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Judgments

Dy. Commissioner of Income Tax vs Fidelio India Private Limited  [INCOME TAX APPELLATE TRIBUNAL, 14 Aug 2014]

Narain Dass Taneja vs Income Tax Officer  [INCOME TAX APPELLATE TRIBUNAL, 14 Aug 2014]

Rhone-Poulenc (India) Limited vs Commissioner of Income Tax  [BOMBAY HIGH COURT, 13 Aug 2014]
Income Tax & Direct Taxes - Income Tax Rules, 1962, r.10 - Income Tax Act, 1961, s.43(6) - Tax computation - Liability - Whether, on the facts and in the circumstances of the case, the Tribunal was justified in approving the depreciation granted on Rs.93,14,942/- when the profits of the Indian undertaking of non- resident parent company were computed in accordance with the provisions of r.10 of Rules -

Held, HC found that the ratio laid down in the judgement of SC would clearly apply to the facts of the instant case and the Tribunal was in grave error in ignoring the said judgement even though the same finds reference in its order dt. 8-11-1993 - In view of the clear statement of the law laid down by SC in the judgment as well as the analysis of Act, HC had no hesitation in holding that in the facts of the instant case, the written down value of fixed assets of the U.K. Company had to be calculated on the basis of the actual cost less the depreciation 'actually allowed' to the U.K. Company - The written down value could not have been arrived at on the basis that depreciation had been granted on a notional basis, or implicitly as held by Tribunal, more so, when nothing contrary to the decision of SC, or in law was brought to HC's notice - Having held so, HC should decide what would be the written down value of the fixed assets taken over by the Assessee Company, and on which depreciation ought to be granted - On a perusal of Schedule 'A' to the Scheme of Amalagamation it was clear that the fixed assets of the U.K. Company were taken over by the Assessee Company at cost less depreciation - In the Scheme of Amalgamation the fixed assets (less depreciation) were valued at Rs.1,72,78,297 - Therefore, the written down value of the fixed assets transferred to the Assessee Company pursuant to the Scheme of Amalagamation would have to be Rs.1,72,78,297 - HC was unable to agree with the submission of that for the purpose of calculating the written down value, the figure of Rs.2,54,67,325/- had to be taken into account - The Scheme of Amalgamation approved by the Assessee Company itself, had valued the fixed assets at Rs.1,72,78,297/-, which valuation was arrived at after taking into account depreciation - That being the case, and the Assessee having accepted the written down value of the fixed assets at Rs.1,72,78,297/-, it could not be heard to say that the written down value had to be calculated by taking into account the figure of Rs.2,54,67,325/- being the original cost of the fixed assets to the U.K. Company - In any event, that argument ran contrary to Explanation 2A to s. 43(6) of Act - In the Scheme of Amalgamation, with effect from 1-1-1975 (the Appointed Date under the scheme) the U.K. Company and the Assessee Company had valued the fixed assets at Rs.1,72,78,297/- being the cost less depreciation. In the assessment years in question, hypothetically, if the U.K. Company claimed depreciation on these fixed assets as if the amalgamation had not taken place, then depreciation would have been allowed to it on Rs.1,72,78,297/- being the value of the fixed assets at cost less depreciation, and not on Rs.2,54,67,325/- being the original cost of the fixed assets - That being the case, in view of Explanation 2A to s. 43(6) of Act the Assessee Company also could not claim depreciation by valuing the fixed assets at Rs.2,54,67,325 - That argument also ran contrary to the principle that the 'written down value' method sought to ensure that the aggregate of the depreciation allowances granted, year to year, did not exceed hundred per cent of the original cost of the asset - In instant case, the original cost of the fixed assets to the Assessee Company was Rs.1,72,78,297 - Argument in that regard was therefore rejected - To be fair HC should state that HC did not deal with the other judgements cited by him, as they basically laid down the same principle as in the judgement of SC - Mahadeva Upendra Sinai Etc. Etc. v Union Of India & Ors. 1974 Indlaw SC 113, relied on - In view of what HC had held in the judgement, HC answered the question raised in the reference in the negative i.e. in favour of the Assessee and against the Revenue, by holding that depreciation on the fixed assets taken over by the Assessee Company under the Scheme of Amalgamation, ought to be granted by taking the written down value of the fixed assets at Rs.1,72,78,297/- and not Rs.93,14,942/- as held by the authorities - Reference disposed of.


