Thursday, August 13, 2015

[aaykarbhavan] Judgements and Infomration [3 Attachments]




DCIT vs. Cybertech Systems & Software P. Ltd (ITAT Mumbai)

COURT:
CORAM: ,
SECTION(S): ,
GENRE:
CATCH WORDS: , ,
COUNSEL:
DATE: August 7, 2015 (Date of pronouncement)
DATE: August 13, 2015 (Date of publication)
AY: 1997-98, 1998-99, 1999-00
FILE: Click here to download the file in pdf format
CITATION:
S. 271(1)(c): Claim that interest income is eligible for s. 10B exemption, though upheld by the ITAT for an earlier year, is so implausible that it attracts penalty for concealment/ furnishing inaccurate particulars of income
The assessee claimed benefit u/s.10B on the interest income following the decisions in the case of CIT vs. Paramount Premises (P.) Ltd. [1991] 190 ITR 259 (Bom) and CIT vs. Nagpur Engineering Co. Ltd. [2000] 245 ITR 806 (Bom). The claim was rejected by following the subsequent judgement of the apex court in Liberty India. The AO levied penalty u/s 271(1)(c). This was deleted by the CIT(A). On appeal by the department HELD allowing the appeal:
(i) As regards the decisions by the Hon'ble jurisdictional High Court relied upon, in our clear view, the same would be of no assistance to the assessee. As unequivocally clarified in Paramount Premises (P.) Ltd. (supra), the decision upholding the assessment of interest as business income is based squarely on the factual finding by the tribunal to the effect that the interest income sprang from the business activity of the assessee-respondent, and did not arise out of the any independent activity. There is clearly little scope for the application of the said decision in the facts of the present case, given the clear finding of no connection between the assessee's business activity and the deposits yielding interest income. In fact, even assessment as business income, as observed during hearing, would not by itself suffice in-as-much as it would require a further satisfaction of the condition of section 10B, i.e., of it being derived from such business, toward which we find no contention, much less basis, being, as apparent, with the deposits per se. The decision in the case of Nagpur Engineering Co. Ltd. (supra) is only by following the decision in Paramount Premises (P.) Ltd. (supra). It is well settled that what is binding and has precedent value, is the ratio decendi of a decision. The said decision, rendered following the decision in Paramount Premises (P.) Ltd. (supra), thus, cannot be said to lay down any proposition independent and apart from that stated in Paramount Premises (P.) Ltd. (supra), and which we find as no different from that stated by the Hon'ble Apex Court in Govinda Choudhary and Sons (supra). That is, that it all depends on the facts of the case. The Hon'ble High Court, therefore, presumably and inferably, in the latter decision, i.e., Nagpur Engineering Co. Ltd. (supra), again found a direct nexus between the assessee's business and the interest income, leading it to being assessed as business income and, further, of the said nexus as being of first degree, as explained as far back as in Raja Bahadur Kamakhya Narayan Singh (supra), so that 8 ITA Nos. 3655 to 3657/M/06 & 2358 to 2360/ M/06 (A.Y s.1997-98, 1998-99 & 1999-2000 ) Cybertech Systems & Software P. Ltd. the primary condition of 'derived from', as against incidental or attributable to, as is again well settled, stands satisfied in the facts and circumstances of the case, as found by the tribunal. That is, its decision again rests on the edifice of the factual findings by the tribunal, the final fact finding authority. The said decisions, thus, on the contrary, support the Revenues' case. The finding by the tribunal in the instant case, as apparent, is of it being a fit case for the impugned claim being disallowed in view of the decision in Liberty India (supra), so that there was no relation of first degree between the assessee's business, which it found as qualifying for deduction u/s.10B, and the interest bearing deposit/s. The decision in the case of Liberty India (supra), it needs to be appreciated, is only in line and tandem with the earlier decisions, cited supra, by the hon'ble apex court, which listing is again not exhaustive, so that the apex court does not thereby lay down any new law. Rather, the decisions by the hon'ble jurisdictional high court relied upon by the assessee are not inconsistent with the decision in Liberty India (supra) and, in fact, in consonance with the decision by the Hon'ble Apex Court in Govinda Choudhary and Sons (supra). Further, the assessee also has nowhere contested any of the several decisions relied upon by the Revenue, including by the hon'ble apex court and the jurisdictional high court cited supra, many of which are prior to the dates of the filing of the returns in the instant case, so that they represented the wellsettled/ established law of the land; there being in fact a complete unanimity between the different high courts on the subject, i.e., both with the regard to the nature of the receipt by way of interest, as explained in Govinda Choudhary and Sons (supra), as well as qua the scope of the words 'derived from'.
(ii) We, in view of the foregoing, find no merit in the assessee's case. It, to our mind, has not adduced any explanation, much less substantiated it, except for a bald assertion (i.e., of the said interest income as being a part of the assessee's business income). The reliance on the decisions by the hon'ble jurisdictional high court, which we have found to be in fact supportive of the Revenue's case, with the law in the matter being, in fact, well settled, is only a false plea or a ruse. Reliance on the decision by the tribunal for a subsequent year (AY 2000-01) is, under the circumstances, again, completely misplaced. A plausible explanation towards its' claim/s saves penalty u/s. 271(1)(c), in view of, again, the settled law in the matter which though is completely missing in the present case.

