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2006 (11) TMI 646
Validity of the notification issued, directing that the provisions thereof would not apply to the buildings; monthly rent - extending the exemption provision u/s 3 of the Act to the Administrator - whether exemption could be granted by an executive order issued u/s 3 or only by way of an amendment - Power conferred u/s 87 issued a notification - fixing the quantum of rent - HELD THAT:- The Administrator in issuing the notification has missed the relevance of the distinction between the National Housing Policy and the legislative policy. The power of exemption could be exercised having regard to the legislative intent and policy whereas the National Housing Policy could be given effect to by the legislature in modifying, varying or altogether doing away with the existing legislative policy and laying down a new policy therefor. Change of legislative policy with the aid of the National Housing Policy was not within the domain of the Administrator. It was the sole prerogative of the legislature.
A statute can be amended, partially repealed or wholly repealed by the legislature only. The philosophy underlying a statute or the legislative policy, with the passage of time, may be altered but therefor only the legislature has the requisite power and not the executive. The delegated legislation must be exercised, it is trite, within the parameters of essential legislative policy. The question must be considered from another angle. Delegation of essential legislative function is impermissible. It is essential for the legislature to declare its legislative policy which can be gathered from the express words used in the statute or by necessary implication, having regard to the attending circumstances. It is impermissible for the legislature to abdicate its essential legislative functions. The legislature cannot delegate its power to repeal the law or modify its essential features.
Section 3 of the Act, indisputably, is constitutionally valid. It, however, provides for an enabling provision. The Central Government, by reason of the said provision, has been empowered to direct that all or any of the said provisions would not apply to any of the building or rented buildings or any class of buildings or any rented lands.
We, however, cannot accept the submission that as Appellants themselves in the writ petition contended that as in the year 1978 a building standing on a land of 1500 square yards with 3 to 4 bed rooms, one drawing and dining room, garage and servant quarter, was available on a monthly rent of ₹ 1000/-and, thus, on that premise a presumption can be raised that such tenanted premises used to be occupied by the affluent families, those who are paying less than ₹ 1500/- continued to be protected and, thus, the same would come within the purview of the legislative policy and the object and purport of the Act.
The criterion which was required to be considered was not as to what rent a building could have fetched in 1978 but what would have been a fair criterion as regard the quantum of rent when the notification was issued. For that purpose, no data has been collected nor has any study been made. As to how the said criterion had been fixed is not known. Except stating that the rent of ₹ 1500/- to ₹ 3500/- was made the criterion in terms of the National Housing Policy, the Administrator did not assign any other reason.
The Administrator while issuing the impugned notification misdirected himself in law insofar as he failed to take into consideration that he could not have exercised any jurisdiction in terms thereof as the National Housing Policy, inter alia, contains the guidelines for the State legislatures for enactment of law and the same was not meant to be taken recourse to by the Executive Government of the State. While exercising his jurisdiction u/s 3 of the Act, the Administrator was required to apply his own mind to the relevant facts.
Application of mind on the part of the Administrator was also necessary having regard to the rate of inflation and other factors including the prevalent rental in the neighbouring areas of the States of Punjab and Haryana. He further failed to take into consideration that in terms of National Housing Policy, that quantum of rent was made flexible. Only a broad guideline had been provided therefor. What was necessary to be applied was the principle and not the minimum rent specified therein.
Thus, it was necessary to collect relevant data. Rental of ₹ 1500/- could not have been applied mechanically. The High Court has followed D.C. Bhatia [1994 (10) TMI 301 - SUPREME COURT] but it has failed to notice that in D.C. Bhatia (supra) itself whereas the proposal in the bill was to fix ₹ 1500/- as the outer limit, the members of the legislature upon deliberation in the matter, had fixed the quantum of rent at ₹ 3500/-. Furthermore, for the aforementioned purpose, the lowest ceiling of ₹ 1500/- might have been treated to be fair in the year 1992 but the same would have lost much significance and relevance in the year 2002 in view of the passage of time.
