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Showing 121 to 140 of 721 Records

• 2010 (11) TMI 1024
  
  Issues Involved:
  1. Whether the assessee is required to withhold tax under section 195 of the Income Tax Act for the purchase/use of software from parties resident in the UK.
  
  Issue-wise Detailed Analysis:
  
  1. Withholding Tax under Section 195:
  The primary issue in these appeals is whether the assessee must withhold tax under section 195 of the Income Tax Act for purchasing/using software from UK-based parties. The software in question is operational software purchased for internal use, and the assessee was granted a non-exclusive, perpetual, irrevocable, royalty-free, worldwide license to use the software solely for internal operations. The parties from whom the software was acquired do not have a "Permanent Establishment" in India.
  
  2. Agreements and Software Details:
  The appeals involve agreements with different UK-based parties for various software purchases:
  - M/s Petroleum Experts Ltd.: Software for Material Balance analysis related to Oil & Gas Exploration.
  - M/s Independent Technology Systems Ltd.: Inter Connect V6.06, intermediate 3.3.7, and maxi-route E v1.2 software.
  - M/s Petrel Software Ltd.: Software for reserve modeling and characterization calculation and analysis for O&G Business.
  - Sofibits Consultants Ltd.: Flare Radiation & Noise analysis Software for O&G Division.
  
  3. CIT(Appeals) Decision:
  The CIT(Appeals) considered the agreement with Petroleum Experts Ltd. (PEL) and concluded that the payment made by the appellant did not amount to royalty under Article 13 of the Indo-UK Double Taxation Avoidance Agreement (DTAA) and section 9(1)(vi) of the Income Tax Act. The software was supplied on a computer disk from outside India, and none of the parties involved had a Permanent Establishment in India.
  
  4. Terms and Conditions of Purchase:
  The terms and conditions of purchase included restrictions on the use, copying, and distribution of the software. The software was supplied for internal use only, and the assessee did not acquire any copyright.
  
  5. Tribunal's Findings:
  The Tribunal referenced previous decisions, including the Bangalore Bench in Samsung Electronic Company Ltd. vs. ITO and the Delhi Bench in Motorola Inc vs. DCIT, which distinguished between acquiring a copyrighted article and acquiring a copyright. The Tribunal concluded that the assessee had purchased a copyrighted article and not the copyright itself, meaning the payment was not royalty but business income.
  
  6. Application of DTAA:
  The Tribunal noted that the definition of "royalty" under the Indo-UK DTAA is similar to the Indo-US DTAA. Since the payment was not considered royalty under the Income Tax Act, it was not necessary to examine its status under the DTAA. The payment was classified as business income, and since the assessee had no Permanent Establishment in India, it was not taxable in India.
  
  7. Conclusion:
  The Tribunal upheld the CIT(Appeals) decision, concluding that the software supplied was a copyrighted article and not a copyright. The payment received by the assessee for the software could not be considered royalty under the Income Tax Act. Consequently, the appeals filed by the Revenue were dismissed.
  
  Final Judgment:
  The appeals filed by the Revenue are dismissed. The order was pronounced in the open court on 26th Nov., 2010.

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• 2010 (11) TMI 1023
  
  Issues Involved:
  1. Requirement to withhold tax under Section 195 of the Income-tax Act for the purchase/use of software from an Australian resident.
  2. Nature of payments made for the software - whether they constitute 'royalty' under the Double Taxation Avoidance Agreement (DTAA) between India and Australia.
  3. Taxability of business income under the DTAA in the absence of a Permanent Establishment (PE) in India.
  
  Issue-wise Detailed Analysis:
  
  1. Requirement to Withhold Tax under Section 195 of the Income-tax Act:
  The primary issue in the appeal is whether the assessee is required to withhold tax under Section 195 of the Income-tax Act for purchasing/using software from a party resident in Australia. The software in question is operational software for internal use, and the agreements are governed by the DTAA between India and Australia. The software was purchased for Seismic Data Processing/Interpretation for the Oil & Gas Division from M/s Paradigm Geophysical Pty Ltd., Australia.
  
  2. Nature of Payments - Whether Constituting 'Royalty' under DTAA:
  The CIT(Appeals) examined whether the payment made for the software constitutes 'royalty' under Article 12 of the DTAA and Section 9(1)(vi) of the Income-tax Act. The CIT(A) concluded that the payment did not amount to royalty as defined under the DTAA. The appellant did not acquire any copyright but only a license for internal business purposes. The software was supplied on proprietary hardware, and the agreement did not grant any rights to modify, reverse engineer, or commercially exploit the software. The CIT(A) relied on a previous decision in the appellant's own case, holding that the payment was business income, not royalty, and thus not taxable in India without a PE.
  
  3. Taxability of Business Income under DTAA in Absence of PE:
  The Tribunal upheld the CIT(A)'s decision, emphasizing that the payment for the software was not 'royalty' but business income. Since M/s Paradigm did not have a PE in India, the business income was not taxable in India under Articles 5 and 7 of the DTAA. The Tribunal referenced multiple cases, including decisions from the Bangalore and Delhi Benches, which distinguished between payments for copyrighted articles and copyright rights. The Tribunal concluded that the software was a copyrighted article, not a copyright, and thus the payment was not 'royalty' under Section 9(1)(vi) of the Income-tax Act or the DTAA.
  
  Conclusion:
  The Tribunal dismissed the Revenue's appeal, holding that:
  - The software purchased was a copyrighted article, not a copyright.
  - The payment made by the assessee was business income, not royalty.
  - In the absence of a PE in India, the business income was not taxable in India under the DTAA.
  - The assessee was not required to withhold tax under Section 195 of the Income-tax Act for the software purchase.
  
