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Judgments

Commissioner of Income Tax I vs Muktaben N. Sanghvi  [GUJARAT HIGH COURT, 22 Apr 2014]
Practice & Procedure - Income Tax & Direct Taxes - Income Tax Act, 1961, s. 41(1) - Revenue filed appeal against order of the Tribunal contending that Tribunal without discussing the facts relied on the decision of HC in CIT vs. G.K.Patel & Co. [2013]212 Taxman 384 (Guj.) passed the impugned order - Whether appeal filed by the revenue could be allowed -

Held, issue pertains to cessation of liability u/s. 41(1) of Act - Tribunal in facts of the case referred to the decision of HC in CIT vs. G.K.Patel & Co. - Court does not find that it was a case where the Tribunal does not refer to facts - No reason to remand the proceedings to the Tribunal for fresh consideration as this would serve no purpose - Appeal dismissed.


Caterpillar Global Mining vs Asst. Director of Income-tax  [INCOME TAX APPELLATE TRIBUNAL, 21 Apr 2014]

Association of Unified Tele Services Providers and others vs Union of India  [SUPREME COURT OF INDIA, 17 Apr 2014]
Telecom - Constitution - Accounts & Audits - Practice & Procedure - Constitution of India, 1950, arts. 148, 149, 266 - Telecom Regulatory Authority of India Act, 1997- Comptroller and Auditor-General's (Duties, Powers and Conditions of Service) Act, 1971, ss. 13, 16 - Telecom Regulatory Authority of India, Service Providers (Maintenance of Books of Accounts and other Documents) Rules, 2002, rr. 3, 5, 5(1)(ii) - Production of books of account - Competence of Comptroller and Audit General of India (CAG) - Jurisdiction of CAG - Audit of private telecom licensees - Legality - Telecom Regulatory Authority of India (TRAI) was entrusted with various regulatory functions on unified licensing - 1997 Act and recommendations made by TRAI emphasized on efficient utilization of spectrum to all the service providers (appellants) and indicated that it would make further recommendations on efficient utilization of spectrum, spectrum pricing, availability and spectrum allocation procedure, and Dept. of Telecommunications (DoT) had to issue spectrum related guidelines, based on its recommendations - TRAI u/r. 5 of 2002 Rules issued a communication to one of the service providers for furnishing books of accounts to the Branch Audit Office of Director General of Audit and Comptroller and Audit General of India (CAG) had decided to audit the books of accounts of appellant (companies) to assess the Govt. share out of the revenues carried by companies in terms of licence agreement with DoT -TRAI apprised the Service Providers that audit sought to be conducted by CAG was separate and independent of the audit or special audit conducted by DoT, and thus, directed the Service Providers to make available all the records for audit by CAG or else appropriate action would be taken against them under the 1997 Act - Service providers, aggrieved by stand of DoT and TRAI, filed petition, challenging the legality of notices before HC seeking that r. 5 of 2002 Rules was ultra vires s. 16 of 1971 Act, art. 146 of Constitution and to set aside action of respondents - HC by impugned judgment held that CAG had powers to conduct revenue audit of all accounts drawn by licensees and expressed the view that accounts of the licensee, in relation to revenue receipts could be said to be the accounts of Central Govt. and, thus, subject to a revenue audit, as per s. 16 of 1971 Act and dismissed the petitions were dismissed - Hence, instant appeals - Appellants contended that s. 16 of 1971 Act did not apply to audit of private telecom licensees and that mere fact that licence fee payable under the licence agreement had to be credited into the Consolidated Fund of India (CFI) in the form of receipts did not mean that a proprietary audit in respect of such receipts extended to a statutory audit of private telecom licensee - For audit of telecom licensees the correct legal regime would be cl. 22 of the Licence Agreement which specifically provided for audit and special audit and that DoT, under the agreement, could appoint an outside auditor of its choice or even CAG could conduct an audit in terms of cl. 22 of Unified Access Services (UAS) and that r. 5 of 2002 Rules stated that CAG might carry out an audit of the accounts of telecom licensee u/s. 16 of 1971 Act did not make such audit legally permissible - Further contended that there should be an element of Govt. control of finance and same was completely lacking in instant case of service providers and that art. 266 of Constitution deals with receipts which were payable into the CFI and receipts were only that of Union and States, as the case may be, and not private telecom companies - Whether power of CAG u/s. 16 of 1971 Act empowered CAG to conduct audit of accounts of private entities or their underlying accounts and records maintained by them in absence of law made by Parliament -