The rate of inflation and other relevant factors as well as the fact that the per capita income in UT of Chandigarh is considered to be the highest in the country, were necessary to be taken into consideration. This Court, in Prabhakaran Nair & Ors. vs. State of Tamil Nadu & Ors.[1987 (9) TMI 421 - SUPREME COURT], opined that a National Housing Policy should be formulated and the observations made therein had been given effect to. But, this Court never intended that a National Housing Policy would be applied in a manner not contemplated under our constitutional scheme.
We, therefore, in this case, have sufficient materials on record to hold that ₹ 1500/- could not have been fixed as the quantum of rent for the purpose of extending the exemption provision u/s 3 of the Act to the Administrator.
The legislative objective and policy indisputably must be considered having regard to the preamble and other core provisions of the Act. Section 3 although is a part of the Act, but the same cannot be said to contain an in-built policy so as to empower the Administrator to do all such things which can be done by the legislature itself.
Moreover, the notification has not been issued for a limited period. It will have, therefore, a permanent effect. Submission of Mr. Nariman that having regard to the provisions of the General Clauses Act, the same can be modified, amended at any time and withdrawn, cannot be accepted for more than one reason. Firstly, Respondent proceeded on the basis that the said notification has been issued with a view to give effect to the National policy, i.e., amendments must be carried out until a new Rent Act is enacted. Whether the Act would be enacted or not is a matter of surmises and conjectures. It would be again a matter of legislative policy which was not within the domain of the Administrator.
Secondly, the Administrator in following the National policy proceeded on the basis that the provisions of the Act must ultimately be repealed. When steps are taken to repeal the Act either wholly or in part, the intention becomes clear i.e. the same is not meant to be given a temporary effect. When the repealed provisions are sought to be brought back to the statute-book, it has to be done by way of fresh legislation. In any event, the General Clauses Act shall not apply to an executive action. Executive actions can be taken by a person who is statutorily authorized therefor. He is required to apply his own mind. What can be done in future by another authority cannot be a ground for upholding an executive act.
Hence, the impugned judgments cannot be sustained which are set aside accordingly. The appeals are allowed. However, in the facts and circumstances of the case, there shall be no order as to costs.
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2006 (11) TMI 645
The High Court of Bombay dismissed an appeal against an order of the ITAT, stating that the Assessing Officer must provide reasons when requested by the Assessee, as it is part of complying with the principles of natural justice. No substantial question of law arose from the decision.
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2006 (11) TMI 644
Issues involved: Challenge to the order passed by Punjab and Haryana High Court dismissing review application in CWP No.17615 of 2001.
Judgment Summary:
The Supreme Court addressed the challenge to the order passed by a Division Bench of the Punjab and Haryana High Court dismissing the review application in CWP No.17615 of 2001. The High Court had dismissed the writ petition due to the petitioner's prolonged absence, deeming them a habitual absentee and unworthy of relief in the punishment quantum. The appellant contended that the High Court erred in deeming the review petition as not entertainable, citing materials that were not considered. On the other hand, the respondents argued that the High Court's decision on the maintainability of the review petition was correct.
The Supreme Court noted that the challenge in the appeal was solely against the order of the review application, which rendered the appeal not maintainable. Citing the case of Shanker Motiram Nale v. Shiolalsing Gannusing Rajput, the Court emphasized that an appeal against the rejection of a review application is incompetent as per Order 47 Rule 7 of CPC. The Court also referred to cases like Suseel Finance & Leasing Co. v. M. Lata and M.N. Haider v. Kendriya Vidyalaya Sangathan, reiterating the same principle.
The appellant mentioned challenging the basic order dated 20.8.2004 through a special leave petition filed on 9.10.2006. The Court clarified that the dismissal of the present appeal would not hinder the consideration of the Special Leave Petition filed. Ultimately, the appeal was dismissed with no costs imposed.
