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Showing 1 to 20 of 1287 Records
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2014 (11) TMI 1295
Higher rate of depreciation - disallowance of depreciation claimed at higher rate, i.e. 30%, when the assessee is eligible for a normal rate of depreciation, i.e. @15% only - as per AO vehicles in question were not handed over to the client but were used by assessee himself to provide services including collection and transportation, as per contracts - CIT(A) deleted addition
Assessee is a partnership firm doing business of transportation of vehicles hiring to ONGC and other Corporates and also doing work of Municipal Corporations. Assessee is doing the work of garbage collection and its disposal
HELD THAT:- It is evident that garbage does not belong to assessee but to clients and the receipts of the assessee include very substantially the charges for transporting the garbage from various locations to common points and thereafter to the dumping points. This is the basic business of assessee and vehicles are basically used for transportation of garbage of the clients only.
The trucks with special type of bodies were used mainly for transporting the garbage throughout the period. Most of the trucks were so specially designed that these could not have been used for any other purpose.
The ownership of particular number and type of trucks was the basic requirement of the contracts awarded which shows that main services required by the clients was transportation of its garbage by these Vehicles.
As in case of CIT vs. S. C. Thakur and Bros.[2009 (1) TMI 20 - BOMBAY HIGH COURT] wherein assessee was a civil contractor whose receipts included substantially charges for transportation of earth from one place to another and not hiring the trucks directly, it is held that it is entitled to depreciation at higher rates as it is doing business of transportation on hire.
CIT (A) was justified in holding that assessee whose receipts included substantially charges for transportation of garbage from one point to another is entitled to depreciation at higher rates on vehicles used for the purpose of this business; as it is doing the business of transportation on hire.
Therefore, reasoned finding of CIT(A), whereby CIT (A) has deleted the addition made on account of disallowance of depreciation, needs no interference from our side. Appeal filed by the Revenue is dismissed.
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2014 (11) TMI 1294
Section 167B applicability to the Society registered under the Societies Act or any other society formed in accordance with the similar laws - assessee is a society registered under the Andhra Pradesh Societies Registration Act 2001 - According to the AO, the rate applicable to AOP and individuals is not applicable to the assessee and the maximum marginal rate is applicable in view of the provisions of sec 167B
HELD THAT:- As gone through the Act both 1860 and 2001 and the submissions of the learned counsel. We find that the A.P. Societies Registration Act, 2001 is corresponding to the Societies Registration Act, 1860. The learned counsel has submitted copy of certificate of registration and Memorandum of the society which indicate that it is a society registered under the Societies Registration Act, 2001. Hence the provisions of sec 167B have no application to the society registered under the Societies Act or any other society formed in accordance on similar lines. Hence appeal of the assessee is allowed.
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2014 (11) TMI 1293
Estimation of income - bogus purchases - Tribunal assessed the disallowance at the rate of 15% - HELD THAT:- The decision of this Court in the case of Sanjay Oil Cake Industries [2008 (3) TMI 323 - GUJARAT HIGH COURT] will govern the issue involved in the present appeals. Tribunal has rightly assessed the disallowance at the rate of 15%. Decided in favour of the assessee.
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2014 (11) TMI 1292
Petition for winding up filed u/s 433(e) and (f), 434 and 439 of the Companies Act, 1956 - respondent-company is unable to pay debt of Rs. 5,96,907/- as principal and interest due thereon despite repeated reminders and notice for winding up of the company - HELD THAT:- The dispute primarily remains regarding payment of Rs. 3,64,000/-. The receipt of AICD pacemaker against that bill has not been disputed by the respondent. The date of the bill is dated 25.8.2007. The stand of the respondent is that as against the pacemaker of particular mark and specification approved by the Government, the petitioner supplied a different one, which was costlier, it was with the understanding that payment thereof will be made after the same is reimbursed to the respondent. For the procedure carried out on patient-Jagir Singh, the respondent had raised a bill of Rs. 6,60,047/- to ECHS. The payment has still not been made, though it is being pursued. Even though the petition is dated 5.8.2013, but still the fair stand of the respondent is that as and when the payment is received, the same shall be made to the petitioner.
