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2011 (11) TMI 749
Issues involved: Impugning Settlement Commission's order on fraudulent import and duty payment.
Details of the judgment:
Issue 1: Fraudulent import and duty payment
The Commissioner of Customs filed a writ petition challenging the Settlement Commission's order regarding the fraudulent import of mobile phones by misusing IEC code and falsely declaring them as water purification parts. The total customs duty payable was &8377; 3,09,935, out of which the respondent had already deposited &8377; 3,10,000 during the investigation. The Settlement Commission directed the respondent to pay a penalty of &8377; 30,000 and a redemption fine of &8377; 20,000 within 30 days for the confiscated mobile phones without valid IMEI numbers. However, the petitioner claimed that the redemption fine of &8377; 20,000 was not paid by the respondent, leading to the denial of redemption benefit. Despite the absence of Revenue representation during the Settlement Commission hearing, the petitioner did not provide any justification for the non-appearance.
Issue 2: Dismissal of writ petition
Considering the facts, the quantum involved, and the petitioner's failure to appear before the Settlement Commission, the High Court declined to entertain the writ petition and dismissed it in limine.
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2011 (11) TMI 748
The Bombay High Court ruled that the production of perfumed hair oil using coconut and mineral oil qualifies as a manufacturing activity for claiming deduction under Section 80IB of the Income Tax Act, 1961. The court upheld the ITAT decision, stating that the activity constitutes manufacturing, as confirmed by the payment of Central Excise duty on the final product. The appeal was dismissed.
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2011 (11) TMI 747
Issues:
1. Compliance of Section 153 of the Customs Act.
2. Limitation period for filing an appeal.
3. Allegations against the appellant regarding import discrepancies.
4. Discretion of the Tribunal to condone delay in filing the appeal.
Compliance of Section 153 of the Customs Act:
The appellant argued non-compliance of Section 153 of the Act, stating the order by the Commissioner was served on them on 14th December, 2009, making the appeal within limitation. However, the Tribunal found that the original assessment order file was not traceable. The appellant participated in the proceedings, and it was deemed unlikely that they were unaware of the order for 10 years. The Tribunal noted attempts made by the Revenue to recover penalties post the order in 1999, indicating the appellant's knowledge of the situation. Correspondence was sent to the correct address, and recovery steps were taken, leading to the dismissal of the appeal.
Limitation period for filing an appeal:
The appeal was against an order dated 14th October, 1999, filed over 10 years later. The Tribunal justified its decision not to condone the delay, citing the appellant's awareness of the order and the Revenue's efforts to recover penalties. The Tribunal concluded that the appellant had delayed approaching the tribunal until faced with harsh recovery measures, indicating a lack of diligence.
Allegations against the appellant regarding import discrepancies:
The appellant was implicated in a case where a consignment of computer parts was found to contain watch movements instead of the declared items. The appellant was linked to the non-existent importer and was accused of involvement in the import discrepancy. This formed the basis of the order by the Commissioner, leading to the subsequent appeal.
Discretion of the Tribunal to condone delay in filing the appeal:
The Tribunal, after considering the circumstances and findings, determined that no substantial legal question arose for consideration in the appeal. The Tribunal upheld its decision to dismiss the appeal, emphasizing the appellant's delay in seeking redress and the lack of grounds for condoning the 10-year delay in filing the appeal.
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2011 (11) TMI 746
Issues involved:
The appeal challenges the order of the learned CIT(A) regarding the addition of Rs. 19,00,000 on account of FDRs owned by Shri Suresh Gupta, the settlement application of Shri Suresh Gupta, and the evidence related to the investment of Rs. 19,00,000.
Addition of Rs. 19,00,000 on account of FDRs:
- A search u/s 132(1) was conducted leading to the assessment of undisclosed income.
- The CIT(A) deleted the Rs. 19,00,000 addition, but the ITAT directed the matter back to the AO for further investigation.
- The AO reiterated the addition as the assessee failed to submit the final order of the Settlement Commission.
- The CIT(A upheld the AO's findings due to non-submission of the required document.
- The ITAT reiterated its previous directions, emphasizing the need for the final order of the Settlement Commission.