  Order Pronounced:
  The appeal filed by the Revenue was dismissed, and the order was pronounced in the open court on 26th November 2010.

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• 2010 (11) TMI 1022
  
  Issues Involved:
  1. Whether the assessee is required to withhold tax u/s 195 of the Act for the purchase/use of software from parties resident in Canada.
  2. Whether the payment made by the appellant to M/s DBR Software Inc., Canada amounts to 'royalty' under Article 12 of the Indo-Canada DTAA and u/s 9(1)(vi) of the I.T. Act, 1961.
  
  Summary:
  
  Issue 1: Withholding Tax u/s 195
  The primary issue is whether the assessee is required to withhold tax u/s 195 of the Act for the purchase/use of software from Canadian residents. The software in question is operational software, purchased for internal use, with a non-exclusive, perpetual, irrevocable, royalty-free, worldwide license. The parties from whom the software was acquired do not have a "PERMANENT ESTABLISHMENT" in India.
  
  Issue 2: Nature of Payment as 'Royalty'
  The CIT(Appeals) examined the agreement with M/s DBR Software Inc., Canada, and concluded that the payment did not amount to royalty within the meaning of Article 12 of the Indo-Canada DTAA. The appellant did not acquire any copyright, and DBR does not have a Permanent Establishment in India. Therefore, its business income is not taxable in India as per Articles 7 and 5 of the DTAA. The AO's argument that the payment was 'royalty' was based on the License Agreement, which the CIT(A) found to be a purchase agreement with specific terms and conditions that did not confer any copyright to the appellant.
  
  Terms and Conditions of Purchase:
  The CIT(A) detailed the terms and conditions of the purchase, emphasizing that the appellant did not receive any right or copyright over the software. The software was supplied on a computer disk from outside India on an FOB basis, and none of the parties involved had a Permanent Establishment in India.
  
  Tribunal's Findings:
  The Tribunal referred to similar cases, including the Bangalore Bench's decision in Samsung Electronic Company Ltd. vs. ITO and the Delhi Bench's decision in Motorola Inc vs. DCIT, which distinguished between payments for a copyright and a copyrighted article. The Tribunal concluded that the software supplied was a copyrighted article and not a copyright itself. Therefore, the payment received by the assessee could not be considered as royalty under the Income-tax Act or the Indo-Canada DTAA. Since the assessee does not have a P.E. in India, the business income is not taxable in India.
  
  Conclusion:
  The Tribunal upheld the CIT(A)'s order, stating that the software purchase was a transaction involving a copyrighted article, not a copyright. Consequently, the payment was not 'royalty' and was not taxable in India. The appeal filed by the Revenue was dismissed.
  
  Order:
  The appeal filed by the Revenue is dismissed. Order pronounced in the open court on 26th Nov., 2010.

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• 2010 (11) TMI 1021
  
  Issues Involved:
  1. Whether the assessee is required to withhold tax under Section 195 of the Income-tax Act for the purchase/use of software from parties resident in Singapore.
  
  Detailed Analysis:
  
  1. Withholding Tax Requirement under Section 195:
  The central issue in these appeals is whether the assessee must withhold tax under Section 195 of the Income-tax Act for purchasing or using software from Singapore-based entities. The software in question is operational and purchased for the assessee's internal use. The assessee received a non-exclusive, perpetual, irrevocable, royalty-free, worldwide license to use the software solely for internal operations. The parties from whom the software was acquired do not have a "Permanent Establishment" in India.
  
  2. CIT(Appeals) Decision:
  The CIT(Appeals) considered an agreement with M/s Sun Microsystems Pte. Ltd., Singapore. The CIT(A) noted that the payment made by the appellant did not amount to royalty under Article 12 of the Indo-Singapore Double Taxation Avoidance Agreement (DTAA) and was not taxable in India as SUN did not have a Permanent Establishment in India. The CIT(A) concluded that the payment was business income, not royalty.
  
  3. Terms and Conditions of Purchase:
  The terms and conditions of the software purchase agreement included several restrictions on the use, duplication, and distribution of the software. The software was supplied on a computer disk from outside India on an FOB basis, and none of the parties involved had a Permanent Establishment in India. The CIT(A) noted that the appellant had not received any rights to modify, decompile, or reverse engineer the software, and the right to use the software was confined to the appellant's internal operations.
  
  4. Tribunal's Analysis and Precedents:
  The Tribunal referred to several precedents, including the Bangalore Bench's decision in Samsung Electronic Company Ltd. vs. ITO, where it was held that the payment for software was not royalty but business income. Similarly, the Delhi Bench in Motorola Inc vs. DCIT and the Special Bench in the same case concluded that the software supplied was a copyrighted article, not a copyright right, and thus, the payment could not be considered royalty under the Income-tax Act or the DTAA.
  
  5. Definition of Royalty under Indo-Singapore DTA:
  The Tribunal examined the definition of "royalty" under the Indo-Singapore DTA, which is similar to the Indo-US DTAA. It concluded that the payment for the software was for a copyrighted article and not for the use of a copyright. Therefore, Section 9(1)(vii) of the Income-tax Act, which deals with royalty, was not applicable.
  
  6. Tribunal's Conclusion:
  The Tribunal upheld the first appellate authority's order, concluding that:
  - The software, once put on media and sold, becomes goods like any other tangible item.
  - The assessee purchased a copyrighted article, not the copyright itself.
  - The software cannot be treated as a patent or an invention.
  - The payment for the software is business income, not royalty, and since the seller does not have a Permanent Establishment in India, it is not taxable in India.
  
  7. Final Decision:
  The Tribunal dismissed the appeals filed by the Revenue, affirming that the payment for the software was not royalty and, therefore, not subject to withholding tax under Section 195 of the Income-tax Act.
  
