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2009 (4) TMI 944 - ITAT JAIPUR
Liability to deduct tax u/s 194J or 194C - Payment of wheeling charges (transmission charges) and State Load Dispatch Centre Charges (SLDC charges) as fees for technical services - liability of interest u/s 201(1A) and tax u/s 201(1) - The Jaipur Vidhyut Vitran Nigam Ltd., the assessee (JVVNL) is a company incorporated under the Companies Act, 1956 - 100 per cent Government company in consonance with a mandate prescribed under the Rajasthan Power Sector Reforms Act, 1999.
What is the nature of payment of wheeling/transmission/ SLDC charges on the basis of documents on records and the facts explained and after considering the nature of such payments as well as facts on records whether the same is liable for deduction of tax at source under the IT Act, 1961 specifically under s. 194J which provides for deduction of tax at source on payment of fees for professional or technical services?
HELD THAT:- From all these clauses of transmission service agreement, it is clear that all the parties involved with generation, transmission and distribution of electricity are to comply with the direction of SLDC and the Regulatory Commission for achieving the economy and efficiency in the operation of power system and therefore question of any person rendering service to another does not arise. The operation and maintenance of transmission lines by RVPNL and the use of these lines by assessee for transmitting energy does not result into any technical services being rendered to the assessee. The technical staff of RVPN by operating and maintaining its grid station and transmission lines simply discharge their function. They do not render any technical service to the assessee.
Section 194J would have application only when the technology or technical knowledge of a person is made available to others and not where by using technical systems, services are rendered to others. Rendering of services by allowing use of technical system is different than charging fees for rendering technical services. The applicability of s. 194J would come into effect only when by making payment of fee for technical services, assessee acquired certain skill/knowledge/intellect which can be further used by him for its own purpose/research. Where facility is provided by use of machine/robot, or where sophisticated equipments are installed and operated with a view to earn income by allowing the customers to avail of the benefit by use of such equipment, the same does not result in the provision of technical service to the customer for a fee.
On going through the paper book filed by the Department we note that as per those papers only some report/letters has been issued by the TDS officer requiring the deduction of tax at source on such, payment. Similarly M/s Hindustan Zinc Ltd. deducting the tax at source under s. 194C in respect of payment of transmission charges to RVPN cannot lay down the law. Here it would be pertinent to mention that even the CIT(A) in assessee's own case for asst. yr. 2006-07 against the order of AO under s. 143(3) has given a finding on p. 54 of his order that these payments are not covered under s. 194C against which no appeal is filed by the Department though we are otherwise convinced with the argument of learned Authorised Representative that s. 194C is not applicable on this payment in view of the detailed submission made in this regard at paper book pp. A-18 to A-21.
The case of CANARA BANK. VERSUS INCOME-TAX OFFICER, TDS - 1, SURAT. [2008 (2) TMI 515 - ITAT AHMEDABAD-B] in respect of payment of MICR charges to SBI which involved human skill and computerised machine and not simply making available the technical equipment working on its own and therefore held to be a payment towards managerial services. The decision in the case of DR. HUTAREW AND PARTNER (I) (P) LTD. VERSUS ITO [2008 (9) TMI 414 - ITAT DELHI-C] is with reference to s. 195 and not s. 194J. In this case also the non-resident to whom payment was made was not maintaining any server for everybody that anyone can feed the data and get the solutions. The solutions were provided on the specific needs of the customers. The information supplied is specific which helps the assessee in finalizing its design. The information supplied to the assessee was a technical information which has been used in further generating the product of the assessee. Therefore, such specific client based information was held not equitable with the standard services provided by telecommunication company. Thus these decisions are quite distinguishable and not applicable on the facts of the present case. We therefore hold that there is no liability to deduct tax at source on payment of transmission/wheeling/SLDC charges under s. 194J or for that matter under s. 194C.
Thus, the lower authorities were not justified in holding that the assessee is liable for deduction of tax at source on the payment of transmission/SLDC charges to RVPN. We thus set aside the order of the lower authorities and allow the ground of the assessee.
Demand of interest under s. 201(1A) relying on Circular No. 275, dt. 29th Jan., 1997 - ITO (TDS) held that the assessee was liable to deduct the tax at source on the payment of transmission/wheeling and SLDC charges - HELD THAT:- The provision of the Act is a measure to compensate the Revenue for delay in payment of taxes. In the present case, RVPN to whom transmission charges are paid are assessed with the same AO with whom the assessee is assessed with. RVPN has regularly filed its return of income for asst. yrs. 2005-06 to 2008-09 declaring nil income and having substantial carry forward of unabsorbed depreciation. For asst. yrs. 2005-06 and 2006-07, RVPN is assessed under s. 143(3) at nil income with substantial carry forward of unabsorbed depreciation. Thus RVPN has no tax liability and it has been allowed the refund of tax which was deducted at source on some other payments by some other parties. Thus, there is no loss of revenue to the Department by not deducting tax at source by the assessee on the transmission payment.