Held, cl. 16 of the agreement indicated the pattern of 'revenue sharing' between the UOI and licensee - Licence fee envisages, apart from the one-time non-refundable Entry Fee, licence fee annually be paid at the rate of 6% of Adjusted Gross Revenue (AGR) excluding spectrum charges - Right was also reserved on the licensor to modify the licence fee during the currency of agreement - Spectrum charges have to be paid in addition to the licence fee on 'Revenue Sharing Basis' - While levying spectrum charges based on AGR, components which form the AGR have also given in cl. 19.1 of Agreement, which was wide enough to embrace other source of revenue inflow - Licensee was, thus, obliged to maintain the accounts relating to licence agreement and particularly revenue received by it because it had to share the revenue with Union, which had to be calculated with reference to the Gross Revenue Receipts - Duties and powers conferred by Constitution on the CAG u/art. 149 of Constitution could not be taken away by Parliament, being the basic structure of Constitution - Parliament should know how nation's wealth was dealt with by executive and even by UAS Licence holders and the quantum of Revenue generated out of the use of the spectrum and whether same was properly assessed, collected and accounted for by the Union and UAS Licence holders - Parliament had an obligation to ascertain whether the entire receipts by way of licence fee, spectrum charges, were realized by UOI and credited to CFI - Art. 266 of Constitution says, all public moneys received by or on behalf of GOI should be credited to CFI - CAG could carry out examination into the economy, efficacy and effectiveness with which the UOI had used its resources, and whether it has realized the entire licencee fee, spectrum charges and also whether UOI had correctly carried out the audit u/cl. 22.5 and 22.6 of UAS Licence Agreement - CAG's examination of accounts of Service Providers in a Revenue Sharing Contract was extremely important to ascertain whether there was an unlawful gain to Service Provider and an unlawful loss to UOI, because revenue generated out of that had to be credited to CFI - 'Spectrum', a natural resource, which belonged to people, thus, people of country, through Parliament should know how its natural resources were dealt with by the Union, State or its instrumentalities or even by UAS licence holders - Instances were not rare, where even the Executive, at times, acts hand in glove with licence holders, who deal with natural resources, thus, necessity of proper parliamentary control over the resources - U/s. 16 of 1971 Act, expression 'to audit all receipts' did not distinguish the revenue receipts and non-revenue receipts - For the purpose of audit of receipts, duty of CAG extends 'to such examination of the accounts as it thinks fit and report thereon' - S. 13 of 1971 Act read along with s. 16 of 1971 Act makes it clear that expression 'to audit all transactions' so also 'audit of all receipts', payable into CFI would take in not only the accounts of Union and of State and of any other authority or body as might be prescribed or under any law made by Parliament but also to audit all transactions which Union and State have entered into which had a nexus with CFI, especially when the receipts have direct connection with Revenue Sharing -CAG was entitled to seek the records in terms of r. 3 of 2002 Rules r/w cl. 22 of Licence Agreement - CAG, in that process, was not actually auditing the accounts of UAS Service providers as such, but examining all the receipts to ascertain whether Union was getting its due share by way of licence fee and spectrum charges, which it was legitimately entitled to, by way of Revenue Sharing - By adopting that process, CAG was not carrying out any statutory audit of accounts of the service providers, but for the limited purpose of ascertaining whether Union was getting its legitimate share by way of 'Revenue Sharing' - Service providers were, thus, bound to provide all the records and documents called for by CAG - CAG's function was separate and independent, which was not similar to the audit conducted by DoT u/cl. 22.5 or special audit u/cl. 22.6 of Agreement - CAG's function was only to ascertain whether the UOI was getting its due share, while parting with the right to deal with its exclusive privilege to Service Providers, who were dealing with a national wealth, to that extent, r. 5(1)(ii) of 2002 Rules had to be read down, but the service providers were bound to make available all the books of accounts and other documents maintained by them u/r. 3 of 2002 Rules, so as to ascertain whether UOI was getting its full share of revenue - Impugned communications indicate that they were sent for seeking cooperation for Audit of Telecom service providers by CAG, which was neither an audit by Dept. within meaning of cl. 22.5 of Agreement, nor a special audit u/cl. 22.6 of Agreement - Communications clearly indicate that CAG intended to conduct Audit, since there was 'revenue sharing' between UOI and UAS licence holders and revenue generated would have to be credited to CFI - An audit to be conducted by CAG would not depend upon 'formation of opinion' by DoT that the statements or accounts submitted to it were inaccurate or misleading, which, would deprive the statutory and Constitutional powers conferred on CAG to conduct the audit or enquiry or inspection - Impugned Tribunal's order was an encroachment upon Constitutional and statutory power conferred on CAG u/arts. 148, 149 of Constitution as well as s. 16 of 1971 Act r/w r. 5 of 2002 of Rules and the licensing provisions - Appeals dismissed.


