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Case Laws
Showing 101 to 120 of 637 Records
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2004 (12) TMI 636 - ITAT MUMBAI
Deduction of tax at source - Taxability of payment for preparation of Material Safety Data Sheets (MSDS) u/s Article 12(4) of the Indo-Swiss Tax Treaty - remittance for payment of invoice - Rate of tax applicable on technical services u/s Article 12 of the Indo-French Tax Treaty -
HELD THAT:- It is also an undisputed position that under the Indo-Swiss Tax Treaty, the payment in question can only be taxed in India in case the provisions of article 12(4) are held to be applicable. We may also mention that, as held by the Tribunal in the case of Maharashtra State Electricity Board v. Dy. CIT [2003 (8) TMI 165 - ITAT BOMBAY-H], in a case the foreign recipient of an income is held to not liable to tax in respect of a certain income, the payee can also not be saddled with the tax deduction at source liability in respect of the related remittance.
Thus, we hold that the assessee was not liable to deduct tax at source in respect of payment of CHF 8,000, for making the material safety data sheets, to M/s. RCC Registration & Consulting Company Limited, Switzerland. We, therefore, set aside the orders of the authorities below on this issue.
Rate of tax - The Indo-US Tax Treaty defines the ‘taxable year’ as ‘previous year’ so far Indian laws are concerned. Therefore, the applicability of the rate of 15 per cent, which is effective after five taxable years after the treaty coming into force, is relevant from previous year 1996-97. In other words, the rate of tax, so far as royalties and fees for technical services earned by the persons covered by the Indo-French DTAA after 1st April, 1996 are concerned, is to be applied at the rate of 15 per cent. We need not go beyond this point so far as the impact of protocol clause is concerned.
As we have already noted, as far as previous year 1996-97 and subsequent years are concerned, the correct rate of tax is 15 per cent. By the virtue of protocol clause 7, which is recognized by and given effect to by the CBDT itself, the same rate should also apply on the Indo-French DTAA. The grievance of the assessee is quite justified.
We may clarify that even though we have referred to the CBDT notification earlier in this order, it is also necessary to add that, as the Tribunal held in the case of ITC Ltd. (supra), "the benefit of lower rate or restricted scope of ‘fees for technical services’ under the Indo-French DTAA is not dependent on any further action (e.g. notification referred to by us) by the respective Governments, unlike the situation envisaged in, for example, para 4 of protocol to India-Philippines DTAA or para 3 of protocol to Indo-Swiss DTAA". Since we have concluded that on merits the lower rate of 15 per cent in the Indo-US Tax Treaty was applicable with effect from previous year 1996-97, the same benefits are also available to the persons covered by the Indo-French Tax Treaty.
Thus, we uphold the grievance of the assessee. We, accordingly, direct the Assessing Officer to apply the tax rate of 15 per cent as claimed by the assessee. The excess amount collected will be refunded by the Assessing Officer.
In the result, both the appeals are allowed.
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2004 (12) TMI 635 - ITAT JAIPUR
Business expenditure, ... ... ... ... ..... er to examine the issue in the light of decision of Hon rsquo ble Supreme Court in the case of Bharat Earth Movers v. CIT 2000 245 ITR 428 . In set aside assessment, the Assessing Officer, vide her order dated 26-12-2002, has found that issue is covered by the decision of Hon rsquo ble Supreme Court, supra, and, accordingly, allowed the provision of leave encashment in case of assessee for assessment year 1993-94. 25. After having considered the facts of the case and also respectfully following the order of this Bench for the assessment year 1993-94, this issue is restored to the Assessing Officer with the direction to reconsider the claim of the appellant in the light of decision of Hon rsquo ble Apex Court in the case of Bharat Earth Movers (supra). Thus, the Cross Objection filed by the assessee is allowed for statistical purpose. 26. In the result, the appeal filed by the Revenue is allowed and the Cross Objection filed by the assessee is allowed for statistical purposes.
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2004 (12) TMI 634 - ITAT, MUMBAI
Capital gains ... ... ... ... ..... cited supra squarely applies to the facts of the case on hand. Hence, respectfully following the decision of Hon rsquo ble Madras High Court cited supra, we are inclined to hold that the sale proceeds of old bottles amounting to Rs. 7,82,388 is taxable as short-term capital gains under section 50 of the Income-tax Act, 1961. Accordingly, we are holding that the bottles costing less than Rs. 5,000 constitute part of block of assets as contemplated under section 2(11) of the Act and attracts the provisions of the section 50 of the Act. Thus, our answer to question No. 1 is positive/affirmative. 7. Since the question No. 1 has been answered in positive, there is no need for us to deal with the question No. 2 since it is to be answered only when the answer to question No. 1 is in the negative. 8. Now, this will go before the Division Bench to be given effect to while deciding other issues (which were not referred to this Special Bench) in the normal course. We order accordingly.
