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The High Court held that the substantial question of law is not res integra and is covered against the Revenue by the decisions of the Hon'ble Supreme Court in Commissioner of Income Tax vs. Lakshmi Machine Works and Commissioner of Income Tax vs. Shiva Tex Yarn Ltd. The Court noted that the Supreme Court, in Lakshmi Machine Works, observed that the purpose of Section 80HHC was to provide incentives for exports, and the formula was designed to ascertain export profits. The Court emphasized a schematic interpretation of Section 80HHC, noting that items like commission, interest, and rent, which do not involve an element of turnover, were not eligible for deduction, even if they formed part of the profit and loss account. Similarly, excise duty and sales tax, being indirect taxes recovered on behalf of the government and not originating from 'turnover' itself, should be excluded. The Court found that even after the insertion of Section 145A, the principle laid down in Lakshmi Machine Works and Shiva Tex Yarn Ltd. remained applicable. Therefore, the ITAT was not in error in holding that Sales Tax and Excise duty do not form part of sale proceeds for the purpose of Section 80HHC.
The High Court held that the substantial question of law is not res integra and is squarely covered against the Revenue by the Supreme Court's decisions in Commissioner of Income Tax vs. Lakshmi Machine Works and Commissioner of Income Tax vs. Shiva Tex Yarn Ltd. The Court noted that while the Revenue attempted to distinguish these decisions based on the insertion of Section 145A, they could not satisfy the Court on how the Supreme Court's rulings would not apply. The reasoning, drawing from the Supreme Court's judgments, emphasizes a purposeful and schematic interpretation of Section 80HHC. The Court reiterated that excise duty and sales tax, being indirect taxes recovered on behalf of the government, do not involve an element of "turnover" in the same way that commission, interest, or rent do not form part of turnover for the purpose of the Section 80HHC formula. Therefore, these taxes must be excluded. The Tribunal's decision was found to be correct, and the appeal was dismissed.
The High Court agreed with the reasoning of the CIT(A) and the ITAT. The Court noted that the assessee had discharged the initial onus by furnishing full particulars for most lenders, including confirmation letters with name, address, and PAN, balance sheets, profit and loss accounts, and income tax returns. Even for the remaining two lenders, confirmation, address, and PAN were provided. The loans were received through cheques and reflected in the lenders' balance sheets. The ITAT had found that the AO had not brought any material on record to rebut the assessee's evidence and distinguished the revenue's cited case of N.R. Portfolio. The High Court concluded that the AO was not justified in making the addition. Consequently, no substantial question of law arose, and the appeal was dismissed.
The High Court held that while the issue before the Assessing Officer and CIT(A) was the exercise of the option under Explanation 2 of Section 11, the ITAT's decision to consider whether the grant itself constituted income was permissible. The Court noted that the amount of Rs. 7,68,96,000 was received as a grant from the State Government and was distributed to various blood banks. Citing its own decision in Commissioner of Income Tax Vs. Gujarat State Disaster Management Authority, the Court found that the ITAT had rightly held that the amount received by way of grant from the Government of Gujarat could not be considered as income. Therefore, the addition made by the Assessing Officer was rightly deleted by the ITAT. The High Court concluded that no substantial question of law arose and dismissed the appeal.
The High Court dismissed the Tax Appeal filed by the Revenue. The Court noted that the ITAT, in its impugned order for Assessment Year 2005-06, had relied on its own previous decision concerning Assessment Year 2003-04, where a similar addition made by the AO was set aside. The Court found that since the ITAT's decision for the earlier year had attained finality, and the facts and grounds were similar for the current assessment year, the ITAT's deletion of the addition of Rs. 88,00,000/- in respect of commission payments to directors was justified. The Court concluded that no question of law, much less a substantial question of law, arose from the ITAT's order, and therefore, the appeal deserved to be dismissed.
The High Court held that no substantial question of law arises and dismissed the appeals. Regarding the addition under Section 40A(3), the Court agreed with the CIT(A) and ITAT. It was noted that the AO did not issue notices to the six parties to whom cash payments were allegedly made. The CIT(A) had found that the assessee admitted to issuing accommodation entries for a 0.25% commission and that the cash payments were not for purchases but a return of money received. The CIT(A) directed computation of income at 0.25% of the total turnover, which was confirmed by the ITAT. The Court found no justification for the addition made by the AO under Section 40A(3) when it was not established that the payments were actually made in cash for purchases and the transactions were found to be paper entries. The Court also noted that the CIT(A)'s direction to compute income at 0.25% on total turnover, without benefit of expenditure claims, was confirmed by the ITAT. The Court found no reason to interfere with the ITAT's order, and similarly for AY 2006-07.