(1) N. Gopalaswami and others; (2) Manohar Lal Sharma vs (1) Union of India and another; (2) Principal Secretary, Prime Minister Office and others  [DELHI HIGH COURT, 13 Aug 2014]
Accounts & Audits - Constitution - Constitution of India, 1950 - Comptroller and Auditor-General's (Duties, Powers and Conditions of Service) Act, 1971 -

Appointment - CAG - Challenged - Petitions were filed challenging the appointment of respondent No. 2 as the Comptroller and Auditor-General (CAG) - Petitioners also sought a writ, direction or order commanding the Union of India to frame a transparent selection procedure based on definite criteria and to constitute a broad based non-partisan selection committee, which, after calling for applications and nominations, would recommend to the President of India, the most suitable person for appointment as the CAG - Hence instant petitions - Whether respondent No. 2 suitable for the post of CAG -

Held, HC could not sit in judgment over the suitability of the respondent No. 2 to be appointed as the CAG - Judicial review should be limited to considering as to whether respondent No. 2 was eligible to be appointed as the CAG - Of course, as the high constitutional post of a CAG was an integrity institution, an incumbent should have the qualities of competence and integrity - There was no prescribed criteria as to what qualifications a person should possess before he was considered for the post of the CAG - In fact, there could be none as amply demonstrated by the Constitutional debates referred to by us earlier in instant judgment - Of course, the person being considered for the position of the CAG should have a comprehensive knowledge of the entire administration - There was nothing on record to suggest that respondent No. 2 did not have a comprehensive knowledge of the entire administration - As pointed out by respondents, respondent No. 2 has had about four decades of administrative experience in different departments of the Govt. - Respondent No. 2 has had an unblemished record and, therefore, the integrity aspect could not also be doubted - Only reference in the CAG report with regard to the purchase of helicopters for VVIPs was to be found in two places, none of them, in HC's view, could be regarded as an indictment or implying ineligibility of respondent No. 2 - Thus, neither on integrity nor on competence, was there any material to substantiate the plea of petitioners that respondent No. 2 was not eligible for appointment as the CAG - Manner in which president functions in appointing the CAG was also clear-cut inasmuch as he acts on the aid and advice of the Council of Ministers - Practice adopted for the appointment of the CAG was that a shortlist emanated from the Cabinet Secretary - It was approved by the Finance Minister and placed before the Prime Minister who, then, recommends one name from that list to the President - If the President approve the same, the appointment of the CAG was made by warrant under the hand and seal of the President - There was no disciplinary proceeding pending against him - There was no criminal case pending against him - There was only a supposition on the part of the petitioners that as he had dealt with defence procurements in his various capacities in the past, there might be a conflict of interest when he prepares audit reports in respect of the defence procurements - That was merely a surmise, conjecture and presumption on the part of the petitioners insofar as the audit report in respect of purchase of helicopters was concerned - That, as HC pointed out, already been tabled in Parliament - With regard to conflict of interest, it might be pertinent to note that any civil servant would have served in various departments and Ministries of the Govt. and any of those Ministries could be the subject matter of an audit report of the CAG - Merely because a person served in those departments would not constitute a ground for raising the plea of conflict of interest - HC was of the view that a writ of quo warranto did not lie for quashing the appointment of respondent No. 2 to the post of CAG - Appointment did not, in HC's view, violated the principles of institutional integrity nor was the appointment arbitrary - Petitions dismissed.


