Kerala Athirapally Falls FYI. Not of any professional interest Link below.
Make Your Budgeting Easy With a Credit Card
When the salary arrives, it's time to budget. Yet, Sachin's salary does not seem to include all the things that were required based on his lifestyle. Rather than looking at a bleak outlook at the end of the month, he ensured he had a credit card to facilitate his monthly needs. After successfully receiving his credit card, his monthly budget looks better with the convenience of a credit card at hand.
With mounting bills at the end of the month, Sachin's credit card bailed him out of a lot of critical payments. The traditional notion of impending debt arising from a credit card is slowly changing. The credit card has moved beyond being the bearer of impending debt but it is slowly transforming into a debt-releaser.
Yes, it's true; a credit card can open a lot of doors. The common belief that a credit card displaces our monthly budget considerably is slowly being dispelled. With a credit card in hand, your monthly budget can take a breather and perhaps open-up financial avenues for you. Whether you are single or in a family with dependents, the convenience of having a credit card in your wallet impacts all.
Future events in Present 'Play'
It's obvious that while budgeting, purchases are postponed for the future as we cannot accommodate them in the present. A credit card does more than enhance possibilities of per-planning such purchases to the present, it ensures that one can live life the way one is expected to.
Freedom to live beyond budgets – With a Credit Card in hand
Banks and financial institutions offer credit cards to access a variety of credit facilities. With a credit card in-hand, one can access a variety of credit facilities suited to their lifestyle. When it comes to credit card facilities, the world of altering one's lifestyle based on the budgeted amount has stopped. Extending the possibility of credit facilities for every kind of purchase, the credit card is slowly becoming dearer to the common man due to the following reasons:
- Unlocking freedom: Credit cards are accepted by practically every retail outlet selling everything from medical supplies to retail clothing or any other type of purchase. This facility of credit offered by the use of a credit card gives a considerable leverage while budgeting. Considering some purchases that are extraneous to the budget with the help of the credit card is the amount of freedom that one can access.
- An asset during emergencies: No matter how much we plan, there are certain aspects of our budget that cannot include emergencies. It is at these times that the credit card comes handy. Imagine having an emergency when the funds run out at the end of the month. It's too late to go knocking on people's doors for loans and advances; yet one ready reckoner is the credit card within your wallet.
- Controlling your budget and lifestyle: If you thought that the credit card has a tendency to spiral your purchases to another dimension, then don't fester over it, as it's possible to control. No matter how convenient deferred payments are with a credit card, it's always good to remind one of the impending interest rates and penalties involved. Being ignorant of these facts can put a deeper hole in your budget in future. Although, the convenience of the credit card is to defer the payments, but one has to ultimately pay it in full or in installments.
Opting for a credit card at the opportune time before you begin budgeting for the month, quarter or the year always makes sense. Take a look at the most attractive offers for credit cards that allow you to link payments, offer flexible re-payments options and does not impose unreasonable penalties on you. Finally, with credit card in hand, you can easily access the best of your lifestyle without worrying much about overstepping your budget and compromising on your lifestyle.
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(Anupama Sughosh is widely followed for her personal finance and banking blogs pertaining to the Indian financial sector. With a prior experience in the banking sector, she has used her experience of six years with top Indian and international banks such as HSBC & ICICI Bank to advice consumers on personal finance. She is widely followed in some of the top financial magazines with citations in online financial websites.)
Companies may accept deposits without deposit insurance contract till 31.03.2015
In view of the suggestions received from the stakeholders to give transitional period for complying with the deposit insurance requirements, the amendment in the relevant rule has been made allowing companies to accept deposits without deposit insurance for one year i.e. till 31.03.2015.
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 6th June, 2014
G.S.R. 386(E).— In exercise of the powers conferred by Sections 73 and 76 read with sub-section (1) of Section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules to amend the Companies (Acceptance of Deposits) Rules, 2014, namely:-
1. (1) These rules may be called the Companies (Acceptance of Deposits) Amendment Rules, 2014.
(2) They shall come into force from the date of their publication in the Official Gazette.
2. In the Companies (Acceptance of Deposits) Rules, 2014, in rule 5, in sub-rule (1), the following proviso shall be inserted, namely:-
"Provided that the companies may accept the deposits without deposit insurance contract till the 31st March, 2015."
[F. No 1/8/2013-CL-V]
AMARDEEP SINGH BHATIA, Jt. Secy.
CLB can allow further time to companies for repayment of deposits/interest in certain cases
MINISTRY OF CORPORATE AFFAIRS
ORDER
New Delhi, the 6th June, 2014
S.O. 1460(E).— In exercise of the powers conferred by sub-section (1) of Section 470 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following Order, namely:—
1. (1) This Order may be called the Companies (Removal of Difficulties) Fourth Order, 2014.
(2) It shall come into force from the date of notification in the Official Gazztte.