In the present case, from the copy of the IT return for asst. yrs. 2005-06 to 2008-09 and copy of the assessment order for asst. yrs. 2005-06 and 2006-07, it is noted that whatever tax was deduted at source has been claimed/allowed as refund to RVPN. Therefore no interest under s. 201(1A) for earlier years is leviable on the assessee.
Appeal allowed.
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2009 (4) TMI 943 - ITAT DELHI
Addition on expenses incurred on legal and professional expenses as capital expenditure - enduring benefit - CIT(A) allowed the claim of the assessee as the expenditure was incurred for increasing the efficiency and import of the assessee in getting the work done for the clients and the assessee did not acquire any asset out of the said payment.
HELD THAT:- No enduring benefit can be said to have obtained by the assessee. The consultancy charges were paid to Laxmi and Associates for brokerage charges for obtaining office space on lease for acquiring office space on lease and not for acquiring any capital asset. The consultancy charges were paid to Bharat S. Raut and Co. for preparation of agreement for legal costs cross charges, marketing cost cross charge, advice on exchange control issues for the aforesaid agreement, advice on withholding tax for remittance of the aforesaid agreement for preparing cost sharing arrangement of legal cost and marketing cost with the parent company in USA. The company has also incurred a total amount. It comprises of payment to M/s QSYS Constants for implementing ISO 9001: 2000 based Quality Management System as the major part of the amount was paid for professional fee to M/s QSYS.
In this connection, reliance was placed on various decisions of the Hon'ble High Court in which it has been that any expenditure which improves efficiency and does not lead to any additional asset is a revenue expenditure. Therefore, this expenditure, in our opinion, cannot be treated as capital expenditure.
The consultancy charges paid to Design and Development for planning, designing the interiors, a leased premises. This expenditure also, is to be treated as a revenue expenditure and cannot be said to be capital expenditure as no enduring benefit has been obtained by the assessee. The consultancy charges paid to Keystone for architectural services such as layout plans, work station details, toilet details, false ceiling plan etc.
A similar view in this regard was held in B and A Plantation vs. CIT [1999 (12) TMI 43 - GAUHATI HIGH COURT] and Modi Spinning and Weaving Mills Co. Ltd. vs. CIT,[1992 (10) TMI 76 - DELHI HIGH COURT] observing that expenditure on items like fixing false ceiling, painting, making some structural charges are of a revenue nature. Therefore, the decision of the CIT(A) deserves to be upheld and we do so. Therefore, this ground of the revenue is dismissed.
Disallowance of depreciation on computer peripherals and computers accessories - claimed a depreciation @ 60% - AO did not accept the claim of the assessee and reduced the said deprecation to 25% - CIT(A) accepted the plea of the assessee that the "Router" which is an integral part of the computer system without which it is unable to connect the high speed computers with the internet and also with the internal Local Area Network and allowed the depreciation claimed.
HELD THAT:- We are of the considered view that the decision taken by the CIT(A) in this regard is correct and deserves to be upheld. A "Router" is a device that forwards data packets along networks and is connected to at least two networks, commonly known as Local Area Network (LAN) or Wireless LAN (WAN) and its ISP's network. The usage of the "Router" in the computer is not only required for its functioning, but is an important and an integral part of the computer for increasing the high speed with the interned efficiently. The order of the CIT(A) is, therefore, upheld and the ground of the revenue is dismissed.
The appeal of the revenue is dismissed.
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2009 (4) TMI 942 - DELHI HIGH COURT
... ... ... ... ..... cent in relation to local sales and 7 per cent as far as export turnover is concerned. Even then according to us there remains no reason to doubt these payments. It has been laid down in several decisions of the Supreme Court that the ITAT is a final forum for findings of fact. The High Court would intervene only if a finding appears to be perverse, which we are unable to conclude in the case in hand. 3. So far as the second question is concerned it relates to disallowance of ₹ 2 lakhs under section 14A of the Income-tax Act, 1961. The ITAT has noted, and correctly so in our view, that the expenditure cannot be disallowed on the basis of a mere estimate as to what possibly could have been incurred to earn income exempted from tax. The Tribunal records no evidence has been brought on record to show that the impugned expenditure was incurred to earn exempted income, thus meriting disallowance. 4. No substantial questions of law arise for our consideration. 5. Dismissed.
