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Showing 61 to 80 of 948 Records
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2010 (9) TMI 1250
Issues: Appeal filed by Revenue against CIT(A) order for AY 2006-07 regarding deduction u/s 80IB on disallowed expenses u/s 40(a)(ia) of IT Act.
Summary:
1. The Revenue appealed against CIT(A) order for AY 2006-07, challenging the allowance of deduction u/s 80IB on disallowed expenses of Rs. 16.49 lakhs u/s 40(a)(ia).
2. Despite no representation from the assessee, the appeal was heard by the Bench. The AO disallowed the deduction u/s 80IB due to non-deduction of TDS on a payment of Rs. 16,49,762, citing Section 40(a) provisions.
3. CIT(A) allowed the deduction u/s 80IB, stating that the disallowed expenses do not pertain to profit & gains derived from business, hence not admissible for deduction u/s 80IB. CIT(A) referenced the Delhi High Court judgment on profit computation u/s 80HHC.
4. CIT(A) emphasized that profits of business, as computed by the AO, should be considered for deduction u/s 80IB, including all additions and disallowances. The disallowance of expenses for TDS breach should not bar the deduction u/s 80IB.
5. CIT(A) clarified that any disallowance of expenses automatically increases business profits eligible for deduction u/s 80IB. The detailed findings of CIT(A) were upheld, and the appeal of Revenue was dismissed.
Decision: The appeal of the Revenue was dismissed by the ITAT, upholding the CIT(A) order allowing deduction u/s 80IB on disallowed expenses.
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2010 (9) TMI 1249
Issues Involved:
1. Denial of Cross-Examination
2. Maintainability of Appeal
Summary:
1. Denial of Cross-Examination:
The appellant, a member of the Bombay Stock Exchange and a registered share and stock broker, was accused by the Securities and Exchange Board of India (SEBI) of executing fictitious and backdated transactions on behalf of Niskalp Investments and Trading Company Private Limited and Tata Finance Limited. SEBI issued a show cause notice based on statements from six individuals. The appellant requested to cross-examine these individuals, but the enquiry officer denied this request. The Tribunal emphasized that cross-examination is crucial for arriving at the truth, citing previous judgments and principles of natural justice. The Tribunal noted that SEBI had repeatedly ignored this fundamental principle and its own guidelines for conducting cross-examinations. Consequently, the Tribunal allowed the appeal, directing the enquiry officer to permit the appellant to cross-examine the six individuals.
2. Maintainability of Appeal:
SEBI contended that the appeal was not maintainable, arguing that the impugned communication was not "an order" within the meaning of Section 15T of the Securities and Exchange Board of India Act, 1992. The Tribunal disagreed, stating that the term "an order" is comprehensive enough to include decisions that adversely affect the rights of parties. The Tribunal held that the denial of cross-examination was a final decision on this issue within the enquiry and affected the appellant's substantive rights, making the appeal maintainable. The Tribunal referenced the Division Bench judgment of the Bombay High Court in Harinarayan G. Bajaj v. Securities Appellate Tribunal and Anr., clarifying that procedural orders not affecting substantive rights are not appealable, but this was not the case here.
In conclusion, the Tribunal allowed the appeal, set aside the decision of the enquiry officer, and directed that the appellant be allowed to cross-examine the six individuals. There was no order as to costs.
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2010 (9) TMI 1248
Issues involved:
The issues involved in this case are the disallowance of management charges paid to a sister concern u/s 40A(2)(b) and the denial of claim of exemption u/s 80IA for development charges.
Disallowance of management charges u/s 40A(2)(b):
The Revenue filed an appeal against the order of the CIT(Appeals) restricting the disallowance of management charges paid to a sister concern. The AO disallowed the charges as the sister concern had no experience in power generation. The CIT(Appeals) granted partial relief, reducing the disallowance to &8377; 10 lakhs from &8377; 30 lakhs. The Revenue contended that the sister concern did not render services and that fresh evidence was admitted without allowing the AO to examine it. The Tribunal upheld the CIT(Appeals) order, stating that the sister concern had capabilities for the project and the disallowance was restricted to &8377; 10 lakhs.
Denial of claim of exemption u/s 80IA:
The Revenue challenged the CIT(Appeals) decision not to uphold the disallowance of deduction u/s 80IA for development charges. The Revenue argued that the charges were not derived from eligible business activities. The CIT(Appeals) directed the AO to verify the nature of the development charges. The Tribunal noted that the CIT(Appeals) had no power to set aside the issue but decided to restore it to the AO for fresh adjudication. The Tribunal allowed the Revenue's appeal for statistical purposes.
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2010 (9) TMI 1247
Issues Involved:
1. Possession and tenancy of the house where the poppy husk was found.
2. Presence and involvement of the accused at the scene.
3. Credibility and reliability of the prosecution witnesses.
4. Handling and integrity of the case property and samples.
5. Allegations of bias and false implication by senior police officers.
Issue-wise Detailed Analysis:
1. Possession and Tenancy of the House:
The prosecution failed to prove that the house from which the poppy husk was recovered was in the exclusive possession of Surender Singh. The alleged landlord, Kaur Singh, denied leasing his house to Surender Singh. No rent receipt or lease document was produced. Additionally, no witness from the locality was examined to establish Surender Singh's tenancy. The court noted that the mere presence of the accused in the room did not establish possession, especially since they were not arrested at the spot.
2. Presence and Involvement of the Accused:
The story of the accused absconding from the house's backside was deemed implausible given the heavy police presence. The court found it unbelievable that the accused could flee in the presence of about 12 police personnel, including an ASP. The prosecution's failure to conduct a Test Identification Parade further weakened their case. The mere presence of Shashi Atwal with Surender Singh was insufficient to prove his involvement in the crime.