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2004 (12) TMI 633 - ITAT COCHIN
Income escaping assessment, Business income ... ... ... ... ..... venue and in favour of the assessee. 22. The fourth ground (effective third ground) for both the years under consideration is against the order of the Commissioner of Income-tax (Appeals) in confirming the disallowance of certain business expenditure claimed. The Assessing Officer disallowed and the Commissioner of Income-tax (Appeals) confirmed the disallowance of expenditure incurred by the assessee towards the payment of VRS for head office and sales office staff and gratuity paid to the retired employees as part of the BIFR scheme. We have already held hereinabove that the rental income received by the assessee is to be treated as income from business and as such this ground becomes academic interest. The Assessing Officer is directed to give consequential relief to the assessee. 23. The Stay petitions moved by the assessee become infructuous and as such they are dismissed. 24. In the result, the appeals are allowed whereas the stay petitions are dismissed as infructuous.
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2004 (12) TMI 632 - ITAT DELHI
Tax on dividends, royalty and technical services ... ... ... ... ..... essee has been claiming its status as a foreign company and has nowhere raised this issue in the appeal itself. Therefore, the assessee company cannot raise this issue by way of this Miscellaneous Application alleging that there is a mistake apparent from record. Hence the contention is not legally sustainable. 18. As regards the 3rd apparent mistake as referred to above it may be mentioned that under section 115A, no deduction is allowable in respect of expenditure under assessment year provision of the Act in computing the foresaid incomes of foreign company. Further, where the gross total income of these assessees consist only of the above named incomes no deduction shall be allowed to them under Chapter VIA of the Act. Therefore, the Tribunal has impliedly rejected the claim of the assessee while dismissing the appeals of the assessee. In view of the above, the Miscellaneous Application is partly allowed. 19. In the result, the Miscellaneous Application is partly allowed.
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2004 (12) TMI 631 - ITAT MUMBAI
Preliminary expenses, Deductions ... ... ... ... ..... of the jurisdictional High Court in the case of Maganlal Chaganlal reported in 236 ITR 515 (SC), the disallowance of Rs. 9,16,09,210 is hereby confirmed. From the above, it is seen that the ld. CIT(A) has not at all gone into the question as to whether the proportionate expenditure estimated by the Assessing Officer represents the actual expenditure incurred by the assessee in earning the dividend income. In our view, the expenditure which has nexus with earning of dividend income should be deducted from the gross dividend before allowing deduction under section 80M. This issue is, therefore, restored back to the Assessing Officer with the direction that opportunity may be allowed to the assessee for producing the details and after verifying the details actual expenditure incurred by the assessee for earning dividend income may be determined and the deduction under section 80M may be recomputed accordingly. 10. In the result, the assessee rsquo s appeal stands partly allowed.
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2004 (12) TMI 630 - ITAT DELHI
Agricultural income ... ... ... ... ..... filing the return. The ld. Departmental Representative sought to place reliance on the decision of the Delhi Bench of the ITAT in the case of Proagro Seeds Co. Ltd. v. Jt. CIT 2003 126 Taxman 37 (Delhi)(Mag.). We have perused the said decision. It was a case where the assessee was growing various kinds of hybrid germ seeds after conducting agri genetic agricultural research costing crores of rupees. Income earned on sale of such seeds was claimed as income from the agriculture, which was refused by the Tribunal. The facts in the present case are different and therefore, the said decision is not of any help to the case pleaded by the assessee. Considering the facts and circumstances of the present case we are of the view that the CIT(A) was fully justified in coming to the conclusion that the income in question was agricultural income. We therefore, confirm the order of the CIT(A) and dismiss the appeal by the Revenue. 14. In the result, the appeal by the Revenue is dismissed.
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2004 (12) TMI 629 - ITAT MUMBAI
Business expenditure ... ... ... ... ..... . Ground No. 4 is thus allowed in these terms. 11. In ground Nos. 5 to 9, the assessee has raised grievance against the CIT(A) rsquo s sustaining the addition of Rs. 75,10,253 in respect of Modvat. This issue is also now settled by the Hon rsquo ble Supreme Court rsquo s judgment in the case of CIT v. Indo Nippon Chemicals Co. Ltd. 2003 261 ITR 275 . Accordingly, we direct the Assessing Officer to give necessary relief in respect of the aforesaid disallowance of Rs. 75,10,253 in terms of the principles laid down by the Hon rsquo ble Supreme Court. 12. Ground Nos. 5 to 9 are thus allowed in these terms. 13. Ground No. 10, which pertains to the disallowance of guest house expenses, has not been pressed by the assessee as the same is covered against the assessee by Special Bench decision in the case of Eicher Tractors Ltd. v. Dy. CIT 2003 84 ITD 49 (Delhi). In this view of the matter, no adjudication is required by us. 14. The appeal is thus allowed in the terms indicated above.