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2009 (4) TMI 941 - ITAT DELHI
... ... ... ... ..... iews were clearly possible and, therefore, no penalty can be imposed. In the present appeals also, two views were clearly possible which were supported by orders of the Tribunal as well as decisions of Hon’ble High Courts. In such situation, it cannot be said that assessees have concealed income or furnished inaccurate particulars. There is no allegation by the AO that assessees have not disclosed the complete particulars. The only allegation is that assessees have claimed deduction on DEPB and duty drawback under s. 80-IB which is not admissible to them. Taking into consideration all these facts and circumstances, we allow all these appeals and delete the penalty. In the result, all the appeals filed by the assessees are allowed." 8. There is no disparity on facts, therefore, respectfully following our order passed recently in the case of Oriental Rug Company (supra) along with other appeals, we allow all the three appeals of the assessees and delete the penalty.
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2009 (4) TMI 940 - BOMBAY HIGH COURT
... ... ... ... ..... ssarily be a corresponding adjustment made in the opening stock of that year. The said view is in consonance with the view taken by the Division Bench of this Court in I.T.Appeal No.192/2009 (C.I.T. v. M/s.The Mahalaxmi Glass Works Pvt.Ltd.) decided on 1st April, 2009. 3. In the above view of the matter, no substantial question of law is involved in this appeal. Appeal is dismissed in limine with no order as to costs.
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2009 (4) TMI 939 - ITAT DELHI
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2009 (4) TMI 938 - ITAT CHANDIGARH
Estimation of household expenses - Addition on low household withdrawals - assessment u/s. 153A r/w s. 143(3) - assessee explained that the household expenses are met from self-contributions, contributions from his brother, i.e., the other appellant and another family member - expenses declared by the assessee have been held to be inadequate by the AO.
HELD THAT:- We find that before the claim of household expenses made by the assessee is to be rejected, the AO must bring out cogent material and evidence. In this case, reasons advanced by the AO are quite general in nature. In fact, the first reason relating to the household articles pointed out, does not turn much on the subject because such articles are a normal occurrence in urban household. There is no allegation by the AO, much less a finding, that the lifestyle or the expenditure on the gadgets was ostentatiously lavish.
Secondly, even estimation of household expenses admitted by the lady member of the family, can at best, be a yardstick to consider the acceptability of the expenses incurred by the assessee in the AY in question. Considering the amount admitted by the lady member of the family in the year 2003 and also household goods referred to by the AO, in the years under consideration, the amounts returned by the assessee on household expenses cannot be rejected as unbelievable or unreasonable.
Considering in the overall light and on the basis of absence of any adverse material on record, we find no justification with the AO to estimate the household expenses over and above those returned by the assessee in the respective assessment years. We, therefore, set aside the order of the CIT(A), and direct the AO to delete the additions.
Appeals of the assessee are allowed.
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2009 (4) TMI 937 - ITAT MUMBAI
... ... ... ... ..... dividend. No doubt, as per law laid down by the Hon'ble Apex Court in Dharmendra Textile Processors case (supra), levy of penalty is a culmination of civil proceedings and such penalty is only compensatory in nature, and there is not question of any element of mensrea. But where an assessee bonafide believes a sum as not chargeable to tax and subsequent orders of the appellant authority show that such a stand was a justifiable one, in our opinion, it cannot be deemed as a case of concealment or furnishing inaccurate particulars. Just because an assessee could not offer explanation referring to the concerned case laws in an exact manner, it would not make any significant difference in the state of law as it existed at the time of filing the return. Therefore, in our opinion, this was not a fit case for levy of penalty, and the penalty which was levied on a mere addition would not stand. In the result, appeal of the assessee stands allowed. Order pronounced on 17.04.2009.
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2009 (4) TMI 936 - BOMBAY HIGH COURT
... ... ... ... ..... on the basis of factual finding that the impugned transaction in the hands of the broker company M/s.Goldstar Finvest (P) Ltd., the transaction was accepted as genuine transaction. In this view of the matter, no substantial question of law involved in the appeal. The appeal is, therefore, dismissed in limine. No order as to costs.
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2009 (4) TMI 935 - SUPREME COURT
Whether the averments made in the complaint petition are imaginary?
Whether no document has been produced by the appellant to show that Gopal made an assignment of the land in favour of Hanumanthegowda?
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2009 (4) TMI 934 - CESTAT MUMBAI
CENVAT credit - reversal of - CENVATable inputs - job-work - HCC Bounder tube, anhydrous ammonia, varnishes etc.