The High Court held that no substantial question of law arises and dismissed the appeals. Regarding the addition under Section 40A(3), the Court agreed with the CIT(A) and ITAT. It was noted that the AO did not issue notices to the six parties to whom cash payments were allegedly made. The CIT(A) had found that the assessee admitted to issuing accommodation entries for a 0.25% commission and that the cash payments were not for purchases but a return of money received. The CIT(A) directed computation of income at 0.25% of the total turnover, which was confirmed by the ITAT. The Court found no justification for the addition made by the AO under Section 40A(3) when it was not established that the payments were actually made in cash for purchases and the transactions were found to be paper entries. The Court also noted that the CIT(A)'s direction to compute income at 0.25% on total turnover, without benefit of expenditure claims, was confirmed by the ITAT. The Court found no reason to interfere with the ITAT's order, and similarly for AY 2006-07.
The High Court dismissed the appeal filed by the revenue. Regarding the first issue concerning the Section 263 revision, the Court held that the ITAT correctly quashed the CIT's order. The Court noted that at the time the ITAT passed its order, there was a binding decision of the jurisdictional High Court in General Motors India (P) Ltd. vs. Deputy Commissioner of Income Tax. The AO's action in allowing the set-off of unabsorbed depreciation was considered a possible view, which was later confirmed as the correct view by the High Court. Therefore, the ITAT was justified in relying on this binding precedent. Concerning the second issue on the applicability of Section 32(2) amendments, the Court found that the issue was squarely covered by the General Motors India (P) Ltd. decision. The Court rejected the revenue's argument that the Supreme Court had kept the question of law open, stating that the dismissal of SLP on delay meant the High Court's decision remained binding on the High Court itself. The Court reiterated that the unabsorbed depreciation available on April 1, 2002 (AY 2002-03) would be dealt with under Section 32(2) as amended by the Finance Act, 2001, allowing indefinite carry forward and set-off. No substantial question of law arose.
The High Court held that the substantial question of law (A) is squarely covered by the Supreme Court's decision in Commissioner of Income-tax Vs. Lakshmi Machine Works, which ruled against the Revenue. Therefore, question (A) was answered against the Revenue. Regarding question (B), the Tribunal relied on the Special Bench decision in Lalsons Enterprises Vs. DCIT, which was subsequently approved by the Supreme Court in ACG Associated Capsules Pvt. Ltd. Vs. Commissioner of Income-tax. As this was not disputed by the Revenue, question (B) was also held against the Revenue. Consequently, the appeal was dismissed.
The High Court held that the issue is squarely covered by the decision of the Hon'ble Supreme Court in the case of Joint Commissioner of Income-tax Vs. Mandideep Eng. And Pkg. Ind. P. Ltd. [2007] 292 ITR 1 (SC). The Supreme Court held that Sections 80HHC and 80IA of the Income Tax Act are independent. Consequently, a newly established industrial undertaking can claim deductions under both Sections 80HHC and 80IA on the gross total income. Applying this ratio, the question framed in the present Tax Appeals was answered against the Revenue. The appeals were dismissed.
The High Court held that the issue is squarely covered by the decision of the Hon'ble Supreme Court in the case of Joint Commissioner of Income-tax Vs. Mandideep Eng. And Pkg. Ind. P. Ltd. [2007] 292 ITR 1 (SC). The Supreme Court held that Sections 80HHC and 80IA of the Income Tax Act are independent. Consequently, a newly established industrial undertaking can claim deductions under both Sections 80HHC and 80IA on the gross total income. Applying this ratio, the question framed in the present Tax Appeals was answered against the Revenue. The appeals were dismissed.
The High Court held that the impugned notice dated 03.12.2012, issued under Section 148 of the Income Tax Act, 1961, for AY 2007-08, was without jurisdiction and bad in law. The Court reasoned that the reassessment was sought to be reopened after a period of four years from the end of the assessment year. As per the first proviso to Section 147 of the Act, such reopening is permissible only if income chargeable to tax has escaped assessment due to the assessee's failure to make a return, respond to a notice, or disclose fully and truly all material facts. The Court found that the original assessment involved a scrutiny assessment where the AO had applied his mind to the deductions claimed under Sections 80IB and 80JJA, including issuing a specific query regarding Section 80JJA. Therefore, the reopening appeared to be based on a change of opinion by the AO, which is not permissible, especially after four years. The conditions stipulated under the first proviso to Section 147 were not satisfied. Consequently, the petition succeeded, and the impugned notice was quashed and set aside.
The High Court held that the impugned notice dated 03.12.2012, issued under Section 148 of the Act for reopening the assessment for AY 2006-07, is without jurisdiction and bad in law. The Court reasoned that the reopening was sought after a period of four years from the end of the assessment year. According to the first proviso to Section 147 of the Act, such reopening is permissible only if income chargeable to tax has escaped assessment due to the assessee's failure to file a return, respond to a notice, or disclose fully and truly all material facts. In this case, the original assessment was made after scrutiny, and the AO had applied his mind to the claims for deductions under Sections 80IB and 80JJA. The reasons recorded for reopening indicated a change of opinion by the AO regarding the allowability of these deductions, which is not permissible, especially after four years. The conditions stipulated under the first proviso to Section 147 were not satisfied. Therefore, the notice deserved to be quashed and set aside. The rule was made absolute.