Related Judgements

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  2. Adobe Systems Software Ireland Ltd vs. ADIT (Delhi High Court) 
    Assessee is bound to furnish a return in response to a s. 148 notice. The reasons for reopening can be given only thereafter. A writ involving disputed factual issues cannot be entertained
    (i) The petitioner did not file any returns of income in response to the notices issued u/s…
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  5. ACIT vs. Oil and Natural Gas Corporation Ltd (ITAT Mumbai) 
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ACIT vs. R.P.G.Credit & Capital Ltd (ITAT Delhi)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: August 7, 2015 (Date of pronouncement)
DATE: August 13, 2015 (Date of publication)
AY: 2004-05, 2006-07, 2009-10
FILE: Click here to download the file in pdf format
CITATION:
Strictures passed against the Dept for 'mischievous adamancy to attempt to mislead the Tribunal', 'obduracy and adamancy in filing meritless appeal', 'travesty of justice', 'Mocking at the system by filing the appeals', 'grave assault on the trust and reputation of fair play enjoyed by the tax administration' etc
(i) We are pained to address the serious damage done by this deliberate, mischievous and selective reference to facts by such responsible persons which grievously damages the public faith and belief in the honest fair play of the tax administration. The conscious and selective reference to facts demonstrates that at the very stage of filing of the appeal its fate and conclusion was known for which specific purpose the facts were attempted to be obfuscated. The filing of present appeal with complete knowledge of its fate by the Revenue only reflects the mischievous adamancy to attempt to mislead the Tribunal and waste the time of the Court and the officers concerned. The present appeal as a part of a search cannot be a case of non-application of mind where the grounds presumably proposed by the AO have been approved carelessly. To our minds the present appeal is a prime example of meritless litigation for reasons best known to the few departmental officers having powers of directing authorization for filing appeals. This over confidence of the concerned Departmental officers in filing an appeal completely devoid of merit prima facie shows that these officers endowed with the onerous task of handling Department's actions in litigation matters have willfully and deliberately failed to exercise their powers mindfully as required of them as per law and thereby abused government machinery to initiate a litigation which entails financial costs and tarnishes the image of the Department and also strains the government resources.
(ii) This obduracy and adamancy of the concerned officers in filing a meritless appeal only because officially they are entitled/empowered to do so, strikes a blow to the blind faith reposed in them by the tax administration in always acting fairly as evident from the orders passed in the Remand proceedings and the order of the CIT(A) in the present appeals. However only because of the conduct of few Departmental officers who appear to be unconcerned or rather mock the sincere efforts made by CBDT with impunity unmindful of the consequences to the system by their sense of entitlement the reputation of the tax administration suffers, this needs to be addressed at the earliest. The entitlement of always believed to be acting in good faith cannot be abused by irresponsibly setting in motion the entire justice delivery system where admittedly there was no grievance to the AO. The Assessing Officer including all the officers in the tax administration are functionaries of "the State" exist for "the State" and perform the functions of "the State". For this specific purpose they are entrusted with vast powers to discharge "the State functions". In the discharge of their onerous duties and responsibilities these officers are armed with wide and sweeping powers.
