Assessment after merger with another company - Company no longer in existence cannot be an assessee by any stretch of imagination: ITAT

BANGALORE, JUNE 08, 2009: THE assessee as well as the Revenue are aggrieved by the decision of CIT( A)'s impugned order on which both the parties preferred these appeals.

M/s Software & Silcon Systems India Pvt. Limited ( SSSIPL ) was in the business of software services. By virtue of a scheme of amalgamation, the SSSIPL along with another company, called, Trillium software systems India Pvt. Ltd had merged with Intel Technology India Pvt. Limited ( ITIPL ), the appointed date being 1.4.2004. SSSIPL , for the AY 2003-04 (for the previous year 1.4.2002 to 31.3.2003), had furnished its return of income on 28.11.2003 admitting a total loss of Rs.28 ,26,310 /- and book profits u/s 115JB of Rs.3,89,211 . After proceeding its return u/s 143(1), the same was subjected to scrutiny and, accordingly, the assessment concluded, resulting in assessable total income of Rs.19,50,84,606 /-.

Aggrieved, the assessee had approached the CIT(A) pleading that since the assessee [ SSSIPL ] had ceased to exist consequent of its amalgamation with the ITIPL w.e.f . 1.4.2004, the impugned order dated 27.3.2006 passed by the AO was without jurisdiction. The jurisdiction to assess the ITIPL was vested with the Ward 11(2), Bangalore and the impugned order passed by the ACIT , C 12(2) who had no jurisdiction to assess the ITIPL and, hence, the impugned order in question was bad in law. After much deliberations, the CIT( A) had concluded.

"3.4......But, other facts of the case are that the appellant having income-tax liability and attendant income-tax implications for the AY under appeal being prior to the AD of the amalgamation is also not disputed by it The appellant had voluntarily furnished its return, in its former name of SSIPL , in respect of which scrutiny proceedings were initiated on 16/2/2004-which was also prior to the AD. The appellant had participated in the scrutiny proceedings without raising any objection. Thus, on the facts of the case, the appellant was assessable to income-tax to determine its tax liability, if any, for the accounting period prior to the AD of amalgamation. Therefore, the AO, who had the jurisdiction to assess the appellant, in its former name of SSIPL , had rightly assumed jurisdiction to assess it Accordingly , the impugned order is valid in law. In such view of the matter, the objection raised by the appellant, challenging the jurisdiction, is found untenable. Besides, the provisions of the section 292-B of the Act are also supportive to the proceedings initiated.........................."

Another effective ground was directed against the assessing of Rs.5 ,311 on the ground that the same representing the negative cash balance. The AO from the verification of the cash book/petty cash book had found deficit cash balance of Rs.5 ,311 as on 31.12.02. After discussions on the importance of cash book and stating that a big organization like that of the assessee's was supposed to keep its cash book in order and, hence, Rs.5 ,311 was added. After considering the rival submissions, the CIT( A) observed that considering the assessee's size of financial transactions and the assessee's own admission that the negative cash balance had arisen due to clerical error inadvertently, the addition was sustained.

With regard to charging of interest u/s 234B and u/s 234D , the ld.CIT(A) was of the view that charging of interest was mandatory and no appeal can lie against an order charging of interest u/s 234B and u/s 234D , if there were incidence, unless such charging is in contravention to the relevant section. However, he directed the AO to charge interest, if chargeable after considering the relief allowed in his impugned order.

The Revenue has raised three effective grounds which are as under:

In respect of treating the expenditure on purchase of application software as capital in nature, the AO had held that such software was used in its business as the assessee was providing software service; as such it was an asset with enduring benefit during the relevant previous year. The CIT( A), by placing reliance on the decision of ITAT, Bangalore Bench in assessee's own case for the AY 02-03 had observed that as the facts of the case are similar to that of the AY 02-03, directed the AO to allow the said expenditure on application software of Rs.20616386 as revenue expenses.

