITAT Mumbai, in the case of an appeal by the assessee society, addressed the limited issue of the nature of the amount received under the caption 'contribution to common amenities.' The assessee contended that it is not taxable u/s principles of mutuality, while the Assessing Officer and CIT(A) argued otherwise, limiting mutuality to transfer and maintenance fees only.
During the hearing, the assessee's counsel referred to a recent decision of the Tribunal in the case of M/s. Abhilasha CHS Ltd., where it was held that the impugned receipts should be considered akin to transfer fees, and since the amount is used exclusively for the society members' benefit, principles of mutuality apply, rendering it non-taxable under the Income Tax Act.
The learned DR, however, failed to present any contradictory decision to challenge the applicability of mutuality to the amount received as contribution to common amenities funds.
After careful consideration, the tribunal accepted the assessee's argument that the amount received as contribution to common amenities fund is utilized for the common members' benefit, thus attracting the principles of mutuality. Therefore, the tribunal held that the impugned amount is exempt from tax, allowing the appeal filed by the assessee.
The judgment was pronounced in the open court on the date of the hearing, i.e., on 10.1.2011.
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2011 (1) TMI 1408
Issues involved: The judgment involves two main issues: 1. Deletion of addition on account of suppressed profits from unrecorded sale, and 2. Additions made u/s. 68 of the Income Tax Act.
Deletion of addition on account of suppressed profits from unrecorded sale: The appeals filed by the Revenue were against the order of the CIT(A), I Nagpur for the assessment years 2002-03 to 2004-05. The first issue related to the deletion of addition made on account of suppressed profits from the unrecorded sale. The Tribunal had previously decided in favor of the assessee in similar cases. The Ld. Counsel for the Revenue argued that the assessee admitted to the suppression of sales but retracted the statement later. However, there was no supporting seized material to substantiate the suppressed sales or profits. The Tribunal noted that extrapolation of suppressed sales to an assessment year based on seized data for a different year is not legally permissible. The Tribunal referred to previous orders and case law to support its decision. Ultimately, the Tribunal found no incriminating material to support the Revenue's allegations of sales suppression for the years in question, and thus, ruled in favor of the assessee.
Additions made u/s. 68 of the Income Tax Act: The second issue pertained to additions made u/s. 68 of the Income Tax Act. The Ld. Counsel requested that this issue be sent back to the Assessing Officer (A.O) for fresh consideration, citing similar cases where such additions were set aside by the Tribunal. The Tribunal agreed to set aside this issue to the files of the Revenue for reevaluation, directing the Ld. Counsel to provide copies of relevant Tribunal orders for the A.O's reference. Consequently, the grounds raised in the appeal of the Revenue regarding u/s. 68 additions were set aside.
Judgment Outcome: In conclusion, ITA No. 1771/PN/07 was partly allowed, ITA No. 1772/PN/07 was allowed for statistical purposes, and ITA No. 1773/PN/07 was partly allowed. The order was pronounced in the open court on the 7th day of January, 2011.
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2011 (1) TMI 1407
Issues Involved: The issues involved in the judgment are: 1. Allowance of TDS receivable as bad debts u/s.36(1)(vii) when not arising during normal course of business. 2. Treatment of "TDS receivables" written off as bad debts when no proper claim made by the assessee.
Issue 1: Allowance of TDS receivable as bad debts u/s.36(1)(vii): The Assessing Officer disallowed the deduction of Rs. 8,48,592 claimed by the assessee in respect of bad debts written off, specifically TDS receivables. The AO argued that TDS amount does not represent a debt and cannot be considered for deduction as bad debt u/s.36(1)(vii). The assessee contended that the un-claimable TDS represented dues recoverable from tax deductor/customer, hence written off as bad debts. The CIT (A) allowed the deduction based on the argument that the inability to claim credit for tax deductions at source was a loss incidental to business, citing the judgment in the case of CIT vs Shreyans Industries. The ITAT upheld the CIT (A)'s decision, stating that the TDS amounts represented a loss incurred by the assessee in the course of business activities, and approved the allowance of deduction for the written-off TDS receivables.
Issue 2: Treatment of "TDS receivables" written off without proper claim: The Assessing Officer raised concerns about the treatment of "TDS receivables" written off as bad debts when no proper claim was made by the assessee to retrieve them by filing proper returns. The AO contended that since the TDS amount did not arise in the normal course of business, it should not be treated as bad debts. However, the CIT (A) relied on the judgment in the case of Shreyans Industries to allow the deduction for the loss incurred due to unclaimed tax deductions at source. The ITAT agreed with the CIT (A)'s decision, emphasizing that the TDS amounts represented a loss to the assessee and should be allowed as a deduction, dismissing the appeal of the revenue.