- As the Settlement Commission had not issued the final order, the ITAT vacated the CIT(A)'s findings and reiterated the directions from the previous order.
Settlement application of Shri Suresh Gupta:
- The appellant contended that the proceedings before the Assessing Officer were subject to the final order of the Settlement Commission in Shri Suresh Gupta's case.
- The ITAT emphasized the importance of the Settlement Commission's final order in determining the tax liability related to the FDRs.
Evidence related to the investment of Rs. 19,00,000:
- The CIT(A) was criticized for sustaining the addition without adjudicating on the evidence presented.
- The ITAT stressed the significance of the evidence and the need for compliance with their directions regarding the Settlement Commission's final order.
Separate Judgement:
No separate judgment was delivered by the judges in this case.
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2011 (11) TMI 745
Disallowance of depreciation on office building, addition on account of foreign traveling expenditure, addition on account of foreign traveling expenditure, addition on account of unregistered Provident Fund Trust, disallowance u/s 14A, disallowance towards interest on late payment of TDS.
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2011 (11) TMI 744
Issues involved: Levy of penalty u/s 271(1)(c) of the I.T. Act, 1961.
Summary:
The appeal by the assessee for assessment year 2007-08 was related to the levy of penalty u/s 271(1)(c) of the I.T. Act, 1961. The Assessing Officer disallowed certain expenses claimed by the assessee, leading to the imposition of a penalty equivalent to 100% of the tax sought to be evaded. The CIT(A) upheld the penalty, stating that the assessee did not voluntarily offer to add back the excess claims. However, the assessee argued that the claims were made in good faith based on legal interpretations and that no penalty was imposed in a similar situation in the past.
The ITAT Delhi considered the facts and held that the assessee had disclosed all relevant information in the return of income and revised the computation after the disallowance was made for the previous assessment year. It was noted that the assessee did not make fraudulent or bogus claims but genuinely believed in the eligibility of the deductions claimed. Relying on a previous decision of the Hon'ble Delhi High Court, it was concluded that the penalty u/s 271(1)(c) was not applicable in this case. Therefore, the penalty imposed by the Assessing Officer was canceled, and the appeal filed by the assessee was allowed.
This judgment highlights the importance of good faith in tax assessments and the need for clear disclosure of facts to avoid penalties under the relevant provisions of the Income Tax Act.
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2011 (11) TMI 743
Issues Involved:
1. Disallowance of national sales tax liability.
2. Charging of interest u/s 234B.
3. Treatment of Die Tooling charges.
4. Treatment of technical know-how expenses.
Summary:
1. Disallowance of National Sales Tax Liability:
The assessee contended that the sales tax exemption/subsidy amounting to Rs. 5,66,47,652/- should be treated as a capital receipt. However, the CIT(A) confirmed the disallowance, treating it as a revenue receipt. The Tribunal referred to its previous decision in the case of CIT Vs. M/s Abhishek Industries, 286 ITR 1, where it was held that sales-tax subsidy quantified at a percentage of fixed capital investment is a revenue receipt. Consequently, the Tribunal decided this issue in favor of the Revenue and against the assessee, dismissing Ground No.1.
2. Charging of Interest u/s 234B:
The assessee argued against the charging of interest u/s 234B, claiming a bona fide belief that the sales tax subsidy was a capital receipt. The Tribunal, however, noted that the levy of interest u/s 234B is mandatory and automatic upon completion of assessment. Therefore, Ground No.2 taken by the assessee was dismissed.
3. Treatment of Die Tooling Charges:
The Department challenged the CIT(A)'s decision to treat Die Tooling charges of Rs. 7,73,15,047/- as revenue expenditure instead of capital expenditure. The Tribunal referred to its earlier decision in the assessee's case for assessment year 2001-02, where similar expenses were treated as revenue expenditure. The Tribunal upheld the CIT(A)'s decision, noting that the expenses were incurred for modernization and improving efficiency, not for setting up new machinery. Thus, Ground No.2 taken by the Department was dismissed.