2. Jurisdiction, powers, authority and functions of Company Law Board.- Until a date is notified by the Central Government under sub-section (1) of Section 434 of the Companies Act, 2013 (18 of 2013), the Company Law Board constituted in pursuance of sub-section (1) of Section 10E of the Companies Act, 1956 (1 of 1956) shall exercise the jurisdiction, powers, authority and functions of the Tribunal under sub-section (2) of Section 74 of the said Act.
[F. No. 1/8/2013-CL-V ]
AMARDEEP SINGH BHATIA, Jt.Secy.
Provisions of Sec 74(2) & 74(3) of Companies Act 2013 to come into force from 06.06.2014
With a view to allow relief to companies facing difficulties in repayment of deposits, provisions of section 74(2) & (3) of the Act have been brought into force with effect from 6th June, 2014 and the Company Law Board (CLB) has been allowed to exercise the powers to allow further time to companies for repayment of deposits/interest in certain cases.
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MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 6th June, 2014
S.O. 1459(E).— In exercise of the powers conferred by sub-section (3) of Section 1 of the Companies Act, 2013 (18 of 2013), the Central Government hereby appoints the 6th day of June, 2014 as the date on which the provisions of sub-sections (2) and (3) of Section 74 of the said Act shall come into force.
[F. No. 1/8/2013-CL-V ]
AMARDEEP SINGH BHATIA, Jt.Secy.
Business receipts of a trust above prescribed limit would deny it sec. 11 relief; its registration would remain valid
IT: Where in case of assessee, a charitable trust, gross receipts having exceeded stipulated monetary limit provided in second proviso to section 2(15), assessee was not entitled to claim exemption of income in relevant year but said fact alone could not make trust non-genuine for purpose of invoking section 12AA(3)
IT: Where in case of assessee, a charitable trust, gross receipts having exceeded stipulated monetary limit provided in second proviso to section 2(15), assessee was not entitled to claim exemption of income in relevant year but said fact alone could not make trust non-genuine for purpose of invoking section 12AA(3)
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[2014] 45 taxmann.com 303 (Mumbai - Trib.)
IN THE ITAT MUMBAI BENCH 'F'
Vanita Samaj
v.
Director of Income-tax (Exemption)*
D. MANMOHAN, VICE-PRESIDENT
AND N.K. BILLAIYA, ACCOUNTANT MEMBER
AND N.K. BILLAIYA, ACCOUNTANT MEMBER
IT APPEAL NO. 1034 (MUM.) OF 2012
[ASSESSMENT YEAR 2009-10]
[ASSESSMENT YEAR 2009-10]
FEBRUARY 26, 2014
Section 12AA, read with section 2(15), of the Income-tax Act, 1961 - Charitable or religious trust - Procedure for registration (Cancellation of registration) - Assessment year 2009-10 - In course of assessment, DIT (Exemption) found that assessee-trust carried on various business activities and its gross receipts exceeded Rs. 10 lakhs - He thus taking a view that by virtue of first and second proviso to section 2(15), assessee lost its charitable character, passed an order under section 12AA(3) and cancelled registration granted to assessee-trust - Whether gross receipts having exceeded stipulated monetary limit provided in second proviso to section 2(15), assessee was not entitled to claim exemption in relevant year but said fact alone could not make trust non-genuine for purpose of invoking section 12AA(3) - Held, yes - Whether, therefore, impugned order of DIT (Exemption) cancelling registration of assessee-trust was to be set aside - Held, yes [Para 8][In favour of assessee]
FACTS
| ■ | In the course of assessment, the DIT (Exemption) found that the assessee trust, having carried on the business of sports material, flour mill, miscellaneous edibles and giving hall on hire for marriage, etc. and its gross receipts having exceeded Rs. 10 lakhs by virtue of first and second proviso to section 2(15), lost its charitable character. | |
| ■ | The DIT (Exemption) thus invoked provisions of section 12AA(3) and cancelled the registration granted to assessee-trust. | |
| ■ | On appeal : |
HELD
| ■ | It is not disputed that the trust had come into existence in year 1953 and it was granted registration under section 12A and there is no change in the nature of activities of the trust since then. It is not the case of the DIT (Exemption) that the activities of the trust are not genuine; in fact the DIT (Exemption) assumed that by virtue of the first proviso to section 2(15) the activity of the trust should be treated as not genuine overlooking the fact that there is no change in the activity so as to invoke provisions of sub-section (3) of section 12AA. [Para 6] | |
| ■ | On a conjoint reading of the first proviso with second proviso to section 2(15), a trust can be denied exemption in the year where the gross receipts exceed the limit prescribed in the second proviso to section 2(15) and in all other years income from such activities should be considered for the benefits under section 2(15) if it is within the limit provided therein. If it was to be interpreted that once the income of the trust in one year crosses the limit provided in the second proviso, the registration originally granted has to be cancelled, it makes the second proviso redundant for the years where the receipts are less than the specified limit; this could not be the intention of the Legislature. In fact, the Act does not provide for claiming of exemption on year to year basis. [Para 7] | |
| ■ | On a conspectus of the matter, it is, therefore, held that denial/cancellation of registration in the instant case is not in accordance with law. To clarify further the gross receipts having exceeded the stipulated monetary limit provided in the second proviso to section 2(15), the assessee was not entitled to claim exemption in relevant year but that fact alone could not make the trust non-genuine for the purpose of invoking section 12AA(3). Therefore, the order passed by the DIT (Exemptions) is set aside and the appeal filed by the assessee is allowed. [Para 8] |
CASES REFERRED TO
Ghatkopar Jolly Gymkhana v. DIT(E) [2013] 40 taxmann.com 207 (Mum. - Trib.) (para 4), Jammu Development Authority v. CIT [2012] 52 SOT 153 (URO)/23 taxmann.com 343 (Asr.) (para 5) and CITv. Smt. Godavaridevi Saraf [1978] 113 ITR 589 (Bom.) (para 5).
