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Showing 61 to 80 of 1441 Records
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2014 (2) TMI 1385
Termination of services of an employee - principal contention of the learned counsel for the petitioner that the employee had been discharging supervisory and managerial functions by controlling three branches of the petitioner company at different locations - HELD THAT:- In the present instance, it is not a case of jurisdictional error but, at best, an adjudicatory error, if any. Further, the order of the first appellate authority cannot be treated as a nullity. The adjudicatory authority lacking the inherent jurisdiction is one thing and the applicant not fitting into the framework of a statute under which the authority does have power is another thing. In this case it cannot be stated that the petitioner company is not covered by the provisions of the Act, which in section 2(5) defines 'commercial establishment', which the petitioner is. In the same breath, it cannot be further said that the first appellate authority is not the proper authority under the said Act to exercise his quasi judicial jurisdiction over the petitioner company. The entire issue hinges on the categorisation of the deceased employee - whether he was an employee in terms of section 2(8). Even otherwise, there are disputed questions of fact to be adjudicated as has already been indicated.
It is a truism to state that a decision is an authority to what it actually decides, more particularly, in the factual setting of the said case. The constitutional courts have always leaned towards the common man when he has come to the court with a grievance that he has been a victim of executive excesses or administrative vagaries. Under those circumstances the benefit of public law remedy cannot be thwarted on technicalities. Under a writ of certiorari the jurisdiction of the High Court is extremely restricted, for it looks at the decision making process rather than the decision itself -
Going by the settled principles of law as to the writ of certiorari, it is difficult to see any error in the decision making process. It is only in the interest of Justice that this court desires to provide ample scope for the respective parties to agitate their issues, compendiously and comprehensively involving disputed questions of fact as well as the status of the parties, before a statutory authority, that is the second appellate authority - Going by the settled principles of law as to the writ of certiorari, it is difficult to see any error in the decision making process. It is only in the interest of Justice that this court desires to provide ample scope for the respective parties to agitate their issues, compendiously and comprehensively involving disputed questions of fact as well as the status of the parties, before a statutory authority, that is the second appellate authority.
This Court is of the considered opinion that it is not a case of inherent lack of jurisdiction on the part of the first appellate authority, nor is it a case of laying challenge against statutory provisions as ultra vires. No infraction of principles of natural Justice has been pleaded, either. It is a simple case of determining whether the deceased employee is an employee in terms of section 2(8) of the Act - Petition dismissed.
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2014 (2) TMI 1384
Revision u/s 263 - TDS deduction on foreign agent export commission - AO allowed assessee’s foreign agent commission payments as expenditure without deduction of any TDS - HELD THAT:- Admittedly, the assessee had made payment to its overseas export agent in lieu of getting export orders and did not deduct any TDS qua the said payments. Per Revenue, the assessee was supposed to deduct TDS in question. The assessee places reliance on the circulars of the ‘board’ bearing No.23 dated 23.7.1969, No.163 dated 29.5.1975 and No.786 dated 7.2.2000. In the first circular, the ‘board’ had clarified that a foreign agent of Indian exporter is not liable to pay any income tax in India.
This position continued till the year 2009. It was only in the year 2009 i.e after the impugned assessment year 2008-09 that the ‘board’ decided to withdraw the circular on 22.10.2009. We notice that the hon'ble Delhi high court in the case of CIT vs Angelique International Ltd (supra) has held that the action of the ‘board’ in issuing withdrawal of earlier circulars with effect from 22.10.2009 is only prospective and not retrospective. As a result, we also observe that since the impugned assessment year is 2008-09 i.e well before 22.10.2009, the circular issued in the year 2009 did not have any effect in the assessee’s case.
That being so, the Assessing Officer had rightly followed the circular in allowing the assessee’s foreign agent commission payments as expenditure without deduction of any TDS. Rather, in the case of Faizan Shoes Pvt. Ltd [2014 (1) TMI 440 - ITAT CHENNAI] the co-ordinate bench of the Chennai ‘tribunal’ holds that even in assessment year 2009-10, the circular dated 22.10.2009 does not apply. Thus, we hold that the Assessing Officer had taken the only possible view by following the circular issued by the ‘board’ which provided that in case of foreign agent commission payments the said income could not be taxed in India. In this manner, the argument of the assessee challenging the sole reason stated in the section 263 show cause notice succeeds.
That leaves us with the latter reason in the impugned order that since the Assessing Officer did not carry out any investigation/ enquiry to determine nature of the commission payments and therefore, the CIT has only remitted the matter back to the Assessing Officer to re-examine the issue which causes no prejudice to the assessee. After considering this plea of the Revenue, it emanates from the case file that factually, the assertion is correct. However, in the show cause notice issued by the CIT, there is no such reason of lack of enquiry forthcoming. We make it clear that in section 263 proceedings, the jurisdiction of the CIT is confined to only those issues which form part of the show cause notice. In this manner, the order under challenge traverses beyond the show cause notice. Since we are dealing with a ‘fiscal’ statute, the powers of the Revenue have to be strictly interpreted. Assessee’s appeal is allowed.