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2011 (1) TMI 1406
Issues Involved: 1. Disallowance of depreciation on car. 2. Disallowance of interest expenses. 3. Allowance of business loss. 4. Disallowance of bad debts.
Summary:
1. Disallowance of Depreciation on Car: The Revenue challenged the deletion of disallowance of depreciation on a car amounting to Rs. 1,94,948/-. The Assessing Officer (AO) disallowed the claim as the car was registered in the name of a director and not the company. The CIT(A) deleted the disallowance, stating the car was purchased with company funds and used for business purposes. The Tribunal upheld the CIT(A)'s decision, referencing multiple case laws, and concluded that non-registration under the Motor Vehicles Act does not disentitle the company from claiming depreciation u/s 32 of the Income-tax Act, 1961.
2. Disallowance of Interest Expenses: The AO disallowed Rs. 10,97,994/- on account of interest, arguing that the assessee advanced interest-free loans to sister concerns without business purposes. The CIT(A) deleted the disallowance, noting the advances were for business purposes and the assessee had sufficient interest-free funds. The Tribunal upheld the CIT(A)'s findings, citing the absence of evidence that borrowed funds were used for non-business purposes and referencing the decision in CIT vs. Reliance Utilities and Power Ltd., which presumes investments are made from interest-free funds if available.
3. Allowance of Business Loss: The AO rejected the book results and estimated gross profit, leading to an addition of Rs. 9,49,176/-, due to the assessee's continuous losses and lack of detailed project-wise expenses. The CIT(A) deleted the addition, stating the accounts were audited without defects and the AO did not justify rejecting the books u/s 145(3). The Tribunal upheld the CIT(A)'s decision, emphasizing that low profit alone does not justify rejection of books without specific defects, referencing multiple case laws supporting this view.
4. Disallowance of Bad Debts: The AO disallowed Rs. 1,01,081/- claimed as bad debts, arguing no recovery action was taken. The CIT(A) deleted the disallowance, accepting the assessee's explanation that the amounts were sundry balances written off due to claims by parties. The Tribunal upheld the CIT(A)'s findings, noting the Revenue did not provide material to dispute the genuineness of the write-off.
Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions on all grounds. The order was pronounced on 21-01-2011.
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2011 (1) TMI 1405
Tax on amount of differential sales - Difference between the old and the revised tariff - Price Escalation clause - sale as per Power Purchase Agreement (PPA) - assessee raised invoice applying a rate of ₹ 3.48 per unit, in the books of account, however, the assessee accounted for sales only at ₹ 3.18 per unit - whether the differential amount of sales, as per the Power Purchase Agreement applying which invoices for supply of power to APTRANSCO were raised, can be treated as the income of the assessee for the assessment year 2005-06?
HELD THAT:- The CIT(A) has given elaborate reasoning before concluding that the income worked at the rate of ₹ 3.48/- per unit of power supplied had neither accrued to the assessee nor was receivable during the previous year and therefore, no corresponding debt in respect of the differential amount stood created in the books of the purchaser, i.e. APTRANSCO. Merely based on the invoices raised, income cannot be deemed to accrue to the assessee, when the differential income was subject matter of litigation, and there is no certainty of the assessee being entitled to such income, unless it succeeds in such litigation. Even if an assessee succeeds ultimately in the litigation, a debt enforceable against the other party does not get created, unless a claim in that behalf was raised before the same being barred by limitation. It is for this reason that an assessee, to keep the issue alive, has to raise the claim against the other party within the period of limitation, which in its view is due to it according to the terms of the contract, so as to get an enforceable right for the recovery of the amount as and when it succeeds in the litigation.
Though invoices raised constitute fundamental record for maintenance of accounts in the normal course, as observed by the Assessing Officer, that logic does not hold good when the subject matter was under dispute and was under litigation before the judicial fora, including the jurisdictional High Court and Hon’ble Supreme Court during the relevant points of time. Assessee’s method of accounting only the amount which was not subject matter of litigation and which in fact was received by it from the APTRANSCO in terms of the interim order of the A.P.High Court, was in conformity with the Accounting Standard 9 - thus, there are no infirmity in the order of the CIT (A), which is accordingly confirmed and the grounds of appeal of the Revenue are rejected.
Revenue’s appeal is dismissed.