Ashok J. Patil for the Appellant. Rajesh Ranjan Prasad for the Respondent.
ORDER
D. Manmohan, Vice-President - This appeal by the assessee Trust is directed against the order passed by the Director of Income Tax (Exemption) wherein the DIT (Exemption) observed that the assessee Trust/Institution, having carried on the business of sports material, flour mill, miscellaneous edibles and giving hall on hire for marriage, etc. and its gross receipts having exceeded Rs. 10,00,000/-, by virtue of first and second proviso to section 2(15) of the Act it looses its charitable character and by virtue of this change in the status it can no longer be considered as a Trust constituted for charitable purposes. The learned DIT (Exemption) further observed that consequently the Trust becomes non-genuine for the purpose section 11 of the I.T. Act and by invoking the provisions of section 12AA(3) of the Act he is entitled to cancel/withdraw the registration originally granted.
2. The case of the assessee, on the other hand, was that there is no change in the status of the Trust. As per the original constitution of the Trust the same activities were carried on from 1953 onwards and it continued to carry on the same activities even till date. It was also submitted that the objectives of the assessee Trust are to start Library and Newspaper readings for study, Lectures, organising competitions and similar other activities. To attain the objectives of the Trust it requires finances and the receipts from the activities carried on by the assessee are hardly sufficient to cover the expenditure towards medical relief, education, relief to poor, etc. which are of general public utility and the charges for various activities are nominal and hence it cannot be considered as non-charitable activity and, at any rate, it cannot be said that the Trust is non-genuine. It was also submitted that section 12AA(3) was wrongly invoked by the AO since proviso 1 and 2 to Section 2(15) have been incorporated in the Statue w.e.f. 01.04.2009 with the sole purpose that as and when the aggregate value of receipts exceed the stipulated limit prescribed in the second proviso the activities carried on by the assessee for earning income should be treated as falling out side section 2(15) irrespective of the nature of use or application, or retention, of the income from such activity which implies that though the Trust will not loose its character as charitable Trust but only in the years where the receipts exceed the stipulated limited it looses the benefit of exemption. The learned DIT was, however, of the opinion that by virtue of the new proviso introduced w.e.f. 01.04.2009 the activities of the Trust cannot be considered as charitable in nature and hence the Trust itself become non-genuine. Accordingly the registration allowed to it in earlier years under section 12AA was cancelled/withdrawn from 2009-10 and the assessee Trust was held to be non-charitable Trust/Institution.
3. Aggrieved, assessee contented before the Tribunal that the DIT (Exemption) should have fulfilled the requirements of section 12AA(3) before cancelling the registration granted to the appellant earlier under section 12A of the I.T. Act and he has not considered the provisions of section 11(1)(b) of the I.T. Act properly.