Commissioner of Income Tax Central-III, Mumbai vs Valiant Glass Works Private Limited, Mumbai  [BOMBAY HIGH COURT, 13 Aug 2014]
Income Tax & Direct Taxes - Income Tax Act 1961, ss.260A and 80HHC - Tax computation - Liability - Appeal u/s.260A of the Act was filed by the Commissioner of Income Tax challenging the order passed Tribunal dt. 29-7-2011 - A/Y in question was 2003-04 - Tribunal, by the impugned order inter alia held that the amount of deemed credit of Rs.89,34,887/- under the CENVAT incentive scheme was part of the business profits of the assessee, eligible for deduction u/s.80HHC of the Act - Tribunal therefore allowed the appeal filed by the assessee and reversed the order of the CIT (Appeals) on that issue - Appellant contended that the Tribunal had gravely misdirected itself in construing the provisions of section 80HHC of the Act and correspondingly allowing the deemed credit of Rs.89,34,887/- under the CENVAT Incentive Scheme as part of business profits of the assessee eligible for a deduction under the said section - In a nutshell appellant contended that when an assessee, being an Indian company or a person (other than a company) resident in India, was engaged in the business of export out of India of any goods or merchandise to which s. 80 HHC of Act applied, then subject to the other provisions of the said section, the assessee whilst computing it's total income, was allowed a deduction to the extent of profits, referred to in s.80(1-B) of Act thereof derived by the assessee from the export of such goods or merchandise - Appellant submitted that CENVAT Credit was not one of the items included u/s. 80 HHC(3) of Act -

Held, in the instant case, it could hardly be argued that the deemed credit under the CENVAT Incentive Scheme would not reduce the material / manufacturing cost of the goods exported by the assessee - That was not the case of the Revenue also - That being the case, under the provisions of s.80HHC of Act, the assessee would be entitled to a deduction to the extent of the profits referred to in s.80HHC(1-B) of Act thereof derived by the assessee from the export of such goods or merchandise - No other provision was brought to our notice that would justify the disallowance of CENVAT incentive whilst computing the admissible deduction u/s 80HHC of the Act - Thus, HC did not find that in the peculiar facts and circumstances of the instant case, Tribunal misdirected itself in coming to the conclusion that the amount of deemed credit under the CENVAT Incentive Scheme was a part of the business profits of the assessee eligible for a deduction u/s.80HHC of Act despite the fact that it did not specifically find place in s.80HHC(3) of Act - Appeal dismissed.


(1) Dy. Commissioner of Income Tax; (2) Hindon Forge Private Limited vs (1) Hindon Forge Private Limited; (2) Dy. Commissioner of Income Tax  [INCOME TAX APPELLATE TRIBUNAL, 12 Aug 2014]

I.T.O vs Nabikchuddin Sk  [INCOME TAX APPELLATE TRIBUNAL, 12 Aug 2014]

(1) BRNR Holding Private Limited; (2) Samarat Marine Products Private Limited; (3) Ganga Greenfields Private Limited; (4) Malayagiri Greenlands Private Limited vs (1) ACIT; (2) ITO  [INCOME TAX APPELLATE TRIBUNAL, 11 Aug 2014]
Income Tax & Direct Taxes - Re-opening of assessments - Legality - Notices were issued for assessment year under consideration beyond period of 4 years from specified period relevant to A/y 2002-03 - AO was requested to furnish reasons - Books of accounts were fudged for past several years and revenues and profits were manipulated by falsification of accounts for last several years - AO sought to re-open assessment in the case of other companies, which were of appellants - Copy of order passed by Tribunal 'A' in the case of certain group of companies to highlight that when notice was issued beyond period of 4 years, it was duty on part of AO to record proper reasons in those cases - AO could not highlight failure on part of assessees to disclose fully and truly all materials and facts necessary for assessment in which event merely based on statement concerning different assessees, it should not form basis for reopening assessment - Hence instant appeal - Appellant contended that no further investigation was made by AO before issuance of notice u/s 148 of the Act and thus re-opening of assessments was bad in law -

Held, appeals filed were identical to facts and circumstances of cases which were disposed of by ITAT 'A' Bench, wherein Tribunal had already taken view and held that reopening of assessments were bad in law - Consistent with view taken, reopening of assessments was bad in law and therefore assessments and orders passed by CIT(A)was set aside - Appeals allowed.