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2011 (1) TMI 1404
Issues Involved: 1. Deduction u/s 80P(2) of the I.T. Act. 2. Admissibility of income-tax refund and other income for deduction u/s 80P(2).
Summary:
(A) Revenue's Appeal; ITA No.2985/Ahd/2008
Issue 1: Deduction u/s 80P(2) The Revenue contended that the CIT(A)-IV, Surat erred in restricting the addition of Rs. 94,53,213/- to Rs. 11,63,444/- made by the Assessing Officer (AO) on account of deduction u/s 80P(2). The AO had recalculated the eligible deduction u/s 80P, determining the net amount of Rs. 93,97,213/- after deducting expenses of Rs. 4,91,47,302/- from the eligible receipts of Rs. 5,85,44,515/-. The CIT(A) restricted the non-eligible deduction to Rs. 11,63,444/- (income-tax refund of Rs. 6,30,820/- and other income of Rs. 5,32,624/-). The Tribunal found the Revenue's ground misplaced as the AO had assessed the income at Rs. 17,46,753/- and not Rs. 94,53,213/-. The Tribunal dismissed the Revenue's appeal.
(B) Assessee's Appeal; ITA No.3129/Ahd/2008
Issue 1: Deduction on Gross vs. Net Income The assessee argued that the CIT(A) erred in holding that the deduction u/s 80P(2)(a) is allowable only on the net income and not on the gross income. The Tribunal upheld the AO's decision, stating that the deduction u/s 80P is only for the income defined in sub-section (2) of section 80P and not the entire gross total income. The Tribunal dismissed this ground of the assessee.
Issue 2: Admissibility of Income-tax Refund and Other Income The assessee contested the disallowance of deduction u/s 80P for income-tax refund of Rs. 6,30,820/- and other income of Rs. 5,32,624/-. The Tribunal held that income-tax refund is not eligible for deduction u/s 80P(2) as it is beyond the scope of the provision. The Tribunal upheld the AO's disallowance of the income-tax refund deduction.
For the other income, the Tribunal allowed deductions for locker rent, share transfer fee, and insurance refund as these are eligible for deduction u/s 80P. However, the Tribunal restored the issue of penalty interest of Rs. 4,58,217/- to the AO for further investigation. The Tribunal disallowed the deduction for the sale of a motor cycle, stating it had no nexus with the banking activity.
Conclusion: The Revenue's appeal was dismissed, and the Assessee's appeal was partly allowed. The order was signed, dated, and pronounced in the Court on 13/1/2011.
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2011 (1) TMI 1403
Issues involved: The judgment involves the issue of rectification petition under section 154 of the Income Tax Act, 1961 for correcting an erroneous declaration made by the assessee in the return of income, leading to a dispute regarding the computation of income and tax liability.
Summary: The assessee, a software development company, erroneously entered an amount under income from business or profession in its return of income, resulting in an increase in gross total income. The Assessing Officer (AO) processed the return based on this erroneous declaration, leading to a tax demand under normal provisions. The assessee filed a rectification petition under section 154, which was rejected by the AO, who also initiated penalty proceedings. The Commissioner of Income Tax (Appeals) upheld the rejection of the rectification petition. The matter was then appealed to the Appellate Tribunal.
The Tribunal observed that the error in the return was an arithmetical one, as the assessee manually entered a wrong numerical value, causing the income to be wrongly computed. The Tribunal noted that the mistake was apparent from the return and could be rectified under section 154. Referring to a previous Tribunal decision, the Tribunal allowed the rectification petition and directed the AO to adopt the income from business as 'nil'. Consequently, the appeal of the assessee was allowed.
In conclusion, the Tribunal held that the erroneous declaration made by the assessee in the return of income, which led to a higher tax liability, was a clear arithmetical error that could be rectified under section 154. The Tribunal directed the AO to consider the income from business as 'nil', thereby allowing the appeal of the assessee.
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2011 (1) TMI 1402
Issues involved: Two cross appeals filed by the assessee and the Revenue against the order of ld. CIT(A) dated 8.5.2008 for Asst. Year 2005-06.
Assessee's Appeal - Share Capital Introduced by Partner: The assessee contested the addition of Rs. 9,62,333 made by the Assessing Officer u/s 68 of the IT Act out of fresh capital introduced at Rs. 14,62,333 by a partner. The ld. CIT(A) upheld the addition, stating that the details furnished were additional evidence and could not be considered. The appellant argued that the partner's identity and tax assessment details were known to the AO, and the capital introduced should be considered explained. The Tribunal held that if the partner admitted to introducing the capital, the firm had discharged its onus, citing relevant case laws. Consequently, the addition u/s 68 was directed to be deleted in favor of the assessee.