4. At the time of hearing the learned counsel for the assessee submitted that there is no change in the objects of the Trust or the activities of the Trust since inception and the Trust was already granted registration. By virtue of the first proviso introduced to section 2(15) of the Act w.e.f. 01.04.2009, carrying on any activity in the nature of trade, etc. was deemed to be not an activity for charitable purpose but upon introduction of the first proviso the Legislature, in its wisdom, noticed that it affects the genuineness of small Trusts who have to survive on such income so as to apply the receipts for its charitable activities and immediately thereafter, by Finance (No.2) Act with retrospective effect from 01.04.2009, introduced the second proviso whereby it was clarified that first proviso shall not be applied if the aggregate value of the receipts from the activities referred to therein is Rs. 10,00,000/- or less in the previous year and this monitory limit was increased in the subsequent years. Strong reliance was placed upon the decision of the ITAT "G" Bench, Mumbai in the case of Ghatkopar Jolly Gymkhana v. DIT(E)[2013] 40 taxmann.com 207 wherein the Bench, considering identical circumstances, observed that on a conjoint reading of first proviso as well as the second proviso to section 2(15) alongwith section 12AA(3) of the Act, the only conclusion that could be reached is that the assessee, whose gross receipts cross the stipulated limit, would be denied exemption in the year in which the gross receipts exceed the stipulated limit but the Trust as such cannot be considered as non-charitable/non-genuine in nature so as to cancel the registration under section 12AA(3) of the Act. In para 5.4 of the aforementioned order the Bench observed that registration under section 12A of the Act can be cancelled only upon finding that the activities of the Trust are non-genuine or the same were not carried out in accordance with the objects of the Trust. In other words, so long as the assessee Trust is carrying out its activities in accordance with its objects, Revenue cannot invoke provisions of section 12AA(3) of the Act which was introduced by Finance (No. 2) Act, 2009 with retrospective effect from 01.04.2009. As could be noticed from the above provisions, where a Trust or an Institution has been granted registration earlier, it is for the Commissioner to record satisfaction that the activities of such Trust or Institution are not genuine or are not being carried out in accordance with the objects of the Trust or Institution, as otherwise he is not empowered to invoke sub-section (3) of section 12AA of the Act. Having regard to the circumstances of the case the Bench observed that denial of exemption can be limited to the years where the gross receipts exceed the stipulated monitory limit but the registration as such cannot be cancelled unless the Trust is held to be non-genuine; it is for the Commissioner to show that there is change in the activities of the Trust. The learned counsel adverted our attention to the order passed by the DIT (Exemption) to highlight that there is no change in the activities of the Trust from its inception and it is only by virtue of application of first proviso, having regard to the fact that in this year the gross receipts exceeded the limit provided under the second proviso, the learned DIT (Exemption) proceeded to assume that the assessee Trust becomes non-genuine for the purpose of section 11 of the I.T. Act without giving any finding, whatsoever, that there is change in the objects of the Trust. He, therefore, strongly relied upon the order passed by the ITAT Mumbai Bench to contend that the general order passed by the DIT (Exemption) to cancel the Registration is not in accordance with law.
5. On the other hand, the learned D.R. relied upon the order passed by the ITAT, Amritsar Bench in the case of Jammu Development Authority v. CIT [2012] 52 SOT 153 (URO)/23 taxmann.com 343 which in turn was affirmed by the Hon'ble High Court of Jammu and Kashmir and submitted that subsequent to the introduction of first proviso to section 2(15) it looses its character as charitable activity if a Trust is engaged in earning income from trade or any similar activity. He also relied upon the decision of the Hon'ble Bombay High Court in the case of CIT v. Smt. Godavaridevi Saraf [1978] 113 ITR 589 to submit that when there is a lone High Court judgement on an issue all the Tribunals, anywhere in the country, have to respect the law laid down by the High Court, though of a different state, so long as there is no contrary decision of any other High Court on that point. He, thus, strongly supported the order passed by the DIT (Exemption).
6. In reply, the learned counsel for the assessee submitted that the facts in the case of Jammu Development Authority are distinguishable. The said authority was established to promote and secure the development of local area for which it was granted registration under section 12A vide its order dated 30.09.2009 which date falls after the introduction of first proviso as well as second proviso to section 2(15) of the Act. The law, as it exists as on that date, clearly specifies that any authority which is carrying on any activity in the nature of trade cannot be considered as engaged in a charitable activity. As soon as the Commissioner realised the mistake he invoked provisions of section 12AA(3) of the Act which, in the said circumstances, is not in accordance with law; whereas in the case of the assessee before us the registration originally granted was in accordance with law since the first proviso and second proviso to section 2(15) was not on Statute book at the point of time of granting registration and the powers of the Commissioner under section 12AA(3) can be invoked only when there is change in the objects of Trust whereas there is nothing on record to suggest that there is change in the objects of the Trust or the Trust has carried out any new activity. Apart from that, in the case of Jammu Development Authority (supra), it was originally considered as 'local authority' but by virtue of omission of section 10(20A) by Finance (No.2) Act, 2002 w.e.f. 01.04.2003 the assessee had to comply with provisions of section 2(15) and cannot claim exemption by treating itself as local authority. Under these circumstances the case law relied upon by the Revenue is distinguishable on facts. Neither the Amritsar Bench of ITAT nor the High Court of Jammu and Kashmir had taken into consideration the scope and ambit of section 12AA(3) in the peculiar circumstances of the case whereas this precise issue was considered by the Mumbai Bench of the ITAT and thus the decision of the ITAT. Mumbai Bench applies, on all fours, to the facts of this case.
7. We have carefully considered the rival submissions and perused the record. It is not in dispute that the Trust had come into existence in 1953 and it was granted registration under section 12A of the Act and there is no change in the nature of activities of the Trust since then. It is not the case of the DIT (Exemption) that the activities of the Trust are not genuine; in fact the DIT (Exemption) assumed that by virtue of the first proviso to section 2(15) of the act the activity of the Trust should be treated as not genuine overlooking the fact that there is no change in the activity so as to invoke provisions of sub-section (3) of section 12AA of the Act. In our considered opinion, on a conjoint reading of the first proviso with second proviso to section 2(15) of the Act, a Trust can be denied exemption in the year where the gross receipts exceed the limit prescribed in the second proviso to section 2(15) and in all other years income from such activities should be considered for the benefits under section 2(15) if it is within the limit provided therein. If it was to be interpreted that once the income of the trust in one year crosses the limit provided in the second proviso, the registration originally granted has to be cancelled, it makes the second proviso redundant for the years where the receipts are less than the specified limit; this could not be the intention of the Legislature. In fact, the Act does not provide for claiming of exemption on year to year basis.
