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Income Tax
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2012 (2) TMI 238
Valuation of Closing Stock - AO made additions as "Excise Duty" not included in stock - Held That:- In view of Asst.CIT vs. Narmada Chematur Petrochemicals Ltd. (2010 - TMI - 202159 - Gujarat High Court), duty to be included only at the time of sale since goods not cleared additions not justified. TDS - Delivery of gas to be made from buyer to seller at the outlet station - Held That:- Its a contract of sale/ purchase and not of work thus no liability to deduct TDS under 194C.
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2012 (2) TMI 237
Best Judgment - Yield of paddy reflected at 63% AO adopted at 65% - Held That:- Additional evidences in support of yield and trading results were filed as revenue could not confront the same. - Decided in favour of assessee. Cash Credits - Unsecured Loan - Balance confirmed by Ram Prasad Rawat - Held That:- No infirmity in CIT(A) order. Appeal of revenue rejected.
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2012 (2) TMI 236
Registration under Trust - Object encouraging "Religious Discourses" - Held That:- encouraging religious discourses without mentioning any religion cannot per se be considered as benefiting any particular religious community even if considered as religious in nature it is only a part of many number of object clauses, all of which are charitable and hence cannot be considered as of a nature which is wholly or substantially wholly religious. Whether Fees from Apprentices convert trust into commercial venture - Held That:- Fee received from apprentices who were studying in the institution or establishment by the Trust could not be ‘per se’ be a commercial activity. possibility of a future contingency with a remote probability will not make the Trust itself a commercial venture
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2012 (2) TMI 235
Penalty - Search - Block assessment - Jewelery worth RS 12,77,635 added as Undisclosed Income - CIT(A) deleted entire additions - Tribunal: duplicate bills were neither found at the time of search nor were produced before the Investigating Authority - AO on tribunal findings levied penalty - Held That:- It is not the case of Department that the duplicate bills produced by the assessee were false or the parties who issued those bills were not existent parties. Minor variation in the description cannot be conclusive proof for coming to the conclusion that the bills were not genuine. Therefore, it cannot be said that the assessee’s explanation was, in any case, malafide. Penalty un-justified.
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2012 (2) TMI 234
Trust - Transfer versus Donation - Held That:- Transfer of assets for consideration, from one society to another, which has been received by way of book entries and cannot be a donation - Taxable as "Capital Gain". RE-assessment under 147 - reasons to believe - Capital Gain not charged to tax - Held That:- The re-opening of the assessment for bringing the capital gains to tax which was omitted earlier does not amount to change of opinion. The omission to apply the provisions of the Act and later on applying them is a valid ground for invoking notice under 148.
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2012 (2) TMI 233
Estimation of profit on cash portion - 15% on cheque and 10% on cash margin - Held That:- Assessee only pressed for one issue of application of profit rate on the cash portion during the course of arguments which have been considered and decided on merit, therefore, both the Misc. Applications of the assessee are not maintainable.
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2012 (2) TMI 232
Stock - Difference in Valuation of Rs 2,35,983 - Held That:- When the difference in stock has been accepted by assessee and the same is not appealed, levy of penalty is justified.
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2012 (2) TMI 231
Expenses incurred on Car driving and security of director on foreign tour personal in nature - Held That:- No material to establish foreign visit to Bangladesh of the employees of the assessee was directly or distinctly related to the business of the company. We upheld the order of CIT(A). Decided against assessee. TDS - Payment for "Technical Retainer-ship" Fee - Amount deposited on 7.10.05 - Held That:- Finance Act 2008, as retrospectively amended the law enabling payments made before the due date of filing will be allowed as deduction. Decided in favour of assessee.
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2012 (2) TMI 230
Validity of Block Assessments - Period of limitation - Search on 27.07.99 - Delay more than 3 years while issuing Notice under 158BD - Search completed after Seven from the date of Search - Held That:- Issue of notice u/s 158BD after three years from the date of completion of the assessment in respect of the person against whom search was carried out is barred by limitation. Reliance placed on (Khandubhai Vasanji Desai & Ors vs DCIT (1998 - TMI - 16365 - GUJARAT High Court)) and Shri P Venkata Ramana (Hyderabad Bench Tribunal).