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2006 (11) TMI 643
Issues involved:
1. Determination of dissolution and formation of new firm.
2. Tax liability on capital gains from sale of property.
Issue 1: Determination of dissolution and formation of new firm:
The case involved the dissolution of M/s Maganahalli Steel Corporation (MSC) and the formation of a new firm, M/s Maganahalli Associates (MA). MSC was formed as a partnership firm in 1976 for dealing in iron and steel items. A property was purchased in 1977 and later transferred to one of the partners. MSC claimed dissolution in 1983, with the business taken over by another partner. The three retiring partners of MSC formed MA in 1983, with the property jointly owned by them. Dispute arose regarding the genuineness of the dissolution and formation of MA. The Tribunal concluded that MSC was not dissolved and MA did not come into existence, based on circumstantial evidence and the lack of proper documentation.
Issue 2: Tax liability on capital gains from sale of property:
The dispute centered around the ownership of the property sold in 1987. The Department contended that MSC continued to exist and the sale was made by individuals associated with MA. However, the Tribunal found that the property was sold by the three male partners of MSC, acting as partners of MA, and the sale proceeds were deposited in MA's bank account. As a result, the Tribunal ruled that MSC did not sell the property, and the capital gains tax liability was deleted for MSC. The Tribunal's decision was challenged, leading to the High Court remitting the matter back to the Assessing Officer for re-decision, allowing both parties to present all relevant documents for a fair decision.
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2006 (11) TMI 642
Issues:
1. Writ of habeas corpus for quashing an order of detention under COFEPOSA Act.
2. Alleged offence under S.135 of the Customs Act.
3. Delay in disposing of representations made by the detenu.
4. Failure to consider representations promptly by detaining authority and State Government.
5. Quashing of the order of detention.
Analysis:
1. The petitioner, the wife of the detenu, sought a writ of habeas corpus to challenge the order of detention under the COFEPOSA Act. The detenu was alleged to have committed an offence under S.135 of the Customs Act by exporting common salt misdeclared as high-value 'G' salt. The detenu was arrested, released on bail, and made representations before the order of detention was issued.
2. The order of detention was passed by the Principal Secretary (Appeals and Security), Government of Maharashtra. The detenu was arrested in Delhi and served the detention order in Mumbai. The petitioner filed a writ petition which was dismissed, directing the detenu to make fresh representations. The detenu made representations, one before the detaining authority and another before the State Government, which were eventually rejected.
3. The delay in disposing of the representations by the detaining authority and the State Government was a key issue. The affidavits filed revealed a lack of satisfactory explanation for the delay in considering the detenu's representations. The detaining authority and the State Government failed to promptly address the representations, leading to the quashing of the detention order.
4. The detaining authority and the State Government were found to have not applied independent minds in considering the detenu's representations promptly. The detaining authority took an unreasonably long time to reject the representations, indicating a lack of diligence. The Additional Chief Secretary of the State disposed of the representation swiftly, highlighting the detaining authority's failure to act promptly.
5. Due to the delays and lack of proper consideration of the detenu's representations, the Supreme Court quashed the order of detention and ordered the immediate release of the detenu. The court found that the detaining authority and the State Government had not satisfactorily explained the delays, leading to the decision to quash the detention order.
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2006 (11) TMI 641
Issues involved:
The issues involved in this case are the addition of purchases made and job work expenses paid, treatment of purchases/job work executed from certain parties as bogus, and the disallowance of expenses claimed by the assessee.
Addition of Purchases and Job Work Expenses:
The appellant, engaged in manufacturing tractor lights, filed a return declaring income of Rs. 3,21,840, but the assessment was completed at Rs. 29,95,500. The disallowance of purchase price and job-work charges from 10 parties amounting to Rs. 26,73,663 was made on the grounds that the claims were bogus. The reasons included improper purchase bills, non-cooperation of parties during summons, and lack of confidence in statements. The CIT (Appeals) set aside the issue for further enquiry, but upon appeal, upheld the disallowance stating that the onus was on the assessee to substantiate the expenses claimed. However, the appellant argued that complete books of account were produced, no discrepancies were found, and the disallowance was unwarranted as the sellers were not maintaining books of account or assessed to tax. The Tribunal noted that the genuineness of expenses should be adequately proven and that discrepancies alone cannot justify disallowance.