  Order Pronounced:
  The order was pronounced in the open court on 26th Nov., 2010.

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• 2010 (11) TMI 1020
  
  Issues Involved:
  1. Whether the assessee is required to withhold tax u/s 195 of the Act for the purchase/use of software from parties resident in the Netherlands.
  
  Summary:
  
  Issue 1: Withholding Tax u/s 195 for Purchase/Use of Software

  The sole issue that arises for our consideration in these appeals is whether the assessee is required to withhold tax u/s 195 of the Act, for purchase/use of software from the parties who are resident of Netherlands. The software in question is operational software, purchased for the internal use of the assessee. The assessee was granted a non-exclusive, perpetual, irrevocable, royalty-free, worldwide license to use the number of copies of the software enumerated in the agreement solely for internal operation, including use of software for ASP Services and web housing services. The parties from whom the assessee acquired the software do not have a "PERMANENT ESTABLISHMENT" in India.

  The learned CIT(Appeal) in her orders dated 19-11-2007 and 21-08-2008, considered agreements for purchase with M/s Jason Geosystems BV and Geoquest Systems BV, Netherlands respectively. The AR submitted that the payment made by the Appellant did not amount to royalty within the meaning of Article 12 of the Indo-Netherlands Double Taxation Avoidance Agreement (DTAA) and that JG does not have a Permanent Establishment (PE) in India, making its business income non-taxable in India as per Articles 7 and 5 of the DTAA.

  The AO, however, concluded that the payment made by the Appellant to JG is 'royalty' within the meaning of Article 12 of the DTAA and also u/s 9(1)(vi) of the Income-tax Act, 1961. The CIT(A) held that the payment made for the purchase of software is not 'royalty' but only business income and is taxable in India only if JG has a PE.

  The Tribunal, referencing similar cases, held that the software supplied was a copyrighted article and not a copyright right, and the payment received by the assessee in respect of the software cannot be considered as royalty either under the Income-tax Act or the DTAA. The Tribunal cited various cases, including the Bangalore Bench in the case of Samsung Electronic Company Ltd. vs. ITO and the Delhi Special Bench in the case of Motorola Inc vs. DCIT, which supported the view that the payment for the purchase of software is not royalty but business income.

  In conclusion, the Tribunal upheld the order of the first appellate authority, stating that the software supplied was a copyrighted article and not a copyright, and the payment received by the assessee in respect of the software cannot be considered as royalty under the Income-tax Act. Since it is not royalty, it is business income, and as the assessee does not have a PE in India, it is not taxable in India. The appeals filed by the Revenue were dismissed.

  Order pronounced in the open court on 26th Nov., 2010.

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• 2010 (11) TMI 1019
  
  Issues Involved:
  1. Whether the words "any property" in Section 102 of the Code of Criminal Procedure, 1973 include "immovable property."
  2. Whether a police officer can take control of any immovable property under circumstances that create suspicion of the commission of any offense.
  3. Which of the two conflicting judgments (Kishore Shankar Signapurkar vs. State of Maharashtra & Ors. and M/s. Bombay Science and Research Education Institute vs. State of Maharashtra & Ors.) lay down the correct law regarding the powers of a police officer to seize immovable property under Section 102 of the Code.
  4. Whether the Supreme Court's ruling in State of Maharashtra v. Tapas D. Neogy is restricted to the seizure of bank accounts or can be extended to immovable property as interpreted by the Division Bench in M/s. Bombay Science and Research Education Institute.
  
  Detailed Analysis:
  
  Issue 1: Inclusion of Immovable Property under "Any Property" in Section 102
  The judgment deliberated on whether the term "any property" in Section 102 includes immovable property. The court noted that the term "property" is used in a broader sense in various sections of the Indian Penal Code (IPC) and the Code of Criminal Procedure (CrPC). However, it emphasized that the context and specific wording of Section 102 suggest that "property" refers to movable property capable of being produced before the court. The court held that immovable property cannot be seized under Section 102 because it cannot be transported or produced before the court, as required by the section.
  
  Issue 2: Police Officer's Control Over Immovable Property
  The court examined whether a police officer can take control of immovable property under circumstances creating suspicion of an offense. It concluded that the term "seizure" is contextually used for movable property, and "attachment" is more appropriate for immovable property. The court found it impractical and legally unsound to allow police officers to seize immovable property under Section 102, as it could lead to misuse and potential abuse of power.
  
  Issue 3: Correct Interpretation of Law
  The court compared the conflicting judgments in Kishore Shankar Signapurkar and M/s. Bombay Science and Research Education Institute. It concluded that the judgment in Kishore Shankar Signapurkar, which held that immovable property cannot be seized under Section 102, lays down the correct law. The court reasoned that the interpretation in M/s. Bombay Science and Research Education Institute, which extended the Supreme Court's ruling in Tapas Neogy to include immovable property, was incorrect.
  
  Issue 4: Scope of Tapas Neogy Judgment
  The court analyzed whether the Supreme Court's ruling in Tapas Neogy, which allowed the seizure of bank accounts under Section 102, could be extended to immovable property. It concluded that the Supreme Court's decision was specific to bank accounts and did not imply that immovable property could also be seized under Section 102. The court emphasized that the context and wording of the judgment in Tapas Neogy were limited to movable property, specifically bank accounts.
  
  Conclusion:
  The court held that:
  1. The term "any property" in Section 102 does not include immovable property.
  2. A police officer cannot take control of immovable property under Section 102.
  3. The judgment in Kishore Shankar Signapurkar correctly interprets the law, while the judgment in M/s. Bombay Science and Research Education Institute does not.
  4. The Supreme Court's ruling in Tapas Neogy is restricted to the seizure of bank accounts and cannot be extended to immovable property.