8. On a conspectus of the matter we, therefore, hold that denial/ cancellation of registration in the instant case is not in accordance with law. To clarify further the gross receipts having exceeded the stipulated monitory limit provided in the second proviso to section 2(15) of the Act, the assessee is not entitled to claim exemption in this year but that fact alone cannot make the Trust non-genuine for the purpose of invoking section 12AA(3) of the Act. We, therefore, set aside the order passed by the DIT (Exemption) and allow the appeal filed by the assessee. Needless to observe that the AO is duty bound to independently verify as to whether the assessee fulfilled the other conditions such as application of income, etc. so as to claim exemption under section 12(15).
9. In the result, the appeal filed by the assessee is allowed.
SUNIL*In favour of assessee.
IT : Where during assessment proceedings, assessee on a specific query with respect to depreciation clearly mentioned that commercial vehicles purchased during year were given on lease, Assessing Officer was not justified to reopen assessment on ground that vehicles were not used for hiring and, thus, assessee was entitled for depreciation at normal rate of 20 per cent and not at higher rate of 40 per cent
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[2014] 45 taxmann.com 328 (Gujarat)
HIGH COURT OF GUJARAT
Garden Finance Ltd.
v.
Assistant Commissioner of Income-tax*
AKIL KURESHI AND MS. HARSHA DEVANI, JJ.
SPECIAL CIVIL APPLICATION NO. 12251 OF 2002 & 489 OF 2005
SEPTEMBER 3, 2012
Section 32, read with section 147, of the Income-tax Act, 1961 - Depreciation - Allowance/rate of (Motor Vehicles) - Assessment years 1996-97 and 1997-98 - Assessee-company/petitioner was engaged in business of financing, money lending and financing motor vehicles on lease - It lodged a claim of depreciation at rate of 40 per cent on written down value of commercial vehicles - In addition thereto, it also claimed depreciation at rate of 20 per cent on vehicles purchased in second half of year which were leased out to another company - In assessment, Assessing Officer called upon assessee to give details of vehicles on which depreciation at rate of 40 per cent was claimed - In reply, assessee specifically pointed out that purchased vehicles were given on lease and lessee had used them for business of running them on hire - Assessing Officer made no disallowance - Thereafter, assessment was reopened on ground that assessee had used motor vehicles for lease and not for hiring - Therefore, assessee was entitled for depreciation at normal rate of 20 per cent on commercial motor vehicles and not at higher rate of 40 per cent - Whether full facts were laid before Assessing Officer in context of assessee's claim for depreciation at higher rate on commercial use for running them on hire - Held, yes - Whether, therefore, it was not a case where income chargeable to tax could be stated to have escaped assessment for reason of assessee failing to disclose truly and fully all material facts to enable Assessing Officer to reopen assessment beyond period of four years - Held, yes [Para 9] [In favour of assessee]
FACTS
| ■ | The assessee company was a non-banking finance company engaged in the business of financing, money lending and financing of motor vehicles on lease. | |
| ■ | It filed its return of income claiming depreciation at the rate of 40 per cent on the commercial vehicles purchased by it from time to time. In the second half of the year, the assessee made fresh purchases of such commercial vehicles and supplied to a company on lease. On such purchases it claimed depreciation at the rate of 20 per cent being 50 per cent of available depreciation for full year. | |
| ■ | The Assessing Officer called upon the assessee for details of vehicles on which depreciation at the rate of 40 per cent was claimed. In the assessment, the Assessing Officer made no disallowance with respect to claim of depreciation. | |
| ■ | Thereafter, notice of reopening was issued beyond the period of four years from the end of the relevant assessment year on the ground that the assessee-company had used the motor vehicles for lease and not for hiring. It was, therefore, entitled for depreciation at the normal rate of 20 per cent on motor vehicles (commercial) and not at the higher rate of 40 per cent as claimed and allowed while finalizing the assessment. |
HELD
| ■ | Full facts were laid before the Assessing Officer in context of the assessee's claim for depreciation at the higher rate on commercial use for running on hire. | |
| ■ | The company had placed full facts before the Assessing Officer in the original assessment itself. In addition to filing the return, claiming depreciation at the rate the company thought was applicable, during the course of scrutiny assessment, the company made detailed submissions why despite commercial vehicles have been leased out, higher rate of depreciation was justified. | |
| ■ | This is therefore, not a case where income chargeable to tax can be stated to have escaped assessment for the reason of assessee failing to disclose truly and fully all material facts. | |
| ■ | In that view of the matter, the mandatory condition to enable the Assessing Officer to reopen the assessment beyond the period of four years not having been satisfied, impugned notice must be quashed. [Para 9] |
CASES REFERRED TO
Garden Finance Ltd. v. Asstt. CIT [2004] 268 ITR 48/137 Taxman 49 (Guj.) (para 3), GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19/[2002] 125 Taxman 963 (SC) (para 3), Bhagwati Appliance v. ITO [2011] 337 ITR 286/199 Taxman 131/10 taxmann.com 329 (Guj.) (para 6), Dy. CIT v.Pradip N. Desai (HUF) [2012] 341 ITR 277/21 taxmann.com 151 (Guj.) (para 6) and CIT v. Aravali Finlease Ltd. [2012] 341 ITR 282/21 taxmann.com 147 (Guj.) (para 6).