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2014 (2) TMI 1383
Addition u/s 68 - unexplained cash credit - assessee has only proved the identity of the company and the details of flow of money through the banking channels and it has failed to prove the credit worthiness of M/s Great Valley P Ltd in terms of sec.68 - contentions of the Ld A.R was that the provisions of sec. 68 cannot be applied to an International Transaction - HELD THAT:- In the case of Pondu Metal and Rolling Mill [2007 (2) TMI 652 - DELHI HIGH COURT], the issue related to the “Share Application Money” received by the assessee therein. In the instant case, the assessee has received loans in the form of “Debentures” and hence, in our view, the ratio of the said decision cannot be applied to the facts of the instant case.
In the case of Russian Technology Centre [2013 (4) TMI 659 - ITAT DELHI] the issue was related to “Share Application money” received from a foreign parent company.However in the instant case, there was no prior approval of Indian Government authorities (if required) and further the assessee has miserably failed to prove the source available with M/s Great Valley Co. Pvt Ltd, i.e., the credit worthiness of the said company with supporting evidences. In fact, the submission of the Ld A.R was that the assessee could not enforce the above said company to furnish the financial details, which appears to be very strange to us. Hence, in our view, the assessee cannot take support of this decision also.
The issue considered in the case of Smt. Susila Ramasamy [2009 (4) TMI 554 - ITAT CHENNAI] was about the applicability of provisions of sec. 69 of the Act on an assessee, who was a Non- Resident Indian. In the instant case, we are concerned with the applicability of the provisions of sec. 68 to an Indian assessee on the loan received by it. Hence, in our view, the assessee cannot take support of the case of Smt. Susila Ramasamy (supra) also.
In the instant case, it is a fact that the assessee did not furnish any material to prove the credit worthiness before the AO. However, before the Ld CIT(A), the assessee has furnished a certificate obtained from M/s Barclays Bank to the effect that the funds were transferred to the assessee company from out of the balance available in a Bank account. It is pertinent to note that the said certificate is very bald in nature, i.e., it did not give any detail about the Bank account, i.e., the Bank account number, the account holder name, when the account was opened, details of dates and amounts of deposit in the said bank account etc. Be that as it may, the fact remains that the said certificate has not been examined by the Ld CIT(A) or by the AO (in the remand proceedings). Whatever may be the worth, the assessee has furnished a certificate obtained from M/s Barclays bank in order to prove the credit worthiness of the foreign company, referred above and hence, in our view, the tax authorities should have examined the same and there after, they should have taken a decision. Hence, in our view, the issue before us needs to be examined afresh at the end of the assessing officer - Appeal of the assessee is allowed for statistical purposes.
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2014 (2) TMI 1382
Seeking return of security on the basis that the suit was filed and security obtained for the plaintiff's claim in arbitration - Lifting of Corporate Veil - HELD THAT:- It is trite law that a company is a separate juristic entity distinct from the shareholders; its assets are separate and distinct from those of its members; it can sue and be sued exclusively for its own purpose; its creditors cannot obtain satisfaction from the assets of its members; the liability of the members or shareholders is limited to the capital invested by them; similarly, the creditors of the members have no right to the assets of the corporation and unless fraud is asserted or at least alleged in the plaint, as required under Order VI Rule 4 and in such a way that it will be sustained at the time of trial, the question of lifting a corporate veil does not arise. To accept the plaintiff's submissions that there need not be any fraud or underlying element of dishonesty in formation of corporate entities would amount to violating and shaking these fundamental tenets of corporate law.
Simply because the shareholders, the Directors (in this case were not common) the addresses of the two companies that own the two ships are common or the constituted attorney who was appointed to buy the vessel is the same or that both the ships were purchased pursuant to the board meeting on the same day does not mean that the efforts of the subscribers were to conceal that fact and does not automatically mean that the intention to register the two ships in different names was to play a fraud. There is no bar in purchasing ships in different names if that is the way a person wants to do his business. There is of course an exception that the intention was to mask the true owners and the companies are a sham - Under order VI Rule 4 of Code of Civil Procedure, it is provided that if party pleading relies on any fraud then particulars with dates and time and the nature of fraud has to be stated in the pleading, i.e., the plaint. There are no particulars as required under Order VI Rule 4 of CPC of fraud stated in the plaint. Moreover, all these factors were known to the plaintiff or the plaintiff is deemed to have known prior to entering into the management agreement with the plaintiff. It is not the plaintiff's case that they would not have entered into the management agreement otherwise.