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• 2010 (11) TMI 1018
  
  Issues involved: Appeal against orders of CIT(A)-II, Ludhiana for assessment years 2005-06 and 2006-07 u/s 143(3) of the I.T. Act, 1961.
  
  Issue 1 - Disallowance of interest on investment in capital work-in-progress:
  The Revenue appealed against the deletion of disallowance of interest on investment in capital work-in-progress for assessment years 2005-06 and 2006-07. The Assessing Officer disallowed interest of &8377; 56,48,840/- for 2005-06 and &8377; 1,44,242/- for 2006-07 u/s 36(1)(iii) of the Income Tax Act. The CIT(A) held that no interest-bearing borrowed capital was invested in the capital work in progress, based on findings from previous years. The Tribunal upheld the CIT(A)'s decision, stating that no borrowed funds were used for the investment in capital work in progress, and hence, disallowance of interest was deleted.
  
  Issue 2 - Disallowance of ESI & PF contribution:
  The Revenue challenged the deletion of an addition of &8377; 5,09,184/- made by the Assessing Officer on account of disallowance of ESI & PF contribution. The CIT(A) ruled in favor of the assessee, citing precedents where contributions made to ESI and PF accounts before the due date of filing the return of income were allowed as expenditure. The Tribunal, following the decision of the Hon'ble Punjab & Haryana High Court, directed the Assessing Officer to allow the claim of the assessee regarding the contributions to Provident Fund and ESI. Consequently, the appeal by the Revenue was dismissed.
  
  In conclusion, both appeals by the Revenue were dismissed by the Appellate Tribunal ITAT Chandigarh, with decisions favoring the assessee in both issues regarding disallowance of interest on investment in capital work-in-progress and ESI & PF contributions.

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• 2010 (11) TMI 1017
  
  Issues involved: Disallowance of employees' contribution to provident fund u/s. 36(1)(va) for Assessment Year 2002-03.
  
  Summary:
  
  Issue 1: Disallowance of employees' contribution to provident fund
  
  The appeal was filed against the order disallowing employees' contribution to PF. The Assessing Officer disallowed the amount, which was confirmed by the Ld. C.I.T.(A) due to payment made beyond the due date. The appellant contended that payments were made before the due date of filing the return for the relevant year. The Finance Act, 2003 amendment allowed deductions u/s. 43B if payments were made before the due date. The appellant cited relevant case laws supporting their claim. The Ld. D.R. argued that section 43B did not apply to employees' contribution. The counsel relied on a Delhi High Court judgment supporting the deduction of employees' contribution if paid before the due date.
  
  Decision: The Tribunal noted the Delhi High Court's stance on employees' contribution and directed the Assessing Officer to verify the payments made before the due date and allow the deduction accordingly. The appeal was partly allowed based on this verification.
  

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• 2010 (11) TMI 1016
  
  Issues involved: The judgment involves the interpretation of section 80M of the Income-tax Act, 1961 regarding the deduction of dividends received from Master shares of Unit Trust of India (UTI) by the assessee for Assessment Years 1995-96 and 1996-97.
  
  For A.Y. 1995-96:
  The appeal was filed against the order of the CIT-I Pune dated 15-3-2000 passed u/s 263 of the Act for A.Y. 1995-96. The CIT held that the assessee was entitled to deduction at 40% instead of 100% for dividends received from Master shares of UTI. The assessee argued that Master shares should be considered as dividend from other companies and entitled to 100% deduction u/s 80M. The Tribunal analyzed the Mutual Fund (Subsidiary) Unit Scheme 1986 and the provisions of section 80M, concluding that the CIT's order was justified as the scheme was under the umbrella of UTI, making the assessee eligible for deduction only at 40%.
  
  For A.Y. 1996-97:
  The appeal challenged the disallowance of deduction u/s 80M for dividends received on Master shares of UTI. Revenue Authorities held that Master shares were part of UTI unit schemes and not distinct for deduction purposes. The Tribunal upheld the decision, stating that the dividend from Master shares was not entitled to deduction u/s 80M. Consequently, the disallowance of deduction for the assessee in respect of dividend received on Master shares of UTI was deemed justified, leading to the dismissal of both appeals.
  
  Separate Judgment:
  No separate judgment was delivered by the judges in this case.
  
  Conclusion:
  The Tribunal upheld the CIT's decision for both A.Y. 1995-96 and 1996-97, ruling that the assessee was entitled to deduction at 40% for dividends received from Master shares of UTI. The appeals were dismissed, and the disallowance of deduction u/s 80M for the assessee in respect of dividend received on Master shares of UTI was deemed justified.

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• 2010 (11) TMI 1015
  
  Issues involved: Disallowance of transport and carting expenses for non-deduction of TDS u/s 40(a)(ia) of the Income-tax Act, 1961.
  
  Summary:
  The appeal by the assessee challenged the disallowance of expenditure of transport and carting expenses due to non-deduction of TDS u/s 40(a)(ia) of the Act. The Assessing Officer presumed a contract u/s 194C with transporters, leading to the disallowance. The CIT(A) confirmed this disallowance, stating that the appellant had a contract, oral or otherwise, with the transporters, making TDS deduction necessary. However, the assessee argued that there was no contract with the transporters, as evidenced by the absence of truck ownership and varying freight rates paid. The Tribunal referred to a similar case where the absence of a transport contract absolved the assessee from TDS liability. Relying on this precedent, the Tribunal allowed the claim of the assessee, finding the facts analogous to the previous case.
  