(iii) The officers who have authorized the filing of the appeals and have filed the appeals have made a travesty of justice. Mocking at the system by filing the appeals and highlighting the apathy of the Department by issuing specific instructions from time to time that necessary due diligence and caution is not being exercised while granting authorization for filing appeals and to pursue litigation only in deserving cases. Filing of an appeal by an Assessing Officer is a right which is vested by the statue in the "State" herein the tax department i.e. the Assessing Officer as and when he is aggrieved by the order of the First Appellate Authority can file an appeal before the ITAT. However, where as in the present case, admittedly the Assessing Officer, consciously and carefully after due and proper enquiry carried out by issuance of notices u/s 133(6) to the concerned persons/parties and considering the material comes to the conclusion that he is satisfied by the claim of the assessee on verification, then in such a situation the filing of the present appeals cannot be justified and can only be termed as a farce. We are aware that the tax administration has put in place robust checks and balances to ensure that the filing of appeals is not done carelessly and as per the procedures set in place the grounds to be raised by the Assessing Officer have to be duly approved by a Senior Commissioner of Income Tax. The evidence that the said exercise in the facts of the present case has been done is on record. The said exercise in the facts of the present appeals has been reduced to a mere ritual cannot be ignored. Thus in the face of the above precedent where costs of Rs.10,000/- have been awarded to the assessee by the Co-ordinate Bench having giving our serious consideration to the same in the facts of the present case where the Revenue has indulged in frivolous meritless litigation, we desist from awarding costs considering the statement of the Ld. CIT DR that due care shall be taken in future. It is our earnest hope and endeavour that having invited the attention of the Chairman, CBDT to this grave assault on the trust and reputation of fair play enjoyed by the tax administration the malaise is immediately addressed. We have taken cognizance of the fact that the present cases are group of appeals in a search case, however where the issue is given up by the AO in the remand proceedings in such an eventuality the mischievous manner of filing the appeals needs careful attention as the Revenue in the appeals before the ITAT cannot be allowed to waste the time of all concerned where the issue for all intents and purposes has been given up by him.

Related Judgements

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Bombay Bar Association vs. UOI (Supreme Court)

COURT:
CORAM: , ,
SECTION(S):
GENRE:
CATCH WORDS: ,
COUNSEL:
DATE: August 10, 2015 (Date of pronouncement)
DATE: August 13, 2015 (Date of publication)
AY: -
FILE: Click here to download the file in pdf format
CITATION:
Interim stay of the operation and implementation of the judgement of the Bombay High Court upholding the constitutional validity of service-tax on lawyers granted
In P. C. Joshi vs. UOI, a Writ Petition was filed in the Bombay High Court to challenge the levy of service-tax on advocates. It was claimed that an advocate renders services which cannot be said to be commercial or business like. They cannot be equated with the service providers mentioned in the Finance Act 1994. It was also contended that advocacy is not a business but a profession and a noble one. An advocate is a part and parcel of the administration of justice and which is a sovereign or regal function and hence providing for a Service Tax on advocates would mean that their services will no longer be available or accessible to those seeking justice from a Court of law. That would defeat the constitutional guarantee of free, fair and impartial justice. The High Court dismissed the Petition and held that levy of service-tax on lawyers is valid. On appeal to the Supreme Court HELD by an interim order:
Until further orders, there shall be interim stay of the operation and implementation of the impugned final order and judgment passed by the High Court of Judicature at Bombay in W.P.(L) No.1764 of 2011, dated 15.12.2014