4. Treatment of Technical Know-How Expenses:
The Department also contested the treatment of technical know-how expenses amounting to Rs. 35,01,307/- as revenue expenditure. The Tribunal referred to its previous decisions for assessment years 2001-02 and 2003-04, where similar expenses were treated as revenue expenditure. The Tribunal upheld the CIT(A)'s decision, noting that the expenses were for improving productivity and resolving quality issues, not for acquiring a capital asset. Consequently, Ground No.3 taken by the Department was dismissed.
Conclusion:
Both the appeals by the assessee and the Department were dismissed, with the Tribunal upholding the CIT(A)'s decisions on all contested issues.
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2011 (11) TMI 742
Disallowance u/s 43B - Held that:- We find that though previously assessee had included said amount of ₹ 1.18,53,407/to be disallowed under Section 43B of the Act, even before the assessment was finalised, the assessee through its letter contended that same was purely an error and that exclusion would not apply to cash credit account since the same is not covered under Section 43B of the Act.
To our mind this was a pure question of law. If under Section 43B of the Act such interest was not included, mere fact that assessee initially himself excluded in the return, would not prevent him to contend that same was erroneous and that correct treatment should be as per the statutory provisions. In that context CIT(Appeals) as well as Tribunal both were justified in entertaining such additional grounds. Had the entire issue being highly contested on facts and had such claim not being made in original assessment, could the same have been entertained by the Assessing Officer without revised return and whether consequentially higher authorities could have directed the Assessing Officer to examine the same are questions we are not required to go into.
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2011 (11) TMI 741
Issues Involved:
1. Relief in loan utilized for the purchase of depreciable assets.
2. Allowance of interest on loan not paid by the assessee.
3. Depreciation on assets purchased out of funds received from financial institutions.
4. Admission of fresh evidence without affording an opportunity to the Assessing Officer.
Summary:
Issue 1: Relief in Loan Utilized for Purchase of Depreciable Assets
The Revenue contended that the CIT(A) erred in allowing relief for a loan of Rs. 4,61,36,264/- utilized for purchasing depreciable assets. The assessee argued that the loan waiver by State Bank of India and M.P. Financial Corporation was a capital receipt and should not be added back. The CIT(A) held that the loan waived was of a capital nature and could not be added back, which was upheld by the Tribunal.
Issue 2: Allowance of Interest on Loan Not Paid by the Assessee
The Revenue argued that the CIT(A) wrongly allowed interest on a loan amounting to Rs. 9,98,01,259/- which was not paid by the assessee. The assessee contended that the interest was not claimed as a deduction in any year, and thus, the addition u/s 41(1) was incorrect. The Tribunal upheld the CIT(A)'s decision, stating that the interest liability was never claimed nor allowed, and thus, could not be added back u/s 41(1).
Issue 3: Depreciation on Assets Purchased Out of Funds Received from Financial Institutions
The Revenue's ground regarding depreciation on assets purchased out of funds received from financial institutions was dismissed as it did not arise from the A.O.'s or CIT(A)'s order. The Tribunal found no basis for this ground and dismissed it.
Issue 4: Admission of Fresh Evidence Without Affording Opportunity to the Assessing Officer
The Revenue claimed that the CIT(A) entertained fresh evidence without giving the A.O. an opportunity to examine it. The Tribunal noted that the CIT(A) sought clarifications from the auditor within his powers u/s 250(4) and did not consider it as additional evidence under Rule 46A. Thus, this ground was also dismissed.
Conclusion:
The Tribunal dismissed the Revenue's appeal on all grounds, upholding the CIT(A)'s order in favor of the assessee. The appeal of the Revenue in ITA no.651/Agr/2008 was dismissed.
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2011 (11) TMI 740
Issues involved: Appeal against the Commissioner of Income-tax(Appeals) order u/s 143(3) of the Income Tax Act, 1961 for assessment years 2005-06 and 2006-07 regarding deduction claimed u/s 80IC.
Issue 1: Deduction under section 80IC
The Revenue challenged the deletion of addition of Rs. 7,53,650/- made by the Assessing Officer by disallowing deduction claimed under section 80IC. The Revenue contended that non-payment of interest and salary to partners was a colorable device for tax evasion. The Tribunal noted that the assessee qualified for deduction under section 80IC for profits earned in manufacturing activities. However, the Assessing Officer disallowed the deduction due to non-payment of salary and interest to partners as per the partnership deed. The Tribunal upheld the CIT (Appeals) decision based on a previous ruling in a similar case for assessment year 2004-05, stating that the arrangement did not result in more than ordinary profits for the assessee.