Mere fact that issue regarding a particular bill which is six years old is being specifically raised, itself shows that there was some dispute regarding that between the parties.
Considering the totality of circumstances, where the respondent-company is ready and willing to make payment of the bills bearing Nos. 442, 735, 000909 and 000910 and considering its financial health, where it is running a hospital and earning profits, it is not deemed appropriate to direct its winding up. The amount, as undertaken by the respondent, be paid to the petitioner within a period of one month from the date of receipt of a copy of the order and a sum of 3,64,000/- be paid immediately after receipt from ECHS.
The petition is dismissed.
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2014 (11) TMI 1291
Maximum period, also called the span period, prescribed by the University of Delhi and Jamia Millia Islamia University for completing the various courses / programmes being conducted by the said Universities - absence of any power of relaxation of span period in the respondent Jamia Millia Islamia University - HELD THAT:- The students cannot be said to have any right to complete the course / programme to which they have sought admission, in whatever time they may deem proper, particularly when the rules of the University provide otherwise. The students having taken admission to a University, are governed by the rules and regulations thereof. They even otherwise have no right to claim that there should be no span period for completing an educational course / programme or as to what the said time period should be or whether there should be any provision of relaxation therein or not. No such right was argued by any of the counsels inspite of our specifically posing the said query.
It cannot also be lost sight of that the span period is the outer limit for completing the educational course / programme and is generally found to be double the duration otherwise prescribed for the course / programme. The relaxation /exemption which is being sought is thus found to be inbuilt in the span period. The arguments thus urged, of the rule/regulation of span period being harsh, are of no avail. The counsels, inspite of our asking were unable to cite and we have also not been able to find any principle of law which mandates making a provision for relaxation of a rule. Man Singh and Andhra Pradesh Dairy Development Corporation Federation (supra), referred to in this regard on our prodding have no application. In fact the very purpose of making a rule and fixing a time limit is to govern the human conduct and behaviour and once a grace period is inbuilt in the rule, no argument of the same being harsh can be urged.
The only order which can be made in these proceedings is to direct the Universities to consider the matter, including in the light of our aforesaid observations, within a time bound period. Needless to state that if the outcome is to do away with the span period or to provide relaxation therein, the appellants/petitioner would be the beneficiaries thereof, notwithstanding having so become time barred prior thereto. Else, as we have already observed, appellants/petitioner have no right.
The respondent University of Delhi are directed to, within three months herefrom, have the aspects of, (a) need to continue with the span period; (b) whether Ordinance X-C applies to span period also, in the meeting of its Academic Council; and to pass a Resolution on both aspects giving reasons therefor - respondent Jamia Millia Islamia University directed to have the matter relating to the need for having the span period and if so, the need to provide for exemption in exceptional cases therefrom, considered in its appropriate body and to pass a reasoned order thereon, within three months from today - the Secretary, Ministry of Human Resource Development, New Delhi are directed to, in consultation with the educationist, in an appropriate fora, debate and arrive at a consensus and to lay down Policy Guideline to be followed by the Universities in the matter of the need for having a span period for completing the courses/ programmes being offered by the Universities.
Petition disposed off.
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2014 (11) TMI 1290
Acquisition of lands of the Appellants - Applicability of Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 - HELD THAT:- The State Government has neither accepted the recommendations of the Land Acquisition Collector nor assigned any reasons before issuing declaration notification Under Section 6 of the Act. The same is sought to be justified by the learned Addl. Advocate General contending that it is the prerogative of the Government to either accept or reject the recommendations of the Land Acquisition Collector with respect to the proposed land to be acquired by issuing declaration notification Under Section 6 of the Act. This contention of the learned Additional Advocate General is wholly untenable.
If the Government comes to the conclusion contrary to the report of the Land Acquisition Collector then the Government shall assign valid and cogent reasons for not accepting the same. Therefore, the declaration notification by the State Government issued without accepting the recommendation of the Land Acquisition Collector and without assigning reasons for not accepting the same is bad in law. Therefore, the acquisition proceedings in relation to the land covered in these appeals are liable to be quashed on this ground also.