3. Credibility and Reliability of Prosecution Witnesses:
The court expressed doubts about the credibility of Gurtej Singh, the alleged independent witness. His name did not appear in the initial ruqa or the detailed report prepared at the time of recovery. The court concluded that Gurtej Singh appeared to be an introduced witness. Furthermore, the prosecution failed to examine Sub-Inspector Janak Singh, who allegedly received the secret information, making it difficult to ascertain the accuracy of the information received.
4. Handling and Integrity of the Case Property and Samples:
The court found significant discrepancies in the handling of the case property. The Investigating Officer did not turn the contents of the bags to verify if they contained only poppy husk. One of the bags produced in court did not bear any seal, raising suspicions of tampering. The court also noted the delay in sending the samples to the Chemical Examiner without any explanation, which was considered a serious lapse. The MHC, who was supposed to handle the case property, was not examined, further weakening the prosecution's case.
5. Allegations of Bias and False Implication:
The accused alleged that they were falsely implicated due to personal vendettas with senior police officers. Although the court did not fully accept the defense's version, it emphasized that the prosecution must prove its case beyond reasonable doubt. The court found that the prosecution failed to do so, given the numerous inconsistencies and lack of credible evidence.
Conclusion:
The court concluded that the prosecution failed to prove the case beyond reasonable doubt. The discrepancies in the evidence, handling of the case property, and lack of credible witnesses led to the acquittal of the accused. The court emphasized that the principles of natural justice and the need for cogent and convincing evidence are paramount in criminal cases. The appeal was accepted, the impugned judgment was set aside, and the accused were acquitted of the charges framed against them. They were ordered to be set at liberty forthwith, and any fine deposited was to be refunded.
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2010 (9) TMI 1246
Issues involved: Appeal against order of CIT(A) regarding deduction of compensation paid to canteen contractor under sect ion 143(3) read with sect ion 153A for assessment year 2001-02.
Summary:
1. The only issue in the appeal was whether the compensation paid to the canteen contractor on contract termination was allowable as a business expenditure similar to a voluntary retirement scheme.
2. The AO disallowed the compensation claim of &8377; 29,80,000 during the original assessment under sect ion 143(3) but CIT(A) deleted the addition.
3. AO repeated the same addition under sect ion 153A, stating the CIT(A) order was under appeal, which the assessee challenged.
4. CIT(A, in the appellate order, allowed the deduction of compensation as it was wholly and exclusively for business purposes, akin to a voluntary retirement scheme.
5. The revenue failed to show any stay or reversal of the CIT(A) order, and as per sect ion 153A(1), the addition made in the original assessment cannot be repeated.
6. The Tribunal upheld the CIT(A) decision, dismissing the revenue's appeal.
This judgment clarifies the treatment of compensation paid to a contractor upon contract termination as a deductible business expenditure, emphasizing the necessity for expenses to be wholly and exclusively for business purposes to qualify for deduction u/s 37 of the IT Act.
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2010 (9) TMI 1245
Issues Involved:
1. Constitution of the arbitral tribunal.
2. Quality of the Respondents' work.
3. Termination of the Respondents' services.
4. Claims for refund of retention money and bank guarantee.
5. Claims for charges incurred for extension of the bank guarantee.
6. Claims for house rent, salary, and bonus for the engineer.
7. Claims for rent/compensation for loss of opportunities.
8. Claims for loss of profit due to abrupt stoppage of work.
Detailed Analysis:
1. Constitution of the Arbitral Tribunal:
The Appellant challenged the constitution of the arbitral tribunal on the basis that the presiding arbitrator was appointed more than 30 days after the appointment of the arbitrator by the Appellant, arguing that only the Chief Justice or his designate could appoint the presiding arbitrator in such a case, as per section 11 of the Arbitration and Conciliation Act, 1996. The court disagreed, stating that section 11(4)(b) uses the term "fail to agree" rather than "fail to appoint," indicating that the provision applies only when there is a disagreement between the two arbitrators about the third arbitrator's appointment. Since neither arbitrator proposed a third arbitrator within the 30-day period, there was no failure to agree, and thus, the arbitrators retained the power to appoint the presiding arbitrator beyond the 30 days.
2. Quality of the Respondents' Work:
The arbitral tribunal found in favor of the Respondents, concluding that the Appellant had not established that the Respondents' work was unsatisfactory. This conclusion was based on several factors, including the Appellant's continuation of the Respondents' services without termination and the lack of convincing evidence from the Appellant. The court upheld this finding, noting that mere allegations in correspondence were insufficient to overturn the tribunal's decision.
3. Termination of the Respondents' Services:
The Appellant's claim that the Respondents' services were terminated was rejected. The arbitral tribunal found that the Appellant had only instructed the Respondents to stop work, which did not constitute a termination of the contract. The court agreed, emphasizing that previous instructions to stop work due to external factors (lockout and cyclone) did not imply termination of the agreements.
4. Claims for Refund of Retention Money and Bank Guarantee:
The arbitral tribunal awarded the Respondents the refund of the retention money/security deposit and the amount received by the Appellant upon invoking the bank guarantee. The tribunal concluded that the invocation of the bank guarantee was wrongful, as there were no defects in the Respondents' performance. The court upheld this award.
5. Claims for Charges Incurred for Extension of the Bank Guarantee:
The arbitral tribunal awarded the Respondents Rs. 2,500 against their claim of Rs. 7,500 for charges incurred for the extension of the bank guarantee. The court found this award justified.