The Gujarat High Court disposed of all the captioned writ petitions without adjudicating on the merits of the case. This decision was made in light of the pronouncement of the Apex Court in the case of Union of India and Others vs. Ashish Agarwal. The High Court directed that all the writ petitions be disposed of in terms of the Apex Court's order. The Apex Court's order, as reproduced in the judgment, held that impugned Section 148 notices issued under the unamended Act would be deemed to have been issued under Section 148A of the IT Act as substituted by the Finance Act, 2021. The assessing officer was directed to provide information to the assessees and issue show-cause notices. The requirement of prior approval for enquiry under Section 148A(a) was dispensed with as a one-time measure. The assessing officers were to pass orders under Section 148A(d) and then issue notices under the substituted Section 148. All defenses available to the assessees and Revenue were preserved. The High Court clarified that if any petition contained issues other than Section 148 of the Income Tax Act, liberty was reserved to file a fresh petition.
The High Court of Gujarat, in light of the Supreme Court's pronouncement in Union of India and Others vs. Ashish Agarwal (Civil Appeal No. 3005/2022 and allied matters, decided on 04.05.2022), disposed of all the captioned writ petitions without adjudicating them on merit. The Supreme Court had held that impugned Section 148 notices issued under the unamended Section 148, which were the subject of writ petitions, would be deemed to have been issued under Section 148A of the IT Act as substituted by the Finance Act, 2021, and treated as show-cause notices under Section 148A(b). The Apex Court directed the assessing officers to provide information to assessees within thirty days, allowing them two weeks to reply. The requirement of prior approval for inquiry under Section 148A(a) was dispensed with as a one-time measure for notices issued from 01.04.2021 till date. Assessing officers were to pass orders under Section 148A(d) and then issue notices under the substituted Section 148. All defenses available to assessees and revenue were preserved. The High Court clarified that if any other issue existed beyond Section 148, a fresh petition could be filed.
The High Court of Gujarat, in light of the Supreme Court's pronouncement in Union of India and Others vs. Ashish Agarwal (Civil Appeal No. 3005/2022 and allied matters, decided on 04.05.2022), disposed of all the captioned writ petitions without adjudicating on merit. The Supreme Court's order held that notices issued under the unamended Section 148 of the Income Tax Act, 1961, between April 1, 2021, and June 30, 2021, shall be deemed to have been issued under Section 148A of the Act as substituted by the Finance Act, 2021. These notices were to be treated as show-cause notices under Section 148A(b), with the Assessing Officer providing information within thirty days and assessees to reply within two weeks. The requirement of prior approval for inquiry under Section 148A(a) was dispensed with as a one-time measure. The Assessing Officers were to pass orders under Section 148A(d) and then issue notices under the substituted Section 148. All defenses available to the assessees and the Revenue were preserved. The High Court clarified that if any petition involved issues other than Section 148, a fresh petition could be filed.
The High Court held that the substantial question of law raised by the assessee is to be answered in favour of the assessee. The Court relied on the decision of the Supreme Court in ACG Associated Capsules Pvt. Ltd. vs. Commissioner of Income-Tax, which held that for the purpose of deduction under Section 80HHC, net interest is to be excluded. The ITAT's decision to exclude gross interest was found unsustainable in light of this Supreme Court ruling. Consequently, the impugned judgment and order of the ITAT were quashed and set aside. The appeal was allowed. No costs were awarded.
The High Court disposed of all the captioned writ petitions without adjudicating on the merits of the case. This decision was made in light of the Supreme Court's pronouncement in Union of India and Others vs. Ashish Agarwal. The Supreme Court had held that notices issued under the unamended Section 148 of the Income Tax Act, 1961, between April 1, 2021, and June 30, 2021, shall be deemed to have been issued under Section 148A of the Act as substituted by the Finance Act, 2021. These notices were to be treated as show-cause notices under Section 148A(b). The Assessing Officer was directed to provide information and material relied upon to the assessees, who would then have two weeks to reply. The requirement of conducting an inquiry with prior approval under Section 148A(a) was dispensed with as a one-time measure. The Assessing Officers were to pass orders under Section 148A(d) and then issue notices under the substituted Section 148. All defenses available to the assessees and the Revenue were preserved. The High Court clarified that if any petition involved issues other than Section 148, a fresh petition could be filed.
The High Court disposed of all the captioned writ petitions without adjudicating on the merits of the individual cases. This decision was made in direct consequence of the pronouncement of the Apex Court in the case of Union of India and Others vs. Ashish Agarwal. The Apex Court had held that notices issued under the unamended Section 148 of the Income Tax Act, 1961, between April 1, 2021, and June 30, 2021, would be deemed to have been issued under the newly substituted Section 148A(b) as show-cause notices. The Apex Court directed that assessing officers should provide the assessees with the information and material relied upon within thirty days, allowing the assessees two weeks to reply. The requirement of prior approval for inquiries under Section 148A(a) was dispensed with as a one-time measure. The Apex Court's order was made applicable pan-India and was intended to govern pending writ petitions challenging similar notices. The High Court clarified that if any petition involved issues other than Section 148 of the Income Tax Act, 1961, the writ petitioner would have the liberty to file a fresh petition.