Revenue's Appeal - Deduction u/s 80IB: The Revenue challenged the allowance of deduction u/s 80IB on disallowance of Rs. 7,25,031 made u/s 40a(ia) of the IT Act. The issue revolved around whether the disallowance under section 40a(ia) could be treated as business profit for the purpose of deduction under section 80IB. The ld. CIT(A) allowed the claim of the assessee as business income. The Tribunal upheld this decision, citing a previous case where it was held that such additions fall under the head of business income and not income from other sources. Therefore, the Revenue's appeal was dismissed.
Conclusion: The Tribunal allowed the assessee's appeal regarding the share capital introduced by the partner and dismissed the Revenue's appeal concerning the deduction u/s 80IB. The decision was based on the principle that if partners admit to contributing capital, any unexplained amounts should be dealt with in the partners' hands, not the firm's. The Tribunal's order was pronounced on 21.1.11.
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2011 (1) TMI 1401
Issues Involved: 1. Conviction under Section 20 of the NDPS Act. 2. Alleged procedural lapses in handling and sending samples to CFSL. 3. Admissibility of CFSL report. 4. Compliance with mandatory provisions of the NDPS Act. 5. Mentioning of FIR number on documents before FIR registration.
Summary:
1. Conviction under Section 20 of the NDPS Act: The Appellant was convicted u/s 20 of the NDPS Act and sentenced to 10 years of Rigorous Imprisonment and a fine of `1 lakh, with an additional two years imprisonment in default of payment.
2. Alleged procedural lapses in handling and sending samples to CFSL: The defense argued that the prosecution failed to prove the link evidence, citing discrepancies in the dates and the handling of the FSL form. The court found that the form FSL was filled and deposited with the Moharar Malkhana on 2nd May 1999, and the samples were sent to CFSL Chandigarh with intact seals, thus proving the link evidence. The delay in sending the samples was not considered fatal as the seals were intact and matched the specimen seals.
3. Admissibility of CFSL report: The court held that the CFSL report is per se admissible u/s 293 Cr.P.C. and does not require the expert's examination unless the court deems it necessary. The Appellant did not object to the CFSL report being exhibited during the trial, and thus, the objection cannot be raised in the appeal.
4. Compliance with mandatory provisions of the NDPS Act: The court found that Sections 52, 55, and 57 of the NDPS Act were directory and not mandatory. The compliance with these sections was deemed sufficient based on the evidence presented. The court also held that Sections 42 and 50 of the Act were not applicable as this was a case of chance recovery.
5. Mentioning of FIR number on documents before FIR registration: The court accepted the prosecution's explanation that the FIR number was added to the seizure memo after the FIR was registered for procedural convenience. This did not amount to tampering with the documents.
Conclusion: The appeal was dismissed, and the conviction of the Appellant u/s 20 NDPS Act was upheld. The Appellant was ordered to be taken into custody to serve the remaining sentence.
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2011 (1) TMI 1400
Issues involved: Classification of profit earned on sale of landed property as business income or capital gain.
Summary: The judgment by the Appellate Tribunal ITAT Hyderabad involved three appeals by the Revenue against orders of CIT(A)-VI, Hyderabad regarding the classification of profit earned on sale of landed property by three independent assessees. The main issue in all three appeals was the classification of the profit earned on the sale of the property.
The Revenue argued that the assessees' activities, including dividing the land into housing plots and selling them, indicated an adventure in the nature of trade, thus the profit should be considered as business income. On the other hand, the assessees contended that the property was initially purchased as an investment and not for business purposes, and the subsequent sale did not change its nature.
After considering the arguments, the Tribunal emphasized that the intention of the assessees at the time of property purchase was crucial in determining the nature of the income. The Tribunal noted that the property was held for 35 years without any business activities related to it, indicating an investment intent rather than a business motive.
Additionally, the Tribunal highlighted that the assessees' partnership in a construction firm did not automatically imply real estate business activity in their individual capacity. The Tribunal concluded that there was no evidence of systematic business activity by the assessees, and therefore, the profit from the property sale was rightly treated as capital gain by the CIT(A).
Ultimately, the Tribunal dismissed all three appeals by the Revenue, confirming the order of the lower authority.
