IT: Payment of excess self-assessment tax can't be regarded as payme
IT: Payment of excess self-assessment tax can't be regarded as payment of tax before processing of return under section 143(1). Thus, refund of excess self-assessment tax will not carry any interest from the date of payment but it will carry interest from the date of processing of return under section 143(1) till the date of granting of refund. Excess self-assessment tax, being not chargeable under Section 4(1), it cannot be regarded as payment of tax merely for the reason that the assessee has chosen to pay it. The same simply represents the deposit, made on an ad hoc basis, without any basis in fact or in law
[2015] 61 taxmann.com 120 (Mumbai - Trib.)
IN THE ITAT MUMBAI BENCH 'D'
Raymond Ltd.
v.
Deputy Commissioner of Income-tax, Mumbai
[2015] 61 taxmann.com 120 (Mumbai - Trib.)
IN THE ITAT MUMBAI BENCH 'D'
Raymond Ltd.
v.
Deputy Commissioner of Income-tax, Mumbai
Excise & Customs : Evasion penalty cannot be levied in case of technical or venial breach of law or breach arising out of a bona fide belief; hence, evasion penalty cannot be levied in matters of classification, if issue was subject to differing interpretations by Tribunal and matter was resolved by Larger Bench
[2015] 60 taxmann.com 452 (Madras)
HIGH COURT OF MADRAS
Novel Digital Electronics
v.
Commissioner of Customs(Imports)
[2015] 60 taxmann.com 452 (Madras)
HIGH COURT OF MADRAS
Novel Digital Electronics
v.
Commissioner of Customs(Imports)
IT : Since the object in the Memorandum permitted the appellant to carry on business in letting out properties and as 85% of the income of the appellant was by way of deriving rent and lease rentals, the income from rent constituted the business income of the appellant. Since compensation paid by the appellant, the landlord of the premises, to obtain possession from the lessee/tenant so as to earn a higher rental income, it had arisen out of business necessity and commercial expediency. Thus, such compensation was allowable as business expenditure
The issue that was disputed in the instant case was:
Whether the rental income earned by the appellant is assessable under the head 'business&# 39; and the compensation paid by it for obtaining possession from lessee/tenant so as to earn a higher income is an admissible revenue deduction?
The High Court held as under:
(1) The object for which the company was established is vital in considering the impugned issue. This was also evident from the judgment in case of S.G. Mercantile Corporation (P.) Ltd. v. CIT [1972] 83 ITR 700 (SC) wherein the Supreme Court held income from letting out would fall under the head business income as taking property on lease and subletting portion thereof was part of the business and trading activity of assessee. (2) Since the object in the Memorandum permitted the appellant to carry on business in letting out properties and as 85% of the income of the appellant was by way of deriving rent and lease rentals, the income from rent constituted the business income of the appellant. Since compensation paid by the appellant, the landlord of the premises, to obtain possession from the lessee/tenant so as to earn a higher rental income, it had arisen out of business necessity and commercial expediency. (3) The finding by the Assessing Officer and Tribunal that declaring the rental income under the head"income from house property" precludes the appellant from calming deduction could not be accepted as Memorandum permitted it to carry on business of letting out properties and indisputably it was carrying on business in letting out properties and in carrying on such trading activity had paid compensation. (4) The observation of the Tribunal that the appellant had all along, including in this assessment year, had shown the income under "Income from house property" could not be a ground for denial of the deduction as in the earlier assessment years never an occasion arose for adjudication or decision on the said issue. (5) As the judgment in Chennai Properties and Investments Ltd. v. CIT [2015] 56 taxmann.com 456 (SC)had held "that the objects of the company must also be kept in view to interpret the activities, the Tribunal was not justified in disallowing the claim of appellant. (6) Hence, as the appellant, being the owner of the property, was carrying on business and had paid compensation for deriving higher rent which was in tune with the Memorandum - a fact which was not at all considered by the Assessing Officer and the Tribunal, assessee was eligible impugned deduction.
[2015] 61 taxmann.com 121 (Calcutta)
HIGH COURT OF CALCUTTA
Shyam Burlap Company Ltd.
v.
Commissioner of Income-tax, Central-I , Kolkata
SOUMITRA PAL AND MIR DARA SHEKO, JJ.
