The original demand of Rs. 225.86 crores comprised of two components as per the petitioner. The two components were Rs. 114 crores towards the alleged principal tax liability and Rs. 110 crores towards the purported interest liability. We shall first consider the Rs. 110 crores interest liability. According to the learned counsel for the petitioner the said figure of Rs. 110 crores can be broken up into three components.
Assessee had produced relevant evidence before the CIT (Appeals) establishing that all the persons, who had deposited the share application, were not fictitious persons. Most of them were identifiable; they made the payment by cheques and most of them were assessed to Income-tax. The Tribunal has given further relief to the assessee and has not accepted the argument of the department that the explanation furnished by the assessee for the addition under Section 69 on account of unexplained investment was not to the satisfaction of the Assessing Officer.
Arrangement by which the respondent-assessee sent tickets to the stockists who in turn sold the same to their agents did not indicate that the sale took place at the point of dispatch of tickets to the stockists. We also notice that the unsold tickets are to be returned to the organizing agent of the respondent-assessee at least one day before the actual date of the draw and any tickets received thereafter would not be accepted and treated as sold by the stockists. This makes it clear that those tickets which are returned by the stockists cannot be treated as having been sold. The corollary to this is that mere dispatch of tickets to the stockists would not entail a sale. It is only those dispatches of tickets which are not returnable in the manner indicated above which would be recorded as sales. Thus, till the date of the draw or just prior to the date of the draw it cannot be ascertained as to whether the dispatched tickets were actually sold or not. We, therefore, agree with the view taken by the Tribunal and consequently, decide this question in favour of the assessee and against the revenue.
Apex Court has observed in Ajantha Industries (supra) is that while transferring the case on the ground of co-ordinated investigation, some reason has to be given by the commissioner which reveals why it is necessary to transfer the case for the purpose of co-ordinated investigation. In our view unfortunately Commissioner of Income Tax apart from stating that case has been transferred for co-ordinating investigation has not given any other reason. Impugned order is therefore quashed and set aside.
The other ground on which the CLB interfered with the decision at the board meeting held on 31-10-2012 was that the notices of the board meeting were issued at a time when the Respondent was not in the country and was stuck in New Jersey, USA, which was admittedly hit by a hurricane. While the notice was properly delivered to the Respondent, its request for adjournment of the meeting could have been easily accommodated by the Appellants. Nevertheless, they went ahead and held the meeting. This has been sought to be remedied by the impugned order of the CLB by directing that a fresh board meeting be convened. In the facts and circumstances, the CLB was justified in issuing the said direction. What however cannot be sustained in law is the direction that in the fresh board meeting, effect must be given to clause 6.2 of the JVA. That portion of the impugned order is, therefore, set aside.
Though the Assessing Officer invoked penalty under Section 27(1)(c) of the Act and stated that the assessee failed to furnish complete details from bank statement, on going through the materials placed before this Court, it is seen that the Assessing Officer has subsequently found that the said deposit was made for the period commencing from 01.04.2004 to 29.03.2005.
For these reasons, we have come to the conclusion that the Petitions would have to be allowed. We accordingly allow the Petitions by quashing and setting aside the notices under section 148 of the Income-tax Act, 1961 purporting to re-open the assessment for A.Ys. 2005-06, 2006-07, 2007-08 and 2008-09. Rule is made absolute in the aforesaid terms. There shall be no order as to costs.
The case of the revenue is that the respondent assessee is not entitled to concessional rate of tax provided in Article 12 of DTAA on the ground that it is not the beneficial owner of the musical tracks in respect of which the royalty income was earned. Thus, not entitled to concessional rate of tax at 10% under DTAA as held by the Assessing officer.
Commissioner of Income Tax (Appeals) as well as Tribunal both were satisfied with regard to identify and creditworthiness of the donors and genuineness of the gifts. Learned Tribunal also satisfied that there is no room to doubt about love and affection of the donors with the assessee as donors were brothers of the assessee. Therefore, gifts could have been given without any occasion and only for the love and affection with the assessee.
With regard to the amendment to section 2(14), which has been brought about by the Finance Act, 2007 w.e.f. 1.4.2008 and which alters the clause pertaining to ‘personal effects’ in the manner indicated below, we may say straightaway that the same would not apply as it has prospective operation with effect from 01.04.2008, whereas in the present case the assessment year is 2002-03.