  Therefore, the Tribunal allowed the appeal of the assessee, overturning the disallowance of transport and carting expenses for non-deduction of TDS u/s 40(a)(ia) of the Income-tax Act, 1961.

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• 2010 (11) TMI 1014
  
  Issues involved: Refund claim of duty paid on imported goods for manufacturing goods exported, unjust enrichment.
  
  The appellant, a manufacturer exporter, sought a refund claim for duty paid on imported goods used in manufacturing exported goods. The lower authorities sanctioned the claim but denied it due to unjust enrichment. The appellant argued they paid duty as they lacked permission for duty-free import for export, and as they had no domestic sales, they were entitled to the refund since there is no duty on exports. The appellant's consultant contended that the bar of unjust enrichment did not apply in this case.
  
  The appellant claimed they exported goods manufactured from the imported goods on which duty was paid. The appellant's consultant argued that since duty was paid on the raw material used for manufacturing exported goods, they should be entitled to the refund. The appellant's position was that they met the criteria for refund and unjust enrichment should not be a barrier.
  
  The Departmental Representative (DR) contended that the appellant failed to prove that the exported goods were manufactured from the duty-paid imported goods. The DR argued that unjust enrichment applied in this case, and the appellant did not provide sufficient evidence to support their claim. The DR supported the lower authorities' decision to deny the refund claim.
  
  After hearing both sides, the Tribunal noted that if the appellant could demonstrate that the exported goods were indeed manufactured from the duty-paid imported goods, they would be entitled to the refund claim. The Tribunal decided to set aside the lower authorities' decision and allowed the appeal by way of remand. The adjudicating authority was directed to examine the records, provide a reasonable opportunity for the appellant to present their case, and ensure the appellant satisfied the authority regarding their claim.

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• 2010 (11) TMI 1013
  
  Issues Involved:
  1. Eligibility for exemption u/s Notification No. 90/2004-Cus dated 10.09.2004.
  2. Requirement of establishing nexus between imported goods and exported products.
  3. Validity of adjudicating authority's order on confiscation, duty demand, interest, and penalties.
  
  Summary:
  
  Issue 1: Eligibility for exemption u/s Notification No. 90/2004-Cus dated 10.09.2004
  The core issue was whether the Crude Palm Oil (Edible Grade) imported by the appellant was eligible for the benefit of Notification No. 90/2004-Cus dated 10.09.2004 against 7 DFRC Licences. The Tribunal noted that the DFRC licences were genuine and purchased from M/s. Parle Products Pvt. Ltd. It was undisputed that the imported goods were crude palm oil (edible grade) and not listed as sensitive items in para 4.31 of the Handbook of Procedures. The DGFT authorities had clarified that palm oil, coconut oil, and palm kernel oil are inputs required for manufacturing biscuits. The Tribunal found that the adjudicating authority accepted that the crude palm oil (edible grade) could be used for manufacturing biscuits after refining, thus qualifying as "intermediate" materials under Notification No. 90/2004-Cus.
  
  Issue 2: Requirement of establishing nexus between imported goods and exported products
  The Tribunal held that establishing a nexus between the imported goods and the exported products was not required for the transferee of the DFRC licences. This position was supported by the Tribunal's decision in the case of Ramniklal S. Ghosalia and Co., which stated that the nexus is not required to be established by the transferee of a licence. The Tribunal emphasized that the appellant had purchased the DFRC licences from M/s. Parle Products Pvt. Ltd., and thus, there was no need to establish the nexus.
  
  Issue 3: Validity of adjudicating authority's order on confiscation, duty demand, interest, and penalties
  The adjudicating authority had ordered the confiscation of the imported Crude Palm Oil of edible grade, imposed a fine in lieu of confiscation, confirmed the customs duty short paid, ordered recovery of applicable interest, and imposed a penalty u/s 112(a) of the Customs Act, 1962. The Tribunal found that the adjudicating authority's findings were based on the incorrect premise that the crude palm oil required refining before use, which did not negate its eligibility for exemption. Consequently, the Tribunal set aside the impugned order and allowed the appeal with consequential relief.
  
  Conclusion:
  The Tribunal concluded that the Crude Palm Oil (Edible Grade) imported by the appellant was eligible for the benefit of Notification No. 90/2004-Cus dated 10.09.2004, and there was no requirement for the appellant to establish a nexus between the imported goods and the exported products. The adjudicating authority's order was set aside, and the appeal was allowed with consequential relief.

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• 2010 (11) TMI 1012
  
  Issues involved:
  The judgment involves the issue of rejection of claim made by the assessee during assessment regarding expenditure on Trips schemes not liable for FBT based on CBDT circular 8/2005.
  
  Comprehensive details of the judgment for each issue involved:
  
  1. The issue in this appeal pertains to the assessee's claim of Rs. 30.58 million, initially included in the computation of FBT u/s 115WB but later claimed as not includable during assessment. The CIT(A) rejected the claim based on the decision in Goetze India Ltd. vs. CIT 284 ITR 323 and ITO vs. Daga Capital Management Pvt. Ltd. 312 ITR 1 (AT) (Mum)(SB).
  
  2. The assessee contended that the Trips scheme expenditure should be excluded from FBT as per the CBDT circular 8/2005. The claim was not considered by the A.O. or the CIT(A) on its merits. The counsel referred to a similar claim allowed by ITAT in the assessee's case for A.Y. 2003-04 and requested the issue to be reconsidered.
  
  3. The Coordinate Bench in the assessee's case for AY 2003-04 discussed the powers of the CIT(A) to admit claims without a revised return, citing the decision in Goetze India Ltd. The Bench concluded that the CIT(A) has the power to consider the claim on merits and remitted the matter back to the CIT(A) for examination.
  