Issue 2: Interpretation of Section 80IA(10)
The Tribunal analyzed Section 80IA(10) which deals with close connections between the assessee and other persons leading to more than ordinary profits. It was argued that the non-payment of remuneration and interest to partners did not fall within the scope of "business transacted" for the purposes of the section. The Tribunal found that the partners had mutually agreed to waive these payments, and as there was no actual liability or payment made, the Assessing Officer could not reduce profits under Section 80IA(10). The Tribunal upheld the CIT (Appeals) decision based on this interpretation.
Conclusion:
The Tribunal dismissed the Revenue's appeals, upholding the CIT (Appeals) decision regarding the deduction under section 80IC. The issues raised were found to be similar to a previous case, and the Tribunal's decision was based on the interpretation of relevant sections of the Income Tax Act. Both appeals of the Revenue were ultimately dismissed.
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2011 (11) TMI 739
Issues Involved:
1. Addition on account of unaccounted sales.
2. Disallowance of inflated labor charges.
3. Telescoping of addition of inflated labor charges against excess stock found.
4. Disallowance under section 40(a)(ia) r/w section 194C.
5. Disallowance under section 40(a)(ia) r/w section 194H.
Detailed Analysis:
1. Addition on account of unaccounted sales:
The Tribunal examined whether the unaccounted sales were from trading transactions or manufacturing transactions. The material seized during the search, including the statements of Mr. Bhagwan Gada and Mr. Kalpesh Gada, indicated that the transactions were unaccounted trading transactions. The Tribunal found no evidence of suppression in production or defects in the production registers. Consequently, the unaccounted trading transactions were held to belong to Mr. Kalpesh Gada and Mr. Vipul Gada, not to Mr. Alpesh B. Gada or M/s. K.K. Tex Enterprises. The addition made on account of unaccounted sales was deleted. The Tribunal also noted that even if the transactions were considered, only the profit from the transactions could be taxed, not the entire turnover.
2. Disallowance of inflated labor charges:
The Tribunal noted that the average labor charges paid by the assessee increased over the years due to inflation. The Tribunal referred to its previous decisions, where labor charges were allowed at Rs. 3.00 per meter. Considering the evidence from the seized material, the Tribunal restored the issue to the Assessing Officer for fresh adjudication, directing the AO to consider the inflation factor and the material found during the search.
3. Telescoping of addition of inflated labor charges against excess stock found:
In the appeals for assessment years 2008-09, the assessee raised an additional ground for telescoping the addition of inflated labor charges against excess stock found. The Tribunal restored this issue to the Assessing Officer for fresh adjudication, directing the AO to grant telescoping benefits to the extent of additions sustained.
4. Disallowance under section 40(a)(ia) r/w section 194C:
The assessee did not press this ground, and consequently, it was dismissed as "not pressed."
5. Disallowance under section 40(a)(ia) r/w section 194H:
The Tribunal noted that the applicable tax rate for the relevant assessment year was 5%, and the rate of 10% came into effect from 1st June 2007. Therefore, the disallowance on the ground that TDS was deducted at a lower rate than prescribed was deleted.
Conclusion:
The appeals were partly allowed, with the Tribunal providing relief on several grounds, including the deletion of additions on account of unaccounted sales and the issue of inflated labor charges being restored to the Assessing Officer for fresh adjudication. The Tribunal also provided directions for telescoping benefits and addressed the issues related to disallowance under section 40(a)(ia) r/w sections 194C and 194H.
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2011 (11) TMI 738
Issues involved: Appeal filed u/s 260A of the Income Tax Act challenging the order passed by the Income Tax Appellate Tribunal u/s 271(1)(c) of the Act regarding deduction claimed u/s 80HHC.
Summary:
The appellant claimed a deduction under Section 80HHC of the Income Tax Act but was found to have made a false claim and furnished incorrect particulars. The tribunal had previously decided against the appellant on a similar issue in an earlier assessment year. However, the appellant argued that the decision was made after the filing of the return for the current assessment year. The High Court had admitted an appeal related to the computation of deduction under Section 80HHC in a separate case, citing relevant precedents.