6. Claims for House Rent, Salary, and Bonus for the Engineer:
The arbitral tribunal awarded the Respondents amounts for house rent, salary, and bonus paid to the engineer during the extended period of the contract. The court upheld this award, noting that the presence of the engineer at the site was established, and it was reasonable to presume that he had been paid as per his appointment letter.
7. Claims for Rent/Compensation for Loss of Opportunities:
The arbitral tribunal found that the Respondents' claim for rent/compensation for loss of opportunities was not fully substantiated by evidence. However, it awarded damages based on a return of 9% per annum on the value of the material detained, which was established at Rs. 10,69,685. The court upheld this approach, finding it reasonable and justified.
8. Claims for Loss of Profit Due to Abrupt Stoppage of Work:
The arbitral tribunal awarded the Respondents Rs. 15,00,000 for loss of profit due to the abrupt stoppage of work. The tribunal computed the incomplete work at Rs. 31,69,120 and determined the profit margin at 15% of the value of the work. The court upheld this award, noting that the Respondents had pleaded and provided evidence for a 15% profit margin, and the tribunal's reliance on relevant Supreme Court judgments was appropriate.
Conclusion:
The court upheld the judgment of the District Court and the arbitral award, dismissing the appeal with costs fixed at Rs. 10,000. The judgment was stayed until 31st October 2010 to allow the Appellant to challenge the same.
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2010 (9) TMI 1244
Issues Involved:1. Maintainability of the writ petition. 2. Entitlement to the benefits of the One Time Settlement (OTS) Scheme. 3. Legality of the possession notice issued u/s 13(4) of the SARFAESI Act. Summary:1. Maintainability of the Writ Petition:The Petitioner challenged the possession notice dated 16.09.2004 issued by the Respondent bank under the SARFAESI Act after a lapse of six years. The Respondent argued that the writ petition is not maintainable as no appeal was filed by the Petitioner u/s 17 of the Act within 45 days before the Debt Recovery Tribunal. The Court held that the Petitioner, having not challenged the possession notice in a timely manner and not availing the statutory remedy, cannot invoke the writ jurisdiction of the High Court. The Court cited the Supreme Court's decision in United Bank of India v. Satyawati Tondon and Ors., emphasizing that the High Court should not entertain a writ petition if an effective alternative remedy is available. 2. Entitlement to the Benefits of the OTS Scheme:The Petitioner sought the benefits of the SBI OTS-SME 2010 Scheme for settling her dues. The Respondent contended that the Petitioner is not eligible for the OTS Scheme as she violated the terms of the mortgage by transferring the secured asset to her son, creating encumbrances over the property. As per Clause 1.7 of the SBI OTS-SME 2010 Scheme, "Cases of fraud, malfeasance and wilful default will not be eligible for OTS Scheme." The Court upheld the Respondent's contention, stating that the Petitioner, having committed acts of fraud and malfeasance, is not entitled to the benefits of the scheme. 3. Legality of the Possession Notice Issued u/s 13(4) of the SARFAESI Act:The Petitioner challenged the possession notice issued u/s 13(4) of the SARFAESI Act on 16.09.2004. The Court noted that the Petitioner did not object or reply to the possession notice and did not make any payment towards the settlement offers made by the Respondent bank. The Court held that the Petitioner, having not challenged the possession notice before the competent forum and having violated the terms of the loan by transferring the property, cannot seek relief under Article 226 of the Constitution of India. The Court referred to the Supreme Court's decision in X-Calibre Knives Pvt. Ltd. and Anr. v. State Bank of India, where it was held that a borrower who violates the conditions of the mortgage is not entitled to the benefits of the OTS Scheme. Conclusion:The writ petition was dismissed as not maintainable, with the Court concluding that the Petitioner has no legal right to compel the bank to accept the one-time settlement offer. The Court also denied the Petitioner liberty to move the Debts Recovery Tribunal for condoning the delay, but stated that it is always open to the Petitioner to approach the Tribunal if so advised.
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2010 (9) TMI 1243
Issues Involved:1. Adjustment/set-off of tax quantified u/s 8(1) of the Central Sales Tax Act, 1956. 2. Applicability of amendments to Section 8(5) of the Central Sales Tax Act by the Finance Act No. 20 of 2002. 3. Principle of promissory estoppel in the context of tax exemptions. 4. Set-off of higher rate of tax from the maximum monetary limit under the eligibility certificate u/s 4A of the U.P. Trade Tax Act, 1948. Summary:Issue 1: Adjustment/set-off of tax quantified u/s 8(1) of the Central Sales Tax Act, 1956The Petitioners challenged the assessment orders of trade tax under the U.P. Trade Tax Act, 1948, arguing that the assessing authorities did not allow adjustment/set-off of tax quantified u/s 8(1) of the Central Sales Tax Act, 1956, from the monetary limit of the exemption mentioned in the eligibility certificate granted u/s 4A of the U.P. Trade Tax Act, 1948. Interim orders were passed by the Court to continue the benefit of tax exemption as per the notifications, despite their withdrawal by the State Government. Issue 2: Applicability of amendments to Section 8(5) of the Central Sales Tax Act by the Finance Act No. 20 of 2002The Central Sales Tax Act was amended by the Finance Act No. 20 of 2002, restricting the State Government's power to grant tax exemptions only if sales were made against form C or D. The Department argued that this amendment would apply automatically, negating the principle of promissory estoppel. The Court held that the State Government could not grant exemptions contrary to the amended Central Act. Issue 3: Principle of promissory estoppel in the context of tax exemptionsThe Court ruled that the principle of promissory estoppel did not apply as the eligibility certificate and exemptions were not withdrawn, nor was the rate of tax increased. The benefit of exemption was not denied to the Petitioner, and the tax liability was confined to Central sales covered by forms C/D. Issue 4: Set-off of higher rate of tax from the maximum monetary limit under the eligibility certificate u/s 4A of the U.P. Trade Tax Act, 1948The Supreme Court allowed the Petitioner to argue that the higher rate of tax payable for non-compliance with the amended provisions of Section 8(5) should be set off from the maximum monetary limit under the eligibility certificate. The Court held that the rate of tax has nothing to do with the amount of tax benefit under the eligibility certificate. The higher rate of tax for non-production of form C/D cannot be a ground to deny the set-off from the limits prescribed in the eligibility certificate, subject to other conditions. Conclusion:All writ petitions were partly allowed. The assessing authorities were directed to modify the assessment orders to allow set-off to the Petitioners, which was earlier denied due to the rate of tax without the benefit of reduced rate of tax on inter-State transactions for which forms C/D were not produced. The required modifications are to be carried out within two months from the date of production of this judgment.