The plaintiff has not made out a case for lifting or piercing the corporate veil and hence defendant no. 1 cannot be a sister of M.V. Eastern Light. The foundation of the plaintiff's case that defendant no. 1 and M.V. Eastern Light are sister ships itself is not sustainable, let alone security to be continued till the suit is heard and disposed.
The notice of motion is allowed.
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2014 (2) TMI 1381
Addition to value of closing stock on account of CENVAT credit u/s 145A - assessee has been consistently following exclusive method of accounting for valuation of closing stock of excluding the CENVAT - AO revalued the closing stock by including CENVAT/MODVAT credit in closing stocks on the ground that non inclusion of CENVAT credit is not only improper but also cannot depict the true and fair picture of taxable profit of the business - HELD THAT:- Jurisdictional High Court in the case of Mahalaxmi Glass Works P. Ltd [2009 (4) TMI 182 - BOMBAY HIGH COURT] wherein it has been held that to give effect u/s 145A, if there is any change in closing stock at the end of the year there must be necessarily of corresponding adjustment in the opening stock of that year and accordingly directed the AO to calculate disallowance/addition after verification.
Tribunal in the case of Jindal Iron & Steel Company Ltd. [2013 (1) TMI 182 - ITAT MUMBAI] has held that if unutilized MODVAT credit is added to closing stock, then similar adjustment should be made even in opening stock and purchases. The Tribunal further held that from the plain reading of provisions of section 145A, it is evident that for the purpose of valuation of purchase and sale of goods and inventories on account of tax, duty, cess or fee actually paid are incurred by the assessee has to be made. Excise duty component in the form of MODVAT in the raw materials has to be included while valuing the purchases and sales of goods and inventories as it has direct bearing on valuation of stock. The Tribunal in the said decision has considered the decision of the Hon’ble Bombay High Court in the case of Mahalaxmi Glass Works P. Ltd (supra) which has been relied by the Ld.CIT(A). Therefore, following the aforementioned decision of the Tribunal, we modify the direction of the Ld.CIT(A) in such a manner that the issue is remitted back to the file of the AO with the direction to make the adjustments as per section 145A on account of CENVAT credit to the value of purchases/sales of opening and closing stock and accordingly re-compute the addition if any to be made on this issue. Appeal filed by the assessee is allowed for statistical purpose.
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2014 (2) TMI 1380
Dishonor of Cheque - time limitation - section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- In the case on hand, even if the averments of complaint and evidence of complainant are accepted at their face value, dishonoured cheque was issued on 30.10.2001 to discharge the debt, which had become due on 20.05.1997. Therefore, I hold dishonoured cheque was issued to discharge time barred debt - The learned trial Judge taking into consideration material discrepancies in the evidence adduced by complainant and also having regard to question of limitation has held that complainant has failed to prove the case beyond reasonable doubt and acquitted accused.
Therefore, the impugned judgment can be sustained dehors affidavit evidence of accused. In the circumstances, there is no need to remand the matter to trial court. There are no reasons to interference with impugned judgment - Appeal dismissed.
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2014 (2) TMI 1379
Set off of the carried forwarded capital loss against the current year long term capital gain - HELD THAT:- The assessee mentioned that these issues stand covered in favour of the assessee by virtue of the judgment of Ace Builders P. Ltd. [2005 (3) TMI 36 - BOMBAY HIGH COURT] and many other decisions of this Tribunal such as (1) Geetanjali Traing Ltd[2013 (3) TMI 194 - ITAT MUMBAI] and Manali Investments [2011 (4) TMI 116 - ITAT MUMBAI] - Some of these decisions were not available to the AO / CIT (A) at the appropriate point of time. Therefore, in our considered opinion, the issue should be remanded to the files of the CIT (A) with a direction to examine the applicability of the said decisions to the facts of the present case and decide the grounds.
MAT Computation - provisions for diminution of the value of investment constitutes an allowable deduction for the purpose of computing the book profits or not? - HELD THAT:- As assessee says issue stands covered by the decision of the ITAT, Kolkata Bench in the case of DCIT vs. Mcleod Russel India Ltd [2013 (4) TMI 315 - ITAT KOLKATA] direct the CIT (A) to examine the said decision and decide the claim of the assessee.
Appeal treated as allowed for statistical purposes.
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2014 (2) TMI 1378
Disallowance of deduction u/s.80IA on the profits derived from Trikampura Division - Sole argument of assessee is that the facts are similar to the facts of the Assessment Year 2001-02 and therefore, the arguments advanced for Assessment Year 2001-02 be treated as arguments for the year under consideration.