  4. Considering the above decision, the present appeal is allowed for statistical purposes, and the matter is remitted back to the CIT(A) for a fresh examination of the claim on its merits in accordance with the law, providing a reasonable opportunity of hearing to both parties.

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• 2010 (11) TMI 1011
  
  Issues Involved:
  1. Deletion of disallowance of commission expenses.
  2. Deletion of disallowance of depreciation on rolls.
  3. Deletion of addition on account of deemed dividend under Section 2(22)(e).
  4. Deletion of disallowance of deduction under Section 80G.
  5. Disallowance under Section 40a(ia) for non-deduction of TDS.
  
  Issue-wise Detailed Analysis:
  
  1. Deletion of Disallowance of Commission Expenses:
  The first issue pertains to the deletion of the disallowance of commission payment of Rs. 61,64,968/- by the CIT(A). The assessee claimed commission payments to Rutvi Steel & Alloys (P) Ltd. and Marudhar Industries Ltd. for procuring orders from Gujarat Electricity Board (GEB). The AO disallowed the commission payments due to lack of evidence of services rendered. However, the CIT(A) deleted the disallowance, noting that the parties confirmed receipt of commission and explained the services rendered. The payments were made through account payee cheques, and service tax was paid. The Tribunal upheld the CIT(A)'s decision, stating that the AO did not provide evidence to disprove the genuineness of the expenditure or the nature of services rendered.
  
  2. Deletion of Disallowance of Depreciation on Rolls:
  The second issue involves the deletion of disallowance of Rs. 7,17,883/- being the excess claim of depreciation on rolls. The AO allowed depreciation at 80% instead of 100%, misunderstanding the assessee's claim. The CIT(A) clarified that the assessee had written off rolls that had lost their utility value and directed the AO to allow the actual expenditure written off. The Tribunal confirmed the CIT(A)'s decision, noting that the AO misunderstood the issue and the expenditure was not a claim of depreciation but a write-off of obsolete rolls.
  
  3. Deletion of Addition on Account of Deemed Dividend under Section 2(22)(e):
  The third issue concerns the deletion of addition of Rs. 1,01,54,414/- as deemed dividend under Section 2(22)(e). The AO treated advances received from M/s. Mahavir Inductomelt Pvt. Ltd. (MIPL) as deemed dividend, citing substantial interest by a common shareholder. The CIT(A) deleted the addition, referencing case law that deemed dividend provisions apply only if the recipient is a shareholder of the payer company. The Tribunal upheld this view, citing the Special Bench decision in ACIT v. Bhaumik Colour (P.) Ltd., which held that deemed dividend can only be assessed in the hands of a shareholder of the lender company.
  
  4. Deletion of Disallowance of Deduction under Section 80G:
  The fourth issue involves the deletion of disallowance of deduction under Section 80G amounting to Rs. 1,51,000/-. The CIT(A) admitted fresh evidence regarding donations to the Chief Minister's and Prime Minister's Relief Funds. The Tribunal set aside this issue to the AO for verification of the claim, noting that the receipts did not mention the date of payments.
  
  5. Disallowance under Section 40a(ia) for Non-deduction of TDS:
  The fifth issue pertains to the disallowance of Rs. 26,51,989/- under Section 40a(ia) for non-deduction of TDS. The AO disallowed the expenses due to late remittance of TDS. The CIT(A) confirmed the disallowance but directed the AO to allow it in the subsequent year. The Tribunal noted that the payments were made within the due date of filing the return under Section 139(1) and allowed the assessee's claim, referencing the amended provisions of Section 40a(ia).
  
  Conclusion:
  The Tribunal dismissed the Revenue's appeal on issues of commission expenses, depreciation on rolls, and deemed dividend, confirming the CIT(A)'s decisions. The issue of deduction under Section 80G was remanded to the AO for verification. The Tribunal allowed the assessee's cross-objection regarding disallowance under Section 40a(ia). The overall appeal of the Revenue was partly allowed for statistical purposes, and the assessee's cross-objection was allowed.

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• 2010 (11) TMI 1010
  

  Addition in block assessment proceedings in the hands of other person - According to the Department, the actual price received was ₹ 6.5 crores, the consideration shown in the sale deed was only ₹ 1.40 crores - Held that: - before invoking the provisions of Section 158 BD of the Act, the Assessing Officer of the person searched u/s 132 (1) must satisfy himself that some undisclosed income belongs to a person other than the persons with respect to whom search was made under Section 132 (1) of the Act. Such satisfaction must be based on the material found in the course of search. In the absence of any such satisfaction (which is to be recorded in writing) the concerned Assessing Officer does not get any jurisdiction to assess that other person by invoking the section 158 BD of the Act.

  During the search carried out at the premises of Mr. & Mrs. Charla, no books of accounts or other documents or other assets pertaining to the assessees herein was found or seized. The entire foundation of the block assessment under Section 158 BD of the Act, in so far assessees are concerned, was the statement of Smt. Suraksha Charla recorded during the course of search.

  Revenue appeals dismissed in view of Manish Maheshwari Vs. ACIT, (2007 -TMI - 2889 - SUPREME COURT), Amity Hotels (P) Ltd. (2004 -TMI - 10034 - DELHI High Court) and CIT Vs. Karan Engg. P. Ltd. and Janki Exports International Vs. UOI, (2004 -TMI - 10668 - DELHI High Court)

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• 2010 (11) TMI 1009
  
  Issues Involved:
  1. Non-fulfillment of the provisions of Sec.80IB(10)(a) of the Act.
  2. Non-fulfillment of the provisions of Sec.80IB(10)(b) of the Act.
  3. Non-fulfillment of the provisions of Sec.80IB(10)(c) of the Act.
  4. Non-fulfillment of the provisions of Sec.80IB(10)(d) of the Act.
  5. Addition of unexplained receipts of money.
  