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2010 (9) TMI 1242
Issues involved: Valuation of goods, related person relationship, remand to Commissioner for fresh adjudication.
Valuation of goods: The case involved M/s. Special Prints Ltd. (SPL) engaged in processing fabrics and trading yarn, and M/s. Garden Silk Mills Ltd. (GSML) in a related person relationship. The department proposed to determine the assessable value of processed fabrics based on GSML's sale price to dealers. Similarly, for texturised yarn cleared by GSML, the value was to be determined based on the method prescribed by the Supreme Court. The Tribunal initially ruled in favor of SPL, but the Supreme Court remanded the matter to the Commissioner for fresh adjudication due to the related person relationship between the companies.
Related person relationship: The Commissioner concluded that SPL and GSML were related persons, but certain issues raised by SPL were not thoroughly discussed. SPL argued that the valuation of goods sold to a related person should be based on the value at which the related person sells the goods only when the assessee arranges that the goods are sold only to or through the related person. The Commissioner's decision did not delve into this aspect in detail, necessitating a fresh consideration. Additionally, the issue of limitation was not adequately addressed by the Commissioner, requiring further examination.
Remand to Commissioner: Considering the factual aspects and decisions of the Tribunal and the Supreme Court, the Tribunal deemed it appropriate to remand all appeals to the Commissioner for a fresh decision. The matter was to be adjudicated by one authority to ensure comprehensive consideration of all issues. The appellants were to be given an opportunity to present their case during the fresh adjudication, and the Tribunal clarified that it was not expressing an opinion on any issue.
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2010 (9) TMI 1240
Issues Involved:
1. Alleged suppression of production and clandestine clearance of goods by SSPL.
2. Capacity of the furnace and its impact on production.
3. Reliability of private records versus statutory records.
4. Alleged clandestine clearance of MS ingots to KSPL.
5. Shortage of raw material (MS scrap) and its implications.
Summary:
1. Alleged Suppression of Production and Clandestine Clearance by SSPL:
The Tribunal examined the Commissioner's findings that SSPL had suppressed production and cleared goods clandestinely without payment of duty. The Commissioner based his findings on private registers recovered from SSPL, which showed the number of heats and production details. The Commissioner confirmed the demand of Rs. 27,34,645/- based on the ingot movement register from SSPL to KSPL. However, the Tribunal found discrepancies in the production records and noted that the capacity of the furnace was 2.1 MTs, as per the manufacturer's invoice and the Commissioner's determination. The Tribunal remanded the matter for re-examination, emphasizing the need to consider the production capacity and other related documents.
2. Capacity of the Furnace and Its Impact on Production:
The Commissioner found that the furnace installed in SSPL had a capacity of 2.1 MT per heat, as reflected in the purchase invoice issued in 1987 and confirmed by the jurisdictional Commissioner in 1997. The Tribunal noted that there was no evidence of alteration to enhance the furnace's capacity. The Tribunal observed that the actual production could not have been worked out using a capacity of 3.8 MT per heat, as suggested in the show cause notice. The Tribunal emphasized the need to verify the actual quantity produced during the relevant period.
3. Reliability of Private Records Versus Statutory Records:
The Commissioner granted the benefit of doubt to SSPL regarding excess production reflected in private records, as there was no corroborative evidence of actual clearance, sale, and purchase by particular persons or removal through any transporter. The Tribunal noted that the private records indicated a higher number of heats and production compared to statutory records. The Tribunal found that the private records could not be entirely relied upon without corroborative evidence.
4. Alleged Clandestine Clearance of MS Ingots to KSPL:
The Commissioner held that the department had not proved the allegation of clandestine clearance of 4250.243 MTs of MS ingots to KSPL. There was no evidence of receipt of the ingots by KSPL, and the weighment slips did not show the related buyers. The Tribunal noted that the revenue had not raised any valid challenge to the Commissioner's findings and emphasized the need to examine whether SSPL cleared ingots clandestinely to KSPL in addition to the alleged clandestine production.
5. Shortage of Raw Material (MS Scrap) and Its Implications:
The Commissioner found that the shortage of 1039.450 MTs of MS scrap was explained by SSPL as due to non-accountal of scrap used for manufacturing moulds and burning loss. The Tribunal noted that the department did not inquire into this aspect and emphasized the need to give SSPL another opportunity to provide evidence supporting their claim.
Conclusion:
The Tribunal remanded the matter to the Commissioner for fresh adjudication, emphasizing the need to follow principles of natural justice and re-examine the issues based on the evidence. The appeal filed by the Revenue was allowed by way of remand.