IT APPEAL NO. 163 OF 2005
SEPTEMBER 4, 2015
The issue that was disputed in the instant case was:
Whether the rental income earned by the appellant is assessable under the head 'business&# 39; and the compensation paid by it for obtaining possession from lessee/tenant so as to earn a higher income is an admissible revenue deduction?
The High Court held as under:
(1) The object for which the company was established is vital in considering the impugned issue. This was also evident from the judgment in case of S.G. Mercantile Corporation (P.) Ltd. v. CIT [1972] 83 ITR 700 (SC) wherein the Supreme Court held income from letting out would fall under the head business income as taking property on lease and subletting portion thereof was part of the business and trading activity of assessee. (2) Since the object in the Memorandum permitted the appellant to carry on business in letting out properties and as 85% of the income of the appellant was by way of deriving rent and lease rentals, the income from rent constituted the business income of the appellant. Since compensation paid by the appellant, the landlord of the premises, to obtain possession from the lessee/tenant so as to earn a higher rental income, it had arisen out of business necessity and commercial expediency. (3) The finding by the Assessing Officer and Tribunal that declaring the rental income under the head"income from house property" precludes the appellant from calming deduction could not be accepted as Memorandum permitted it to carry on business of letting out properties and indisputably it was carrying on business in letting out properties and in carrying on such trading activity had paid compensation. (4) The observation of the Tribunal that the appellant had all along, including in this assessment year, had shown the income under "Income from house property" could not be a ground for denial of the deduction as in the earlier assessment years never an occasion arose for adjudication or decision on the said issue. (5) As the judgment in Chennai Properties and Investments Ltd. v. CIT [2015] 56 taxmann.com 456 (SC)had held "that the objects of the company must also be kept in view to interpret the activities, the Tribunal was not justified in disallowing the claim of appellant. (6) Hence, as the appellant, being the owner of the property, was carrying on business and had paid compensation for deriving higher rent which was in tune with the Memorandum - a fact which was not at all considered by the Assessing Officer and the Tribunal, assessee was eligible impugned deduction.
[2015] 61 taxmann.com 121 (Calcutta)
HIGH COURT OF CALCUTTA
Shyam Burlap Company Ltd.
v.
Commissioner of Income-tax, Central-I , Kolkata
SOUMITRA PAL AND MIR DARA SHEKO, JJ.
IT APPEAL NO. 163 OF 2005
SEPTEMBER 4, 2015
CA Avinash Gupta and Tax Research Foundation, Delhi has filed a Writ petition in Delhi High Court on 10.09.2015, seeking Extension of due date of Tax Audit Report required to be filed Under Section 44AB of the Income Tax Act,1961 for Assessment Year 2015-16.
Writ details are as follows :- Avinash Gupta and Ors V/s Union of India and Ors (Delhi High Court) , WP(C.) of 8771 of 2015.
Writ is likely to be listed in Court Room No. 09 on coming Monday i.e. on 14th day of September, 2015.
It is to be noted that last year too many Chartered Accountants & Tax Association has filed writ petition in various High Courts across India and got the due date extended.
This Year CBDT has already rejected any possibility of Due date extension vide its Press Release dated 09th September 2015 which has drawn several criticism from those Associated with Tax Audit Related work.
In the coming Various Tax association from Other parts of Countries and Chartered accountants are also likely to move to other High Courts to get the Tax Audit and Return Filing date extended.
We are attaching herewith Draft of Writ Filed in Delhi High Court and also reproducing below the Grounds on which the writ been filed for the benefit of our readers –
GROUNDS OF APPEAL
A. Because the decision of the Respondent No.1 and 2 vide its Press Release Dated 09.09.2015 by virtue of which, the Respondents has denied to extend the date for filing of returns due by 30.09.2015 for Assessment Year 2015-2016 for certain categories of Assesses including Companies, and Firms and, Individuals Engaged in Proprietary Business/Profession etc., whose Accounts are required to be Audited in terms of section 44AB of the Income Tax Act 1961, is unreasonable, unjust, arbitrary, illegal and unconstitutional and that the same is inter-alia, in violation and contravention to Article 14, and Article 19 (1) (g) of the Constitution of India, as the same is infringing the fundamental rights of equality, trade and profession which is guaranteed under the Constitution of India.