Commissioner of Income Tax, Chennai vs Madrasa E-Bakhiyath-Us-Salihath Arabic College, Vellore  [MADRAS HIGH COURT, 11 Aug 2014]

Commissioner of Income Tax, Bombay vs Montedison of Italy, Bombay  [BOMBAY HIGH COURT, 08 Aug 2014]
Income Tax & Direct Taxes - Income-tax Act, 1961, s. 9(1)(vii) - Tax computation - Liability - Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the payments received by the assessee - company from Fertilizer Corporation of India, Indian Petro Chemicals Corporation and J.K. Synthetics Ltd. under the various contracts were in the nature of technical service fees covered by the proviso to s. 9(1)(vii) of Act and were, therefore, exempt from tax -

Held, in the instant case, the CIT (Appeals) as well as the Tribunal had analysed and interpreted the various agreements entered into between the Assessee Company and FCI, IPCC and J.K. Synthetics Ltd in great detail and thereafter came to the conclusion that the payments made thereunder in the financial year in question were by way of fees for technical services - HC, with the assistance of both sides, had gone through the various clauses in the agreements - On going through the same, HC did not find that the conclusions reached by the CIT (Appeals) or the Tribunal could be said to be perverse or vitiated by any error of law apparent on the face of the record - Conclusions reached by the said Authorities were, on a fair reading of the said agreements, certainly a possible one - HC therefore was in full agreement with the findings of the CIT (Appeals) as well as the Tribunal that the monies received in the financial year in question by the Assessee Company from FCI, IPCC and J.K. Synthetics Ltd. were by way of fees for technical services - Then, HC turned its attention to the fact whether these payments by way of fees for technical services were exempt from tax - It was an undisputed position that all the agreements between the Assessee Company and FCI, IPCC and J.K. Synthetics Ltd. were entered into prior to 1-4-1976 - That being the factual position, clearly the proviso to s. 9(1)(vii) of the Act was attracted - CIT (Appeals) as well as the Tribunal, after holding that that the payments received by the Assessee Company from FCI, IPCC and J.K. Synthetics Ltd. under the various agreements were in the nature of technical service fees, were therefore fully justified in holding that the said payments were exempt from tax by virtue of the proviso to s. 9(1)(vii) of the Act - Thus, HC answered the question raised in the reference in the affirmative, i.e. in favour of the Assessee Company and against the Revenue - Order accordingly.


State of Chhattisgarh and another vs VM Extrusions Private Limited and another  [CHHATTISGARH HIGH COURT, 08 Aug 2014]
Income Tax & Direct Taxes - Entry tax - Validity - Whether or not respondent was entitled to exemption of entry tax on the principle of promissory estoppel -

Held, only objection for not giving the benefit to the respondent was that it did not start commercial production after 01st November, 2004 as envisaged in the Notification - Respondent had set up its own industrial unit in pursuance of the promise given by the State Govt. under the 2001-06 Policy - It had already got exemption from payment of electricity duty as envisaged under the 2001-06 Policy - Govt. had come out with the Notification granting exemption in entry tax but not within the time stipulated under the 2001-06 Policy - Govt. was negligent and there was slackness on its part - Once the govt. had given a promise to give exemption of the entry tax in order to give thrust to industrial growth and in fact such benefit from exemption of entry tax for seven years was being given to all similarly situate industries, then there was no justification to limit it only for industrial unit starting production after 1-11-2004 especially when such notification ought to have been issued within 60 days of issuance of the 2001-06 Policy namely in 2002 itself - Respondent was entitled to exemption from payment of entry tax for seven years from the date of starting its commercial production namely from 16-6-2004 - There was no justification to interfere with the order passed by the Single Judge - Appeal dismissed.