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2004 (12) TMI 628 - ITAT MUMBAI
... ...
... ... ..... uo s case (supra). Respectfully following the decision of the jurisdictional High Court in Burmah Shell Refineries Ltd. rsquo s case (supra) it is held that what the assessee exported during the previous year was nothing but mineral oil within the meaning of section 80HHC(2) and hence was not eligible for deduction under section 80HHC in respect of the income derived from export of calcined petroleum coke. In conclusion we agree with the views taken by the CIT(A) that the assessee is not entitled to deduction under section 80HHC. 11. We also agree with his conclusion that the income derived by way of interest from deposit in Bank cannot be said to have been derived from export business. This view is supported by the judgment of the Hon rsquo ble Supreme Court in Pandian Chemicals Ltd. v. CIT 2003 262 ITR 278 . In view of the above, we are in complete agreement with the order of the CIT(A), the same is upheld. 12. As a result, all the six appeals of the assessee are dismissed.
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2004 (12) TMI 627 - ITAT BANGALORE
Deductions, Income escaping assessment, ... ... ... ... ..... l undertakings but to control the mischief which might otherwise take place. From the facts in hand before us, there is a clear indication that the assessee started manufacturing new components for which purpose it installed new machinery costing Rs. 44,89,892 at the new premises. A fresh licence was applied for and obtained. The old machinery was with WDV of Rs. 1,45,557 only which was transferred which constituted only 4 of the value of the new machinery. In our considered opinion, the finding of the authorities below that it is merely a case of shifting of premises from the old to the new, is not founded on facts and so is not justified. In view of these facts and judicial pronouncements, on merit also, the assessee deserves the benefit of relief under section 80-IA of the Act. Therefore, even on this count also, the appeal of the assessee deserves to be eligible for claim of relief under section 80-IA of the Act. 15. In the result, the appeals of the assessee are allowed.
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2004 (12) TMI 626 - ITAT MUMBAI
Disallowance u/s 40A(2) for payment to sister concern - professional charges - interest to clients on Government securities - brokerage paid to a sister concern - losses claimed against income from Government securities.
HELD THAT:- The CIT(A) has also dealt with the matter at an equally superficial level by only modifying the quantum and without giving any cogent finding about the conditions of applicability of section 40A(2) being satisfied. Unless there is a clear finding that the market value of the services taken from the sister concern is less than the price at which the services are obtained, there cannot be an occasion to apply the disabling provisions of section 40A(2). This exercise, therefore, necessitates a finding about the fair market value of such services. For this reason alone, the disallowance u/s 40A(2) is inherently unsustainable in law on the facts of this case. It is also noteworthy that the services in question are essentially of such a nature that there cannot even be any generalizations about as to what should be the fair market value.
The charges of professional advice of X lawyer may not necessarily comparable with the charges of Y lawyer, and same should be the case of investment consultants. The factum of expenditure, as also the expenditure being in the nature of business expenses, is not in doubt. There is no material to even suggest, leave aside establish, that the expenditure incurred by the assessee is excessive vis-a-vis the fair market value of such services. We are, therefore, of the considered view that it was not a fit case for invoking the provisions of section 40A(2) on the facts of the case. The CIT(A) should have deleted the entire disallowance.
On this issue, therefore, we uphold the contention of the assessee and reject the contention of the revenue. The entire disallowance is to be deleted.
Ground No. 3 in revenue’s appeal is dismissed and ground No. 3 in assessee’s appeal is allowed.
Interest to clients on Government securities - loss incurred for unauthorised use of public money is not be allowed as a deduction in business expenditure - HELD THAT:- As a matter of fact, use of public funds, through such transactions, for financing own business was common enough for the brokers to be termed as a normal financing mode. The very funding of the working capital in the cases of some brokers may be through unscrupulous means but as long as the interest is paid for using the funds which are employed in business, interest continues to be an allowable deduction. The use of fraudulent means to raise the funds, by itself, does not make the interest non-deductible, more so when interest is beyond doubt or dispute compensatory in nature. The payment of interest in such cases cannot be said to be public policy either. In view of these discussions, we approve the conclusions arrived at by the CIT(A). No interference.