The impugned judgment and order dated 15.05.2007 in so far as the present appeals are concerned, is set aside and the impugned acquisition-notification including the award is quashed holding that the acquisition proceedings are deemed to have lapsed by not taking the physical possession of the acquired land of the Appellants by the State Government or any other authorized authority and also for not following the mandatory procedure as required Under Section 5A of the Act.
Appeal allowed.
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2014 (11) TMI 1289
Classification of Works Contract Services - Revision of classification - Commercial or Industrial Construction Services to Works Contract Services - it was held by CESTAT that 'There was thus no doubt in the authority issuing show cause notice dated 22.10.2008 and its corrigendum dated 29.09.2009 that the classification of the services being dealt was ‘Works Contract Services’ with effect from 01.7.2006.' - HELD THAT:- There are no merit in the Civil Appeals - the Civil Appeals are dismissed.
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2014 (11) TMI 1288
Guilty of “other misconduct” falling under Section 22 read with Section 21 of The Chartered Accountants Act, 1949, as it stood prior to the amendment with effect from 17th November, 2006 - respondent No.1 despite opportunity failed to represent against the report of the either of the two Disciplinary Committees and also failed to participate in the 324th meeting of the petitioner Institute, in which both the reports were taken up for consideration - Violation of principles of natural justice - time limitation - HELD THAT:- Though the jurisdiction of this Court under Section 21(6) of the Act is wide, without any restriction but in our opinion, the findings of the members of the Disciplinary Committee of the petitioner and the views of the petitioner Council are entitled to great weight in light of the fact that they are the experts with regard to the matters pertaining to profession of chartered accountants and know the intricacies of the profession on account of their personal experience. Moreover, the said bodies have been created to maintain a high standard of conduct and discipline amongst the members of the petitioner institute. Thus, unless gross violation or disregard of the provisions of the Act or the Regulations made thereunder or of the principles of natural justice and fairness is to be found, this Court would be slow to interfere with the finding of such professional bodies.
At the time of issuing notice of both the petitions had brought the said fact to the notice of the Advocate for the petitioner Institute. It is also found that other references are also being filed after such long delay and without any explanation given therefor.
Though no limitation appears to have been prescribed for filing such reference (though a perusal of The Chartered Accountants (Procedure of Investigation of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 and the Chartered Accountants Regulations, 1988 brought into force since then contain some tentative time limits) but the petitioner Institute which is a professional body also empowered to discipline its members ought not to so delay dealing with the complaints against its members and which delay not only enables the erring members to continue with their erring activities, to the prejudice of the persons dealing with them, but we are of the opinion that such delays on the part of the petitioner Institute is also prejudicial to the members against whom complaints are directed. Such members of the petitioner Institute in the interregnum continue to grow and build their reputations. A punishment at an early stage in the career can have vitally different consequence than a punishment at a time when the professional is at the peak.
The petitioner Institute is called upon to introspect into the said aspect and to in future ensure that the complaints are dealt with in a time bound manner.
It is accepted that the recommendation of the petitioner Institute in both the cases and remove the respondent No.1 from the membership of the petitioner Institute for a period of five years in each of the two cases and which period shall run separately, in accordance with law.
The references are disposed of.
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2014 (11) TMI 1287
Seeking grant of regular bail - whether the applicant has been falsely implicated in this case as no role has been assigned to the applicant? - HELD THAT:- No doubt that Sanjay Chandra’s case (supra) and Suresh Kalmadi’s CWG Scam, reinforce and revisit the basic principles of law with regard to grant of bail. However, it is important to pay due consideration to the phrase that “bail is the real” and “jail is exception” and further that while granting bail to the accused not only gravity of the offences is to be seen, but also the fact as to whether accused would be available to face the trial or flee away from the process of law or he should not have propensity to win over the witnesses or tamper with the evidence. This Court is also cognizant of the fact that there is a fundamental difference between the said cases and the present case. In the said cases, no member of the general public was affected directly rather it was the public exchequer who was put to loss by not holding auction of government resources or by over invoicing lenders which is totally different from the facts of the present case where the applicants floated advertisement and made proposal for pre-launch of residential projects and collected hundreds of crores of rupees by inducing, misrepresenting and suppressing the material facts.