Treatment of Purchases/Job Work Charges as Bogus:
The CIT (Appeals) upheld the disallowance of purchases/job work charges from certain parties, citing the inability of one party to confirm transactions and the failure to produce remaining parties. The appellant contended that the purchases were genuine, tax was deducted at source, and reliance was placed on precedents where lack of evidence from parties did not justify disallowance. The Tribunal observed that the assessee had produced bank statements for most parties, and since disallowance was deleted for other parties based on these statements, there was no reason to sustain the disallowance for the mentioned parties. It was emphasized that the correctness of the claim was established through relevant documents and the necessity of the purchases and job charges for manufacturing.
Disallowance of Expenses Claimed:
The Assessing Officer disallowed the expenses claimed by the assessee, stating that bills alone were insufficient to prove the genuineness of transactions. The absence of the concerns to whom payments were made led to the disallowance as the genuineness could not be verified. The onus to establish the correctness of claims rested with the assessee, and failure to produce parties for verification justified the disallowance. However, the Tribunal found that the manufacturing process of tractor lights necessitated the purchases and job work charges, and the trading results were acceptable, indicating the genuineness of the expenses. The Tribunal concluded that the addition of expenses was unjustified based on the evidence provided by the assessee.
In conclusion, the Tribunal allowed the appeal, emphasizing the importance of substantiating expenses, the necessity of purchases and job work charges for manufacturing, and the acceptance of trading results as indicators of genuine transactions.
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2006 (11) TMI 640
The Gujarat High Court directed the respondents to allow the petitioners to cross-examine the experts before issuing the final order of adjudication if their opinion is being used. The petitions have been disposed of accordingly.
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2006 (11) TMI 639
Whether periodical payments made to the non-resident person, having no office/establishment in India, in connection with the use of software developed by him on internet are subject to tax deduction at source under the Double Taxation Avoidance Agreement with the USA ?
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2006 (11) TMI 638
Issues involved: Penalty for late payment of service tax and late filing of ST-3 returns.
Summary:
The appeal challenged a penalty of Rs. 1,49,900 imposed on the appellant for late payment of service tax and late filing of ST-3 returns related to 'Broadcasting Service'. The appellants were registered with the department but failed to pay the tax on time from July 2001 to July 2002. The tax was later paid by them without a show cause notice. A notice was issued for interest confirmation and penalty imposition, which was paid before the show cause notice. The adjudicating authority imposed a penalty of Rs. 1,49,800, upheld by the Commissioner (Appeals), leading to the present appeal.
The main contention of the appellant was financial crisis during the relevant period causing confusion with advertising agencies about service tax liability. Reference was made to industry-wide issues with tax collection. Despite depositing the tax and interest, the appellant argued that the penalty was unjustified, citing Tribunal decisions waiving penalties in similar situations.
After hearing the arguments, it was found that the appellant, being aware of the tax liability after registration, could not claim the benefit under Section 80 of the Finance Act for a reasonable cause due to financial crisis. However, considering the overall circumstances, including timely tax payment and interest, the personal penalty was reduced to Rs. 25,000. The appeal was rejected except for the penalty modification.
*(Pronounced in Court on 30-11-06)*
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2006 (11) TMI 637
Issues:
The issues involved in the judgment are related to the levy of excise duty on Petroleum Products under Chapter 27 of the Central Excise Tariff Act, 1985, specifically Liquified Petroleum Gas (LPG) and Superior Kerosene Oil (SKO) for domestic use and Public Distribution System. The main contention is whether duty should be paid based on the price fixed by the Administered Price Mechanism (APM) or the Transaction Value as per Section 4 of the Central Excise Act.
Issue 1: Interpretation of Duty Levy Criteria
The appellant, a PSU Unit, contested the excise duty levy on LPG and SKO based on the price fixed by the APM. The Revenue argued that duty should be paid on the Transaction Value as per Section 4 of the CE Act. The Tribunal referred to the Larger Bench judgment in Gas Authority of India Ltd. case, which held that the APM price should be the criteria for levy of duty. The Tribunal also cited the Hindustan Petroleum Corporation Ltd. case where the same principle was applied independently. It was noted that the demands were time-barred as all facts were known to the department and clarified by the Board.