M.J. Shah and J.P. Shah for the Petitioner. Sudhir M. Mehta for the Respondent.
JUDGMENT
Akil Kureshi, J. - These petitions arise out of similar background involving the same assessee. They have been heard together and are disposed of by this common judgment.
2. Brief facts may be noted as arising in Special Civil Application No.489/2005.
2.1 The petitioner assessee is a company registered under the Companies Act and is regularly assessed to tax. For the assessment year 1996-1997, the petitioner had filed its return of income on 30.11.1996. The petitioner had in that year as in the past claimed depreciation at the rate of 40% on the commercial vehicles purchased by the petitioner from time to time. The opening Written Down Value of such purchases for the assessment year 1996-1997 was Rs. 8.50 crores. On such Written Down Value, the petitioner had claimed depreciation at the rate of 40%. In the second half of the year relevant to the assessment year 1996-1997, the petitioner had made fresh purchases of such commercial vehicles and supplied to one Shriram Transport Finance Co. Ltd. on lease. On such purchases of commercial vehicles, the petitioner claimed depreciation at the rate of 20% being 50% of available depreciation for full year.
2.2 The return filed by the petitioner was taken in scrutiny. The Assessing Officer under his communication dated 21.10.1998 raised several queries with respect to various issues arising out of such return. In particular, with respect to depreciation on the vehicle, he called for following details :
"19. Details of vehicles on which depreciation at the rate of 40% is claimed."
2.3 In response to such queries, the petitioner filed replies. Under reply dated 22.2.1999, the petitioner supplied full details of the depreciation claimed on the purchase of the vehicles. It would be useful to take note of the complete details thereof. The petitioner conveyed as under :
"In reply to your letter dated 21.10.1998, we are submitting herewith a reply of query no.19 as under —
The assessee company is a Non-Banking finance company engaged in a business of leasing H.P. and finance. The assessee company had purchased and leased commercial vehicles during Financial years 01.04.1994 to 31.03.1995 and 01.04.1995 to 31.03.1996. The details as under —
| A.Y. 1995-96 | ||
| Addition during the year | 11,2500,000 | |
| A.Y. 1996-97 | ||
| Addition during the year | 2222,540 |
The assessee company had claimed depreciation at the rate of 40% on commercial vehicles. We have submitted statement of depreciation along with Income tax return filed on 30.11.1996. As per the said statement, we have claimed depreciation on plant and machineries, commercial vehicles, vehicles, furnitures and equipments and Building (residentials) as per the APPENDIX (I) see rule(5). We have claimed depreciation on commercial vehicles at the rate of 40% and on other vehicles we have claimed depreciation at the rate of 20%. The working is reproduced as under :—
| Depreciation of Block of Assets | Cost/Opening W.D.V. Rs. | Rate of Dep. | Depreciation | Closing W.D.V. Rs. | |
| Vehicles Commercial | |||||
| Addition during Asst. Year 1995-96 | 8,5000,000 | 0.4 | 34000,000 | 51000,000 | |
| Addition during Asst. Year 1996-97 eligible for pro-rata Depreciation | 2222,540 | 0.2 | 444,508 | 1778,032 | |
| Vehicles | |||||
| Addition during Asst. Year 1996-97 | 2225,222 | 0.2 | 445,044 | 1780,178 | |
| Addition during Astt. Year 1996-97 eligible for pro-data Depreciation | 824,932 | 0.1 | 82,493 | 742,439 |
We have purchased commercial vehicles and the said vehicles were given on lease. The lessee has used the said commercial vehicles for the business of running them on hire. We also draw your kind attention that, there is no requirement in Section 32 or in the rules there under that the owner of the commercial vehicles shall use the vehicle himself for the business of hire. We rely on following decisions—
| 1. | Sriram Transport Finance Co. Ltd. v. Asstt. CIT [1997] 63 ITR 336 (Mad.) | |
| 2. | Shriram Investments Ltd. v. Asstt. CIT [1996] 59 ITD 570 (Mad.) | |
| 3. | Shriram Transport Finance Co. Ltd. v. Asstt. CIT [1997] 63 ITD 336. |
You are therefore, allowed the depreciation at the rate of 40% on commercial vehicles."