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2012 (2) TMI 229
Search - Document seized indicated investments in Partnership firm - AO made additions on the basis of loose sheets found - Held That:- When document talks at full length the "Total Cost Involved". The cost also mentions about the bar licence fee stock and purchase cost. The seized document itself thus mentions about the initial contribution to be made by the partner at Rs. 1,50,000 and additional contribution of Rs 4,20,000. Reliance also placed on CIT vs Durga Das (1971 -TMI - 6269 - SUPREME Court), Decided against assessee.
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2012 (2) TMI 218
Recognition of income of licence fee – agreement for lease of hotel building with ITC Ltd - fee received assesed under the head “Business Income” – Non- disclosure of such income after A.Y. 1995-96 by assessee on ground that said agreement was unilaterally terminated by them and no amount was due, accrued and payable to them – settlement agreement executed later - Tribunal deleted addition made by Revenue on accrual basis - A.Y. 03-04, 05-06 - Held that:- It is apparent that there are contentious and counter-submissions on the factual matrix, which have to be examined and gone into by the tribunal itself. It is for the tribunal to examine the relevant clauses of the lease agreement and consider the claim regarding unilateral termination, the legal effect thereof and the subsequent settlement agreement between the assessee and ITC Ltd. and the legal effect thereof. Therefore, tribunal will re-examine, the entire aspect and questions afresh .It is, however, clarified that we have not examined the claim or the addition on merits – Decided in favor of Revenue.
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2012 (2) TMI 217
Taxability of Non-Compete fees – Capital gain vs Business Income or capital receipt not chargeable to tax - assessee being director of RCL & SVCL hostily taken over by ICL – consideration paid by ICL vide adjustment towards amount due to RCL – Held that:- It is established that such adjustment of consideration towards amount due to RCL would qualify as non-compete fees. However, consideration was not for sale of any business nor was it for not carrying on any business which he was carrying on, which he had transferred. It was also not a payment for a “right to manufacture, produce or process any article or thing”. The provisions relating to capital gains are therefore not attracted. The amount was paid for “not carrying out any activity in relation to any business” and would fall within the ambit of Sec.28(va)(a), which at the relevant point of time of accrual in the hands of assessee viz., 27.10.1999, was a capital receipt not chargeable to tax. Such receipts became taxable on and from 1-4-2003. As held in the case of Guffic Chemical Industries (2011 - TMI - 202401 - Supreme Court), the provisions of Sec.28(va)(a) are not clarificatory and were applicable only prospectively from 1-4-2003. Therefore the receipts in question were capital receipts and not chargeable to tax in AY 00-01 – Decided against the Revenue.
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2012 (2) TMI 216
Evasion of income tax – abnormal dealings – search conducted - donations collected in the names of approved trusts and institutions without authority and scrupulously aiding the donors in siphoning off the donated money back to them in dubious ways, after retaining a part of the alleged donation as commission - respondents prima facie seem to have caused circumstances for enabling evasion of income tax penalty or interest chargeable/ imposable - Held that:- Present case was at the stage of framing of charges, both the courts below have erred in discharging the respondents based on wrong interpretation of provisions of section 276 C (ii). Consequently, both the orders are hereby set aside and matter is remanded back to the Court of CMM, Delhi with direction to assign it to the court of competent jurisdiction.