HELD THAT:- We find that in the Assessment Year 2001-02, we vide order of even date [2014 (2) TMI 1377 - ITAT AHMEDABAD] found that there was no good reason to interfere with the orders of the lower authorities in respect of this issue. Therefore, we decline to interfere with the orders of lower authorities for the year under consideration also. Therefore, this ground of appeal of the assessee is dismissed.
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2014 (2) TMI 1377
Disallowance of deduction claimed u/s 80IA - income represented by other sales of the Indore division and the Moraiya division - CIT(A) allowed the claim of the assessee on the ground that they are eligible for deduction u/s 8-IA as they form part and parcel of the industrial activity carried on by the assessee and that the sale of these items goes to reduce the cost of production and the cost of the same was debited in the accounts - HELD THAT:- As decided in own case undisputed position that the issues are covered by a decision of this Court in the case of Dy. CIT Vs. Harijivandas Juthabhai Zaveri [1999 (12) TMI 5 - GUJARAT HIGH COURT] in which the court upheld the decision of the Tribunal granting benefit of deduction under section 80I of the Act on various incomes, such as job work receipt, sale of empty soda ash bardan, sale of empty barrels and plastic waste. Such questions are, therefore, not required to be considered.
Deduction u/s 80HHC on export profits arrived at on the basis of the export turnover and the total turnover exclusive of the receipts of excise duty and sale tax - HELD THAT:- the issue is now settled in favour of the assessee by the decision of the Hon’ble Supreme Court in the case of CIT Vs. Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME COURT] wherein it was held that sales tax and excise duty don’t have any element of ‘turnover’ and that excise duty and sales tax are indirect costs which are recovered by the assessee on behalf of the Government and if they are made relatable to exports, the formula u/s 80HHC would become unworkable. Therefore, this ground of appeal of the Revenue is dismissed.
Disallowance of deduction u/s 80IA/80IB on other sales viz., Iron Scrap Sale, Misc Sales and Metal Scrap Sales - HELD THAT:- Set aside the orders of lower authorities and remand the matter back to the file of the Assessing Officer to readjudicate the issue afresh as per law after taking into consideration the above quoted decision of the Hon’ble Supreme Court in the case of Associated Capsules Private Limited. [2012 (2) TMI 101 - SUPREME COURT]
Disallowance of late payment of Provident Fund and ESI u/s 43B - HELD THAT:- Issue was now covered in favour of the assessee by the decision of Hon’ble Supreme Court in the case of CIT Vs. Alom Extrusions Limited [2009 (11) TMI 27 - SUPREME COURT] wherein it was held that if the contribution to PF and ESI was deposited by the assessee before the due date of filing of return under the Income Tax Act, then the assessee would be entitled to deduction. Therefore, we confirm the order of the Ld. CIT(A) and dismiss this ground of appeal of the Revenue.
Disallowance out of other expenses on account of provisions of section 37(1) - HELD THAT:- This issue is covered in favour of the assessee by the order of the Tribunal in Assessment Year 1999-2000.
Disallowance of prior period expenses - HELD THAT:- As gone through the observations of the assessing officer in the assessment order. The assessing officer has not examined the issue in detail. For deciding the allowability of these expenses, each item will have to be examined and it will have to be seen when the liability has arisen/crystallized/ascertained and whether such expenses are allowable u/s 37(1). Having considered the facts of the case, the assessing officer is directed to verify when the liability has arisen. If the liability to pay the same has arisen during the year under consideration and if the expenses are allowable as per the provisions of the Act, the A.O. is directed to allow the same as the appellant company is following mercantile system of accounting. If the same has not arisen during the year under consideration or otherwise not allowable, the same should not be allowed.
Deduction u/s 80IA on account of income from Trikampura Unit - HELD THAT:- In the instant case, no material could be brought before us to show that any part of the manufacturing activity was carried out by the assessee at Trikampura Unit. In the above circumstances, we do not find any good reason to interfere with the order of the lower authorities. Therefore, this ground of appeal of the assessee is dismissed.
Deduction u/s 80HHC - HELD THAT:- We find that it is not in dispute that interest income earned by the assessee is assessable under the head profits and gains of business and as evidenced by the fact that Assessing Officer has excluded 90% of the gross interest income for computing profits of business out of the income under the head profits and gains of business. We, therefore, set aside the orders of lower authorities and direct the Assessing Officer to reduce 90% of net interest income while computing deduction u/s 80HHC.
Charge interest u/s 234C of the Act while computing the income of the assessee u/s 115JB.