Jayadarshini Housing Private Limited vs DCIT  [INCOME TAX APPELLATE TRIBUNAL, 16 Apr 2014]

(1) Sagi Kodanda Rama Raju; (2) G. Bhagyavathi; (3) Alluri Tirumala vs ACIT  [INCOME TAX APPELLATE TRIBUNAL, 16 Apr 2014]

B. Krishnaiah vs DCIT  [INCOME TAX APPELLATE TRIBUNAL, 16 Apr 2014]

DCIT vs Global Energy Consulting Engineers Private Limited  [INCOME TAX APPELLATE TRIBUNAL, 16 Apr 2014]

LE Passage To India Tours and Travels Private Limited vs Additional Commissioner of Income Tax  [DELHI HIGH COURT, 16 Apr 2014]

NTPC Limited vs Commissioner of Income Tax-V  [DELHI HIGH COURT, 16 Apr 2014]

Commissioner of Income Tax-II vs Ashok Wadia  [DELHI HIGH COURT, 16 Apr 2014]

Commissioner of Income Tax-IV vs Devasan Investment Private Limited  [DELHI HIGH COURT, 16 Apr 2014]

CIT vs Modi Entertainment Limited  [DELHI HIGH COURT, 15 Apr 2014]

Addlife Medical Institute Limited vs ACIT  [INCOME TAX APPELLATE TRIBUNAL, 11 Apr 2014]

Frigoglass India Private Limited vs DCIT  [INCOME TAX APPELLATE TRIBUNAL, 11 Apr 2014]

ACIT vs Rashmi Chaturvedi  [INCOME TAX APPELLATE TRIBUNAL, 11 Apr 2014]

Uranium Consultancy Services Private Limited vs ITO  [INCOME TAX APPELLATE TRIBUNAL, 11 Apr 2014]

Income Tax & Direct Taxes - Income Tax Act, 1961, ss. 132(2), 133(6) - Losses in returns - Additions - Sustainability - Assessee company was engaged in business of consultancy - Assessee declared loss of Rs.2,802/- in his returns - Said return was subjected to scrutiny under CASS and after issuance of notice u/s 143(2) of the Act - Income of assessee was assessed at Rs.1,66,02,198/- - Assessee filed appeal before CIT(A) who confirmed action of AO - Hence instant appeal - Whether the order recorded by CIT(A) was sustainable -

Held, at the manner in which relevant information qua assessee's attendance on specific date before AO was concerned how information had been initially blocked and thereafter made available only as result of appeal before CIC there should be no two opinions that justice had not been done - Actions of AO in misrecording suppressing and thereafter obstructing necessary flow of information namely receipt of reply received by director did not speak well of manner in which proceedings have been conducted - Carelessness in recording of names of person empowered to operate bank accounts and carelessness in not recording correct name of Director though accepted in remand proceedings left much to be desired and at least completely felt to inspire any confidence in proceedings - There was no reason to believe that reply had not been followed up with appropriate action however fact remained that in facts of instant case justice had not been done - Tax collecting authority was presumed to act fairly and transparently while exercising its quasi-judicial powers - Recording of facts correctly was least which was expected in this exercise - Though numerous arguments on facts have been raised by assessee in regard to statement of unconcerned persons relied upon in regard to functioning of assessee from specific place and ignoring statements of concerned persons furnished in response to information sough u/s. 133(6)of the Act or in regard to legal consequences qua genuineness of empowering specific person to operate bank accounts on behalf of Directors - Hence, impugned order of was appropriate to set aside and restore issue back to file of AO directing him to complete assessment de-novo - Appeal allowed.


Naran Lala Private Limited vs Assistant CIT  [INCOME TAX APPELLATE TRIBUNAL, 11 Apr 2014]

GSPC Gas Company Limited vs Jt. CIT/ Addl. CIT  [INCOME TAX APPELLATE TRIBUNAL, 11 Apr 2014]

(1) S. D. Enterprises; (2) ACIT vs (1) ACIT; (2) S. D. Enterprises  [INCOME TAX APPELLATE TRIBUNAL, 11 Apr 2014]

(1) Suresh Nanda; (2) ACIT vs (1) ACIT; (2) Suresh Nanda  [INCOME TAX APPELLATE TRIBUNAL, 11 Apr 2014]

Lincoln Pharmaceuticals Limited vs ACIT  [INCOME TAX APPELLATE TRIBUNAL, 11 Apr 2014]

Saheli Synthetics Private Limited vs Income Tax Officer  [INCOME TAX APPELLATE TRIBUNAL, 11 Apr 2014]

ITO vs Trupti Gems  [INCOME TAX APPELLATE TRIBUNAL, 11 Apr 2014]

Dr. Mohan Gupta vs Asst Commissioner of Income-tax  [INCOME TAX APPELLATE TRIBUNAL, 11 Apr 2014]

Hyper Quality India Private Limited vs ACIT  [INCOME TAX APPELLATE TRIBUNAL, 11 Apr 2014]



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