The assessee-company incurred various expenses under the head 'operating and other expenses'. The AO had disallowed 10% of the said expenditure (excluding software expenses) on the ground that most of the expenses debited are expenses paid to M/s. Intel Technology India Pvt. Ltd., Since these expenses are paid to the holding company, 10% of such expenses are treated as incidental to the business. The CIT( A), in his order held that ad hoc disallowance is not sustainable as the AO instead of verifying the genuineness, unreasonableness, excessiveness of the said expenses, has acted arbitrarily and disallowed 10% without any basis or reason.

In deleting the addition on account of disallowance of international relocation expenses, the CIT had reasoned that this disallowance was made with a cryptic observation that the same was incurred on employees of the ITIPL . In view of the AO had failed to substantiate his action in disallowing the said expenses even in his remand report, the CIT(A) went on to delete the disputed disallowance.

Aggrieved by the action of the CIT( A), both parties, the Revenue as well as the assessee have come up with their respective appeals before the Tribunal.

The Tribunal observed, “The Scheme of Amalgamation was in effect from 1st April, 2004. The AO was duly informed by the assessee vide its letter dated 29/6/2004 addressed to the ACIT , Circle 12(2), Bangalore which has been duly acknowledged by the latter. This goes to prove beyond doubt that the AO was well aware of the fact that the assessee was in non-existence as on the dates on which the assessment proceedings have taken place and subsequent order passed. The company which was no longer in existence cannot be an assessee in any stretch of imagination”.

In over all consideration of the facts and circumstances of the issue and respectfully following the decisions, ITAT was of the considered view that the assessment order passed by the AO was null and void and without jurisdiction and, therefore, cancelled.

Since the Tribunal cancelled the assessment order as null and void, Tribunal was not inclined to adjudicate the other grounds raised either by the assessee or by the Revenue as they have become infructuous.

In the result, the assessee's appeal is allowed and the Revenue's appeal is dismissed as infructuous .

(See 2009-TIOL-342-ITAT-BANG in 'Income Tax')

Tragicomedy in 10 acts

Bangalore: For the first time in Karnataka, an MLA is caught taking bribe. MiD DAY brings you all the action, scene by scene of the trap, the foul-mouthed MLAs and the advocate brigade ...

Act 1: Telephone recording
Hussain Mueen Farook had filed a case against one Nayaaz, who he alleged had forged documents about a site. Nayaaz filed a counter complaint. The police directed Farook to approach KGF MLA Y Sampangi. Sampangi asked Farook for Rs 5 lakh bribe to close the case. Farook recorded the conversation in his mobile phone. Farook then showed the recording to the Lokayukta police, who laid the trap.

Act 2: The Trap
On Thursday at around 1 pm, Farook met Sampangi at the Legislators' House. He paid him Rs 50,000 cash and gave a cheque of Rs 4.5 lakh. Sampangi called the police in KGF and asked them to close the case. The Lokayukta raided and arrested the MLA.

A long road to prison

Act 3: The press conference
Lokayukta justice Santosh Hegde held a press conference at 4 pm. He did not get the MLA out saying he did not want him to be made an exhibit. He requested the press not to click his pictures.

Act 4: The Heart Attack
About 10 supporters of Sampangi came to Lokayukta with an ambulance saying that their leader was having chest pain. They said he was a heart patient and they wanted to take him to the hospital.

Act 5: The advocate brigade
Sampangi asked for an advocate and was provided with not one but many. At first, two advocates came. Then many more came along, but were not let inside. They were sending different law books to the two senior advocates. There were 10 advocates assisting. Meanwhile, the ambulance went back without the MLA.

Act 6: Shown the door
MLC D S Veerayya arrived but was not let in despite him telling them about his position. He then went to the side pretending that he had got a call. He joked about the press taking his photos.

MLA A Renukacharya, who made news after Jayalakshmi, a nurse, accused him of having an illicit affair with her, arrived. He was enraged when he was not let in. He and his followers hit the door with their fists and pushed the door. The constables stood firm. Renukacharya yelled using filthy language, not fit for publication.