B. Because the Respondent No.1 and 2 ought to have extended the date of filing of Returns due by 30th September for Assessment Year 2015-2016 for Categories of Assesses Including Companies, and Firms and, Individuals Engaged in Proprietary Business /Profession etc., whose Accounts are required to be Audited u/s 44AB of The Income Tax Act, 1961 from 30.09.2015 to 31.12.2015, on the account of belated notification of the Income Tax Form with the exorbitant delay.
C. Because the decision of the Respondent No.1 and 2 as mentioned in the said Press Release is inter-alia unreasonable, arbitrary, unjustified and unconstitutional, as the same is causing grave prejudice and harassment, not only to the concerned Tax Payers but also for the Chartered Accountants community at large, who are responsible for conducting the tax audit and further to file the same alongwith the Income Tax Return in accordance with Law, in as much as in the given facts and circumstances the time left to make compliance of Section 44 AB of Income Tax Act has been reduced, as the Respondents much after 01.04.2015, has belatedly notified the Income Tax Forms for respective categories of Tax Payers.
D. Because the Tax Payer as well as the Respondents expect from the Chartered Accountant a 100% compliance with zero tolerance while make compliances under the Income Tax Act, however it is not possible to justify the role to the full extent in just 23 days, as the Income Tax Return for the Assesses/Tax Payers not liable for Audit, were being filed till 07.09.2015, in terms of the period of filing ITR being extended by the Respondents on account of delay in notification of ITR Forms.
E. Because the most affected category of Tax Payers has been the Assesses including Companies, and Firms and, Individuals Engaged in Proprietary Business/Profession etc., whose Accounts are required to be Audited in terms of the Income Tax Act 1961 and who suffered a delay in notification of forms and consequent reduction of time wherein the delay in notifying the forms by the Respondents has reduced the time of filing Income Tax Return by 122 to 128 days respectively.
F. Because the Respondent No.1 and 2 has acted against the constitutional Right of Equality under Article 14 of the Constitution inter-alia in as much as the Respondents suo-motu has though given a benefit of extension of time to the Assesses/Tax Payers not liable for Audit till 07.09.2015 (though as per law the last date is 31.07.2015). However, similar such benefit has not been given to Assesses/Tax Payers liable for Audit u/s 44AB.
G. Because inter-alia due to the unjust prejudice and harassment being caused on account of the aforesaid reduction in time, various representations were filed before the Respondents inter-alia by Institute of Chartered Accountants of India. However, the Respondents without any application of mind and in highly unjust, arbitrary and unconstitutional manner did not consider the said representations and denied to extend the time for filing the date of Income Tax Return from 30.09.2015 to any further date vide its said Press Release Dated 09.09.2015.
H. Because as per Section 139 (1) of the Income Tax Act,1961, the Income Tax Return of every financial year ending on 31st March, should be filed in the assessment year by following dates of different categories of Tax Payers:
Sr. No. Category of Assesse Date of filing ITR Time available for filing ITR 1. Assesses not liable for Audit under Income Tax Act or any other Act. 31st July 122 days 2. Assesses liable for Audit under Income Tax Act or any other Act (except mentioned in Serial No.3) 30th September 183 days 3. Assesses covered under transfer pricing regulations 30th November 244 days That accordingly, as per law, the respective Forms under which the respective categories of Tax Payers are required to file their respective Income Tax Return, has to be duly made available to respective categories of Tax Payers on the very first day of the assessment year, so that every tax payer, duly know the manner/prescribed format in which the Income Tax Return is required to be filed and accordingly have sufficient time to further file the Income Tax Return in the prescribed format.
I. Because the Respondent No.1 and 2 despite knowing well the essence of time in filing Income Tax Returns, under the garb of alleged reforms and ease of doing business has deliberately failed to notify the prescribed income tax return forms for respective categories of Tax Payers.