Issue 2: Application of Larger Bench Judgment
The Tribunal considered the findings of the Larger Bench in the Gas Authority of India Ltd. case, which emphasized that the price fixed by the APM for Petroleum Products should determine the duty levy. The Tribunal highlighted that the assessable value of goods should depend on the end user and the price fetched at the sale, as per the law laid down by the Supreme Court. The Tribunal rejected the argument that price should depend on the form of removal (packed or bulk), emphasizing that the use of the product determines the price. The Tribunal also criticized the lack of resolution by the High Power Committee in disputes between the PSU and the Revenue Ministry.
Issue 3: Compliance with Board Circular and Judicial Discipline
In the case of HPCL, the Tribunal upheld the assessees' contention based on the Board Circular, which clarified that certain considerations should not be included in the assessable value for duty calculation. The Tribunal criticized the Commissioner's order for not applying relevant judgments and for alleging suppression of facts. It was emphasized that duty should be collected based on the price fixed by the government, and additional considerations should not be part of the price. The Tribunal found the Commissioner's order to be unacceptable and allowed the appeal with consequential relief.
In conclusion, the Tribunal ruled in favor of the appellants, holding that excise duty on LPG and SKO for domestic consumption should be based on the price fixed by the APM, as per the Larger Bench judgment and relevant legal principles. The Tribunal emphasized the importance of following established legal interpretations and criticized any deviation from such principles.
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2006 (11) TMI 636
Section 138 of the Negotiable Instruments Act, 1881(Act) - Dishonour of cheque - insufficiency of funds - discharge of legally enforceable debt or a security cheque - Section 23 and 65 of the Indian Contract Act, 1872 - illegal gratification - void agreement - HELD THAT:- A review of the legal position with regard to the scope and ambit of the said Section 65 indicates that it would not apply to cases falling u/s 23. In other words, agreements which are void ab initio and their illegality is known to the parties at the time of execution would not fall within the purview of Section 65. An agreement of the kind mentioned in illustration (f) to Section 23 and the one at hand being void ab initio and to the knowledge of the parties would also not benefit from the equitable principle of restitution embedded in Section 65. So, neither the sum of 1,000 rupees mentioned in the said illustration (f) nor the sum of ₹ 80,000/- paid in the present case is recoverable in law.
If the facts of the present case are examined, it would be immediately clear that it does not fall in any of these three classes of cases. The first class of cases deals with situations or agreements where the object is unlawful. In the present case - securing a job in the Haryana Police for the nephew - is not an unlawful object. What is unlawful is the consideration paid for it. The consideration having already been paid, the illegality stood completed on the part of the respondent No.1. And, since the respondent No.1 would have to rely upon this illegality to make out his claim or enforce the same, this case does not also fall within the third class of cases mentioned above. This leaves us with the second class of cases where the parties are not in pari delicto.
In the present case neither party is a victim of exploitation. Both had voluntarily and by their free will joined hands to flout the law. Therefore, in terms of the Supreme Court decisions in Sita Ram v. Radha Bai [1967 (10) TMI 70 - SUPREME COURT], themselves, the parties being in pari delicto, the doctrine would apply and the sum of ₹ 80,000/- could not be recovered in a court of law. Meaning thereby that there did not exist any legally enforceable debt or liability for the discharge of which it could be said that the cheque in question was issued. Consequently, Section 138 of the said Act would not be attracted. This legal position was not appreciated by the courts below and it is for this reason that they fell into error. That being the case, the conviction of the petitioner is set aside.
It is, however, made clear by the learned Counsel for the petitioner that the sum of ₹ 1 lac, which had been deposited pursuant to the orders by the court below, has already been withdrawn by the respondent No.1 and that he would not be pressing for its return. The learned Counsel for the petitioner also submits that to maintain his bona fides, he would be paying a further sum of ₹ 20,000/- within two months to the complainant/respondent No.1. He submits that the said sum will be deposited in the trial court, which the complainant/respondent No.1 may withdraw immediately thereafter.