The appellant, an individual engaged in exports, had disclosed total turnover and domestic turnover. The appellant was also involved in trading shares through another sole proprietorship but did not include this turnover in the deduction calculation under Section 80HHC. The assessing officer rejected this approach, leading to the tribunal's decision against the appellant. The tribunal, considering the explanation provided by the appellant, deleted the penalty citing the possibility of different views on the legal issue. The tribunal's decision was based on the Supreme Court's ruling in CIT Vs. Reliance Petro Products (P) Ltd. regarding the imposition of penalties.
After reviewing the facts and the tribunal's order, the High Court found no reason to interfere with the impugned order and dismissed the appeal.
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2011 (11) TMI 737
Issues involved: The judgment involves the levy of penalty u/s. 271(1)(c) of the Income Tax Act for assessment years 2003-04 to 2005-06.
Assessment Year 2003-04:
The only issue in this appeal is the levy of penalty u/s. 271(1)(c) for non-disclosure of income from other sources in the original return. The Assessing Officer (A.O.) initiated penalty proceedings, observing that the assessee did not rectify the mistake in the original return by filing a revised return u/s. 139(5) and declared the income only after a notice u/s. 148 was issued. The A.O. levied a penalty, stating that the assessee concealed income, making him liable for penalty u/s. 271(1)(c). The Commissioner of Income Tax (C.I.T.) upheld the penalty, emphasizing that the assessee concealed income by not including interest income in the original return, even though it was later disclosed in response to the notice u/s. 148. The ITAT Kolkata, after considering the submissions, found that the revenue did not point out that income had escaped due to non-declaration of interest, and the assessee voluntarily offered the income upon receiving the notice u/s. 148. As there was no evidence to support the claim that the department detected the income, the ITAT directed the A.O. not to levy the penalty u/s. 271(1)(c), allowing the assessee's appeal.
Assessment Years 2004-05 & 2005-06:
The facts for these assessment years are similar to the issue in the assessment year 2003-04. The ITAT directed the A.O. to delete the penalties levied u/s. 271(1)(c) for these two assessment years as well, based on the same reasoning as in the assessment year 2003-04.
In conclusion, the ITAT Kolkata allowed the appeals of the assessee for all the assessment years, directing the A.O. to delete the penalties imposed u/s. 271(1)(c) for non-disclosure of income, as the assessee voluntarily offered the income upon receiving notices u/s. 148 without evidence of detection by the department.
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2011 (11) TMI 736
The Bombay High Court dismissed the Review Petition, stating that the law as enacted by Parliament in the Finance Act is authoritative, and no error apparent on record was found. The judgment of the Supreme Court in B.K. Industries v. Union of India was cited but deemed distinguishable by the Petitioner.
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2011 (11) TMI 735
Issues Involved:
1. Disallowance of business promotion expenses.
2. Disallowance of function expenses.
3. Disallowance of training expenses.
4. Disallowance of bus-pass/commission/discount expenses.
5. Disallowance of conveyance and mobile allowance expenses.
6. Disallowance of license fee expenses.
7. Addition under Section 68 for cash credits in partners' capital accounts.
8. Disallowance under Section 40(a)(ia) for advertisement expenses.
9. Disallowance of donation expenses.
10. Disallowance of car and telephone expenses for personal use.
11. Interest charged under Sections 234B, 234C, and 234D.
Detailed Analysis:
1. Disallowance of Business Promotion Expenses:
The Revenue contended that the CIT(A) erred in deleting the addition of Rs. 1,22,320/- due to non-production of vouchers. The Tribunal upheld the CIT(A)'s decision, noting that the assessee paid fringe benefit tax on the entire amount, treating it as business expenditure. Therefore, no disallowance was warranted.
2. Disallowance of Function Expenses:
The Revenue challenged the deletion of Rs. 50,000/- out of Rs. 1,00,000/- disallowed by the AO. The CIT(A) restricted the disallowance to Rs. 50,000/- due to non-production of vouchers but accepted the expenditure as business-related. The Tribunal upheld this decision, agreeing with the CIT(A)'s detailed findings.