Disallowance of interest claimed as Revenue expenditure u/s 36(1)(iii) - HELD THAT:- It is no doubt that the assessee is engaged in the business of manufacture of soap and the soda ash and 'lab' so produced is used by way of captive consumption. When such facts viewed in light of the findings of the CIT (Appeals) and the Tribunal, we have no reason to interfere with the ultimate conclusion. Had it been a case of entirely a new project undertaken by the assessee as canvassed by the counsel for the Revenue, a serious question of claiming pre-operative expenditure of interest by way of revenue expenditure would arise. However, when the authorities below found that it was an expansion of the existing business, applying the tests laid down by this Court in the case of Alembic Glass Industries Ltd. [1975 (11) TMI 42 - GUJARAT HIGH COURT] in view of the decision of the Supreme Court in the case of Deputy CIT v. Core Health Care Ltd [2008 (2) TMI 8 - SUPREME COURT] the fact whether the borrowing is capital or revenue expenditure would be of no consequence.
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2014 (2) TMI 1376
Condonation of delay - delay of 183 days in filing the present appeal by the assessee - HELD THAT:- Assessee has explained a reasonable cause for not filing the appeal within the period of limitation as there was an inadvertent mistake at the office of the Chartered Accountant of the assessee as explained in the affidavit. It is always a question as to whether the explanation and reason for delay was bonafide or was merely a device to cover an ulterior purpose or an underhand attempt to save the limitation. When it is brought on record that the party has not acted in malafide but the reasons explained are factually correct, then the court should be liberal in construing the sufficient cause and should lean in favour of such party.
Reasons explained by the assessee are not malafide or a device to cover the ulterior purpose as there is nothing on record to infer that by filing a belated appeal the assessee could have achieved an ulterior purpose. Accordingly, we are satisfied with the reasons explained by the assessee that the assessee was having sufficient cause for not filing the appeal within the period of limitation. Hence, we condone the delay of 183 days in filing the present appeal.
Unexplained cash credit u/s 68 - Revenue doubted the source of the share application money - whether transactions of allotment of share is a sham transaction? - HELD THAT:- Disallowance of the claim of the assessee and addition made by the AO under Section 68 is purely based on assumption, guess work without substantiated by any evidence or material. This is not a case of bogus shareholders as all these parties are the company, which are in existence and subjected to Income Tax as the assessee has produced the relevant evidence. Therefore, when the assessee has produced all the relevant evidences, and if the department has doubted the source of the share application money, then it is free to take necessary action in respect of these parties
In the case of CIT Vs. Lovely Exports Pvt. Ltd. [2008 (1) TMI 575 - SC ORDER] has held that if the share application money is received by the assessee company from alleged bogus shareholders whose names are given to the AO then the department is free to proceed to reopen their individual assessment in accordance with law but it cannot be regarded as undisclosed income of the assessee company. There is nothing on record to show that these transactions of allotment of share is a sham transaction, then the department cannot treat the said share capital money as undisclosed income of the assessee. - Decided in favour of assessee.
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2014 (2) TMI 1375
Grant of Interim relief - Fraudulent transfer of shares - shares purportedly pledged by the Plaintiff with Defendant Nos.1 and 2 under loan agreements - It is the case of the Plaintiff that in spite of recovery of the entire outstanding loan with interest, Defendant Nos.1 and 2 have fraudulently sold or transferred shares held as security in breach of the loan agreements as also in breach of trust - whether Defendant No. 3 is bound by this alleged pledge and therefore, not entitled to deal with the security?
HELD THAT:- The suit pledge was admittedly not created with the previous approval of the depository or intimation from the then beneficial owner of the securities, namely, the Plaintiff. There was no compliance with Regulation 58 - Naturally, there were no entries in the records of the depository to that effect as a result. Such entries could have been the only evidence of pledge recognized by sat 13/17 nm (l) 2150-2013.doc the Act. This being the position, Defendant No. 3 (depository participant) could not be expected to act on any pledge, to which Defendant Nos. 1 and 2 (the beneficial owners) were parties. So also, Defendant Nos. 4 and 5 (the depositories) could not be prevented from effecting transfer of the shares on behalf the beneficial owners.
This court, in the case of JRY INVESTMENTS (P.) LTD. VERSUS DECCAN LEAFINE SERVICES LTD. [2003 (3) TMI 601 - HIGH COURT OF BOMBAY], considered the rights of an owner of shares who had transferred the same with intention of creating security, to prevent dealing in such shares by the transferee in the event of failure of consideration for such security. A similar argument, as in our case, was advanced that the transferee had no title to pass on - In Jry Investments Case, this court on the basis of the analysis of the provisions, held that the transfer could not be prevented. The ratio of that case would apply to the facts of our case as well.
In the absence of any pleading that the transferee had notice of any defect in the title of the transferor, it is difficult to accept the case suggested by the learned Counsel on the basis of some reference in an affidavit filed in the Notice of Motion. Non-filing of any affidavit by Seksaria, who is supposed to have attended the alleged meetings, is also of no consequence in the premises. Events of 29 and 30 October do prima facie show that there was some anxiety on the part of Defendant No. 3 to hurriedly sell or confiscate the shares, just when the adinterim order was being considered and later when it was passed.