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2011 (1) TMI 1399
Issues Involved: 1. Classification of income from share transactions: capital gains vs. business income. 2. Addition of unexplained cash credits. 3. Addition based on the difference in property valuation as per books and DVO report. 4. Charging of interest under Sections 234A, 234B, and 234C. 5. Initiation of penalties under Sections 271(1)(c), 269SS, and 269T.
Issue-Wise Detailed Analysis:
1. Classification of Income from Share Transactions: The Revenue contended that the income from share transactions should be treated as business income rather than capital gains. The CIT(A) directed the AO to treat the assessee as an investor, computing income from capital gains. The Tribunal upheld the CIT(A)'s decision, emphasizing that the assessee's transactions were consistent with those of an investor, considering factors like the use of surplus funds, the nature of transactions, and the absence of borrowed funds. The Tribunal also noted the principle of consistency, as the Revenue had accepted similar transactions as capital gains in previous years.
2. Addition of Unexplained Cash Credits: The AO added amounts as unexplained cash credits based on advances received in cash for proposed residential schemes. The CIT(A) upheld these additions, but the Tribunal found that the assessee had provided sufficient evidence, including affidavits, PAN details, and confirmations from depositors. The Tribunal criticized the AO for not cross-examining the depositors and for not considering the replies received under Section 133(6). The Tribunal concluded that the assessee had discharged the onus of proving the identity, creditworthiness, and genuineness of the transactions, leading to the deletion of these additions.
3. Addition Based on Property Valuation Difference: The AO made additions based on the difference between the declared value and the DVO's estimated value of the Samodh Haveli property. The CIT(A) allowed a 20% deduction on the DVO's valuation but upheld part of the addition. The Tribunal, however, noted that the sale deed was registered and the property value was justified by the assessee's explanations regarding the property's condition and location. The Tribunal found the DVO's valuation unsupported by comparable cases and deleted the entire addition.
4. Charging of Interest under Sections 234A, 234B, and 234C: The Tribunal noted that the charging of interest under these sections is consequential and mandatory, thus rejecting the appeals on this ground.
5. Initiation of Penalties under Sections 271(1)(c), 269SS, and 269T: The Tribunal deemed these grounds premature, as the initiation of penalties is an independent proceeding. Therefore, these grounds were dismissed.
Conclusion: The Tribunal dismissed all the Revenue's appeals and partly allowed the assessees' appeals, primarily deleting the additions related to unexplained cash credits and property valuation differences, while upholding the CIT(A)'s decision on treating income from share transactions as capital gains. The Tribunal also emphasized the importance of consistency in tax treatment and the need for the Revenue to properly examine and cross-verify evidence before making additions.
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2011 (1) TMI 1398
Issues involved: Appeal against denial of recognition u/s. 80G(5)(vi) of the Act by the ld. Commissioner of Income Tax.
The assessee trust applied for registration u/s. 12A and recognition u/s. 80G of the Act. The ld. CIT granted registration u/s. 12A but denied approval u/s. 80G stating that the trust had not commenced activities at the time of application, and accounts could not be annexed. The ld. CIT held that the application was premature as the trust's income qualification for exemption u/s. 11 could only be determined at the end of the accounting period. The trust's activities included providing note books to school children and promoting local cultural heritage. The ld. CIT emphasized that compliance with sections 11, 12, and 13 must be assessed for the entire year, not a part period, and the trust's undated certificate u/s. 13(1)(c) did not establish compliance for the remaining financial year. The application for approval u/s. 80G in Form 10G was deemed premature due to non-satisfaction of Act conditions.
The assessee argued that the ld. CIT's order u/s. 80G was time-barred u/s. Rule 11AA(6) and recognition should be deemed granted. Alternatively, it was contended that recognition should have been granted as all Act requirements were met. The ld. DR supported the CIT's order and suggested the trust could reapply for recognition u/s. 80G for a fresh assessment.
The ITAT noted that the application was forwarded to the jurisdictional CIT(E) by the Revenue, establishing the filing date as the date of receipt by the authority. The order u/s. 80G(5)(iv) was within the statutory limitation period. Regarding merits, the ITAT highlighted that recognition u/s. 80G should not be contingent on income derivation and compliance verification post-income generation. The trust's entitlement to recognition u/s. 80G was affirmed based on compliance with Act provisions and timely application submission. The ITAT directed the ld. CIT(Exemption) to grant recognition u/s. 80G(5)(vi) in accordance with the Act.
Judgement: The ITAT allowed the appeal of the assessee, emphasizing the trust's entitlement to recognition u/s. 80G based on compliance with Act provisions and timely application submission. The ITAT directed the ld. CIT(Exemption) to grant recognition u/s. 80G(5)(vi) in accordance with the Act.