J. Because the Respondent No.1 and 2 notified the Income Tax Return Forms for all types of Assesses (auditable and non-auditable) at a belated stage, on different dates being as under:
Sr. No. Forms for the Category of Assesse Date of Notification of Forms Date of enabling E-Filing Reduction in Time (Days) 1. ITR 1 & 4S 23.06.2015 23.06.2015 83 2. ITR 2 & 2A 23.06.2015 29.06.2015 89 3. ITR 3,4 & 7 29.07.2015 01.08.2015 122 4. ITR 5 29.07.2015 02.08.2015 123 5. ITR 6 29.07.2015 07.08.2015 128 It is submitted that on account of the said delay on the part of Respondents in notifying the said Forms, the Tax Payers of the respective categories has suffered a grave prejudice, as due to the same, the respective Forms were not available to the respective categories of Tax Payers, as on 01.04.2015. It is submitted that on 01.04.2015, the right of every tax payer, duly accrues to know the manner/prescribed format in which the Income Tax Return is required to be filed and the right to further file the Income Tax Return in the prescribed format, which ought to have been made available on 01.04.2015. That as is apparent from the aforesaid chart, due to the said belated notification of forms, the different categories of tax payers have suffered and prejudiced on account of reduction in time in preparing and filing the Income Tax Return.
K. Because while notifying the Income Tax Forms for Assesses not liable for Audit under Income Tax Act, the Respondents acknowledging the fact of reduction in time for filing ITR for 81 days, suo-motu extended the date of filing ITR for the said category initially by 31 days i.e 31.08.2015 and further extended the said date by another 7 days i.e 07.09.2015.
L. Because the Ministry of Corporate Affairs came out with various notifications/ clarifications in the new Companies Act, 2013, which has direct implications on the filing of Income Tax Return and the Audit of the Companies under Income Tax Act, 1961. It is also pertinent to mention that the provisions of the said enactment are being made applicable for the first time, while preparing the Annual Accounts of the Corporate Entities.
Writ details are as follows :- Avinash Gupta and Ors V/s Union of India and Ors (Delhi High Court) , WP(C.) of 8771 of 2015.
Writ is likely to be listed in Court Room No. 09 on coming Monday i.e. on 14th day of September, 2015.
It is to be noted that last year too many Chartered Accountants & Tax Association has filed writ petition in various High Courts across India and got the due date extended.
This Year CBDT has already rejected any possibility of Due date extension vide its Press Release dated 09th September 2015 which has drawn several criticism from those Associated with Tax Audit Related work.
In the coming Various Tax association from Other parts of Countries and Chartered accountants are also likely to move to other High Courts to get the Tax Audit and Return Filing date extended.
We are attaching herewith Draft of Writ Filed in Delhi High Court and also reproducing below the Grounds on which the writ been filed for the benefit of our readers –
GROUNDS OF APPEAL
A. Because the decision of the Respondent No.1 and 2 vide its Press Release Dated 09.09.2015 by virtue of which, the Respondents has denied to extend the date for filing of returns due by 30.09.2015 for Assessment Year 2015-2016 for certain categories of Assesses including Companies, and Firms and, Individuals Engaged in Proprietary Business/Profession etc., whose Accounts are required to be Audited in terms of section 44AB of the Income Tax Act 1961, is unreasonable, unjust, arbitrary, illegal and unconstitutional and that the same is inter-alia, in violation and contravention to Article 14, and Article 19 (1) (g) of the Constitution of India, as the same is infringing the fundamental rights of equality, trade and profession which is guaranteed under the Constitution of India.
B. Because the Respondent No.1 and 2 ought to have extended the date of filing of Returns due by 30th September for Assessment Year 2015-2016 for Categories of Assesses Including Companies, and Firms and, Individuals Engaged in Proprietary Business /Profession etc., whose Accounts are required to be Audited u/s 44AB of The Income Tax Act, 1961 from 30.09.2015 to 31.12.2015, on the account of belated notification of the Income Tax Form with the exorbitant delay.
C. Because the decision of the Respondent No.1 and 2 as mentioned in the said Press Release is inter-alia unreasonable, arbitrary, unjustified and unconstitutional, as the same is causing grave prejudice and harassment, not only to the concerned Tax Payers but also for the Chartered Accountants community at large, who are responsible for conducting the tax audit and further to file the same alongwith the Income Tax Return in accordance with Law, in as much as in the given facts and circumstances the time left to make compliance of Section 44 AB of Income Tax Act has been reduced, as the Respondents much after 01.04.2015, has belatedly notified the Income Tax Forms for respective categories of Tax Payers.