With these observations, the revision petition is allowed. The petitioner is acquitted. However, the petitioner has already paid a sum of ₹ 1 lac to the complainant/respondent No.1 and has undertaken to pay a further sum of ₹ 20,000/- to the complainant/respondent No.1 within two months by depositing the same in the trial court, which the complainant/respondent No.1 may withdraw thereafter.
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2006 (11) TMI 635
Issues involved: Applicability of Service Tax on maintenance and repair services provided by a PSU, interpretation of Board Circular regarding Service Tax liability, applicability of previous Tribunal judgment on similar issue.
Issue 1: Applicability of Service Tax on maintenance and repair services
The appellant, a PSU, provided maintenance and repair services to customers based on quotations. Notification No. 7/2003 brought maintenance and repairs under the ambit of Service Tax. The appellant claimed that they did not have a maintenance contract before 16-6-2005, and therefore, Service Tax should not be levied for the relevant period.
Issue 2: Interpretation of Board Circular and Tribunal Judgment
The appellant relied on a Tribunal judgment in the case of Daelim Industrial Co. Ltd., which was affirmed by the Apex Court, to support their claim for waiver of Service Tax. The appellant argued that the Board Circular and Tribunal ruling should result in a waiver of over &8377; 18 crores in Service Tax confirmed in the impugned order.
Issue 3: Applicability of previous Tribunal judgment
The JDR opposed the appellant's claim, stating that the previous Tribunal judgment pertained to different activities and that the Commissioner had provided detailed findings on the matter. The JDR prayed for the appellants to be put on terms.
In the judgment, the Tribunal noted that the appellant being a Government of India undertaking, the Board's circular had applicability to the case. The Tribunal observed that units run by the Government of India are treated differently in terms of deposit requirements, considering the transfer of amounts between departments. After considering the arguments presented by the appellants, the Tribunal granted a full waiver of pre-deposit and stayed the recovery of the amount exceeding &8377; 18 crores until the appeal's disposal. The Tribunal scheduled the matter for final hearing on 19th January 2007.
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2006 (11) TMI 634
Whether an entry in a tariff schedule which after specifying the subject matter of the entry and illustrating it with examples by using the word 'like' can be construed as being limited to only the items listed by way of illustration or includes all such products as answer the classification of the entry?
Whether the revenue can change the classification of the product from the specific enumerated entry, which was accepted for 13 years to the residuary clause without any change of circumstance and without discharging the burden of proof cast on the revenue to show that the particular product falls in the residuary tariff item and not in the specific enumerated entry?
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2006 (11) TMI 633
The Supreme Court dismissed the appeal filed by the Revenue against the order of remand passed by the Commissioner, citing a previous judgment in Collector of Central Excise v. Dodsal Manufacturing (P) Ltd. The appeals were dismissed in line with the Dodsal Manufacturing case, with no costs awarded.
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2006 (11) TMI 632
Issues involved: The judgment deals with the issue of whether a writ petition can be entertained when an alternative remedy is available under the Central Excise Act, specifically u/s 35-H, and the jurisdiction of the High Court to grant relief under Article 226 of the Constitution of India.
Central Excise Act u/s 35-H: The learned Standing Counsel argued that the writ petition should be dismissed due to the availability of a reference under section 35-H of the Central Excise Act. The petitioner contended that since the writ petition was admitted after a significant delay, it should not be dismissed solely on the ground of alternative remedy. The Court referred to previous cases where writ petitions were dismissed on similar grounds, emphasizing that statutory remedies should be exhausted before resorting to writ jurisdiction.
Jurisdiction under Article 226: The Court cited various decisions, including the case of U.P. Spinning Co. Ltd. Vs. R.S. Pandey, where the Supreme Court held that the High Court should not entertain writ petitions when statutory remedies are available unless exceptional circumstances are demonstrated. The Court reiterated that statutory remedies should be preferred over writ petitions, except in cases involving fundamental rights infringement or jurisdictional issues.