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2011 (1) TMI 1397
Issues Involved:1. Addition on account of rental income. 2. Disallowance of expenses u/s 37(1) attributable to earning house property income. Summary:Issue 1: Addition on account of rental incomeThe first common issue relates to the addition made by the A.O. and confirmed by the ld. CIT(A) on account of rental income for A.Y. 2001-02 and 2003-04 to 2006-07. The assessee, a company deriving income from business and rental income, was subjected to a search and seizure action u/s 132. Proceedings u/s 153-A were initiated for the relevant years. The A.O. adjusted the gross rental income based on lease agreements and market conditions, estimating higher rental values. The ld. CIT(A) upheld the A.O.'s action, factoring in higher security deposits while calculating the annual letting value. The Tribunal, however, directed the A.O. to adopt the rent actually received by the assessee, being more than the Municipal Ratable Value, as the annual value of the property for A.Y. 2003-04 to 2006-07, following the decision in Reclamation Realty India P. Ltd. and other judicial pronouncements. Consequently, the additions made by the A.O. were deleted. Issue 2: Disallowance of expenses u/s 37(1) attributable to earning house property incomeThe second common issue pertains to the disallowance of various expenses claimed by the assessee u/s 37(1) by treating them as attributable to earning house property income for A.Y. 2001-02 to 2006-07. The A.O. apportioned these expenses between business income and house property income based on turnover and gross rental income. The ld. CIT(A) confirmed the disallowance, observing that most expenses were related to the overall entity and operations of the assessee. The Tribunal, after reviewing the nature of expenses and submissions, directed the A.O. to estimate the expenses attributable to house property income at 20% of the total expenses, thereby modifying the disallowance. Conclusion:In the result, all the appeals of the assessee were partly allowed. Order pronounced on 28th January, 2011.
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2011 (1) TMI 1396
Grant of Bail - offences under various provisions of the I.P.C., the Explosive Substances Act, and the Unlawful Activities (Prevention) Act - The prosecution case is that the respondent gave medical aid to one of the wounded accused in pursuance of a previous plan that if and when any of the assailants got injured in the attack on Prof. Jacob then immediate medical treatment would be given by the respondent to the injured - Held that: - the respondent has already spent 66 days in custody, and we see no reason why he should be denied bail. A doctor incarcerated for a long period may end up like Dr. Manette in Charles Dicken's novel `A Tale of Two Cities', who forgot his profession and even his name in the Bastille - appeal dismissed - decided against Revenue.
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2011 (1) TMI 1395
Issues involved: Appeal by revenue u/s 260A of Income Tax Act against ITAT order on accumulation of funds u/s 11(2) for assessment year 2006-07.
Summary: 1. The appeal was filed by the revenue against the ITAT order regarding the accumulation of funds by the assessee u/s 11(2) of the Income Tax Act, 1961. The primary question raised was whether the assessee fulfilled the mandatory requirements of Section 11(2) without specifically mentioning the definite purpose of accumulation in Form No.10. 2. The assessee, a statutory body under the Punjab Agriculture Produce Marketing Act, 1961, had funds accumulated without complying with Section 11(2) conditions. The CIT(A) deleted the addition made by the assessing officer, stating that the accumulation was in accordance with statutory provisions. The Tribunal upheld this view, emphasizing that the mentioning of development works in Form No.10 fulfilled the primary condition of Section 11(2).
3. The condition for excluding accumulated income of a charitable institution from total income requires specification of the purpose for accumulation and deposit in a specified mode. The exemption was disallowed initially due to the alleged failure to specify the purpose of accumulation. However, both the CIT(A) and the Tribunal confirmed that the purpose was specified for utilizing the amount, which was for development as per Section 28 of the PAPM Act.
4. The relevant portion of Section 11(2) of the Act was cited, highlighting the conditions to be complied with for accumulation of income for charitable purposes. The counsel for the revenue failed to demonstrate any error in the decisions of the CIT(A) and the Tribunal, leading to the dismissal of the appeal.
5. Ultimately, the appeal by the revenue was dismissed as no substantial question of law was found to arise from the case.
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2011 (1) TMI 1394
Issues Involved: The judgment deals with the issue of renewal of registration of a trust under section 80G of the Income Tax Act, challenged by the Revenue based on the amount of expenditure incurred towards religious activities being less than 5% of the total income.