Act 7: Hegde meets politicians
The Lokayukta met Veerayya and Renukacharya. Renukacharya again raised his voice and said, "Isn't Sampangi human? Why are you not letting us meet him?" The Lokayukta replied that if he let, people would say it was because Sampangi was from the ruling party. But he later took them to meet Sampangi.

Act 8: Lokayukta asks the press to leave
The Lokayukta asked the press to leave his premises, but got no response. In frustration, he joined his hands and begged them to leave. The police too requested them to leave and accompanied the press out of the premises.

Act 9: Distraction and escape
Renukacharya came out and met the TV channels. He said the Congress had laid the trap to tarnish the BJP's image. While the media were busy with him, Sampangi was taken through the back door so that no one could click his pictures while he was arrested. Sampangi was produced before the magistrate in Koramangala.

Act 10: The Jail
Sampangi was rejected bail, and was sent to Parappana Agrahara jail. He spent the night in jail and will be produced before the magistrate on Friday at 11 pm. The BJP also suspended Sampangi from the party.

Source: http://www.mid-day.com/news/2009/jan/300109-KGF-MLA-Y-Sampangi-Caught-Red-handed-10-acts-Lokayuktha-Corruption-Bribe-takers-Bangalore.htm

Bangalore goes organic

Padma Simha, a young techie, now insists that idlis she makes for breakfast are red in colour. No, she is not seeing things due to long hours in front of the computer; she is just one of a new breed of consumers who want to go organic.

Padma recalls the day when a friend gave her a packet of idli mix prepared from an indigenous variety of rice with a red hue. The mix was made of unpolished grains and she was taken by its unique taste.

"It took some time for us to get used to the colour of the idlis, but the taste made it worth it. Also, there is a texture. You can actually taste the rice," said Padma.

She has now decided to substitute her polished rice with red rice for at least a few meals a week, and plans to take a whole load of organic pickles and jams when leaving for a project abroad.

Padma is not alone. Sumathi Ravi, a 50-year-old homemaker, has regularly used turmeric in her bath for as long as she can remember. But for the last few years she has been swearing by organic turmeric powder. "You can tell the difference from the fragrance," she says.

Organic food is that which is grown without using pesticides or chemical fertilisers and uses renewable resources to conserve soil and water.

Though the market for organic food and products has been less, it won't be too long when it will be accepted as mainstream. Dedicated retail outlets have been springing up around the city and a few of the organic brand names are now quite familiar.

In addition, organic food is not subjected to radiation treatment and artificial colours and is not genetically modified. It includes everything from staple crops such as rice and wheat to vegetables, fruits, pulses, milk, etc.

Wonder food

Health experts say organic food is more nutritious and flavour-rich. Some long-term users of organic products vouch for it.

"I have no stomach upsets, gas problems, belching and other such problems," says Panchasheela, an organic-only consumer.

Organic food has abundant anti-cancer agents. This makes us wonder what we were eating in the name of conventional food.

"Conventional produce being sourced into Bangalore is richly drenched in pesticides, growth hormones and what not", says Arun Kumar, of a retail chain. "They contain lead compounds and traces of arsenic, which have long-term adverse effects", he says.

Increased public health consciousness has helped this market gain importance. But the cost is holding some people back.

However, Prem points out, "It is worth the extra bucks. When we don't mind spending extra for PVR gold class movie tickets or eating junk food, we should not crib about a mere 15 per cent increase in the grocery bill".

sOURCE:http://www.mid-day.com/news/2008/nov/241108-organic-vegetables-News-Bangalore-food-health.htm

Crow steals thunder at match

Guess what BBMP forest cell staff were doing at KSCA stadium? Rescuing a crow, that's what!

The bird was caught in the net that was installed behind the boundary to prevent the ball from hitting the spectators. They had to struggle for about two hours in the rain to rescue the crow. "We saved the crow that was trapped in the net," said Sharath Babu, advisor, BBMP wildlife cell. "It was due to the nets put in the stadium that the crow was trapped."

Trapped

"The crow was trapped in the net near the electronic score board," said Mahesh, a wildlife expert, who rescued the crow. "It was trapped and was struggling to come out of it. And as it was raining, its wings could have been damaged if it was not attended to in time."