  Issue-wise Detailed Analysis:
  
  1. Non-fulfillment of the provisions of Sec.80IB(10)(a) of the Act:
  The AO contended that the project commenced before 01.10.1998, based on work-in-progress shown in the balance sheet and the letter of intent from SRA dated 17.01.1997. Additionally, the project was not completed by 31.03.2005. The CIT(A) held that the development commenced only after receiving the commencement certificate on 02.12.1998 and that expenses shown as work-in-progress were related to conveyance charges, not construction. The Tribunal upheld the CIT(A)'s view that the project commenced after 01.10.1998 but agreed with the AO that the project was not completed by 31.03.2005, thus denying the deduction.
  
  2. Non-fulfillment of the provisions of Sec.80IB(10)(b) of the Act:
  The AO argued that the project was on a plot less than one acre and was not notified by the CBDT. The CIT(A) found that the total plot area was 5700 sq. meters, including both rehabilitation and saleable buildings, satisfying the one-acre requirement. The Tribunal upheld the CIT(A)'s findings, confirming that the plot size met the statutory requirement.
  
  3. Non-fulfillment of the provisions of Sec.80IB(10)(c) of the Act:
  The AO claimed that some flats exceeded the 1000 sq. ft. limit by combining two flats into one. The CIT(A) found that the agreements and approved plans showed each unit was below 1000 sq. ft. and that any combination of flats was done by buyers post-purchase. The Tribunal upheld the CIT(A)'s findings, confirming compliance with the size requirement.
  
  4. Non-fulfillment of the provisions of Sec.80IB(10)(d) of the Act:
  The AO noted that the commercial area exceeded the 5% limit. The CIT(A) accepted the Assessee's argument that the shops were mandated by SRA for rehabilitation purposes and constructed before the amendment. The Tribunal, following the precedent set in Saroj Sales Organization, held that the law as it existed when the project was approved should apply, confirming compliance with the commercial area restriction.
  
  5. Addition of unexplained receipts of money:
  The AO added &8377; 59,20,000/- based on impounded documents. The CIT(A) upheld &8377; 7,00,000/- and &8377; 1,20,000/- as unaccounted but deleted &8377; 51,00,000/- after finding that the flats were eventually sold to different buyers at higher prices, duly recorded in the books. The Tribunal confirmed the CIT(A)'s deletion of &8377; 51,00,000/- due to lack of evidence of receipt from the named persons and upheld the addition of &8377; 7,00,000/- and &8377; 1,20,000/-.
  
  Conclusion:
  The Tribunal allowed the revenue's appeal partly, denying the deduction under Sec.80IB(10) due to non-completion of the project by 31.03.2005 and confirming the addition of &8377; 7,00,000/- and &8377; 1,20,000/- as unexplained money.

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• 2010 (11) TMI 1008
  
  Issues involved: Condonation of delay, Admission of appeal, Stay application
  
  Condonation of delay: The application for condonation of delay of six days was considered by the court. After hearing both counsels, it was found that sufficient cause existed for condonation of delay. The application was allowed, and the case was disposed of.
  
  Admission of appeal: The court admitted the appeal and issued notice to the respondent. Since the respondent's counsel accepted the notice, no further notice was required. The appeal was scheduled for hearing in January 2011, to be listed among the first ten cases at the top of the Board.
  
  Stay application: An application for stay was presented, and after hearing both parties, the court directed that no coercive steps should be taken against the petitioner. The application was disposed of with this direction, and it was mentioned that if the appellant sought an adjournment, the stay order would be vacated.

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• 2010 (11) TMI 1007
  
  Issues Involved:
  1. Disallowance of bad debts written off.
  2. Computation of eligible profit u/s 80IA.
  3. Treatment of interest income.
  4. Provision for doubtful debts u/s 115JB.
  5. Interest under section 234D.
  6. Penalty proceedings under section 271(1)(c).
  7. Additional grounds related to bad debts and double taxation.
  
  Summary:
  
  1. Disallowance of Bad Debts Written Off:
  The Revenue challenged the deletion of disallowance of bad debts written off by the CIT(A). The Tribunal upheld the CIT(A)'s decision, referencing the Supreme Court's ruling in T.R.F. Ltd. vs CIT 323 ITR 397 (SC), which clarified that post-1989, it is sufficient for the assessee to write off the debt as irrecoverable in their accounts without proving it has become bad.
  
  2. Computation of Eligible Profit u/s 80IA:
  The Tribunal addressed the issue of whether interest expenditure should be excluded from eligible profit and only the net amount should be considered u/s 80IA. The Tribunal upheld the CIT(A)'s decision to consider only net interest income for exclusion, referencing the Delhi High Court's decision in CIT v Shri Ram Honda Power Equip 289 ITR 475.
  
  3. Treatment of Interest Income:
  The Tribunal confirmed that interest income should be assessed under the head 'income from other sources' and not 'business income'. It directed that only the expenditure directly related to earning such interest income should be allowed as a deduction. The Tribunal dismissed the Revenue's appeal on this ground, aligning with the CIT(A)'s decision.
  
  4. Provision for Doubtful Debts u/s 115JB:
  The Tribunal addressed the issue of adding the provision for doubtful debts to the book profit for computing tax u/s 115JB. It referenced the Supreme Court's decision in CIT vs. HCL Comnet Systems and Services Ltd. 305 ITR 409 (SC) and subsequent amendments, directing the AO to consider the actual amount of bad debts written off while computing book profits.
  