Summary: The respondent, a society registered for religious and charitable purposes, sought renewal of registration under section 80G in 2009, which was refused by the Revenue. The Tribunal, after considering the income and expenditure accounts, found that the expenditure towards religious activities was less than 5% of the total income for two consecutive years. Consequently, the Tribunal allowed the appeal and directed the grant of exemption under section 80G to the assessee. The Revenue appealed against this decision.
The Revenue argued that the plea regarding expenditure for religious purposes being less than 5% was raised for the first time before the appellate authority, requesting a remand for further investigation. On the other hand, the assessee contended that the plea was raised before the CIT, and the appellate authority was justified in considering it based on the records provided. The appellate authority's finding was factual and not disputed, hence no fresh inquiry was warranted.
The High Court observed that the society was registered under the Societies Registration Act for religious and charitable activities, holding registration under sections 12AA and 80G. The CIT's refusal to renew registration based on religious activities alone was found to be without merit, as the expenditure towards religious activities was below 5% of the total income, entitling the trust to benefits under section 80G. The Tribunal's decision was based on undisputed records and did not warrant interference. Consequently, the High Court dismissed the appeal, upholding the Tribunal's order.
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2011 (1) TMI 1393
Issues involved: The judgment deals with the appeal against the order passed by the Learned CIT under section 263 of the Act, relating to the assessment year 2007-08, regarding the exemption granted to the assessee under section 10(10C) of the Act on the Ex-gratia amount received.
Summary: The assessee challenged the direction given by the Learned CIT to revoke the exemption granted under section 10(10C) of the Act on the Ex-gratia amount received. The assessee relied on a previous bench decision and argued that the Assessing Officer had accepted their claim for exemption initially. The Learned CIT directed the Assessing Officer to revoke the exemption granted, citing non-compliance with guidelines. The assessee argued that the assessment order was not erroneous as the Assessing Officer had fully verified the claim. The CBDT's letter post the assessment was also considered. The State Bank of India had modified the scheme, fulfilling the conditions mentioned by the Learned CIT. The Departmental Representative contended that the scheme did not comply with rule 2BA and the Assessing Officer had not properly applied the provisions. The legal position under section 263 was discussed, emphasizing the need for the order to be erroneous and prejudicial to the interests of the Revenue. The Tribunal found that the Assessing Officer had taken a plausible view based on available information and set aside the order of the Learned CIT.
Judgment: The Tribunal found that the Assessing Officer's decision was reasonable and in accordance with the law. The subsequent letter from CBDT was issued after the assessment order, and the Assessing Officer had compared the facts with a relevant decision before allowing the exemption. The Tribunal concluded that the initiation of proceedings under section 263 was not justified, and hence, the orders of the Learned CIT were set aside. The appeal of the assessee was allowed based on the consistency with a previous decision.
Separate Judgment: No separate judgment was delivered by the judges in this case.
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2011 (1) TMI 1392
Issues involved: Validity of initiation of revision proceedings u/s 263 of the Income Tax Act regarding exemption u/s 10(10C) and the bar of limitation.
Validity of initiation of revision proceedings u/s 263: The appeal was filed by the assessee against the CIT's order questioning the initiation of revision proceedings u/s 263 of the Income Tax Act, specifically related to the allowance of claim u/s 10(10C). The assessee contended that the revision proceedings were time-barred as the issue had attained finality on the date of intimation u/s 143(1) of the Income Tax Act.
Judgment: The Tribunal referred to a similar case where the CIT's order was set aside under identical circumstances, emphasizing the need for the CIT's order to be considered "erroneous in so far as it is prejudicial to the interests of the Revenue." It was highlighted that the Assessing Officer's view must be plausible and sustainable in law, and in this case, the Assessing Officer had compared the facts with a relevant case and allowed the claim of the assessee. Therefore, the Tribunal concluded that the initiation of proceedings u/s 263 was not justified and set aside the CIT's order.
Bar of limitation: The assessee challenged the initiation of revision proceedings on the ground of being time-barred, asserting that the issue had already attained finality on the date of intimation u/s 143(1) of the Income Tax Act.
Judgment: The Tribunal, after careful consideration, found that the initiation of revision proceedings was not warranted as the Assessing Officer had taken a plausible view based on existing facts and legal provisions. The Tribunal emphasized that the subsequent letter issued by CBDT could not be the basis for terming the assessment orders as erroneous and prejudicial to the revenue. Therefore, the Tribunal allowed the appeal of the assessee, setting aside the CIT's order u/s 263 of the Act.