The High Court, in its judgment dated May 6, 2022, ultimately dismissed all the Letters Patent Appeals and the connected writ applications. The Court agreed with the decision of the learned Single Judge. The reasoning was that in cases where the lease period had expired and there was no clause for renewal in the allotment letter, the petitioner could not claim renewal as a matter of right. The Court found that the KPT's policy of resorting to public auction for allotment of plots was a discretionary decision consistent with its land policies. For IFFCO, the Court noted that the Government of India had declined renewal, and for Kesar Terminals, the original allottee had illegally transferred plots after lease expiry, leading to eviction proceedings. Similarly, for AVEAN International, the KPT's decision not to renew based on its policy of public auction was upheld. The Court did not issue directions to renew leases where the term had expired or where the KPT had exercised its discretion not to renew in line with its policies. The operation of the judgment was stayed for six weeks.
The High Court allowed the appeals, quashing and setting aside the impugned common order of the ITAT. The Court held that the process of twisting and texturising of partially oriented yarn amounts to manufacture in terms of Section 80IA of the Income Tax Act. This decision was based on the ratio laid down by the Hon'ble Supreme Court in the cases of Commissioner of Income Tax Vs. Emptee Poly-Yarn P. Ltd. and Commissioner of Income Tax Vs. Yashasvi Yarn Ltd. Consequently, the assessee was held to be entitled to the deduction under Sections 80HH and 80I of the Income Tax Act. The operative direction was to grant the relief to the assessee. No issue was expressly left undecided.
The Gujarat High Court disposed of all the captioned writ petitions in light of the pronouncement of the Apex Court in the case of Union of India and Others vs. Ashish Agarwal. The High Court reproduced the findings and observations of the Apex Court. The Apex Court held that impugned Section 148 notices issued under the unamended Section 148 of the IT Act shall be deemed to have been issued under Section 148A of the IT Act as substituted by the Finance Act, 2021, and treated as show-cause notices under Section 148A(b). The Assessing Officer was directed to provide information and material relied upon to the assessees within thirty days, allowing them two weeks to reply. The requirement of conducting an enquiry with prior approval under Section 148A(a) was dispensed with as a one-time measure for notices issued from 01.04.2021 till date. The Assessing Officers were to pass orders under Section 148A(d) and then issue notices under the substituted Section 148. All defenses available to the assessees under Section 149 and other rights and contentions were preserved. The Apex Court's order was made applicable PAN India and would govern pending writ petitions. The Gujarat High Court clarified that if any other issue existed beyond Section 148, liberty was reserved to file a fresh petition.
The High Court disposed of all the captioned writ petitions without adjudicating on the merits of each case. This decision was made in light of the Supreme Court's pronouncement in Union of India and Others vs. Ashish Agarwal. The Supreme Court had held that notices issued under the unamended Section 148 of the Income Tax Act, 1961, between April 1, 2021, and June 30, 2021, would be deemed to have been issued under Section 148A of the Act as substituted by the Finance Act, 2021. These notices were to be treated as show-cause notices under Section 148A(b). The Assessing Officer was directed to provide information to the assessees within thirty days, allowing them two weeks to reply. The requirement of prior approval for enquiry under Section 148A(a) was dispensed with as a one-time measure. The Assessing Officers were then to pass orders under Section 148A(d) and subsequently issue notices under the substituted Section 148. All defenses available to the assessees and the Revenue were preserved. The Supreme Court's order was made applicable PAN India and governed pending writ petitions. The High Court clarified that if any petition involved issues other than Section 148 of the IT Act, 1961, the writ petitioner had the liberty to file a fresh petition.
The Gujarat High Court disposed of all the captioned writ petitions without adjudicating on the merits of the case. This decision was made in light of the pronouncement of the Apex Court in the case of Union of India and Others vs. Ashish Agarwal. The High Court directed that all the writ petitions be disposed of in terms of the Apex Court's order. The Apex Court's order, as reproduced in the judgment, held that impugned Section 148 notices issued under the unamended Act would be deemed to have been issued under Section 148A of the IT Act as substituted by the Finance Act, 2021. The assessing officer was directed to provide information to the assessees and issue show-cause notices. The requirement of prior approval for enquiry under Section 148A(a) was dispensed with as a one-time measure. The assessing officers were to pass orders under Section 148A(d) and then issue notices under the substituted Section 148. All defenses available to the assessees and Revenue were preserved. The High Court clarified that if any petition contained issues other than Section 148 of the Income Tax Act, liberty was reserved to file a fresh petition.