Cricketer's concern

An England cricketer on the field reportedly saw the crow that was caught in the net and made a sign to a cameraman near him to look into it, when the match started. Then, they called the BBMP forest cell officials, who later rushed to the spot and rescued the bird. The BBMP staff had to struggle to get in to the stadium, as security persons did not let them in for some time.

"Thanks to the cricketer, who is said to have seen and informed someone about it, we rushed to the place and rescued it after two hours of struggle," he added.

KSCA blamed

Wildlife experts blame KSCA staff for all the mess. They allege that the net was installed unscientifically. "The net has been put unscientifically," said Sharath Babu, wildlife expert. "They may have to face facing legal consequences as putting net at that height proves dangerous for birds. This may also amount to violation of the wildlife protection act."

No comments

Prashanth, KSCA official, said, "All arrangements were made as per the requirements and in accordance with the law."

Source: http://www.mid-day.com/news/2008/nov/241108-Animal-Rescues-Crows-BBMP-staff-KCSA-stadium-Bangalore-News.htm

I'm the boss, says Zulfi

Zulfi Syed is not taking defeat lying down and has alleged that it was he who bagged the maximum number of votes in the Bigg Boss final. Raja Chaudhury and Ashutosh Kaushik stood second and third respectively, he said.

He has also alleged that Rahul Mahajan saw to it that Ashutosh won the show as per his promise to him.

"This portion was not aired on TV. Before leaving the house, Rahul had told Ashutosh that he would spend money, go the extra mile and see to it that Ashutosh wins the show, in front of us. He also said that he would take care of the telecom companies and the votes," said Zulfi.

Zulfi said that he was sure that Ashutosh would win the show.

"When I came out of the house, Shilpa Shetty asked me who I thought had won. I said Ashu. After receiving the award too, Ashu said that the award belonged to Rahul Bhaiyaa. It was an open confession," he said.

'I got maximum votes'

Zulfi also said that he had learnt that he had got the maximum votes, through people in the industry and mediapersons whom he met.

"They all said I was the winner for them. I am happy that Ashu got the money since he comes from a humble background and from a small town," he said. He added that he wanted to "maintain" his "dignity" and is not after the money.

"The way it happened was unfair to both Raja and me since we too spent three months in the house," he said.

On Rahul Mahajan volunteering to leave the house and not apologising after the inmates jumped out of the house, Zulfi said he wanted to make it look as if he had made a sacrifice for the other inmates.

"He wanted to show that he had been charitable by opting to leave the show. He had come to cleanse his image. Even in the house, he kept playing with the word, 'charity'. He also got the Bada Dilwala award," he said.

Zulfi refused to comment on the Rahul-Payal-Monica love triangle saying it was their personal affair. He also refuted rumours that he had an affair with Sambhavna Seth.

He called Diana Hayden commanding. "She was very commanding and did things like hiding food. This was unexpected of a person of her stature, someone who had been Miss World. I never nominated her for eviction though," he said.

Silence as a weapon

He was fond of Debojit and Ehsaan Qureshi in the house.

"Debojit is a straight-forward guy and I liked him the most. I was also friendly with Ehsaanji. With the rest, I knew how much distance I had to keep to maintain my dignity. There is no point in getting into arguments and fights. Silence was my weapon," he said.

Zulfi, however, calls the time spent in the house as a life-time experience. "There were 14 different kinds of people put together. I saw what people could do just for money," he said.

As of now, he has got back to work and is going through some movie scripts.

"I am going to Goa, since my film Taj Mahal is being screened at the International Film Festival of India (IFFI). I will come home to Bangalore next month," he said.

Source: http://www.mid-day.com/news/2008/nov/241108-Zulfi-Syed-Bangalore-Bigg-Boss-contestants-Alleged-foul-Season-finale-Maximum-votes.htm

Saturday is No Honking Day in Bangalore - Horn not OK

November 29 will be a 'No Honking' day. So you'd better take your finger off that horn. A group of volunteers will be going around places educating people about indiscriminate honking and its effects.