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2010 (9) TMI 1239
Dishonor of Cheque - acquittal of the accused - prove beyond reasonable doubt the debt or liability - preponderance of probablities - Section 138 of the N.I. Act - presumption u/s 139 - HELD THAT:- The Trial Court in this case turned a blind eye to the fact that every accused facing trial, whether u/s 138 of N.I. Act or under any penal law, when charged with the offence, pleads not guilty and takes a stand that he has not committed the offence. Even in the cases where loan is taken from a bank and the cheques issued to the bank stand dishonoured, the stand taken is same. Mere pleading not guilty and stating that the cheques were issued as security, would not give amount to rebutting the presumption raised u/s 139 of N.I. Act. If mere statement u/s 313 Cr. P.C. or u/s 281 Cr. P.C. of accused of pleading not guilty was sufficient to rebut the entire evidence produced by the complainant/ prosecution, then every accused has to be acquitted. But, it is not the law. In order to rebut the presumption u/s 139 of N.I. Act, the accused, by cogent evidence, has to prove the circumstance under which cheques were issued. It was for the accused to prove if no loan was taken why he did not write a letter to the complainant for return of the cheque. Unless the accused had proved that he acted like a normal businessman/prudent person entering into a contract he could not have rebutted the presumption u/s 139 N.I. Act. If no loan was given, but cheques were retained, he immediately would have protested and asked the cheques to be returned and if still cheques were not returned, he would have served a notice as complainant. Nothing was proved in this case.
In this case no evidence, whatsoever, was produced by the accused and the Trial Court travelled extra steps, not permitted by law, to presume that the presumption has stood rebutted. I, therefore, set aside the judgment of the Trial Court. The accused is convicted u/s 138 of N.I. Act.
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2010 (9) TMI 1238
Issues involved: Appeal against order u/s 12AA(1)(b)(i) of the IT Act regarding the date of granting registration to a society under the Societies Registration Act, 1860.
Summary:
The appeal was filed by the assessee against the order of the CIT-II, Lucknow u/s 12AA(1)(b)(i) of the IT Act, 1961, regarding the date of granting registration to a society. The grievance of the assessee was related to the registration granted w.e.f. 26th March, 2010, instead of 28th Aug., 2009, the date of constitution of the society. The CIT granted registration from 26th March, 2010, citing an amendment in the society's memorandum of association on that date. The assessee contended that registration should have been granted from 28th Aug., 2009, as per s. 12A(2) of the IT Act. The Departmental Representative supported the CIT's order, stating that the amendment made the society eligible for registration u/s 12AA(1)(b)(i). The ITAT considered the provisions of s. 12A(2) and held that the society should be eligible for benefits from the date of its constitution, i.e., 28th Aug., 2009, modifying the CIT's order accordingly. The appeal of the assessee was allowed, granting registration to the society w.e.f. 28th Aug., 2009.
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2010 (9) TMI 1237
Issues Involved:1. Claim for reduction of short-term capital gains by the amount of provision for diminution in the value of investment. 2. Non-allowance of short-term capital loss on sale of mutual funds invoking section 94(7) of the Act. Summary:Issue 1: Claim for Reduction of Short-Term Capital GainsThe assessee claimed that the amount of short-term capital gains should be reduced by Rs. 2,46,18,593, being the provision for diminution in the value of investment. The CIT(A) did not accept this claim, stating that the revised computation of income could not be considered due to the bar of limitation u/s 139(5) of the Act. The assessee argued that the provision for diminution was mandatory as per Accounting Standard-13 issued by ICAI and that the income under the head 'capital gains' should be computed as per section 45 read with section 48 of the Act. The assessee cited several judgments, including National Thermal Power Limited vs. CIT and CIT vs. Mahalaxmi Sugar Mills Co. Ltd., to support the claim that taxing authorities must assess the correct tax liability in accordance with the law. The Tribunal held that the claim was bona fide and should have been admitted by the CIT(A). However, the short-term capital loss claimed in the revised computation could not be carried forward as it was not made in the original return filed u/s 139(1) of the Act. Thus, the Tribunal directed the CIT(A) to grant the relief but disallowed the carry forward of the loss. Issue 2: Non-Allowance of Short-Term Capital Loss on Sale of Mutual FundsThe CIT(A) confirmed the action of the Assessing Officer in not allowing the short-term capital loss of Rs. 2,22,87,145 arising on the sale of mutual funds, invoking section 94(7) of the Act. The CIT(A) held that the assessee had not held the mutual funds for the specified period prior to their sale. The assessee argued that the term "month" should be construed as a period of 30 days, and since the units were redeemed on 24.6.2002, the provisions of section 94(7) were not applicable. The Tribunal found that the language of section 94(7) was plain and unambiguous, providing that the period of three months after the record date should be calculated from 21.3.2002 to 21.6.2002. Since the redemption occurred on 24.6.2002, the provisions of section 94(7) were not applicable. The Tribunal set aside the order of the authorities below on this issue. Conclusion:The appeal of the assessee was allowed, with directions to the CIT(A) to grant the relief for the reduction of short-term capital gains but disallowing the carry forward of the short-term capital loss. The Tribunal also set aside the order of the authorities below regarding the non-allowance of short-term capital loss on the sale of mutual funds. Order pronounced in open court on this 10th day of September, 2010.
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2010 (9) TMI 1236
Issues involved:
The judgment involves the rejection of an application filed under Section 119(2)(b) of the Income Tax Act for condonation of delay in filing the return and to allow carrying forward of loss for Assessment Year 2001-2002 by the Government of India, Ministry of Finance.