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2012 (2) TMI 215
Taxability on compensation received on transfer of “Development Rights” being the FSI and the “right to load TDR” on the land - capital gain - development agreement with developer - CIT (A) held FSI and TDR to be separate & distinct assets - while TDR did not have a cost, the FSI did and if both were transferred together, there was a “cost” for the “asset” and capital gains was chargeable – assessee contesting the same - Held that:- Receipts on assignment of FSI including originating from the plot of land and/or married to it and right to load consume and use FSI credit by way of TDR which was the subject matter of transfer by the Assessee was a capital asset in respect of which the cost of improvement could not be ascertained and therefore the receipts of consideration for transfer of the said rights cannot be brought to tax as the said receipts will be capital receipts and not capital gain. See CIT vs. B. C. Srinivasa Setty (1981 - TMI - 5845 - SUPREME Court) – Decided in favor of assessee. Contention raised regarding dis-allowance of deduction u/s 24 by A.O. it is held that though the order of the AO or CIT(A) are not clear on this aspect, but the inevitable conclusion that one can reach is that the AO has allowed deduction u/s.24(a) – Decided against the assessee.
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2012 (2) TMI 214
Set- off of loss – partnership on dissolution on 18.09.04 taken over by one partner – loss of partnership set off against income earned as individual – A.Y. 05-06 – Held that:-When the assessee took over the business of the erstwhile partnership firm, it was not a case of succession by inheritance. Partnership firm is a separate and distinct unit of assessment and ceased to exist on dissolution on 18.09.04. Income of partnership firm is to be assessed for the period 1.4.2004 to 18.9.2004. After 18.9.2004, business is carried on as a sole proprietor. The income earned by the appellant, as an individual, would include his share of loss as an individual but not the losses suffered by the partnership firm – Decided against the assessee.
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2012 (2) TMI 213
Depreciation on Plant & Machinery - sugar mill - Revenue contending that same is not allowable on ground that mill was non-functional during the period 29.02.2000 to 19.12.2006 – A.Y. 2002-03, 2005-06 and 2006-07 – Held that:- Mill was not functional in the intervening period for the reasons beyond the control of the assessee company but immediately after the revival scheme was sanctioned by High Court, the mill started working in the beginning of next sugar season. Since, Plant and machinery were kept ready for use with the intention and desire to make it operational as soon as liquid funds were made available and the fact that the factory was ultimately made operational depreciation is therefore allowable – Decided against the Revenue.
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2012 (2) TMI 212
Rectification - Capital Gain - Deduction under 54F - Tribunal findings: House purchased from borrowed fund and partly from relatives, sales consideration were not utilized - Assessee applied for rectification of order - Held That:- Tribunal can rectify only those mistake which are apparent from record. Order passed under 254(1) is final. 254(2) does not have existence de hors the order under section 254(1). Re-calling of the order is not permissible under section 254(2). - Recalling of an order automatically necessitates rehearing and re-adjudication of the entire subject-matter of appeal. - Application of assesee turned down.
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2012 (2) TMI 211
Condonation - Dealay of 40 days - According to the assessee, all the income-tax matters were being looked after by a tax practitioner, Sri Uttam Roy, who due to his ill health failed to represent the cases of the assessee before the department during the period from June, 2009 to September, 2010. - Held That:- In view of Katiji & Ors.(1987 - TMI - 40082 - SUPREME Court) condonation allowed. Penalty - Discrepancy in Stock of jewellery - Held That:- the assessee offered the same for taxation without any protest before the survey party itself. That being the case, there is no mala fide on the part of the assessee and the assessee cooperated with the department by filing the details, names, addresses along with the quantity of goods in respect of karigar’s gold and customer’s gold lying in the vault of the assessee and, therefore, the bonafide action of the assessee has to be accepted - In view of CIT v/s Reliance petroproducts (2010 -TMI - 75701 - SUPREME COURT), decided in favour of assessee. Receipt on account of extra work - In respect of extra work the term ‘white’ and ‘cash’ was written. Admittedly, vide assessee’s letter dated 20/4/2009, ‘white’ indicates cheque receipt and ‘cash’ indicates cash receipt. - held that:- The explanation offered by the assessee is not satisfactory in the eye of law. - Levy of penalty sustained - decided against the assessee.