The Gujarat High Court disposed of all the captioned writ petitions without adjudicating on the merits of the case. This decision was made in light of the pronouncement of the Apex Court in the case of Union of India and Others vs. Ashish Agarwal. The High Court directed that all the writ petitions be disposed of in terms of the Apex Court's order. The Apex Court's order, as reproduced in the judgment, held that impugned Section 148 notices issued under the unamended Act would be deemed to have been issued under Section 148A of the IT Act as substituted by the Finance Act, 2021. The assessing officer was directed to provide information to the assessees and issue show-cause notices. The requirement of prior approval for enquiry under Section 148A(a) was dispensed with as a one-time measure. The assessing officers were to pass orders under Section 148A(d) and then issue notices under the substituted Section 148. All defenses available to the assessees and Revenue were preserved. The High Court clarified that if any petition contained issues other than Section 148 of the Income Tax Act, liberty was reserved to file a fresh petition.
The High Court disposed of all the captioned writ petitions without adjudicating on the merits of the case. This decision was made in light of the Supreme Court's pronouncement in Union of India and Others vs. Ashish Agarwal (Civil Appeal No. 3005/2022 and allied matters, decided on 04.05.2022). The Supreme Court's order, which was made applicable PAN India, held that notices issued under the unamended Section 148 of the Income Tax Act, 1961, from April 1, 2021, onwards, would be deemed to have been issued under Section 148A. These notices were to be treated as show-cause notices under Section 148A(b), requiring the Assessing Officer to provide information to the assessees within thirty days and allowing assessees two weeks to reply. The requirement of prior approval for inquiry under Section 148A(a) was dispensed with as a one-time measure. The Assessing Officers were then to pass orders under Section 148A(d) and subsequently issue notices under the substituted Section 148. All defenses available to the assessees and revenue were preserved. The High Court clarified that if any petition involved issues other than Section 148, liberty was reserved to file fresh petitions.
The High Court disposed of all the captioned writ petitions without adjudicating them on merits. This decision was based on the pronouncement of the Supreme Court in Union of India and Others vs. Ashish Agarwal. The Supreme Court's order, which was reproduced by the High Court, held that notices issued under the unamended Section 148 of the Income Tax Act, 1961, between April 1, 2021, and June 30, 2021, would be deemed to have been issued under Section 148A of the Act as substituted by the Finance Act, 2021. These notices were to be treated as show-cause notices under Section 148A(b). The Assessing Officer was directed to provide information and material relied upon to the assessees, who would then have two weeks to reply. The requirement of conducting an inquiry with prior approval was dispensed with as a one-time measure. The Assessing Officers were to pass orders under Section 148A(d) and then issue notices under the substituted Section 148. All defenses available to the assessees and revenue were preserved. The Supreme Court's order was made applicable PAN India and governed pending writ petitions. The High Court clarified that if any petition involved issues other than Section 148, liberty was reserved to file a fresh petition.
The High Court of Gujarat disposed of all the captioned writ petitions in light of the pronouncement of the Apex Court in the case of Union of India and Others vs. Ashish Agarwal. The Supreme Court, in its order dated 04.05.2022, held that impugned Section 148 notices issued under the unamended Section 148 of the IT Act, which were the subject of writ petitions, shall be deemed to have been issued under Section 148A of the IT Act as substituted by the Finance Act, 2021, and treated as show-cause notices under Section 148A(b). The Assessing Officer was directed to provide information to the assessees within thirty days, allowing them two weeks to reply. The requirement of conducting an enquiry with prior approval under Section 148A(a) was dispensed with as a one-time measure. The Assessing Officers were to pass orders under Section 148A(d) and then issue notices under the substituted Section 148. All defenses available to the assessees and revenue were preserved. The High Court clarified that if any petition contained issues other than Section 148, liberty was reserved to file a fresh petition.
The High Court held that the ITAT had materially erred in its decision. Applying the ratio laid down by the Hon'ble Supreme Court in the case of Liberty India (Supra), the Court found that the export benefit adjustment of Rs. 1,79,05,996/- should not be included while computing the deduction under Section 80IA of the Income Tax Act. The Court answered the substantial question of law in favour of the revenue. Consequently, the impugned judgment and order passed by the ITAT were quashed and set aside. The appeal was allowed to this extent. No issue was expressly left undecided.
The High Court held that the issue was no longer res integra in view of the Supreme Court's decision in 'Topman Exports'. The Supreme Court had held that for the allowance of relief under Section 80HHC(3) of the Act, only the profit, and not the entire sales proceeds, arising out of the DEPB is required to be reduced or considered. Applying this principle, the High Court answered the questions framed in favour of the assessee. The ITAT's order dated November 26, 2010, was quashed and set aside to the extent of the issue decided. The appeal was allowed to this extent. No costs were awarded.
The High Court allowed the appeals, quashing and setting aside the impugned common order of the ITAT. The Court held that the process of twisting and texturising of partially oriented yarn amounts to manufacture in terms of Section 80IA of the Income Tax Act. This finding means the assessee is entitled to claim deduction under Sections 80HH and 80I of the Income Tax Act. The Court applied the ratio laid down by the Supreme Court in Commissioner of Income Tax Vs. Emptee Poly-Yarn P. Ltd. and Commissioner of Income Tax Vs. Yashasvi Yarn Ltd. The operative direction was to grant the deduction to the assessee. No issue was left undecided.