Learned Counsel for Defendant No. 3 submits that Defendant No. 3 had no knowledge of the adinterim application made on 29 October and sold/transferred the shares on 29 October and 30 October 2013, before the court orders were communicated to Defendant No. 3. In an appropriate case, it would have been necessary to go sat 17/17 nm (l) 2150-2013.doc deeper into this aspect. But, here I am convinced that even if I were to eventually find that there was indeed an attempt to overreach the court, that does not imply that the Plaintiff is therefore entitled to any equitable relief. The Plaintiff has not, on his pleadings, made out any case for such relief. On this aspect, it is sufficient for me to record a prima facie finding that the conduct of Defendant No. 3 does not imply any knowledge or acknowledgment on its part of the rights of the Plaintiff, as suggested by Mr. Chinoy.
There is no case made out for grant of any interim relief to the Plaintiff - Notice of Motion dismissed.
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2014 (2) TMI 1374
Concealment of income - imposition of penalty - Validity of notice u/s 271(1)(c) - Whether there was no concealment of income and there was no cessation of liability but it was on assesses agreement additions have been made and therefore no penalty is attracted despite there being no evidence to substantiate such a conclusion and consequently recorded a perverse finding? - Whether the notice issued u/s 271(1)(c) in the printed form without specifically mentioning whether the proceedings are initiated on the ground of concealment of income or on account of furnishing of inaccurate particulars is valid and legal and the proceedings initiated by the Assessing Authority was Legal and valid Penalty proceedings - Whether justification in holding that the basis for initiation of the penalty proceedings is the satisfaction of the Appellate Authority in coming to a conclusion based totally on a different ground other than the ground on which the Assessing Authority had passed the assessment order and the proceedings initiated by the Assessing Authority was legal and valid? - HELD THAT:- SLP dismissed.
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2014 (2) TMI 1373
Bogus purchases u/s 69C - HELD THAT:- In the present case, though it may appear that the purchases have been shown to have been made through M/s. Vishal Traders but supplied by some other agency, in absence of other additional facts noted by this Court in case of Sanjay Oilcake Industries [2008 (3) TMI 323 - GUJARAT HIGH COURT ] gross ad hoc addition of 25% may not be justified.
In the present case, the assessee could produce before the authorities the precise rate at which the purchases were made from M/s. Vishal Traders and other suppliers to demonstrate that the purchases made on the same day carried the same price. This would substantially eliminate the angle of the purchase price being artificially inflated. Additionally, the Tribunal also noted other parameters such as higher net and gross profit rates of the present year compared to the earlier years of the recent past - no question of law arises
Purchases from an unregistered dealer M/s. Amber Trading Company - A.O of the firm M/s. Amber Trading Company treated the URD purchases of M/s. Amber Trading Company as genuine. Once, the URD purchases of M/s. Amber Trading Company is accepted as genuine by the A.O of that party, the disallowance made by the A.O in this regard cannot be sustained because it has no legs to stand. Accordingly, we decide this aspect of the matter in favour of the assessee.
Treating the loss suffered by the assessee as speculation loss - HELD THAT:- Tribunal concurrently, on the basis of evidence on record, held that it was a case of hedging transaction and not one of speculation loss. Such being pure question of fact and the Tribunal's decision not being shown to be per verse, such question is also not required to be considered.
Appeal admitted for consideration - Whether the Appellate Tribunal has substantially erred in upholding the order of the CIT(A) in deleting addition made by the Assessing Officer on account of unutilized CENVAT/MODVAT credit?
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2014 (2) TMI 1372
Computation of capital gain - AO had referred the valuation of the property as on 1-4-1981 to the DVO by invoking the provisions of section 55A - HELD THAT:- A perusal of the assessment order clearly shows that the conditions mentioned in section 55A of the Act have not been satisfied by the AO. Consequently, in view of the decision of the Hon’ble Jurisdictional Calcutta High Court in the case of Umedbhai International P. Ltd [2010 (2) TMI 631 - CALCUTTA HIGH COURT] as also case of Hiaben Jayantilal Shah [2008 (4) TMI 292 - GUJARAT HIGH COURT] we are of the view that the reference to the DVO by the AO is not sustainable in law. Consequently, the addition made by the AO and confirmed by the ld.CIT(A) on the basis of the DVO’s report stands deleted.