The applicants were able to gain confidence of the public to invest money in their scheme by promising them to allot land in their various projects and was able to gain their confidence and subsequently cheated them of their hard earned money of about Rs.200 crores. This kind of activity ultimately shows a great deal of deliberation and preparation.
In the instant case the gravity and implications of the offence have a far reaching effect and the applicants have cheated innocent persons to the tune of Rs.200 crores approximately).
Considering in totality the facts and circumstances of the case and the allegations against the applicants, the applicants do not deserve to be enlarged on bail.
Accordingly, both the applications are dismissed.
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2014 (11) TMI 1286
Allowability of deduction u/s. 80P - interest income earned from banks/post office FDR etc. - HELD THAT:- In the case of Income Tax Officer v. Sahkari Ganna Vikas Samiti Ltd. [2002 (10) TMI 89 - ALLAHABAD HIGH COURT] cited by assessee also, the issue in dispute was regarding allowability of deduction u/s. 80P in respect of interest earned from State Bank of India, Punjab National Bank and Oriental Bank of Commerce along with interest received on FDR and from post office.
In this case, the Tribunal has followed the judgments of Co-operative Cane Development Union Ltd. [1979 (2) TMI 91 - ALLAHABAD HIGH COURT] and also the judgment of Krishak Sahkari Ganna Samiti Ltd. and decided the issue in favour of the assessee. We decline to interfere in the order of CIT(A) in both the cases.
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2014 (11) TMI 1285
Penalty u/s 271B - audit report u/s 44AB has been filed after sufficient long time - transfer of cases from Bharatpur to Jaipur - as argued jurisdiction over the case was with the IT Department, Bharatpur and unilaterally it was transferred to the office of the Dy. CIT, Central Circle-2, Jaipur and before passing of the order neither the assessee received any intimation nor any notice from the office of the authority so as to come to the conclusion that the jurisdiction over the case stood shifted/transferred
HELD THAT:- It would be appropriate to deal with the submission of the counsel that the AO at Bharatpur on account of change of jurisdiction did not accept the return of income or the audit report when presented immediately after completion of the audit of accounts as well as return of income but what was contended, no tangible evidence or material either in the shape of an affidavit or otherwise of the person who claimed that he had presented the return of income along with audit report before the AO at Bharatpur was placed or refusal by the officer at Bharatpur. In our view, mere justification as alleged without any supporting evidence, is no explanation and the Tribunal had rightly rejected the same.
Turnover as per audit report and the turnover as noticed by the AO in the penalty order is not supported with cogent material on record. This discrepancy, when noticed, was expressed to the counsel for the assessee on the earlier date of hearing and specifically observed in the order-sheet of 13th Feb., 2014 but even after lapse of about 8 months on the date of final hearing, counsel for the assessee was unable to clarify the correct figures or the discrepancy noticed. However, ultimately insofar as imposition of penalty is concerned, the Act provides that it is minimum to the extent of Rs. 1 lac which ultimately has been imposed by the AO and sustained by the Tribunal.
Though the assessee has tried to challenge that there was no information about transfer of cases from Bharatpur to Jaipur and S. 127 provides that notice is required to be served to the assessee but it can safely be observed that the assessee neither challenged the transfer of cases from Bharatpur to Jaipur office nor raised issue of jurisdiction at the time of transfer of cases rather the assessee submitted to the jurisdiction of the Dy. CIT, Central Circle-2, Jaipur and not only filed the return of Income but the audit report also, though belatedly and appeared regularly before the Dy. CIT, Central Circle-2, Jaipur in the regular assessment proceedings and submitted to its jurisdiction without even uttering a word assailing the same before any authority.