Discretionary power of High Court: The judgment highlighted the discretionary nature of the High Court's power to grant relief under Article 226, even when alternative remedies exist. The Court referred to several cases where the High Court refused to grant writs if adequate alternative remedies were available. The judgment emphasized that the availability of an alternative remedy does not necessarily exclude the High Court's jurisdiction to grant relief under Article 226.
Conclusion: The Court ultimately dismissed the writ petition on the ground of alternative remedy, following the principle that statutory remedies should be exhausted before seeking relief through writ jurisdiction. The petitioner was advised to apply for the return of the certified copy of the Tribunal's order after obtaining a photocopy.
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2006 (11) TMI 631
Issues involved:
1. Inclusion of receipt on account of fluctuation in foreign exchange rate in gross total income for computing deduction u/s 80-HHC.
2. Allowance of deduction u/s 32-AB on machines assembled by the assessee.
Issue 1: Inclusion of receipt on account of fluctuation in foreign exchange rate in gross total income for computing deduction u/s 80-HHC:
The Assessing Officer contended that the receipts from foreign exchange rate fluctuations were not part of business activity and thus could not be considered for deduction u/s 80-HHC. This view was upheld by the CIT(A). However, the Tribunal disagreed, stating that the receipt was part of export turnover, arising from business activity and was a trading receipt, not on capital account. The Tribunal's decision was supported by a judgment citing that losses or gains from foreign currency transactions are considered trading losses or profits if they occur in the course of business activities. The definition of "export turnover" under explanation (b) to Section 80-HHC(4) of the Act also supported this interpretation. As the amount received due to foreign exchange fluctuations was related to export of goods, it was deemed part of the gross turnover, making the assessee eligible for deduction u/s 80-HHC. The question was answered against the revenue and in favor of the assessee.
Issue 2: Allowance of deduction u/s 32-AB on machines assembled by the assessee:
The assessee claimed deduction u/s 32-AB for new machines purchased/assembled. While the claim for new machines was allowed, the claim for assembled machines was initially not allowed. However, the appellate authority accepted the claim for assembled machines, a decision affirmed by the Tribunal. The High Court referred to a previous judgment on a similar issue and decided in favor of the assessee, stating that the question had already been addressed in a previous case. Therefore, the question was answered against the revenue and in favor of the assessee. The reference was disposed of accordingly.
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2006 (11) TMI 630
Issues involved: Interpretation of tax law regarding addition of unexplained accretion in partner's capital account to firm's income.
The High Court of Punjab & Haryana dismissed the revenue's appeal against the Tribunal's order. The assessing officer doubted a partner's investment of Rs. 6,10,000 claiming it was from gifts received from NRIs. The Commissioner (Appeals) accepted the claim's genuineness. The Tribunal set aside the Commissioner's finding on the gift's validity but noted the partner admitted to investing in the firm and had been taxed accordingly. The Tribunal held that in such a scenario, addition to the firm's income was not warranted. The revenue cited a judgment from Allahabad High Court, stating that if a firm fails to explain the source of a deposit, it is liable to be taxed. However, in this case, the partner, Suresh Bhandari, admitted to making the deposit with the firm, even if the claimed gift was rejected. Therefore, while Suresh Bhandari may be taxed for undisclosed income, the firm cannot be taxed on that basis. The Court found the Tribunal's decision to be correct, as no substantial question of law arose for consideration. Thus, the appeal was dismissed.
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2006 (11) TMI 629
The stay application was filed against the Order-in-Original dated 21-7-06. The demand of duty arose from the denial of Cenvat credit on courier and internet services used for final products. The Tribunal found a strong prima facie case and waived the pre-deposit of Service Tax and penalty, staying the recovery until the appeal's disposal. (Dictated and pronounced on 7-11-06)
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2006 (11) TMI 628
Whether even when a mistake is sought to be rectified, if by reason thereof, an employee has to suffer civil consequences ordinarily the principles of natural justice are required to be complied with?
Whether Appellant was entitled to a hearing?
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2006 (11) TMI 627
The Bombay High Court set aside the Order dated 4-8-2005 of the CESTAT and directed the CESTAT to consider the issue along with the respondent's appeal bearing No. E/111/2004. The appeal was disposed of with these observations.
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9911796707