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2014 (2) TMI 1371
Transfer from cash-credit account to the accounts of Nandlal HUF - amount never accounted for as an income of Dr. Pradeep Kumar against whom a case has been registered under Section 13(1)(e) read with Section 13(2) of the Prevention of Corruption Act, 1988 - HELD THAT:- The matter be placed on 21.02.2014 so that on that day, the materials which had been collected against the petitioner would be produced - Till then, interim order passed on 20.09.2013 shall continue.
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2014 (2) TMI 1370
Additions on the basis of transactions found in the bank account in the name of partner - bank account of the Partnership firm, which was opened in the name of a Partner is not accepted - HELD THAT:- The partnership deed was made effective from 23.03.2007 and the relevant assessment year involved is 2008-09. It means that the partnership firm has now owned up this account, the revenue should take action in the hands of the firm and not in the hands of individual, if law permits - the AO is directed to delete this addition in the hands of individual i.e. the assessee and if any action is required i.e. required in the hands of the firm and not in the hands of the individual - decided in favor of assessee.
Addition on account of Gross profit - restriction on the addition of peak credit at ₹ 10,60,742/- as against the total addition of ₹ 18,02,087/- - HELD THAT:- The bank account maintained with Axis Bank is under dispute i.e. the deposits and withdrawals at ₹ 1,02,92,960/-. The AO has added peak credits at ₹ 18,02,087/- and CIT(A) restricted the peak at ₹ 10,60,742/-. As, it is already adjudicated, that this bank account belongs to partnership firm and not to the individual, taking the same view, the AO is directed to take action in the hands of the firm, if any and that also as per law.
Appeal of assessee allowed.
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2014 (2) TMI 1369
Exemption u/s 11 - Applicability of provisions of clause (via) of sub-section (23C) of section 10 - charitable activity u/s 2(15) - HELD THAT:- When we examine the provisions of section 10(23C) and section 11, we find that the Provisions of section 11 read with section 2(15) are general provisions referring to medical relief in general whereas the provisions of section 10(23C)(vi) are specific provisions regarding hospital.
Therefore the income of a hospital has to be considered for exemption u/s 10(23C)(via) as per specific provisions of that section and not u/s 11 read with section 2 (15) being general provisions for all types of medical relief. For all other assessees providing medical relief excluding running of hospital, the claim of exemption should be considered u/s 11 of the Act.
As per the judgment of Hon'ble Kerala High Court SAHRUDAYA HOSPITAL [2010 (10) TMI 844 - KERALA HIGH COURT] cited by learned A.R. of the assessee, we have seen that this judgment is in fact rendering help to the Revenue because when the hospital has not obtained approval u/s 10(23C)(via) of the Act, the income of the hospital is taxable as can be inferred from this judgment. In the present case, it is factual position as is admitted by learned A.R. of the assessee that the assessee is not running any other charitable activity and, therefore, as per this judgment cited by learned A.R. of the assessee, it has to be held that the profit from running of hospital is to be held to be taxable because the same has not obtained approval u/s 10 (23C) (via) and since the assessee is not running any other charitable activity, such income of the hospital cannot be claimed to be exempt u/s 11 for utilization of the income from hospital in respect of other charitable activities.
Hospital was being run by the "appellant" for profit - Exemption for a hospital has to be exempt only under the provisions of section 20(23C)(via) of the Act and not u/s 11 and since the assessee has not obtained approval u/s 10(23C)(via) of the Act, there is no merit in these grounds of the assessee and the same are accordingly rejected.
Claim for exemption of the surplus - As decided in ADITANAR EDUCATIONAL INSTITUTION VERSUS ADDITIONAL COMMISSIONER OF INCOME-TAX [1997 (2) TMI 3 - SUPREME COURT] after meeting the expenditure, if any surplus results incidentally from the activity lawfully carried on by the educational institution, it will not cease to be one existing solely for educational purposes since the object is not one to be one existing solely for educational purposes since the object is not one to make profit. The decisive or acid test is whether on an overall view of the matter, the object is to make profit. In evaluating or appraising the above, one should also bear in mind the distinction/difference between the corpus, the objects and the powers of the concerned entity.
Treating the utilization in acquisition of fixed assets as application of income - Since it is held that the assessee is not eligible for exemption either u/s 10(23C)(via) because the assessee could not obtain the approval and the assessee cannot get exemption u/s 11, this ground of the assessee has no merit and therefore, the same is rejected.
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2014 (2) TMI 1368
Dishonor of cheque - Whether on the basis of the averments and the evidence produced by the Complainant, there are grounds for proceeding against the accused?
HELD THAT:- There are specific averments that the Petitioners negotiated for the purchase of goods by Pragati and they were responsible for the day to day affairs and conduct of the business of the company. It was specifically stated that the goods were supplied from April, 2010 to November, 2010. It was further stated that certain payments were made in the year 2010 and 2011. It was the complainant case that the post dated cheques in question were sent in the first week of June, 2011 and that the same were dishonuored on presentation - Thus, as per the averments made in the complaint, the cheques were delivered much before the Petitioners' resignation. All the transactions are related to the period when the Petitioners were Directors, and as stated above, according to Respondent No.1 (the complainant) they had negotiated with regard to supply of goods.