Lila Dhar Pandey vs Asstt. Commissioner of Income Tax  [INCOME TAX APPELLATE TRIBUNAL, 07 Aug 2014]

Assistant CIT and another vs Paras Dyes & Chemicals and another  [INCOME TAX APPELLATE TRIBUNAL, 07 Aug 2014]

ACIT vs Lakshmikumaran & Sridharan  [INCOME TAX APPELLATE TRIBUNAL, 07 Aug 2014]

Sharda Exports vs DCIT  [INCOME TAX APPELLATE TRIBUNAL, 07 Aug 2014]

HCL Corporation Limited vs ACIT  [INCOME TAX APPELLATE TRIBUNAL, 07 Aug 2014]

(1) ACIT; (2) Jubilant Foodworks Limited vs (1) Jubilant Foodworks Limited; (2) ACIT  [INCOME TAX APPELLATE TRIBUNAL, 07 Aug 2014]

B. Bhaskar Rao vs Dy. Commissioner of Income-tax  [INCOME TAX APPELLATE TRIBUNAL, 01 Aug 2014]

Hooghly Mills Projects Limited vs Deputy Commissioner of Income-tax  [INCOME TAX APPELLATE TRIBUNAL, 01 Aug 2014]
Income Tax & Direct Taxes - Income-tax Act, 1961, s. 2(22)(e) - Deemed dividend - Appellant assessee filed instant appeal against order of CIT(A) confirming action of AO in treating loan accepted by assessee from a company as deemed dividend u/s. 2(22)(e) of the Act - Whether the order recorded by CIT(A) was just and proper -

Held, issue was very clear that assessee was holding registered shares to tune of 10,99,300 in the company and not 13,99,100 as alleged by revenue - No doubt total shareholding of assessee in company was to tune of 13,99,100 but registered shareholders were to the extent of 10,99,300, Court seen that only registered shareholding and not beneficial shareholder - For this, assessee filed evidence before lower authorities and even before Court now - Assistant Commissioner of Income Tax v Bhaumik Colour Private Limited 2008 Indlaw ITAT 134, followed on - Accordingly, additions were deleted and orders of lower authorities were reversed - Appeal allowed.


Income-tax Officer vs Bihani Commercial  [INCOME TAX APPELLATE TRIBUNAL, 01 Aug 2014]
Income Tax & Direct Tax - Income Tax-Act, 1961, ss. 194C, 40(a)(ia) - Disallowance - Challenged - Appellant Revenue filed instant appeal against order of CIT(A) deleting disallowance made by AO for reason that assessee failed to deduct TDS from transport payments to tune of Rs.3,34,8,822/- u/s. 194C of the Act by invoking provisions of s. 40(a)(ia) of the Act - Whether the order recorded by CIT(A) was just and proper -

Held, instant case was squarely covered against assessee and in favour of revenue by following the case Smt. J. Rama vs. CIT (2010) 236 CTR (Kar.) 105 2010 Indlaw KAR 342 - Appeal allowed.


Assistant Commissioner of Income-tax vs Ashok Kumar Agarwal  [INCOME TAX APPELLATE TRIBUNAL, 01 Aug 2014]
Income Tax & Direct Taxes - Income tax-Act, 1961, s. 69C - Additions - Deletion of additions - Challenged - Appellant Revenue filed instant appeal against the order passed by CIT(A) who deleted addition of Rs.29,55,000/- - CIT(A) restricted addition at Rs.36.50 lacs as against addition made by AO at Rs.66,05,000/- u/s. 69C of the Act in respect to undisclosed cash payments - Whether the order recorded by CIT(A) was just and proper -

Held, amounts on any given day as unaccounted purchases, which did not exceed Rs.18.50 lacs - Assessee already surrendered sum of Rs.30 lacs - If peak amount was taken, addition would be only at Rs.18.50 lacs but as assessee had already declared sum of Rs.30 lacs in return of income, Court felt that CIT(A) had rightly restricted addition at Rs.36,50,000/- being declared amount of Rs.30 lacs plus profit at 5% - Thus, there was no infirmity in order of CIT(A) and confirm the same - Appeal dismissed.