Ground No. 4 is dismissed.
Brokerage payment - There is enough material to demonstrate the factum of services having been rendered by the N.M. Murarka & Co. Once again the disabling provisions of section 40A(2) are invoked but the conditions precedent for invoking the said section are again not satisfied. There are no findings about the fair market place of the services being less than the payments made by the assessee for the same. An expenditure being excessive cannot be inferred based on some subjective perceptions of the authority dealing with the same; it has to be based on cogent material on record. That is not the case there. Thus, we are of the view that the CIT(A) ought to have deleted the entire disallowance. We, therefore, reject revenue’s grievance on this issue and uphold the assessee’s grievance on the same.
Accordingly, ground No. 5 is revenue’s appeal is dismissed and ground No. 4 in assessee’s appeal is allowed.
Income from Government securities - Since the exercise of examination of details involves going through voluminous evidence, we consider it appropriate not to do it first time at the Tribunal level but to remit the matter regarding claim for all these losses to the file of the Assessing Officer for examination de novo by way of a speaking order, in accordance with the law and after giving a fair and meaningful opportunity of hearing to the assessee. We have also noted that in some cases the CIT(A) has deleted the disallowance of losses only because the Assessing Officer had accepted the same in the remand report proceedings. Once the Assessing Officer himself accepts that, it is certainly not open to him to backtrack now and demand re-verification of claim. Barring this rider, the Assessing Officer shall examine all the claims for losses afresh in accordance with the above directions.
Ground No. 7 in revenue’s appeal and ground Nos. 8 to 18 in assessee’s appeal are thus allowed for statistical purposes.
The appeal filed by the revenue is, therefore, partly allowed.
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2004 (12) TMI 625 - ITAT MUMBAI
Expenditure incurred in relation to income not includible in total income, Interest on borrowed capital
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2004 (12) TMI 624 - ITAT KOLKATA
Business income, Interest on borrowed capital, Business disallowance ... ... ... ... ..... . 16,128 being the amount of employee rsquo s and employer rsquo s contribution to P.F. 39. We have heard both the parties and have gone through the orders of the authorities below. Having regard to the amendment made in the 1st proviso to section 43B of the Act by the Finance Act, 2003 with effect from 1-4-2004, which is held retrospective in nature by ITAT Benches of Kolkata in various cases, we direct the Assessing Officer to readjudicate this issue by ascertaining as to whether the payment of Rs. 14,039 and Rs. 16,128 being the amount of employees and employer rsquo s contribution to P.F. has been paid either within the relevant financial year or within the due date of filing the return of income applicable in the case of the present year and if it is so found, the Assessing Officer is directed to allow the same, otherwise the disallowance of these amounts is called for. 40. In the result, the appeal filed by the revenue is partly allowed in the manner as indicated above.
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2004 (12) TMI 623 - ITAT HYDERABAD
Undisclosed income, Service of notice ... ... ... ... ..... duly authorized by him in that behalf. The burden of proof in this case is not discharged by the revenue by placing relevant material to substantiate the plea that the assessee was served with proper notice. In the absence of such proof, the substituted service cannot be held as one, which is validly effected. (Please see page 9236 of Income-tax Law by Chaturvedi and Pithisaria, 5th Edition, Vol. VI). 17. The Hon rsquo ble Punjab and Haryana High Court in the case of CIT v. Har Parshad 1990 178 ITR 591 held that an assessment is not valid if the same is completed in a case without properly servicing a notice. 18. As the revenue could not demonstrate that notice under section 158BD has been served on the assessee, we have to necessarily hold that the service is bad in law and that consequently in the light of the case cited supra, the assessment has to be cancelled and the appeals of the assessee have to be allowed. 19. In the result, the appeals of the assessees are allowed.
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2004 (12) TMI 622 - ITAT INDORE
Eligible projects or schemes ... ... ... ... ..... hus, the assessment order are erroneous insofar as prejudicial to the interest of revenue. The judgments relied on by the ld. DR support this established position of law that the ld. CIT is very much empowered to invoke provisions of section 263 when assessment order is erroneous and prejudicial to the interest of revenue. The Hon rsquo ble Supreme Court in the case of Malabar Industrial Co. Ltd. (supra) has been pleased to hold further that where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the Income-tax Officer is unsustainable in law. In the present case the view taken by the Assessing Officer is not unsustainable in law, to justify the impugned action of the ld. CIT. 15. The revisional order in question is thus set aside and assessment order is restored. In result appeals are allowed in favour of the assessee.
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2004 (12) TMI 621 - ITAT AGRA
... ...