In conclusion, the Tribunal ruled in favor of the assessee, setting aside the CIT's order u/s 263 of the Income Tax Act based on the grounds that the initiation of revision proceedings was not justified and the bar of limitation was not applicable in this case.
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2011 (1) TMI 1391
Issues Involved: The issue involves the apportionment of Tax Deducted at Source (TDS) between members of a joint venture company based on a TDS certificate issued by the Assessing Officer.
Summary:
The appeal by the Revenue for assessment year 2006-07 was directed against the order of the CIT(A), Guntur dated 15.4.2010. The grounds of appeal raised by the Revenue questioned the apportionment of TDS between members of a joint venture company, contending that there is no provision in law for such apportionment. The Revenue argued that the direction of the CIT(A) to allow proportionate TDS to the assessee as a member of the joint venture company was erroneous in law.
The learned DR supported the Assessing Officer's decision, emphasizing that the TDS certificate was issued in the name of the joint venture company, and there is no legal provision for dividing the TDS amount among the members. On the other hand, the counsel for the assessee argued that since the assessee had claimed its 60% share in the TDS amount in the filed return of income, it was entitled to credit for 60% of the TDS amount. The counsel cited a previous decision by the Hyderabad Tribunal in favor of the assessee.
Upon careful consideration, it was noted that the assessee, a partnership firm engaged in civil contract works, had claimed credit for 60% of the TDS amount based on the TDS certificate issued by the joint venture company's Assessing Officer. The Tribunal found that as per section 199 of the Income-tax Act, 1961, the credit for TDS should be given to the person whose receipts are subject to tax. Therefore, the proportionate credit of the TDS amount should be allowed to individual constituents based on their respective share ratio in the joint venture agreement. Citing a previous decision in the assessee's favor for a different assessment year, the Tribunal confirmed the order of the CIT(A) and dismissed the Revenue's appeal.
In conclusion, the Tribunal dismissed the appeal of the Revenue, affirming the decision to allow the assessee credit for the TDS amount based on their share ratio in the joint venture agreement.
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2011 (1) TMI 1390
Grounds for declaring election to be void - Validity of election of the respondent No. 2, who is returned candidate from Legislative Assembly Constituency of Dibrugarh - seeking to order repoll in Polling Station No. 124 Manik Dutta L.P. School (Madhya) of 116 Dibrugarh Legislative Assembly Constituency - whether there had been or not a breach of the Act and the Rules in the conduct of the election at this constituency? - HELD THAT:- It is hardly necessary for this Court to go over the evidence with a view to ascertaining whether there was or was not a breach of the Act and the Rules in the conduct of the election concerned. Having read the evidence on record, this Court is in entire agreement with the decision of the learned Single Judge that by the change of venue of casting votes, breach of the provisions of Sections 25 and 56 of the Act read with Rule 15 of the Rules of 1961 was committed by the officials who were in charge of the conduct of the election at this constituency.
The matter is governed by Section 100(1)(d)(iv) of the Act. The question still remains whether the condition precedent to the avoidance of the election of the returned candidate which requires proof from the election petitioner, i.e., the appellant that the result of the election had been materially affected insofar as the returned candidate, i.e., the respondent No. 2, was concerned, has been established in this case - It is well to remember that this Court has laid down in several reported decisions that the election of a returned candidate should not normally be set aside unless there are cogent and convincing reasons. The success of a winning candidate at an election cannot be lightly interfered with. This is all the more so when the election of a successful candidate is sought to be set aside for no fault of his but of someone else. That is why the scheme of Section 100 of the Act, especially clause (d) of sub-Section (1) thereof clearly prescribes that in spite of the availability of grounds contemplated by sub-clauses (i) to (iv) of clause (d), the election of a returned candidate shall not be voided unless and until it is proved that the result of the election insofar as it concerns a returned candidate is materially affected.
The heads of substantive rights in Section 100(1) are laid down in two parts: the first dealing with situations in which the election must be declared void on proof of certain facts and the second in which the election can only be declared void if the result of the election, insofar as it concerns the returned candidate, can be held to be materially affected on proof of some other facts. The appellant has totally failed to prove that the election of the respondent No. 2, who is returned candidate, was materially affected because of non-compliance with the provisions of the Representation of the People Act, 1951, or Rules or Orders made under it.
This Court is of the firm opinion that the learned Single Judge of the High Court did not commit any error in dismissing the petition filed by the appellant challenging the election of the respondent No. 2. Therefore, the appeal, which lacks merits, deserves to be dismissed.
Appeal dismissed.
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