Related Judgements

  1. P. C. Joshi vs. UOI (Bombay High Court) 
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    S. 234E of the Income-tax Act, 1961 inserted by the Finance Act, 2012 provides for levy of a fee of Rs. 200/- for each day's delay in filing the statement…



SAT: Upholds penalty for share-purchase non-disclosure to stock exchange violating Insider Trading Regulations

SAT dismisses appeal, upholds SEBI Adjudicating Officer's ('AO') order imposing penalty of Rs. 5 lac on appellant, (Promoter of Brijlaxmi Leasing and Finance Company Ltd.) for failing to make disclosures to stock exchange of shares purchased within time stipulated, thereby violating Insider Trading, Regulations; Observes that where disclosures under Insider Trading Regulations are not made, penalty ought to have been Rs.1 crore, however notes all mitigating factors taken into consideration by SEBI AO for imposing penalty of Rs.5 lac, observes that such penalty is not excessively harsh / unreasonable; Dismisses appellant's contention that company has been incurring losses, holds that penalty for violating Insider Trading Regulations is imposable irrespective of whether co. /promoter-director have been incurring losses or not and irrespective of whether investor has suffered loss or not; Upholds SEBI AO's observation that "the entire securities market stands on disclosure based regime and accurate and timely disclosures are fundamental in maintaining the integrity of the securities market"; Rejects appellant's reliance on SAT ruling in case of National Securities Depositories Ltd. vs. SEBI and DSE Financial Services Ltd. vs. SEBI, as ​distinguishable​ on fact:SAT

SAT: Upholds SEBI order imposing penalty for not obtaining SCORES authentication

SAT dismisses appeal, upholds SEBI Adjudicating Officer's ('AO') order imposing penalty of Rs. 1,20,000/- on appellant company for not obtaining SEBI Complaints Redress System ('SCORES') authentication and not redressing investors' complaints; Observes that such non-compliance violates SEBI Circular on SCORES issued in 2011 and 2012; Notes that appellant company has not refuted any allegation but has challenged the imposition of penalty on the ground of proportionality; SAT observes that "it is one of the important duties cast upon SEBI to see that there is speedy redressal of grievances of investors and appellant has admittedly failed to upload and do the needful as regards the redressal of complaints of various investors in time":SAT

SEBI sets aside SCORES adjudication proceedings based on High Court winding-up order

SEBI sets aside adjudication proceedings initiated against Sanghi Polyesters Ltd. ('Noticee'), for failing to file Action Taken Reports pursuant to SEBI Complaint Redressal System ('SCORES') within time stipulated, notes that the extant proceedings are covered u/s 446 of Cos. Act, 1956 (relating to "suits stayed on winding up order"); Observes that there is no material available on record to suggest that leave has been taken while​ commencing adjudication proceedings after date of winding-up order, states that once HC has passed an order for winding up, it is not right to continue proceeding; For understanding the object of winding-up, SEBI refers to ​'Guide to the Companies Act' by A Ramaiya for (16th Edition Reprint 2006), notes the object is to facilitate protection and realization of its assets for ensuring an equitable distribution thereof among those entitled and to prevent administration from being embarrassed by a general scramble among creditors and others; Observes that once Court has taken company assets under its control or has passed winding-up order, it will not be proper to allow proceedings to be started or continued against the company and embarrass the administration of its affairs; Relies on Bombay HC ruling in Deutsche Bank V.SP. Kala and holds that "once a winding-up order is made or the official liquidator is appointed as provisional liquidator, no proceedings can continue or be instituted against the company without the permission of the court":SEBI



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Posted by: Dipak Shah <djshah1944@yahoo.com>


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