2.4 In the ultimate assessment that the Assessing Officer framed under section 143(3) of the Act on 24.3.1999, though he made several adjustments; with respect to claim of depreciation of the petitioner referred to above, he made no disallowances.
3. It is this assessment which the Assessing Officer desired to reopen for which he issued notice dated 20.6.2002. We may record in brief that previously the attempt on part of the Assessing Officer to reopen the assessment came up for consideration before this Court in a writ petition filed by the present petitioner. There was a difference of opinion between the two members of the Bench who heard such petition. Such difference was resolved through third member's opinion in case of Garden Finance Ltd. v. Asstt. CIT[2004] 268 ITR 48/137 Taxman 49 (Guj.) who permitted the petitioner to raise objections to the proposal of reopening in terms of decision of the Apex Court in case of GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19/[2002] 125 Taxman 963. Thereupon the petitioner raised detailed objections before the Assessing Officer which when were turned down the present petition came to be filed.
4. The Assessing Officer had recorded reasons for impugned notice of reopening. Such reasons read as under :
"The assessee company is a non-banking finance company engaged in the business of financing, money lending and trading in shares and financing on lease of motor vehicles. The assessee company has shown source of income viz., lease income, hire purchase income, bill discounting income, profit on sale of long term investment, interest on deposits on loan, loan management fee, merchant banking income and income from other sources.
2. The assessee company filed return of income on 30/11/96 showing taxable income Rs. NIL. Order passed u/s. 143(3) of the Act on 24/3/99 determining taxable income at Rs.5,00,35,628/-. While passing the order, depreciation as per rule was allowed at Rs.8,43,27,096.
3. On verification of the depreciation statement attached with the return of income, it is noticed that depreciation of Rs.8,43,27,096/- is inclusive of depreciation of Rs.3,40,00,000 on motor vehicles (commercial) claimed at the rate of 40% on WDV/cost of Rs.8,54,00,000. As per Rule 5, the rate of depreciation on motor vehicle in the second column of the table in Appendix-I are as under :
| Block of Assets | Depreciation allowance as per percentage of WDV | |||
| III | (1A) | Motor car other than those used in a business of running them on hire acquired or put to use on or after the first day of April, 1990 | 20% | |
| (2) | (ii) | Motor buses, motor lorries and motor taxies used in a business of running them on hire. | 40% | |
4. The assessee is a leasing company. The assessee company has used the motor vehicles for lease and not for hiring. The assessee company is, therefore, entitled for depreciation at the normal rate of 20% on motor vehicles(commercial) and not at the higher rate of 40% as claimed and allowed while finalizing the assessment. Excess depreciation on motor vehicles(commercial) has been allowed by Rs.1,70,00,000 while computing taxable income, which has escaped assessment to that extent."
5. On the basis of said facts on record, counsel for the petitioner vehemently contended that the notice for reopening which has been issued beyond the period of four years from the end of relevant assessment year is wholly without jurisdiction. The petitioner had made true and full disclosures about its claim for depreciation at higher rate. The Assessing Officer had examined such claim and made no disallowance in the final computation in the scrutiny assessment that he farmed. Such assessment cannot be reopened beyond a period of four years for the reasons recorded by the Assessing Officer. Counsel submitted that even in the reasons, the Assessing Officer has nowhere stated that income chargeable to tax had escaped assessment for the failure on part of the assessee to disclose truly and fully all material facts. Counsel lastly submitted that in the reasons, the Assessing Officer recorded that on verification of depreciation statement attached with the return of income, it was noticed that higher depreciation was claimed. It would thus emerge that there was no new material outside of the assessment proceedings on the basis of which the Assessing Officer could form a belief that income chargeable to tax has escaped assessment. He submitted that notice was thus bad in law and therefore be quashed.
6. On the other hand learned counsel for the Revenue made an attempt to suggest that in the original assessment the assessee had not made true and full disclosure. Notice of reopening beyond four years also therefore, was valid. He relied on the reasons recorded by the Assessing Officer to contend that income chargeable to tax had escaped assessment. He pointed out that this Court in case of Bhagwati Appliance v.ITO [2011] 337 ITR 286/199 Taxman 131/10 taxmann.com 329 (Guj.) in terms held that when the vehicle is leased out and thereafter, run on hire by the lessee, higher rate of depreciation would not be available. Counsel pointed out that said decision was subsequently followed in case of Dy. CIT v. Pradip N. Desai (HUF) [2012] 341 ITR 277/21 taxmann.com 151 (Guj.) and in case of CIT v. Aravali Finlease Ltd.[2012] 341 ITR 282/21 taxmann.com 147 (Guj.).
7. At the outset we may record that in the present case, we are not concerned with the validity of the belief of the Assessing Officer that income chargeable to tax had escaped assessment. We are far more concerned with the question whether the income chargeable to tax even if can be stated to have escaped assessment, same was for the reason of assessee not disclosing truly and fully all material facts. This would be relevant because in the present case admittedly the notice of reopening has been issued beyond a period of four years from the end of relevant assessment year.