  5. Interest under Section 234D:
  The Tribunal referred to the judgments of the Bombay High Court in CIT vs. Bajaj Hindustan and the Delhi High Court in DIT vs. Jacobs Civil Incorporated, affirming that section 234D is not retrospective. It directed the AO to compute interest u/s 234D only from 1.6.2003.
  
  6. Penalty Proceedings under Section 271(1)(c):
  The Tribunal noted that this ground was general and premature, thus rejecting it.
  
  7. Additional Grounds Related to Bad Debts and Double Taxation:
  The Tribunal directed the AO to allow the actual amount of bad debts written off while computing profits u/s 115JB, addressing concerns of double taxation.
  
  Conclusion:
  The Tribunal partly allowed the Revenue's appeals and the assessee's cross-objections for statistical purposes, directing specific computations and verifications by the AO in line with the discussed judgments and legal provisions.

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• 2010 (11) TMI 1006
  
  Issues involved: Stay petition filed against the suspension of Custom House Agent Licence based on alleged violations of Customs House Agents Licensing Regulations (CHALR).
  
  Summary:
  The stay petition was filed by the applicant challenging the suspension of Custom House Agent Licence based on the Order No. 25/2010 dated 22.10.2010 issued by the Commissioner of Customs (General), Mumbai. The applicant argued that the suspension was done without bringing on record the alleged violations and that the decision was based solely on the Commissioner's order without proper investigation report as required by Regulation 20(2) of CHALR. The applicant contended that there was no violation on their part and highlighted a previous Tribunal decision supporting their case. On the other hand, the Respondent defended the suspension order, stating that immediate action was necessary based on the interim investigation report and that the principles of Natural Justice did not apply in this case as per Regulation 22(1) of CHALR. The Respondent also mentioned that the matter was sub-judice before the High Court of Mumbai, which had granted an interim injunction allowing the applicant to conduct business temporarily.
  
  Upon considering the submissions from both sides and perusing the records, the Tribunal found that the suspension order was based on the Commissioner's order, which was under challenge in a Writ Petition before the High Court. The Tribunal decided to keep the suspension order at abeyance until the High Court's final disposal on 15.11.2010. It was observed that the allegation of violation of CHALR was not clearly established, as any document manipulation was done by the importer without explicit advice from the applicant. Considering the impact of suspending the licence on the trade and employees, the Tribunal stayed the operation of the suspension order and listed the matter for disposal on 25th November 2010, directing both parties to be prepared for further submissions on the case.
  
  Therefore, the operation of the suspension order was stayed pending the disposal of the appeal, scheduled for 25.11.2010.

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• 2010 (11) TMI 1005
  
  Issues Involved:
  1. Deletion of addition of Rs. 45,00,000/- made by the A.O. u/s 68 of the Income Tax Act, 1961.
  
  Summary:
  
  Issue 1: Deletion of addition of Rs. 45,00,000/- made by the A.O. u/s 68 of the Income Tax Act, 1961

  The department filed an appeal against the order of ld. C.I.T.(A)-VIII, Kolkata, which deleted the addition of Rs. 45,00,000/- made by the A.O. u/s 68 of the Act. The A.O. had treated the share application money received from five companies as unexplained cash credit. The A.O. observed that the parties had the same address, no fixed assets, and the money trail led to the assessee's bank account through intermediaries. Notices u/s 133(6) and 131 were issued, but the parties were not available at their addresses, and the assessee failed to produce them. The A.O. also noted the absence of advertisement and registrar for the share issue.

  The ld. C.I.T.(A) deleted the addition, relying on the decisions of Hon'ble Delhi High Court in Divine Leasing & Finance Ltd. and Hon'ble Supreme Court in CIT vs. Lovely Exports Pvt. Ltd. The ld. C.I.T.(A) held that the share capital of Rs. 45 lakhs received from the investors was not liable to be treated u/s 68 as unexplained credits. The department argued that the facts of the case differed from the cited judicial pronouncements, as the assessee was a private limited company with no involvement of brokers or stock exchange.

  The assessee's counsel supported the order of the ld. C.I.T.(A) and provided affidavits, audited balance sheets, I.T. return acknowledgements, and net worth calculations of the share applicants. The Tribunal observed that the A.O. disbelieved the introduction of capital based on the same address of the parties and lack of fixed assets. However, the existence and identity of the share applicant companies were not in dispute, and the A.O. failed to establish that the share applicants did not have the means to make the investment.

  The Tribunal noted that the receipt of share application money was duly recorded in the books of the assessee-company and the audited accounts of the share applicants. The Tribunal held that the assessee had proved the identity, creditworthiness, and genuineness of the transactions. The burden of proof shifted to the revenue to establish that the investment came from the assessee-company itself, which the department failed to do. The Tribunal cited the Hon'ble Rajasthan High Court in Barkha Synthetics Ltd. vs. ACIT and the Hon'ble Supreme Court in CIT vs. Daulat Rant Rawatmuli, emphasizing that the onus is on the department to prove that the apparent is not the real.

  The Tribunal also referred to the Third Member decision of I.T.A.T., Jodhpur Bench in Polymers (P) Ltd. vs. DCIT and the Hon'ble Supreme Court in CIT vs. M/s. Lovely Exports (P) Ltd., which held that the burden to prove that the money did not belong to the share applicants but to the assessee-company is on the revenue. The Tribunal concluded that the A.O. doubted the genuineness of the share application money on surmises and conjecture without any cogent material. Therefore, the Tribunal upheld the order of the ld. C.I.T.(A) in deleting the addition of Rs. 45 lakhs made by the A.O. u/s 68 of the Act.

  In the result, the appeal of the department was dismissed.

  This order was pronounced in the open Court on 26.11.2010.

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