The Kerala High Court in the case of K. Ravindranathan Nair [2008 (3) TMI 412 - KERALA HIGH COURT] has held that if there is an acceptable explanation, then penalty could have been avoided whereas in the absence of any evidence adduced by the appellant at least before the Tribunal, the minimum penalty imposed under S. 271B for admitted delay for filing audit report was upheld.
Thus Tribunal has rightly sustained the penalty u/s 271B - Decided in favour of revenue.
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2014 (11) TMI 1284
Valid and legal execution of will or not - Defendants Nos. 1 and 2 have caveatable interests in the estate of the deceased or not? - entitlement to oppose the grant of probate in view of having received and accepted the bequest under the will dated 21st August, 1997 - Will was executed by exercising undue influence or not?
Whether the Petitioner has proved that the will dated 21st August, 1997 was legally and validly executed? - Whether Defendants Nos. 1 and 2 have caveatable interests in the estate of the deceased? - Whether the Defendant Nos. 1 and 2 are entitled to oppose the grant of probate in view of their having received and accepted the bequest under the will dated 21st August, 1997? - HELD THAT:- It is a well-settled principle that a person who accepts a benefit under an instrument must accept it in its entirety. He cannot accept the benefit and repudiate its other provisions - His acceptance of the benefit is a renunciation of every right inconsistent with the provisions of that instrument. This is a rule based on the well-known principle of approbation and reprobation. No one may affirm and disaffirm the same transaction, i.e., affirming it to the extent of the benefit received and disavowing it to the extent that it prejudices.
The Defendants have accepted benefits under Vivien’s will. Under Section 187 and 188, the Defendants have made their election; and, in any case, their right to elect and their waiver of the inquiry into the circumstances attendant to that election must now be presumed and held against them. These are specific legacies (the jewellery and the bequest of Rs.2 lakhs to their son), ones to which they had no entitlement on intestacy. Their own entitlement was under the Will itself, and only under the Will. The Defendants, by their own actions, accepted and are bound by the terms of the Will. They cannot simultaneously repudiate it. In addition, there is also the express acceptance of it under the writing Ex.P-5.
An attesting witness, PW2, has deposed to it, as has the Petitioner, who identified Vivien’s signature. The challenge to the will fails.
Whether the Defendants prove that the Will was executed by exercising undue influence? - HELD THAT:- No question arises of the Defendants having proved any undue influence; their challenge to the will is obliterated by their acceptance of legacies under it. The entire defence is fruitless and impermissible.
The suit succeeds, and is decreed.
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2014 (11) TMI 1283
Delay in filling appeal late by 11 days - Disallowance on account of interest expenses - HELD THAT:- In our considered opinion, the assessee does not stand to benefit by lodging an appeal late and when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. We, accordingly condone the delay for both the years.
A careful perusal of the order of the Ld. CIT(A) shows that he has followed the decision in the case of Hitesh S. Mehta [2013 (10) TMI 1065 - ITAT MUMBAI] son of the assessee for A.Y. 2005-06In the case of Hitesh S. Mehta, we find that the Tribunal has restored this issue to the file of the Ld. CIT(A) to adjudicate afresh along with the adjudication of the other ground pertaining to the rejection/reliability of the books of account. Since the Ld. CIT(A) has followed his own decision in the case of Hitesh S. Mehta, respectfully following the findings of the Tribunal in the case of Hitesh S. Mehta as mentioned hereinabove, the issue is restored to the file of the Ld. CIT(A) to be decided afresh in the line of the directions given in the case of Hitesh S. Mehta. Appeals filed by the assessee is treated as partly allowed for statistical purpose.
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2014 (11) TMI 1282
Cheating - dishonest preparation of an agreement for sale of her lands - HELD THAT:- The order of the High Court is not in accordance with law and in the facts of the case no interference should have been made with the investigation by the Police by quashing the FIR.