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2009 (4) TMI 933 - GUJARAT HIGH COURT
... ... ... ... ..... substantial question of law. “Whether the Appellate Tribunal was right in holding that while computing the profit of the business under Explanation (baa) of Section 80HHC, 90 of the profits on transfer of DEPB should be excluded, not the total amount received by the assessee?”
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2009 (4) TMI 932 - SUPREME COURT
Whether appointment of a handicapped person, indisputably, is de' hors the advertisement?
Whether all other districts the Selection Committee had prepared `waitlist' and a large number of appointments had been made therefrom were not specifically been denied?
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2009 (4) TMI 931 - BOMBAY HIGH COURT
... ... ... ... ..... 24th March, 2009. 3. So far as the second question is concerned, it is submitted that the earlier assessment order giving rise to the very same question, in the case of the assessee itself, has been accepted by the revenue. In this view of the matter, the second question can be hardly said to be a substantial question of law. 4. So far as the third question is concerned, the same is covered by the Judgment of the Supreme Court in the case of Apollo Tyres Ltd. V/s. Commissioner of Income Tax reported in 255 I.T.R. 273. Therefore, it can be hardly said to be a substantial question of law warranting adjudication by this Court. 5. So far as the last question is concerned, it is seen that the subject provision came on Statute book w.e.f. 1/6/2003. If that be so, the said provision does not have retrospective effect. In this view of the matter, we do not see appeal giving rise to any substantial question of law. Appeal is, therefore, dismissed in limini with no order as to costs.
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2009 (4) TMI 930 - GUJARAT HIGH COURT
... ... ... ... ..... ctions of the Designated Authority, states that the preliminary objections raised by the petitioners as to jurisdiction of the Designated Authority shall be dealt with and decided by the Designated Authority within a period of four weeks i.e. on or before 07.05.2009 after hearing the petitioners in this regard in accordance with law. (3) In light of the statement made by learned counsel for respondent No.2 authority, learned advocate for the petitioners seeks permission to withdraw the petition, under instructions. Permission granted. The petition stands disposed of accordingly. (4) Needless to state that in light of this position the rights and contentions of facts and in law available to all the parties are left open.
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2009 (4) TMI 929 - SC ORDER
Service tax on the elements of inputs used in the photography services - no dispute about maintaining details of inputs in the invoice - decision in the case of SHRI ROOPCHHAYA COLOUR STUDIO Versus COMMR. OF C. EX., HYDERABAD [2007 (8) TMI 264 - CESTAT, BANGALORE] contested, where it was held that inputs (magnet type or other storage devise) are excluded from purview of service tax when they are sold to the clients - Held that: - the decision in the above case upheld - appeal dismissed - decided in favor of appellant.
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2009 (4) TMI 928 - SUPREME COURT
Whether there is no illegality or irregularity in summoning the witnesses named in the supplementary charge-sheet?
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2009 (4) TMI 927 - CESTAT AHMEDABAD
... ... ... ... ..... reme Court in the case of Dharmendra Textile Processors reported in 2008(89) RLT 103(SC-LB) has held that the authorities have no discretion to purpose less penalty than the 100 of duty amount. In the present case I find that the findings are of clandestine removal, in which case the appellant deserves no mercy. As such I uphold the confirmation of demand of duty and imposition of penalty to the extent of 100 on M/s. Suryanarayan Silk Mills. 7. As regards penalty of ₹ 25,000/- on Shri Devang R. Gandhi, Proprietor of M/s. Devang Fabrics, I find that the goods cleared by M/s. Suryanarayan Silk Mills without payment of duty were at the behest of Devang Fabrics in as much as M/s. Suryanarayan Silk Mills was working as a job worker for processing of grey fabrics sent by the merchant manufacturers. The amount of penalty on the said appellant already stands reduced to ₹ 25,000/-. No further reduction is called for. 8. In view of the above, both the appeals are rejected.
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2009 (4) TMI 926 - GUJARAT HIGH COURT
... ... ... ... ..... ion or for marketing at any time before removal? (2) Whether, in the facts and circumstances of the case, the Tribunal has erred in law in holding that no reversal of modvat credit was required despite CBEC's Circular dated 1.10.2004? (3) Whether, in the facts and circumstances of the case, the Tribunal has erred in law in holding that repeated occurrences of fire on account of lack of installation of fire safety measures or deployment thereof could be termed to be unavoidable event so as to confer benefit of consideration of an application for remission under Rule 21 of the Central Excise Rules, 2002?
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2009 (4) TMI 925 - MADRAS HIGH COURT
Refund claim of excess paid duty - doctrine of unjust enrichment - Section 27 of the Customs Act, 1962 -
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