... ... ..... and the Ld. Assessing Officer is liable to be directed not to act thereupon. 15. We noted that the assessment order passed under section 144 read with section 148 was barred by limitation. Therefore, the directions given by the CIT(A) that the Assessing Officer shall be free to take necessary steps to correct this situation within the frame-work of new scheme of making assessment, which was introduced after 1-4-1989, are not justified. In our view any illegal order cannot be legalized by any Appellate Authority. Once the order was annulled and decided that the same is barred by limitation of time, therefore, the Assessing Officer cannot be asked to legalize the assessment order. There is no such provision under the Act to frame fresh assessment order even if the assessment so passed was held barred by limitation. Hence, the cross objection of the assessee is allowed. 16. In the result, the appeal of the revenue is dismissed and the cross objection of the assessee is allowed.
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2004 (12) TMI 620 - ITAT MUMBAI
Form of appeal and limitation
... ... ... ... ..... ection with the said return. In the light of the above discussions, in our considered view, the provisions of section 249(4) will not apply in a case where the appeal is not relatable to the assessment of income, such as penalty for being an assessee in default under section 221. 10. For the detailed reasons set out above, we are of the considered view that the CIT(A) should have admitted the appeal and considered the same on merits. We, therefore, deem fit and proper to direct the CIT(A) to dispose of the appeal on merits in accordance with the law, by way of a speaking order and after giving due and fair opportunity of hearing to the assessee. Accordingly, the matter stands, restored to the file of the CIT(A) with the above directions. For this reason, we also see no need to address ourselves to merits of the case and decline to deal with the grounds challenging imposition of penalty under section 221 on merits. 11. In the result, appeal is allowed for statistical purposes.
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2004 (12) TMI 619 - CESTAT, NEW DELHI
Demand - Clandestine removal ... ... ... ... ..... s penalty, it is being submitted that it has been already held by the Larger Bench of the Tribunal in the case of CCE, Delhi-III v. Machino Montell (I) Ltd., reported in 2004 (168) E.L.T. 466 (Tribunal-LB) 2004 (62) RLT 709 that when the duty liability is honoured before the issue of notice no penalty is warranted. 6. emsp On perusing the relevant records, I find that the appellant rsquo s explanations in regard to the duty amount and penalty merit acceptance. In regard to the ACs, since there is only one clearance in the gate register for 27th and 28th, the invoice dated 27-3-98 is required to be accepted as covering the clearance of 28-3-98, particularly so, in view of the fact that the vehicle nos. and Sl. Nos. mentioned in both the register and invoice are the same. In respect of the 4 washing machines, the order has been passed by the lower authorities without taking into account invoice No. 4. In result, the appeal is allowed. (Pronounced and dictated in the open Court)
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2004 (12) TMI 618 - CESTAT, KOLKATA
... ...
... ... ..... 1), the memorandum of appeal shall be signed and dated by the officer competent to make an the endorsement under rule 7. (4) emsp The President may in his discretion authorize any officer of the Tribunal to return any memo of appeal, application or document(s) which is/are not in accordance with the Customs, Excise and Gold (Control) Appellate Tribunal (Procedure) Rules, 1982. The Officer so authorised may, however, allow the documents to be refilled after removal of the defects in the specified time. On representation the Bench concerned may in its discretion either accept the memorandum in terms of 11(1) or reject the same in terms of 11(2) but the appeal/application may not be restored to its original number unless the Bench allows it to be so restored on sufficient cause being shown. rdquo 4. emsp Since the defects have not been removed by the Appellant, we reject the Appeal under Rule 11(2) of the CEGAT (Procedure) Rules, 1982. (Dictated and Pronounced in the open Court)
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2004 (12) TMI 617 - CESTAT, MUMBAI
Demand and penalty - SSI exemption ... ... ... ... ..... rance of Rs. 30 lakhs. It cannot be said that the appellant opted for payment of duty at a concessional rate even in respect of first clearance. It is only in case of exercise of option, an assessee cannot be allowed to revert back to the exemption. In the instant case, however, the option to pay duty was never exercised. The appellant right from the beginning cleared the goods at nil rate of duty. The non-mention of ldquo nil rdquo rate in the classification list was as a result of an inadvertent error, which the appellant realised subsequently and took steps to rectify the same by way of filing revised classification list. 5.In these circumstances, I am of the view that the confirmation of demand of duty against the appellant by denying them the benefit of small scale exemption notification is not justified. For the same reasons, penalty is also unsustainable. 6.In view of the foregoing, the appeal is allowed with consequential relief to the appellant. (Pronounced in Court)
............
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