The High Court was not justified in interfering with the Police investigation and quashing the FIR. This is not at all a rare case. Without thorough investigation, it is not possible or proper to hold whether allegations made by the complainant are true or not. Hence the investigation should, have been allowed to continue so that on filing of the report Under Section 173 Code of Criminal Procedure the affected party could pursue its remedy against the report in accordance with law. Keeping in view the fact that the criminal case was at the stage of investigation by the Police the High Court was not justified in holding that the investigation of the impugned FIR is totally unwarranted and that the same would amount to gross abuse of the process of court.
The impugned order of the High Court under appeal is set aside. The appeal stands allowed.
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2014 (11) TMI 1281
Prosecution is time barred or not - Violation of Section 100 of the Companies Act, 1956 - liability for punishment under Section 629(A) of the Companies Act - whether the prosecution in the instant case is barred by limitation under Section 468 of the Code of Criminal Procedure? - HELD THAT:- As per Section 470 of Cr.P.C., as stated in paragraph 6 of the counter, the period spent on stay order has to be excluded while computing the period of limitation. In this case, the stay was ordered on 23.10.2003 and it was vacated on 27.04.2005. This period has to be necessarily excluded while computing the period of limitation. But after 27.04.2005, the complaint was not filed within six months, the reason stated is that some time was taken to complete the investigation and to get permission from the Central Government.
The consent or sanction as has been referred to in sub-clause 3 of Section 470 of Cr.P.C. relates to consent or sanction which is obtained under the Statute itself. Here in this case, to prosecute a person for offence punishable under Section 629(A) of the Companies Act, neither any consent nor any sanction from the Central Government is required. It may be true that on the administrative side permission is obtained from the Central Government to launch prosecution, but that permission cannot be equated to a consent or sanction to be obtained statutorily as referred to under sub-section 3 of Section 470 of the Cr.P.C. Therefore, this period cannot be excluded at all from the period of limitation. If it is done, obviously the complaint is barred by limitation because the complaint was not launched within six months atleast from 27.04.2005, the day when stay order was vacated.
Admittedly the complaint was launched only in the year 2006, thus the prosecution is barred by limitation. Therefore, the proceedings is liable to be quashed.
Petition allowed.
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2014 (11) TMI 1280
Deduction u/s 80IC - CIT(A) held that deduction allowable on the total gross profit without reducing the remuneration and interest payable to the partners - HELD THAT:- deduction under various provisions of this Chapter are allowable only if the income of the nature on which deduction is claimed has been included in the total income and further deduction has to be allowed on the basis of above gross total income. Gross total income has itself been defined in Sec 80B which clearly shows that deduction can be allowed on that income which is computed in accordance with the provisions of the Act before allowing deduction under Chapter VIA. Under Income-tax Act the income has to be computed under various heads as per the provisions of a particular head. Before allowing deduction u/s 80IC the income has to be computed as per the provisions of Sections 32 to 43 of the Act.
This position has been confirmed by the Hon'ble Supreme Court in case of CIT V. Kotagiri Industrial Co-operative Tea Factory Ltd. [1997 (3) TMI 1 - SUPREME COURT]
Above position has been followed later on in various decisions by the Hon'ble Supreme Court like H.H. Sir Rama Verma [1993 (11) TMI 2 - SUPREME COURT] and Motilal Pesticides (I) Pvt Ltd. [2000 (2) TMI 9 - SUPREME COURT]
Therefore it becomes clear that deduction could have been allowed only after computing the income under a particular head. In this case the income in the hands of the a firm was computed in terms of Sec 28 to 43D and Sec 40(b) in respect of allowance of interest and salary falls between these two provisions and therefore full effect has to be given to this provisions also.
As later on it was decided not to pay salary and interest to the partners - This does not seems to be correct because before the Assessing officer it was admitted that remuneration and interest has not been paid as per the partnership deed. Further there is no evidence for the same and in any case this will not make a difference - As for making deduction under chapter VIA the profits has to be computed specifically as per a particular provision of a particular head of income because of the definition of gross total income u/s 80B(5).