Details of the Judgment:
Issue 1: Condonation of Delay in Filing Return
The Petitioner, a Multi State Cooperative Bank, filed a return of income for Assessment Year 2001-2002 declaring a loss. The delay in filing the return was attributed to the time taken by the statutory auditors to complete the audit and a change in management. The Government of India rejected the application for condonation of delay, citing lack of exceptional circumstances beyond the control of the applicant. The High Court noted that the appointment of statutory auditors was beyond the Petitioner's control and deemed the delay justifiable. The Court emphasized a justice-oriented approach in matters of condonation of delay and set aside the impugned order, allowing the Petitioner to carry forward and set off losses.
Issue 2: Legal Provisions and Circulars
Section 119(2)(b) of the Income Tax Act empowers the Board to admit applications for exemption or relief after the specified period if genuine hardship is shown. Circular No.8 of 2001 was issued by the CBDT in this context. The Court considered these provisions and the reasons cited by the Petitioner for the delay, emphasizing the Board's discretion to admit applications based on sufficient grounds. The Court upheld the Petitioner's justification for the delay due to the appointment of statutory auditors by the Central Registrar, ruling in favor of condonation based on this ground.
Conclusion:
The High Court allowed the Petition, setting aside the order rejecting the application for condonation of delay. The delay in filing the return was condoned, enabling the Petitioner to carry forward and set off losses as per the law. The Court directed the parties to bear their respective costs.
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2010 (9) TMI 1235
Issues Involved:
1. Jurisdiction of High Court under Article 227 of the Constitution of India.
2. Delay and laches in filing the petition.
3. Sub-letting and parting with possession under Section 14(1)(b) of the Delhi Rent Control Act, 1958.
4. Relationship of landlord and tenant.
5. Ownership of the premises.
Detailed Analysis:
1. Jurisdiction of High Court under Article 227 of the Constitution of India:
The High Court has the power to ensure that subordinate courts and tribunals act within their authority and follow established principles of law. However, this power must be exercised with care, caution, and circumspection. The High Court should not act as an appellate court to re-appreciate evidence or substitute its conclusions for those of the lower courts unless there is a grave injustice or a blatant violation of fundamental principles of law or justice.
In this case, the Supreme Court found that the High Court exceeded its jurisdiction under Article 227 by re-evaluating the evidence and substituting its conclusions for those of the Additional Rent Controller (ARC) and the Additional Rent Control Tribunal (ARCT). The High Court's intervention was deemed unjustified as both the ARC and ARCT had acted within their jurisdiction and had considered all relevant material.
2. Delay and Laches in Filing the Petition:
The High Court dismissed the objection of delay and laches raised by the appellants, stating that the petition under Article 227 was to correct a patent illegality and that the MCD had been bona fide pursuing the wrong legal remedy. However, the Supreme Court disagreed, noting that the High Court committed a patent error of jurisdiction in entertaining the writ petition, which was unconscionably belated. The MCD had consciously withdrawn its appeal under Section 39(1) of the Delhi Rent Control Act and filed a petition under Article 227 of the Constitution of India, which was inappropriate given the circumstances.
3. Sub-letting and Parting with Possession under Section 14(1)(b) of the Delhi Rent Control Act, 1958:
The ARC and ARCT had found that the DTC had sublet the premises to the MCD without the written consent of the landlord, thereby making both DTC and MCD liable for eviction. The ARC concluded that the DTC had parted with possession of the premises to the MCD, which was paying rent to the DTC. The ARCT upheld this finding, noting that the DTC had sublet, assigned, or otherwise parted with possession of the premises to the MCD.
The High Court, however, set aside these findings, stating that there was no sub-letting as the DTC, MCD, and other entities were creations of statute and the premises had come to them through nationalization. The Supreme Court rejected this reasoning, stating that the High Court had no justification to re-evaluate the findings of the ARC and ARCT, which were based on evidence and material on record.
4. Relationship of Landlord and Tenant:
The ARC and ARCT had found that there was a landlord-tenant relationship between the appellants and the DTC. The High Court, however, questioned this relationship, stating that the premises had been acquired by the Union of India and that the payment of Rs. 3500 per month was a misnomer. The Supreme Court found that the High Court's intervention on this issue was unnecessary and that the findings of the ARC and ARCT on the landlord-tenant relationship were based on adequate evidence.
5. Ownership of the Premises:
The High Court erroneously decided the question of ownership of the premises, which was not an issue in the proceedings under Article 227. The Supreme Court noted that the issue of ownership was the subject matter of a separate civil suit and that the High Court should not have given any opinion on this matter.
Conclusion:
The Supreme Court allowed the appeal and set aside the impugned judgment and order of the High Court. The High Court had overstepped its jurisdiction under Article 227 of the Constitution of India by re-evaluating the evidence and substituting its conclusions for those of the ARC and ARCT. The High Court's dismissal of the objection on the grounds of delay and laches was also found to be inappropriate. The findings of the ARC and ARCT on sub-letting, the landlord-tenant relationship, and other issues were upheld.
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2010 (9) TMI 1234
Issues involved: Admissibility of appeal based on substantial questions of law, addition of income u/s 23 of Income Tax Act, classification of service charge as business income or House Property.
Admissibility of appeal: The appellant sought admission of the appeal based on substantial questions of law. The Court declined admission as the Tribunal had followed decisions of the Jurisdictional High Court and a coordinate Bench. The Tribunal's decision was upheld as it was found to be in accordance with previous rulings and no infirmity was identified. The appellant's argument regarding the High Court's dismissal was rejected, stating that the High Court's affirmation of the Tribunal's decision constituted acceptance by the High Court itself.