D. Because the Tax Payer as well as the Respondents expect from the Chartered Accountant a 100% compliance with zero tolerance while make compliances under the Income Tax Act, however it is not possible to justify the role to the full extent in just 23 days, as the Income Tax Return for the Assesses/Tax Payers not liable for Audit, were being filed till 07.09.2015, in terms of the period of filing ITR being extended by the Respondents on account of delay in notification of ITR Forms.
E. Because the most affected category of Tax Payers has been the Assesses including Companies, and Firms and, Individuals Engaged in Proprietary Business/Profession etc., whose Accounts are required to be Audited in terms of the Income Tax Act 1961 and who suffered a delay in notification of forms and consequent reduction of time wherein the delay in notifying the forms by the Respondents has reduced the time of filing Income Tax Return by 122 to 128 days respectively.
F. Because the Respondent No.1 and 2 has acted against the constitutional Right of Equality under Article 14 of the Constitution inter-alia in as much as the Respondents suo-motu has though given a benefit of extension of time to the Assesses/Tax Payers not liable for Audit till 07.09.2015 (though as per law the last date is 31.07.2015). However, similar such benefit has not been given to Assesses/Tax Payers liable for Audit u/s 44AB.
G. Because inter-alia due to the unjust prejudice and harassment being caused on account of the aforesaid reduction in time, various representations were filed before the Respondents inter-alia by Institute of Chartered Accountants of India. However, the Respondents without any application of mind and in highly unjust, arbitrary and unconstitutional manner did not consider the said representations and denied to extend the time for filing the date of Income Tax Return from 30.09.2015 to any further date vide its said Press Release Dated 09.09.2015.
H. Because as per Section 139 (1) of the Income Tax Act,1961, the Income Tax Return of every financial year ending on 31st March, should be filed in the assessment year by following dates of different categories of Tax Payers:
Sr. No. Category of Assesse Date of filing ITR Time available for filing ITR 1. Assesses not liable for Audit under Income Tax Act or any other Act. 31st July 122 days 2. Assesses liable for Audit under Income Tax Act or any other Act (except mentioned in Serial No.3) 30th September 183 days 3. Assesses covered under transfer pricing regulations 30th November 244 days That accordingly, as per law, the respective Forms under which the respective categories of Tax Payers are required to file their respective Income Tax Return, has to be duly made available to respective categories of Tax Payers on the very first day of the assessment year, so that every tax payer, duly know the manner/prescribed format in which the Income Tax Return is required to be filed and accordingly have sufficient time to further file the Income Tax Return in the prescribed format.
I. Because the Respondent No.1 and 2 despite knowing well the essence of time in filing Income Tax Returns, under the garb of alleged reforms and ease of doing business has deliberately failed to notify the prescribed income tax return forms for respective categories of Tax Payers.
J. Because the Respondent No.1 and 2 notified the Income Tax Return Forms for all types of Assesses (auditable and non-auditable) at a belated stage, on different dates being as under:
Sr. No. Forms for the Category of Assesse Date of Notification of Forms Date of enabling E-Filing Reduction in Time (Days) 1. ITR 1 & 4S 23.06.2015 23.06.2015 83 2. ITR 2 & 2A 23.06.2015 29.06.2015 89 3. ITR 3,4 & 7 29.07.2015 01.08.2015 122 4. ITR 5 29.07.2015 02.08.2015 123 5. ITR 6 29.07.2015 07.08.2015 128 It is submitted that on account of the said delay on the part of Respondents in notifying the said Forms, the Tax Payers of the respective categories has suffered a grave prejudice, as due to the same, the respective Forms were not available to the respective categories of Tax Payers, as on 01.04.2015. It is submitted that on 01.04.2015, the right of every tax payer, duly accrues to know the manner/prescribed format in which the Income Tax Return is required to be filed and the right to further file the Income Tax Return in the prescribed format, which ought to have been made available on 01.04.2015. That as is apparent from the aforesaid chart, due to the said belated notification of forms, the different categories of tax payers have suffered and prejudiced on account of reduction in time in preparing and filing the Income Tax Return.
K. Because while notifying the Income Tax Forms for Assesses not liable for Audit under Income Tax Act, the Respondents acknowledging the fact of reduction in time for filing ITR for 81 days, suo-motu extended the date of filing ITR for the said category initially by 31 days i.e 31.08.2015 and further extended the said date by another 7 days i.e 07.09.2015.