The High Court held that it would not interfere in the appeals and agreed with the decision of the learned Single Judge. For IOC, it was held that renewal could be considered for plots whose leases had not expired, but no direction could be issued for plots whose leases had already expired. For the Tankers' Association, it was held that since there was no renewal clause in the allotment letter and the lease had expired, the petitioner, as an unauthorized occupant, could not seek renewal as a right. In Laxmi Motors' case, eviction proceedings were already initiated, making renewal irrelevant. For IFFCO, the court found that the Government of India had declined renewal due to the inability to charge commercial rates, and renewal would circumvent Section 34 of the Act, thus no direction for renewal could be issued. For Kesar Terminals and Infra. Limited, the original allottee had illegally transferred plots after lease expiry, and eviction proceedings were underway, so renewal was not possible. For AVEAN International Pvt. Ltd., the court upheld the KPT's policy of resorting to public auction for plot allotment, finding that the discretionary decision not to renew was in consonance with land policies, and therefore, no direction to renew could be given. The ratio decidendi is that renewal of a lease is not an automatic right, especially when the lease deed does not provide for it, or when statutory provisions and administrative policies dictate otherwise, and courts will not issue directions that circumvent legal provisions or established policies.
The High Court dismissed the Tax Appeal. It noted that the CIT(A), whose order was confirmed by the ITAT, was satisfied with the genuineness of the transaction and the creditworthiness of Shri Ishwar Adwani, leading to the deletion of the addition. The Court observed that the loan was advanced through cheques (Rs. 1,00,00,000/- via cheque no. 102110 and Rs. 60 lakhs via cheque no. 102111), totaling Rs. 1.60 Crores, with Rs. 15 lakhs repaid. The remaining Rs. 1,45,00,000/- was repaid in the immediate next financial year, and the Department accepted this repayment without further inquiry. Given these facts, the ITAT rightly held that a remand was not necessary as no other view was possible. Consequently, no substantial question of law arose, and the appeal was dismissed.
The High Court held that the Tribunal was correct in deleting the disallowance made under Section 40A(2)(b) of the Income Tax Act. The Court agreed with the ITAT's reasoning that for a disallowance under Section 40A(2)(b) to be made, the Assessing Officer must form an opinion that the expenditure is excessive or unreasonable having regard to the fair market price. This requires the AO to ascertain the fair market price and demonstrate that the payment exceeds it, providing the assessee an opportunity to be heard on such findings. The Court found that the AO had made an ad-hoc disallowance without establishing the fair market value and had wrongly placed the onus on the assessee to prove the reasonableness of payments. The Court also noted that discrepancies in the tax audit report do not automatically render the assessee's explanation unsustainable. Regarding the disallowance under Section 40(a)(ia) for AY 2006-07, the Court noted that the issue of retrospective applicability of the Finance Act, 2010 amendment was squarely covered against the Revenue by a previous decision of the same Court in Tax Appeal No. 412 of 2013 and allied matters, which held the amendment to be retrospective. The Revenue's counsel conceded this point. For AY 2005-06, the Court noted that the issue under Section 40(a)(ia) did not arise as the ITAT accepted the assessee's claim to allow the expenditure in the next assessment year. Consequently, both appeals were dismissed.
The High Court held that the Tribunal was correct in deleting the disallowance made under Section 40A(2)(b) of the Income Tax Act. The Court agreed with the ITAT's reasoning that for a disallowance under Section 40A(2)(b) to be made, the Assessing Officer must form an opinion that the expenditure is excessive or unreasonable having regard to the fair market price. This requires the AO to ascertain the fair market price and demonstrate that the payment exceeds it, providing the assessee an opportunity to be heard on such findings. The Court found that the AO had made an ad-hoc disallowance without establishing the fair market value and had wrongly placed the onus on the assessee to prove the reasonableness of payments. The Court also noted that discrepancies in the tax audit report do not automatically render the assessee's explanation unsustainable. Regarding the disallowance under Section 40(a)(ia) for AY 2006-07, the Court noted that the issue of retrospective applicability of the Finance Act, 2010 amendment was squarely covered against the Revenue by a previous decision of the same Court in Tax Appeal No. 412 of 2013 and allied matters, which held the amendment to be retrospective. The Revenue's counsel conceded this point. For AY 2005-06, the Court noted that the issue under Section 40(a)(ia) did not arise as the ITAT accepted the assessee's claim to allow the expenditure in the next assessment year. Consequently, both appeals were dismissed.