Addition of income u/s 23 of Income Tax Act: The appellant contested the deletion of an addition of Rs. 1,65,46,320/- by the Tribunal without considering Section 23 of the Income Tax Act, 1961, and previous judgments. The Tribunal's decision was upheld based on following the Jurisdictional High Court's rulings and a coordinate Bench's decision. The Tribunal's action was deemed appropriate, and the appeal was dismissed accordingly.
Classification of service charge: The appellant challenged the Tribunal's classification of service charge received as business income instead of House Property. The Tribunal's decision was supported by the Tribunal's adherence to previous judgments and the Commissioner of Income Tax (Appeal)'s actions. The Tribunal's decision was deemed valid, and the appeal was dismissed.
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2010 (9) TMI 1233
Issues Involved:
1. Addition of agricultural income as business income.
2. Addition under Section 41(1) for cessation of liability.
3. Disallowance of repairs and maintenance expenses.
4. Disallowance of telephone expenses.
5. Disallowance of vehicle expenses and depreciation.
6. Levy of penalty under Section 271(1)(c).
Detailed Analysis:
1. Addition of Agricultural Income as Business Income:
The assessee declared agricultural income of Rs. 9,08,000 but failed to maintain proper evidence for agricultural income and expenditure. The AO estimated the agricultural income based on data from Agricultural University, Navsari, concluding it to be Rs. 5,26,597 and added Rs. 3,81,403 as business income due to fall in gross profit from business activities. The CIT(A) upheld the AO's decision, noting the lack of documentary evidence from the assessee. The Tribunal partly allowed the appeal, modifying the addition to Rs. 1,50,000 considering the history of the assessee's agricultural income and the involvement of the assessee's wife in agricultural activities.
2. Addition under Section 41(1) for Cessation of Liability:
The AO added Rs. 88,623 and Rs. 1,29,747 as deemed income under Section 41(1) due to cessation of liability. The assessee argued that these liabilities were written back in subsequent years or were still outstanding. The Tribunal, referencing multiple judicial precedents, concluded that the liabilities acknowledged in the balance sheet cannot be presumed to have ceased merely because they were outstanding for several years. Consequently, the Tribunal deleted the additions under Section 41(1).
3. Disallowance of Repairs and Maintenance Expenses:
The AO disallowed Rs. 12,924 out of total repairs and maintenance expenses on an ad-hoc basis due to lack of supporting bills/vouchers. The CIT(A) confirmed this disallowance. The Tribunal upheld the disallowance, noting the absence of proper records to substantiate the expenses.
4. Disallowance of Telephone Expenses:
The AO disallowed 20% of the telephone expenses, attributing them to personal use. The CIT(A) upheld this disallowance. The Tribunal agreed with the authorities below, citing the lack of evidence to prove that the expenses were solely for business purposes.
5. Disallowance of Vehicle Expenses and Depreciation:
The AO disallowed 20% of vehicle expenses and depreciation due to the absence of a logbook to differentiate between personal and business use. The CIT(A) confirmed the disallowance. The Tribunal upheld the decision, emphasizing the need for proper documentation to support the business use of the vehicle.
6. Levy of Penalty under Section 271(1)(c):
The AO levied penalty under Section 271(1)(c) for the additions made. The Tribunal, considering the partial relief granted on quantum appeal and the nature of the additions (estimation and disallowance of expenses), concluded that the penalty was not justified. The Tribunal referenced the Supreme Court's decision in CIT vs. Reliance Petroproducts Pvt. Ltd., emphasizing that mere disallowance or estimation does not constitute concealment or furnishing of inaccurate particulars. Therefore, the penalty was cancelled.
Conclusion:
The Tribunal provided partial relief to the assessee by modifying the addition of agricultural income and deleting the additions under Section 41(1). However, it upheld the disallowances related to repairs and maintenance, telephone, and vehicle expenses. The penalty under Section 271(1)(c) was cancelled, considering the nature of the additions and the explanations provided by the assessee.
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2010 (9) TMI 1232
Doctrine of basic structure - Whether the inclusion of the Janmam Act (Act 24 of 1969) in the Ninth Schedule amounted to direct negation and abrogation of judicial review - Validity of Thirty-fourth Amendment Act, 1974 - According to the learned Counsel, in the absence of any provisions for distribution of lands having vested in the State, the impugned Section 3 of the Act 24 of 1969 and its insertion in the Ninth Schedule to the Constitution as Item 80 was arbitrary, discriminatory and not only violated Article 14 but also the basic structure of the Constitution in terms of separation of powers and rule of law. According to the learned Counsel, the impugned legislation inter alia violated the rule of law which is a facet of the doctrine of equality and, therefore, it is not validated under Article 31B of the Constitution.