B. Seenaiah vs Dy. Commissioner of Income tax  [INCOME TAX APPELLATE TRIBUNAL, 01 Aug 2014]

Handum Industries Limited vs Asst. Commiss ioner of Income tax  [INCOME TAX APPELLATE TRIBUNAL, 01 Aug 2014]
Income Tax & Direct Taxes - Income Tax-Act, 1961, s. 153C - Deferred revenue expenditure - Additions - Challenged - Assessee company on search and seizure operation notice u/s 153C of the Act - was issued to the assessee calling for returns of income - During assessment proceeding also, though the AO called for various information and details neither assessee appeared nor filed any return of income - Later, assessee filed its return of income and declared 'NIL' income - AO disallowed deferred revenue expenditure and written off profit of Rs. 28,34,000/- and made some more additions income was finally determined at Rs. 32,72,641/- - Assessee filed appeal before CIT(A) - CIT(A) allowed amount of Rs. 17,95,390/- out of total deferred revenue expenditure of Rs. 49,79,098/- claimed by the assessee - Aggrieved appeal before Tribunal was filed by assessee - Appeal was disposed of by Tribunal and remitted matter back to AO - AO made some additions - Appeal before CIT(A) decided appeal ex-parte by dismissing it and sustaining the addition made by the AO - Hence instant appeals - Whether the order recorded by CIT(A) was just and proper -

Held, limited grievance of assessee was that appeal of assessee had been decided exparte, assessee was not able to substantiate its claim of expenditure disallowed by AO - Assessee, therefore, seeks one more opportunity to represent his case before CIT(A) - Though, it was fact on record that CIT(A) granted several opportunities to assessee to represent his case, which assessee had not availed, however, considering nature of dispute and in interest of justice, Court was inclined to grant one more opportunity to assessee to represent his case before the CIT(A) - It was admitted fact that assessee filed appeal before CIT(A) with delay of 12 days - However, in affidavit assessee explained cause of delay and requested for condoning the delay - Thus, order of CIT(A) was set aside and matter was remitted back to his file for considering afresh after affording reasonable opportunity of being heard to assessee - If assessee failed to comply to any notice and did not appear before CIT(A) to represent his case and substantiate claim made with proper documentary evidence, then, CIT(A) would be at liberty to decide issue as per his own wisdom and on basis of material available on record - Appeals allowed.


Rachamalla Omprakash vs Income-tax Officer  [INCOME TAX APPELLATE TRIBUNAL, 01 Aug 2014]
Income Tax & Direct Taxes - Income tax-Act, 1961, s. 148 - Total income - Assessee HUF did not file return of income for AY 2007-08 - AO reopened assessment by issuing notice u/s 148 of the Act - AO completed the assessment and on basis of material available on record determining total income at Rs. 1,82,27,407/- - Aggrieved of assessment order, assessee filed appeal before CIT(A) - CIT(A) dismissed appeal - Hence instant appeals - Whether the order of CIT(A) was sustainable -

Held, sole grievance of assessee was that CIT(A) should have decided appeal on merit instead of dismissing it without condoning delay - At outset, it needed to be clarified that assessment order was served on assessee on 19-12-2011, hence, there was delay of only 9 days and not 17 days as presumed by CIT(A) - Further, on perusing delay condonation petition filed before CIT(A), copy of which was placed in paper book, Court viewed that there was sufficient cause for not filing appeal within prescribed time - Law was fairly well settled that effort should always be made for hearing issues on merits instead of dismissing appeals in-limine on technical grounds - Rule of natural justice also demanded that aggrieved party should be given fair chance to establish his case - In view of aforesaid, Court held that this was fit case where delay should had been condoned and appeal should have been heard on merits - Accordingly, impugned order of CIT(A) was set aside and matter was restored back to his file for deciding on merits after affording reasonable opportunity of being heard to assessee - Appeals allowed.


Commissioner of Income-Tax, Bombay vs Mafatlal Dyes and Chemicals Limited, Bombay  [BOMBAY HIGH COURT, 01 Aug 2014]



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