L. Because the Ministry of Corporate Affairs came out with various notifications/ clarifications in the new Companies Act, 2013, which has direct implications on the filing of Income Tax Return and the Audit of the Companies under Income Tax Act, 1961. It is also pertinent to mention that the provisions of the said enactment are being made applicable for the first time, while preparing the Annual Accounts of the Corporate Entities.
Further, in this vague situation and circumstances, the most affected category of Tax Payers has been the Assesses including Companies, and Firms and, Individuals Engaged in Proprietary Business/Profession etc., whose Accounts are required to be Audited in terms of the Income Tax Act 1961 and who suffered a delay in notification of forms and consequent reduction of time wherein the delay in notifying the forms by the Respondents has reduced the time of filing Income Tax Return by 122 to 128 days respectively.
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Case law citation: ITO Vs. Facor Power Ltd. (ITAT DELHI), ITA No. 4300/DEL/2012, Date of Decision: 10.06.2015
Brief of the case:
AO made addition on account of interest earned on FDRs put in bank for procurement of capital asset by holding that no such capital assets is acquired by assessee during the year under consideration. CIT (A) granted relief to the assessee. On further appeal to ITAT by revenue appeal was dismissed and it was held that amount was invested by joint venture partner by raising share capital and funds were directly linked with setting up of project.
Facts of the case:
- The assessee company was incorporated on 24.08.2005 to carry on in India or elsewhere the business to generate, receive, produce, improve, buy, sell, etc. in electric power by establishing thermal power plant, active power plants etc.
- During the year under consideration, no business activities were carried out by the assessee as the project was under implementation. The case of the assessee was selected for scrutiny.
- During assessment proceedings, the AO observed that assessee had received an amount of Rs.70,75,843/- from State Bank of Mysore as interest on fixed deposits but the same was not declared in the return of income as income from other sources.
- On further perusal of details, the AO observed that the assessee had reduced such interest from capital w.i.p. (capital work in progress), therefore, the assessee was asked to provide an explanation as to why interest income of Rs.70,75,813/- be not treated as income from other sources.
- The AO after relying upon the case law of Tuticorin Alkali Chemicals and Fertilizers Ltd. Vs CIT 227 ITR 172, made the addition of R.70,75,843/- as income from other sources.
Contention of the revenue:
- The company had earned interest income on completion of project on time.
- The case law of Tuticorin (supra) as relied upon by AO was applicable to the facts of the case of the assessee.
- The assessee had no compulsion for making fixed deposits with the bank as these were not made as margin money or against letter of credit.
- There was no compulsion to the assessee to place funds in the form of bank deposits.
Contention of the assessee:
- Assessee had earned interest income from FDRs which were placed with bank as margin money for procurement of various capital goods required for setting up of the project.
- The expenditure including capital advances were used from share application money which were temporarily put in Fixed Deposits awaiting for the payments to be made for awarding newcontracts and for further payments of existing contract.
- Funds placed in FD were inextricably linked with the project and in this respect, case law decided by Hon'ble Delhi High Court in the case of Indian Oil Panipat Power Consortium Ltd. Vs ITO 315 ITR 255 was also relied upon.
Held by CIT (A):
- CIT(A) after going through the copy of contract filed by assessee awarded during July 2008 to June 2009 observed that funds which were kept temporarily in the form of fixed deposits were linked with the setting up of project and cannot be categorized as surplus funds.
Held by ITAT:
- In the case of Tuticorin Alkali Chemicals (supra) the funds which were placed in the form of FD were raised by way of loan whereas in the present case, the assessee had raised funds through share capital.
- In the present case, the funds placed in bank deposits were not raised by borrowing funds and rather they were raised through share capital as noted by CIT(A) at page 8 of his order.
- In the case of M/s. Indian Oil Panipat Power Consortium Ltd., Hon'ble Delhi High Court after considering Hon'ble Supreme Court decision in the case of Tuticorin has held as under:
"In our opinion, the Tribunal misdirected itself in applying the decision of the Supreme Court in Tuticorin Alkali Chemicals (supra) in the facts of the present case. In our opinion on account of the finding of fact returned by the CIT(A) that the funds infused in the assessee by the joint venture partner were inextricably linked with the setting up of the plant, the interest earned by the assessee could not be treated as income from other sources."
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