The High Court held that the Tribunal was correct in deleting the addition of Rs. 1,17,98,030/-. The Court noted that the assessee claimed deduction under Section 32(1)(iia) for installing wind electric generators. The Assessing Officer disallowed this, but the CIT(A) deleted the addition, relying on the Madras High Court's decisions in Commissioner of Income Tax Vs. VTM Ltd. and Commissioner of Income-tax Vs. Hi Tech Arai Ltd. The High Court found that these decisions held that for claiming additional depreciation, the setting up of a wind mill has nothing to do with the power industry itself. What is required is that new machinery or plant should have been acquired and installed by an assessee already engaged in the business of manufacture or production of any article or thing. The High Court concluded that the ITAT, by applying the ratio of the Madras High Court decisions, had not committed any error. No substantial question of law arose, and the appeal was dismissed.
The High Court of Gujarat, in light of the Supreme Court's pronouncement in Union of India and Others vs. Ashish Agarwal (Civil Appeal No. 3005/2022 and allied matters, decided on 04.05.2022), disposed of all the captioned writ petitions without adjudicating on merit. The Supreme Court's order held that notices issued under the unamended Section 148 of the Income Tax Act, 1961, between April 1, 2021, and June 30, 2021, shall be deemed to have been issued under Section 148A of the Act as substituted by the Finance Act, 2021. These notices were to be treated as show-cause notices under Section 148A(b), with the Assessing Officer providing information within thirty days and assessees to reply within two weeks. The requirement of prior approval for inquiry under Section 148A(a) was dispensed with as a one-time measure. The Assessing Officers were to pass orders under Section 148A(d) and then issue notices under the substituted Section 148. All defenses available to the assessees and the Revenue were preserved. The High Court clarified that if any petition involved issues other than Section 148, a fresh petition could be filed.
The High Court held that since the Reserve Bank of India subsequently granted an extension of time up to 31/3/2002 in favour of the assessee, the requirements under Section 80HHC of the Income Tax Act, 1961, were complied with. The Court found no error in the orders passed by the Commissioner (Appeals) and the ITAT. Therefore, the impugned judgment and orders were not required to be interfered with. The appeal filed by the revenue was dismissed. However, the Court noted that the substantial question of law framed at the time of admitting the appeal, regarding whether filing an application for extension of time is sufficient for fulfilling the requirement of Section 80HHC(2)(a), was not answered and was kept open, as the extension was actually granted during the pendency of the appeal before the CIT(A).
The High Court held that the issue raised in the appeal was squarely covered by the decision of the Hon'ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. Vs. Commissioner of Income Tax, reported in [2012] 343 ITR 89 (SC). The Supreme Court's decision had, in effect, approved the Special Bench of the ITAT's ruling in Lalsons Enterprises Vs. DCIT (Delhi) (SB). Consequently, the High Court found that the question raised by the revenue was answered against the revenue. The appeal was therefore dismissed. The operative direction was the dismissal of the appeal, with no specific mention of any issue being left undecided.
The High Court dismissed the appeal preferred by the Revenue on the ground of low tax effect. The Court noted that the amount in dispute was Rs. 1,44,190/-, and as per the Board's Circular dated October 24, 2005, such an appeal should not have been entertained unless a substantial question of law arose or it had an effect on subsequent assessment years, which was not the case here. The Court observed that the ITAT ought not to have gone into the merits of the case while dismissing the appeal on the ground of low tax effect. Consequently, the substantial question of law framed in the present appeal was kept open, and no opinion was expressed on the merits. The appeal was accordingly dismissed, and the notice was discharged without any order as to costs.
The High Court held against the Revenue on both issues. For the first issue concerning the exclusion of sales tax and excise duty from total turnover for Section 80HHC deduction, the Court relied on the Supreme Court's decision in CIT vs. Lakshmi Machine Works, which held that excise duty and sales tax cannot form part of the 'total turnover' under Section 80HHC(3). The Court noted that the period in question was prior to the insertion of Section 80HHC(3), but applied the ratio of the cited judgment. For the second issue regarding the netting of other income, the Court affirmed the ITAT's reliance on the Special Bench decision in Lalsons Enterprises vs. DCIT, which was approved by the Supreme Court in ACG Associated Capsules Pvt. Ltd. vs. CIT. The Supreme Court held that only 90% of net interest, not gross interest, included in business profits is to be deducted under Explanation (baa)(1) to Section 80HHC. Therefore, the ITAT's decision was not erroneous.
The High Court noted that Tax Appeal No. 608 of 2003, concerning the deduction under Section 80HHC, was ordered to be heard with another appeal where a similar issue was decided. The Court referred to the Supreme Court's decision in CIT v. Lakshmi Machine Works (2007) 290 ITR 667 (SC), which held that brokerage, commission, interest, rent, excise duty, and sales tax do not form part of the total turnover for the purpose of Section 80HHC benefits and are to be deducted from the total turnover. Following this precedent, the Court dismissed Tax Appeal No. 608 of 2003 in favor of the assessee. Consequently, as the disallowance under Section 80HHC made by the Assessing Officer was to be deleted, the issue raised in Tax Appeal No. 607 of 2003 regarding the validity of reopening became academic. Therefore, Tax Appeal No. 607 of 2003 was ordered to be disposed of without a decision on its merits.