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2012 (2) TMI 210
Revocation - Assessment under 143 - Income calculated under normal provision of act - profit on sale of investment excluded - Book Profit under 115JB higher - CIT: assessment do not put finality to Book profit, invoked 263 - Held That:- In view of CIT vs. Hemraj Udyog (2002 - TMI - 12196 - RAJASTHAN High Court), Commissioner of Income Tax has power to revise the order of the AO on the issues which were not taken in appeal before the CIT. But if the limitation has expired, the CIT cannot revise the original order of the AO beyond the period of limitation. Since in the instant case, AO passed order on 28.03.2006, notices issued by the CIT u/s.263 on 17.11.2009 and 01.02.2010, therefore, the notices issued u/s. 263 are clearly beyond the period of limitation.
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2012 (2) TMI 209
Car expense being personal in nature - Held That:- When assessee himself disallowed 1/3rd of of car depreciation, contention of the assessee that no disallowance is called for out of expenses incurred towards interest, insurance and taxes do not sustain. Dis-allowance on Incomplete bills & vouchers - Assessee: additions upto 28% on higher side - Held That:- Additions of Rs 1,00,000 would meet end of justice. Annual value of property - Enhancement from 6000 pm to 6500 pm - Held That:- Assessee had not produced any evidence to show that the fair market value has actually come down. Decided against assessee.
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Customs
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2012 (2) TMI 222
Revision petition filed u/s 397 r/w 401 of the CrPC against order of discharge u/s 245CrPC - smuggling of ball bearing - respondents challenging maintainability of the present revision petition – validity of the sanction and also non-examination of the sanctioning authority - Held that:- The petitioner had the concurrent option of filing revision before the Sessions Court or this Court hence, present revision petition is certainly maintainable. Validity of sanction - The sanction order fully sets out the material facts and the offences disclosed by those facts. Moreover, Officer signing the sanction order is not required to state that he had personally scrutinized the file and had arrived at the required satisfaction. The non-availability or non-association of independent witness cannot be a ground for discharge or acquittal in all cases. Therefore, petition is allowed and the impugned order is set aside. The matter is remanded back to the court of learned ACMM, New Delhi.
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2012 (2) TMI 220
Ocean going vessels – seizure for not filing B/E for home consumption - provisional release of vessels ordered subject to conditions including condition of payment of duty – vessels imported prior to 2001 – exemption from custom duty on the date of initial import – assessee contesting payment of duty – Held that:- Revenue is not justified in demanding the duty for provisional release of the vessels when, prima facie, it is not in dispute that on the date of initial import of these ocean going vessels, there was total exemption from payment of duty and customs authorities were also under the belief that it is not necessary to file B/E, where there is total exemption. Since the issue is yet to be adjudicated hence petitioner is directed to file B/E for home clearance of each of the vessels in question without payment of any duty and other conditions as stipulated in order for provisional release. No opinion is expressed on merits of the case.
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2012 (2) TMI 198
Acquittal of charge u/s 135(1) (a) of the Customs Act, 1962 – CLP filed u/s 378(3) of the Code of Criminal Procedure, 1973 seeking special leave to appeal against the said judgment – seizure of gold biscuits – Held that:- In present case, adjudicating authority as also the appellate authority both found the respondent guilty on merits but the revisional authority exenorated him on account of benefit of doubt. Further, there is no retraction of statement u/s 108 of the Customs Act by the aforesaid 3 witnesses and retraction of statement of accused/respondent is highly belated. Therefore, the case requires full consideration and re-appreciation of entire prosecution case. Consequently, leave is granted to the petitioner/department for filing an appeal against the impugned order of acquittal.
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Corporate Laws
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2012 (2) TMI 199
Companies Act 1956 - Petition filed u/s 433(e) & 433(f) of Companies Act, 1956 seeking to wind up the Respondent-Company - 'respondent - Company', is a partnership firm engaged in the business of accepting deposits from the general public – non-repayment of deposit of petitioner – Held that:- Respondent Company is unable to clear the debts of the creditors and therefore, the petitioners have made out a case for winding up of the Company – Decided in favor of petitioner.
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