8. In this context, we may revisit the material on record. The assessee had lodged a claim of depreciation at the rate of 40% on the Written Down Value of commercial vehicles purchased earlier. In addition thereto the petitioner had also claimed part depreciation at higher rate of vehicles purchased in second half of the year and which were leased out to another company. In the scrutiny assessment, the Assessing Officer examined various claims of the petitioner. With respect to depreciation claimed, he raised a specific query and called upon the petitioner to justify the claim by giving details of vehicles on which depreciation at the rate of 40% was claimed. In reply to such question, the assessee made a detailed representation under communication dated 22.2.1999. The petitioner stated that company had purchased and leased commercial vehicles during financial years between 1.4.1994 to 31.3.1995 and 1.4.1995 to 31.3.1996. Details of such purchases were provided. It was also pointed out that the company was claiming depreciation at the rate of 40% on the commercial vehicle. It was stated that on certain vehicles, the company had claimed depreciation at the rate of 20%. This would have reference to the vehicles purchased by the company during the second half of the year and therefore, half of otherwise available depreciation could be claimed. The company specifically pointed out that "we have purchased vehicles and the said vehicles were given on lease. The lessee has used the said commercial vehicle for the business of running them on hire. We also draw your kind attention that, there is no requirement in Section 32 or in the rules there under that the owner of the commercial vehicles shall use the vehicle himself for the business of hire. We rely on following decisions....."
9. Thus full facts were laid before the Assessing Officer in context of the petitioner company's claim for depreciation at the higher rate on commercial use for running on hire. The petitioner in fact firmly asserted that though such vehicles were leased out, the lessee had used such vehicles for the business of running them on hire and that therefore, as per the statutory provisions and the decisions of the Courts, the company would still be entitled to higher rate of depreciation. As already recorded, we are not concerned with the validity of company's legal submissions in this respect. We are only drawing a firm conclusion that the company had placed full facts before the Assessing Officer in the original assessment itself. In addition to filing the return, claiming depreciation at the rate the company thought was applicable, during the course of scrutiny assessment, the company made detailed submissions why despite commercial vehicles have been leased out, higher rate of depreciation was justified. This is therefore, not a case where income chargeable to tax can be stated to have escaped assessment for the reason of assessee failing to disclose truly and fully all material facts. In that view of the matter, the mandatory condition to enable the Assessing Officer to reopen the assessment beyond the period of four years not having been satisfied, impugned notice must be quashed.
10. In Special Civil Application No.12251/2002, we are concerned with later assessment year of 1997-1998. Here also notice for reopening the assessment dated 20.6.2012 which is impugned in this petition, was issued beyond a period of four years from the end of relevant assessment year. In the present case also the assessee had claimed depreciation at higher rate on the vehicles purchased but leased out to another company. Here also during scrutiny assessment, such claim was not disallowed. Here also for identical reasons the Assessing Officer desired to reopen the assessment previously framed after scrutiny beyond a period of four years. Without therefore, recording separate reasons in this case also we are of the opinion that notice for reopening was not valid.
11. In the result both the petitions are allowed. Impugned notices both dated 20.6.2012 issued under section 148 of the Act are quashed. Rule made absolute. No costs.
■■Regards,
Pawan Singla , LLB
M. No. 9825829075
Issue already examined under revisional proceedings can't be reassessed
IT : Once an issue has been dealt with by Commissioner under section 263, Assessing Officer cannot reopen that issue under section 147
Full deduction under section 80-IA, 80-IB or 80HHC can be claimed as each provisionis an independent provision
IT : Deduction under section 80-IA or 80-IB and deduction under section 80HHC are independent of each other and, therefore, full deduction under each section can be claimed
Payments for receipt of satellite signals fall within ambit of process royalty in view of FA, 2012 amendments
IT/ILT : Payment made by the assessee as "Pay Channel Charges" is "royalty" as defined in clause (i) of Explanation 2 to sec. 9(1) of the Act in view of Explanation 6 below clause (vi) of sub-section (1) of sec. 9 defining the word "process"
• Royalty as defined by Explanation 2 to clause (vi) of sub-section (1) of sec. 9 covers consideration for the transfer of all or any rights (including the granting of a licence) in respect of a process .
• The Finance Act, 2012 has inserted Explanation 6 below clause (vi) of sub-section (1) of sec. 9 defining the word "process"
• The expression "process" includes and shall be deemed to have always included transmission by satellite, cable, optic fibre or by any other technology.
• In the instant case, the assessee is engaged in the business of transmitting the television channels or signals by cable by receiving signals through satellite. Such kind of transmission (both receipt of signal and transmission of the same) is included in the definition of "Process" under Explanation 6, which has been inserted by the Finance Act, 2012 to remove the doubts.
• Hence, the payment made by the assessee as "Pay Channel Charges" shall fall in the category of "royalty" as defined in clause (i) of Explanation 2 to sec. 9(1) of the Act.
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