HELD THAT:- We find no merit in the submissions advanced by Shri Viswanathan, learned senior counsel for the petitioner (s) that inclusion of the Janmam Act (Act 24 of 1969) in the Ninth Schedule (Item No. 80) amounted to direct negation and abrogation of judicial review as the impugned Constitution (Thirty- fourth Amendment) Act, 1974 confers naked power on the Parliament to obliterate the judicial decision in Balmadies case which became final, without changing the basis of the decision or the law and, therefore, the said impugned Constitutional Amendment Act destroys the basic feature of the Constitution, namely, judicial review. the amending power under Article 368 of the Constitution is a derivative power. The doctrine of basic structure provides a touchstone on which the validity of the Constitutional Amendment Act could be judged. While applying this doctrine, one need not go by the content of a "right" but by the test of justifiability under which one has to see the scope and the object of the Constitutional Amendment. In the present case, we are concerned with the validity of the Constitution (Thirty-fourth Amendment) Act, 1974. It is true that all lands including forests falling in the janmam estate vest in the State u/s 3 of the Act 24 of 1969. Under that Act, the State gave pattas for cultivable lands though such pattas were not given for forests which vested in the State. It is also true that after Act 20 of 1972 forests which earlier stood exempted from the provisions of the Ceiling Act, 1961 got included in the Ceiling Act (Act 20 of 1972).
we are of the view that the requirement of public purpose and compensation are not legislative requirements of the competence of Legislature to make laws under Entry 18, List II or Entry 42, List III, but are conditions or restrictions under Article 31(2) of the Constitution as the said Article stood in 1969. Breach of such conditions would attract only Part III challenge. Therefore, when the Janmam Act (Act 24 of 1969) was put in the Ninth Schedule in 1974, the Act received immunity from Article 31(2) with retrospective effect. Lastly, in pith and substance, we are of the view that the Janmam Act (Act 24 of 1969) was in respect of "land" and "land tenure" under Entry 18, List II of the Constitution. For the afore-stated reasons, we find no merit in the contention of the learned Counsel for the petitioners that the Tamil Nadu Legislature had no legislative competence to enact the Janmam Act (Act 24 of 1969).
In our view, the scope and ambit of the two Acts are completely different and they operate in different spheres. Secondly, the Ceiling Act (Act 20 of 1972) came into force from 1.3.1972. Prior to that date, forests stood exempted from the provisions of the 1961 Act. It is only on and after 1.3.1972 that forests stood included in the 1961 Act by virtue of the Ceiling Act (Act 20 of 1972). The important point to be noted that before ceiling could be determined and before compensation to be paid for excess lands which vested in the State under the Ceiling Act (Act 20 of 1972), the Janmam Act (Act 24 of 1969) came into force on 27.11.1974 under which the forests vested in the State. The main focus of the Ceiling Act (Act 20 of 1972) was to fix a ceiling of agricultural land holding and to distribute the excess lands to the landless and other agricultural population. The scope of the Ceiling Act (Act 20 of 1972) was made wide enough to cover the lands in the hilly areas. In short, before the excess lands could be determined for vesting in the State under the Ceiling Act (Act 20 of 1972), the Janmam Act (Act 24 of 1969) came into force which, as stated above, operated in a different sphere vis-a-vis the Ceiling Act (Act 20 of 1972). For the afore-stated reasons, we find no merit in the argument on behalf of the petitioners that both the Acts operated in the same field and, consequently, it was not open to the State Government to act according to the provisions of the Janmam Act (Act 24 of 1969).
we see no merit in this batch of cases. Accordingly, the same are dismissed with no order as to costs.
K.S. Panicker Radhakrishnan, J.
Coelho Principle:- Coelho held that the object behind Article 31B is to validate certain legislations, which otherwise may be invalid and not to obliterate Part III in its entirety or to dispense with judicial review of those legislations. The Court held that Article 21 confers right to life, which is the heart of the Constitution and when Article 21 read with Articles 14, 15 and 19 is sought to be eliminated not only the "essence of right" test but also the "right test" has to be applied.
Fundamental rights enshrined in Part III can be extinguished by Constitutional amendments and if it abrogates or abridges such rights, would not as such, abrogate or abridge the basic structure. The test is whether it has the effect of nullifying the over arching principles of equality, secularism, liberty and so on especially when such a law is placed in the 9th Schedule, which test in the present case has not been satisfied.
I, therefore, fully concur with the view of the Lord Chief Justice that the writ petitions and the civil appeals deserve dismissal, and there shall be no order as to costs.
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2010 (9) TMI 1231
Issues involved:
The issues involved in the judgment are the recall of an ex parte order due to the non-appearance of the assessee on the scheduled hearing date and the dismissal of the appeal by the ld.CIT(A) without considering the material on record and giving an opportunity of being heard.
Recall of Ex Parte Order:
The Miscellaneous Application was filed by the assessee to recall the ex parte order dated 17.8.2009 due to the non-appearance of the assessee on the scheduled hearing date. The assessee provided a detailed explanation for the non-appearance, citing a family tragedy and compelling circumstances. The Tribunal found the explanation plausible and recalled the ex parte order, allowing both parties to argue the appeal on merit.
Grounds of Appeal:
In the appeal against the order of the ld.CIT(A), the assessee raised various grounds, including the contention that the ld.CIT(A) erred in passing the ex parte order without giving a reasonable opportunity for the assessee to be heard. The assessee claimed to be fully prepared with written submissions and documentary evidence on the scheduled date but was not given a chance to present the case.
Assessment and Appeal:
The assessee did not file the income tax return initially, and the AO assessed the income at a higher amount than declared by the assessee. The appeal to the ld.CIT(A) was dismissed without considering the written submissions and material presented by the assessee. The Tribunal set aside the order of the ld.CIT(A) and remanded the case to be decided on merit, emphasizing the importance of providing a reasonable opportunity for the assessee to be heard.
Conclusion:
The Tribunal allowed the Miscellaneous Application and the appeal for statistical purposes, directing that the case be decided on merit after providing a fair opportunity for the assessee to present their case. The decision was pronounced in open court on 17.9.2010.
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2010 (9) TMI 1230
The defendant's request for an extension to file the written statement was granted by the High Court of Calcutta until September 8, 2010. Urgent certified photocopies of the order will be provided to the parties upon request.
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