In view of the above clear position the deduction u/s 80IC was allowable only after reducing the interest and remuneration payable to the partners. The Assessing officer has invoked the provisions of section 80IA which are not relevant and the Ld. CIT(A) has decided the issue only on this decision without looking at the specific provisions of the Act and the decision of Hon'ble Supreme Court which are binding on all authorities. Therefore we set aside the order of Ld. CIT(A) and restore that of the Assessing officer (though on a different reasoning). Appeal of the revenue is allowed.
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2014 (11) TMI 1279
Time limitation - Non-compliance with the appointment of whole-time Company Secretary - complaint not launched within a period of six months from the date of commission of the offence - HELD THAT:- The consent or sanction as has been referred to in sub-clause 3 of Section 470 of Cr.P.C. relates to consent or sanction which is obtained under the Statute itself. Here in this case, to prosecute a person for offence punishable under Section 383(1A) of the Companies Act, neither any consent nor any sanction from the Central Government is required. It may be true that on the administrative side permission is obtained from the Central Government to launch prosecution, but that permission cannot be equated to a consent or sanction to be obtained statutorily as referred to under sub-section 3 of Section 470 of the Cr.P.C. Therefore, this period cannot be excluded at all from the period of limitation. If it is done, obviously the complaint is barred by limitation because the complaint was not launched within six months atleast from 27.04.2005, the day when stay order was vacated.
Admittedly the complaint was launched only in the year 2006, thus the prosecution is barred by limitation. Therefore, the proceedings is liable to be quashed.
Petition allowed.
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2014 (11) TMI 1278
Deemed dividend u/s 2(22)(e) - CIT(A) agreed with AO that loan received from the company should be treated as deemed dividend at the hands of assessee, but, he directed AO to restrict the addition to the extent of accumulated profit of the company - as argued assessee is director of the company from which advance was received and was holding more than 10% share, but, other condition of section 2(22)(e) relating to accumulated profit is not satisfied - HELD THAT:- Undisputedly, assessee has received loan of Rs. 2,59,000 from M/s Veteran Properties Pvt. Ltd.. It is also not disputed that assessee is a director in the said company and holds more than 10% of the shares. It is also not in a dispute that the company M/s Veteran Properties Pvt. Ltd. from which assessee received loan is a company in which public are not substantially interested.
As company has shown profit during the year. It is the claim of assessee that profit shown by the company is notional and not real, hence, provisions of section 2(22(e) is not applicable. However, we are unable to accept assessee’s claim.
On a perusal of the P&L a/c for AY 2004-05 it is seen that assessee has shown profit of Rs. 1,79,959.11 before expenditure and tax. It is also evident after claiming deduction towards expenditure, provision for income-tax etc., net surplus available to the assessee is Rs. 98,907.61. Therefore, company has accumulated profit of Rs. 98,907.61. Thus, all the conditions of section 2(22)(e) are satisfied. There is no such distinction in the provisions between real profits and notional profits as sought to be made out by ld. AR.
We agree with the ld. CIT(A) and AO that the loan to the extent of accumulated profit has to be treated as deemed dividend at the hands of the assessee u/s 2(22)(e) of the Act. However, accumulated profit of the company as transferred to reserves and surplus being Rs. 98,907.61 addition u/s 2(22)(e) should be restricted to that amount in stead of Rs. 1,72,959 as directed by ld. CIT(A).
Deemed dividend u/s 2(22)(e) - AO noticed that assessee has shown an outstanding liability from M/s Veteran Properties Pvt. Ltd. wherein assessee is a director and is also holding more than 10% share - CIT(A) assessee submitted that amount is neither loan nor advance but actually represents the outstanding receivable by the company towards sale of a car to assessee - HELD THAT:- CIT(A) directed AO to verify the fact whether the outstanding liability shown represent the amount payable for purchase of vehicle and if it is found to be so, then, not to treat it as deemed dividend u/s 2(22)(e) - In this context, she directed AO to verify registration documents and bank statements of assessee to ascertain whether the said transaction has actually taken place and if assessee’s claim is found to be correct, then, delete the addition made. Having perused the findings of ld. CIT(A), we do not find any serious infirmity in the order of CIT(A).