The High Court held that the ITAT was correct in directing the Assessing Officer to recompute the deduction under Sections 80HH, 80I, and 80IA of the Income Tax Act, 1961, holding that interest is eligible thereon. The Court applied the law laid down by the Supreme Court in ACG Associated Capsules Pvt. Ltd. vs. Commissioner of Income Tax. In that case, the Supreme Court held that for the purpose of clause (1) of Explanation (baa) to Section 80HHC, 90% of the net interest, which has been included in the profits of the business of the assessee as computed under the head 'Profits and gains of business or profession', is to be deducted, and not 90% of the gross interest. Therefore, the question of law raised in the appeal was held against the Revenue.
The High Court held that Question (A) is squarely covered by the Supreme Court's decision in CIT vs. Lakshmi Machine Works, which held that excise duty and sales tax cannot form part of the 'total turnover' under Section 80HHC(3). Applying this ratio, Question (A) is decided against the Revenue. For Question (B), the High Court noted that the ITAT relied on the Special Bench decision in Lalsons Enterprises vs. DCIT, which was approved by the Supreme Court in ACG Associated Capsules Pvt. Ltd. vs. CIT. The Supreme Court held that 90% of only the net interest income, included in the business profits, is to be deducted under Explanation (baa)(i) to Section 80HHC. Therefore, the ITAT did not commit an error in relying on the Special Bench decision, and Question (B) is answered against the Revenue. The appeal is accordingly dismissed.
The High Court held that the questions raised in both appeals were squarely covered by the decision of the Hon'ble Supreme Court in the case of Topman Exports Versus Commissioner of Income Tax, reported in [2012] 342 ITR 49 (SC). The revenue's counsel did not dispute this. Applying the ratio laid down by the Supreme Court in Topman Exports, the High Court found that both appeals deserved to be dismissed. The operative direction was the dismissal of both appeals. No issues were expressly left undecided.
The High Court modified the ITAT's common judgment and order dated 30/11/2007. While acknowledging the Supreme Court's decision in ACG Associated Capsules Pvt. Ltd. vs. Commissioner of Income-Tax, which was conceded by the assessee and not disputed by the Revenue, the Court held that for the purpose of working out deduction under Section 80HHC of the Income Tax Act, net receipts of labour charges are to be included. The Assessing Officer was directed to pass consequential orders accordingly. The issue of whether the reopening was void was not explicitly decided by the High Court, as the appeals were disposed of based on the concession regarding the treatment of labour charges for Section 80HHC calculation.
The High Court allowed the appeals, quashing and setting aside the impugned common judgment and order passed by the ITAT. The Court applied the law laid down by the Hon'ble Supreme Court in the case of Liberty India vs. Commissioner of Income-tax [2009] 317 ITR 218 (SC). The Supreme Court had held that DEPB/Duty drawback receipts are incentives and do not form part of the net profits of eligible industrial undertakings for the purpose of deduction under Section 80-I/80-IA/80-IB of the Income Tax Act. These incentive profits are considered ancillary and do not fall within the expression 'profits derived from industrial undertaking'. Therefore, the ITAT's conclusion that profits from DEPB license sales were profits from export business of an industrial undertaking was found to be unsustainable.
The High Court modified the ITAT's common judgment and order dated 30/11/2007. While acknowledging the Supreme Court's decision in ACG Associated Capsules Pvt. Ltd. vs. Commissioner of Income-Tax, which was conceded by the assessee and not disputed by the Revenue, the Court held that for the purpose of working out deduction under Section 80HHC of the Income Tax Act, net receipts of labour charges are to be included. The Assessing Officer was directed to pass consequential orders accordingly. The issue of whether the reopening was void was not explicitly decided by the High Court, as the appeals were disposed of based on the concession regarding the treatment of labour charges for Section 80HHC calculation.
The High Court modified the ITAT's common judgment and order dated 30/11/2007. While acknowledging the Supreme Court's decision in ACG Associated Capsules Pvt. Ltd. vs. Commissioner of Income-Tax, which was conceded by the assessee and not disputed by the Revenue, the Court held that for the purpose of working out deduction under Section 80HHC of the Income Tax Act, net receipts of labour charges are to be included. The Assessing Officer was directed to pass consequential orders accordingly. The issue of whether the reopening was void was not explicitly decided by the High Court, as the appeals were disposed of based on the concession regarding the treatment of labour charges for Section 80HHC calculation.
The High Court modified the ITAT's common judgment and order dated 30/11/2007. The Court held that for the purpose of working out deduction under Section 80HHC of the Income Tax Act, net receipts of labour charges are to be included. This decision was based on the concession made by the assessee and the undisputed position of the revenue, following the Supreme Court's ruling in ACG Associated Capsules Pvt. Ltd. vs. Commissioner of Income-Tax. The Assessing Officer was directed to pass consequential orders accordingly. The issue of whether the reopening of assessment was void was not explicitly decided by the High Court in this judgment, as the focus shifted to the calculation of deduction under Section 80HHC.