Techie Bala Venkat and his team have got together around 500 volunteers for their campaign "No Honk Please".

They will start the event by tagging stickers on vehicles and holding a road show. It will be flagged off from the Nokia office.

Among pollution concerns of air, water, land, and noise, the noise pollution is the one that has the potential for the most damage to humans and wildlife. It is a hidden health hazard that impacts our physical, psychological and intellectual well-being. There is so much noise around, but unlike our eyes, we can't shut our ears.

Louder than a jet

The increasing number of vehicles has made Bangalore one of the noisiest cities. Various studies show that the decibel level of traffic is increasing by the day, and has crossed the maximum permissible limit (on any road, it is 80 decibels); sometimes it's even louder than a jet taking off.

"Other then debilitating physical and psychological effects, noise pollution can result in decreased learning capacity, memory loss, poor language skills, decreased speech development, decreased academic performance and decreased cognitive ability. Damage to health begins at 75 db. Hearing damage begins at 90 db and can be permanent with one exposure of 120 db or more," says Bala.

Besides warnings by the World Health Organization, the Supreme Court had also passed an order directing all state governments to initiate action against noise pollution. The Union ministry of environment had asked the states to forward an action taken report, compiling details on the measures initiated to curb the menace.

Mission peace

"But the government has done nothing in this direction. So we started the 'Mission Peace Bangalore' Our primary goal is to reduce noise pollution levels caused by honking and autos/bikes that remove or tamper with their silencers," says Siddalingam Prasad, who also works for this cause. Schoolchildren, BMTC and auto rickshaw drivers and others will be educated on the use of horns. ENT experts will speak about the side effects of noise pollution.

"I think instead of telling the people to stop making noise, we need to take it to a higher level and ask companies like Bajaj and Tata to come up with less noisy engines. The autos need to have silencers. It is mainly the driver who is affected so it is important that something is done to curb this problem," says Leo Saldanha, environmentalist.

Source: http://www.mid-day.com/news/2008/nov/241108-No-Honking-Day-November-29th-Bangalore-News-Saturday.htm

Auto-tracking device coming soon in Bangalore - Now follow your vehicle

Auto-tracking devices meant to track down missing vehicles at the click of a button will soon be available in the state.

Introduced by Auto Track Systems India Limited, the system will help police as well as motorists monitor vehicles.

"One person can monitor many things at the click of a button," said Kamal Jadhwani, managing director, Auto Track systems India Limited.

Any vehicle with I-track device, if goes missing, can instantly be traced on web. While this tracking system is helpful to the police, M-track works as a personal tracking system with which individuals can track their vehicles.

How it works

While I-track device is used four-wheelers, M-track devices can be used not just for tracing vehicles, but it can be fitted to other objects like laptops, mobiles and even school bags of kids.

Information on I-track system is constantly displayed in auto track website. Police can easily track down missing vehicles using this system.

It also has Geo-fencing facility, where an alert is made if the vehicle crosses prescribed geo-fence area.

M-track system will be connected to the mobile phone of an individual user. This will keep him constantly updated about the position of the object that has M-track device. The system is based on RFI (Radio Frequency Identification) technology. Wireless telecom network is used in which most parts of country is covered.

Cost effective?

While an I-track device costs Rs 22,000, M-track device costs Rs 21,000. But if I-track devices are installed by the state government, Auto Track Systems may decrease the price.

"We are holding talks with the state government. The government has considered our proposal to introduce this system in the state. At first we plan to have this technology as a pilot project in selected 1,000 vehicles," said Manjunath T A, manager, Melcole Communications, which is working with Auto Track Systems.

Cost of devices

I-Track
Device cost Rs 17,000
Yearly usage cost Rs 3,000
Installation charge Rs 2,000

M-Track
Device cost Rs19,000
Yearly usage cost Currency available, starts with Rs 250
Installation charge Rs 2,000

Source; http://www.mid-day.com/news/2008/aug/050808bang5.htm