Accordingly, we direct the AO to verify the fact as to whether assessee has actually purchased the car from the company as claimed and whether outstanding liability shown represents the outstanding sale consideration to be paid to company towards purchase of car. If assessee’s claim is found to be correct, no addition can be made u/s 2(22)(e) - Decided in favour of assessee.
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2014 (11) TMI 1277
Deduction u/s 10A - Claim denied by Revenue as production was commenced even before the registration of the SIPI and therefore, they are not entitled to deduction and the unit was acquired on 1.10.2001 and therefore it is a case for reconstruction and therefore, they are not entitled to deduction - Tribunal by looking into the material on record by a considered and reasoned order has categorically recorded a finding that Lara Networks did not have STPI network by the time the unit taken over by the assessee - HELD THAT:- The circular No.1 of 2005 dated 61.2005 by CPDT makes it clear that even if the existing undertaking receives STPI approval, it would still be entitled to deduction under Section 10 A and therefore, it was held that the business of STPI Unit-It was not set up by reconstruction or splitting up. Further it was held though registration was subsequent to the production, that is not a condition which is stipulated in Section 1CA for claiming the benefit of the said deduction and therefore, the assessee is entitled to the said benefit.
In fact, these questions were the subject matter in the case of Commissioner of Income Tax and another - vs - Caritor (India Pvt. Ltd) [2015 (2) TMI 670 - KARNATAKA HIGH COURT] and also in the case of Commissioner of Income Tax and Another - vs - Expert Outsource P. Ltd. [2011 (3) TMI 1428 - KARNATAKA HIGH COURT] where, on interpreting the aforesaid provisions, it was held neither the customs bonding nor STPI registration before production is not a condition precedent.
In that view of the matter, the substantial question of law are answered in favour of the assessee and against the Revenue. There is no merit in this appeal and it is accordingly dismissed. However, while giving effect to these orders, the Assessing Authority also shall give effect to the judgment of this court in the case of Commissioner of Income Tazz - vs - Tata Elsi Ltd & Ors. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] as said judgment is the subject matter of appeal before the Apex Court. However, in the event of the revenue succeeding before Apex Court, then consequential order in terms of Section 260(1)(14) of the Income Tax Act should be passed and given effect to.
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2014 (11) TMI 1276
Time Limitation - Recovery of Arrears - Entitlement for suit claim - limitation for recovery of arrears of installments payable by a subscriber of a chit fund company would commence from the date of the first default in the payment of such installments or from the date of termination of the chit agreement? - HELD THAT:- The plea of the appellant is that Article 37 does not apply since the suit is not based either on a promissory note or on a bond. On that basis, they rely upon the residuary clause i.e., Clause 113. There again, the period of three years is to be reckoned from the date on which the right to sue has accrued. If the date on which the third consecutive default in payment of instalments is taken into account, the suit becomes barred by limitation even under that article.
Though it is pleaded that the suit is not based upon promissory note, it is clear that a reference has been made in para 4 of the plaint to the agreement of guarantee dated 05-12-2000 as well as the promissory note of the same date, for a sum of Rs. 92,500/- executed by the respondents herein. Further, in the absence of any promissory note, and the guarantee from respondent Nos. 2 to 9, there would not have been any occasion for the appellant to implead at least respondent Nos. 2 to 6. The 1st respondent alone is party to Ex. A-1. In case, the suit was filed only on Ex. A-1, it ought to have been filed against the 1st respondent alone.
The judgment rendered by the Kerala High Court in Nanoo Sukumaran's case [1977 (6) TMI 108 - KERALA HIGH COURT] perused - Firstly, the judgment is in relation to an enactment of that State. Assuming that the provisions are in pari materia with the Chit Funds Act, we find it difficult to cull out any principle to the effect that the limitation for filing the suits for recovery of amount from a prized subscriber commences from the date on which the chit is concluded. In the instant case itself, the appellant made a mention in the paragraph pertaining to cause of action to 05-12-2000, the date on which the promissory note and the agreements of guarantee were executed and 10-04-2001, the date on which the appellant committed default.
The second appeal dismissed.
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