The Petitioners have not been able to make out a case for quashing of the summoning orders dated 15.11.2011, 15.11.2011, 06.03.2012, 07.12.2011, 31.05.2012 and 30.11.2011 respectively - petition dismissed.
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2014 (2) TMI 1367
Undisclosed investment u/s 69B - assessee has paid amount more than the amount shown as apparent consideration in the registered sale deed - HELD THAT:- We find that the AO had a doubt on the basis of prevailing market rate in the area which was within the range of ₹ 1,500/- to ₹ 2,000/- per square feet and that the cost of construction was ₹ 500/- per square feet, that the consideration stated in the registered sale deed was not the real consideration paid for acquiring the property by the assessee.
We find that the AO has thereafter not brought any material on record by making further inquiries to show that the assessee actually paid any amount over and above the amount shown in registered sale deed for the acquisition of the property. We find in the case of K.P. Verghese Vs. ITO [1981 (9) TMI 1 - SUPREME COURT] has held that the onus lies on the Department to bring material on record to show that the assessee has actually paid any amount more than the amount shown as apparent consideration in the registered sale deed. In absence of any such material brought on record, the Department is not empowered to treat any other amount as actual consideration paid by the assessee for acquiring the property and make addition on that basis. We, therefore, set aside the orders of the lower authorities on this issue and delete the addition
Disallowance at the rate of 20% out of synthetic diamond powder expenses - HELD THAT:- Entire purchase of synthetic powder was supported by bills and vouchers and no specific defect therein was brought on record by the Revenue. However, we do not agree with the submissions of the Ld. AR that stock of power lying with the job workers could not be taken into consideration simply because such stock was not taken into consideration in the past in case of the assessee. We agree that the value of such stock at the rate of 20% of the entire purchase during the year was without any basis and excessive. We find that the details of synthetic powder which was lying with the workers could no be furnished by the assessee before us also - it shall meet the ends of justice to estimate such stock at the rate of 10% of the entire purchases made during the year. We, therefore, restrict the disallowance to ₹ 9,43,052/- and delete the disallowance of ₹ 9,43,051/-. Thus, this ground of appeal of the assessee is partly allowed.
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2014 (2) TMI 1366
Additional depreciation on plant & machinery - D.R. submitted that plant and machinery by its very nature did not include electrical installation therefore, according to him, additional depreciation could not be allowed on plant and machinery - HELD THAT:- There is no dispute that assessee was engaged in manufacture of jute and paper related goods. Items on which depreciation is not allowable have been specifically set out in the proviso. Electrical installation does not fall within any of the provisos. Further definition of ‘plant’ given in section 43(3) of the Act is inclusive and even ships, vehicles, and books are considered as plant. If that be so, electrical installation is definitely part of a plant. In our opinion, ld. CIT(Appeals) was justified in allowing this claim of assessee. Decided against revenue
Belated payments of Employees’ contribution to Provident Fund and ESI - HELD THAT:- Hon’ble jurisdictional High Court in the case of CIT –vs.-Vijay Shree Ltd. [2011 (9) TMI 30 - CALCUTTA HIGH COURT] had held that amendment to second proviso to section 43B of the Act, as introduced by Finance Act, 2003 was curative and retrospectively applied from 1st April, 1988, relying on the decision of the Hon’ble Apex Court in the case of CIT –vs.- Alom Extrusions Limited [2009 (11) TMI 27 - SUPREME COURT] . Their Lordships held that Employees’ contribution paid beyond due date prescribed under Provident Fund Act and Rules were also deductible if the amounts were remitted prior to the due date of filing of the return.
Interest on loan given to subsidary company - HELD THAT:- Whenever a cheque issued by a party is cleared through a Bank loan account, the dues to the Bank will increase. If the cheque is cleared out of a deposit account, the dues from the Bank will be decreased. This arithmetics by itself will not show that money had gone out of interest bearing funds. Assessee has clearly pointed out that the cash credit balance had gone down over the relevant previous year. In other words, the cash credit account stood replenished by more than what was given out as advance, through deposits made by the assessee during the relevant previous year. Assessee had substantial profits during the relevant previous year and, therefore, there is much strength in its arguments that loans did not go out of any interest bearing funds. In any case, the loans were given only to a subsidiary of the assessee and Assessing Officer has not doubted the commercial expediency of such loans. We are, therefore, of the opinion that ld. CIT(Appeals) was justified in deleting this addition - Revenue appeal dismissed.
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