3. Disallowance of Training Expenses:
The CIT(A) reduced the disallowance from 50% to 20% of the training expenses, considering the payments to technically qualified partners as reasonable. The Tribunal upheld this decision, finding no infirmity in the CIT(A)'s well-reasoned order.
4. Disallowance of Bus-Pass/Commission/Discount Expenses:
The CIT(A) deleted most of the disallowance, retaining only Rs. 10,000/-, as over 99% of the expenses were proven to be business-related. The Tribunal upheld this decision, agreeing with the CIT(A)'s detailed and reasonable findings.
5. Disallowance of Conveyance and Mobile Allowance Expenses:
The CIT(A) deleted the Rs. 2,00,000/- disallowance, noting that such expenses are legitimate business expenditures. The Tribunal upheld this decision, finding no valid ground to interfere with the CIT(A)'s findings.
6. Disallowance of License Fee Expenses:
The CIT(A) deleted the Rs. 2,50,000/- disallowance, treating the license fee as revenue expenditure for the annual renewal of licenses. The Tribunal upheld this decision, agreeing with the CIT(A)'s detailed and well-reasoned findings.
7. Addition under Section 68 for Cash Credits:
The CIT(A) deleted the Rs. 5,75,000/- addition, noting that the partners had confirmed their contributions, and the firm had no obligation to prove the source of the source. The Tribunal upheld this decision, agreeing with the CIT(A)'s detailed and well-reasoned findings.
8. Disallowance under Section 40(a)(ia) for Advertisement Expenses:
The Tribunal restored this issue to the CIT(A) for fresh adjudication, noting the lack of documentary evidence indicating the basis of quantification and reimbursement of advertisement expenses. The CIT(A) must provide a proper and reasonable opportunity to the assessee before adjudicating the issue afresh.
9. Disallowance of Donation Expenses:
The CIT(A) reduced the disallowance to Rs. 26,000/-, accepting the eligibility for deduction under Section 80G. The Tribunal directed the AO to delete the entire Rs. 52,000/- disallowance, agreeing with the CIT(A)'s findings.
10. Disallowance of Car and Telephone Expenses for Personal Use:
The CIT(A) allowed a partial relief of Rs. 15,090/- but sustained Rs. 1,24,480/-. The Tribunal deleted the remaining disallowance, noting that the AO's additions were based on presumptions and assumptions without verifiable vouchers.
11. Interest Charged under Sections 234B, 234C, and 234D:
The Tribunal directed the AO to allow consequential relief, if any, at the time of giving effect to the order.
Conclusion:
The appeal of the revenue was dismissed, and the appeal of the assessee was partly allowed for statistical purposes. The Tribunal upheld the CIT(A)'s decisions on most issues, finding them well-reasoned and based on a proper appreciation of facts and legal principles.
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2011 (11) TMI 734
Issues involved: Appeals filed by Revenue against order of CIT(Appeals)-IX for assessment years 2001-02 to 2003-04 in cases of Shri D. Srinivas Vyas and Shri Durga Das Vyas.
Issue 1 - Nature of Expenditure: Assessees received commission from M/s. Siemens Ltd. Assessing Officer disallowed commission paid to sub-contractors as not for business purposes. Settlement Commission accepted M/s. Siemens Ltd.'s offer to tax the commission. Assessees failed to prove genuineness of expenses.
Issue 2 - Rectification Application: Assessee claimed commission paid by M/s. Siemens Ltd. was offered as income before Settlement Commission. CIT(A) accepted contention for protective assessments of Shri Durga Das Vyas but rejected for Shri D. Srinivas Vyas.
Issue 3 - Categorization of Assessees: CIT(A) shifted Shri D. Srinivas Vyas from third category to first category, directing deletion of commission. Revenue argued lack of evidence for repayment to M/s. Siemens Ltd.
Decision: Tribunal found assessees failed to prove repayment of commission to M/s. Siemens Ltd., making it a debatable issue. CIT(A)'s findings were reversed, and Assessing Officer's decision restored. Protective assessments in case of Shri Durga Das Vyas were upheld. Appeals of Revenue were allowed.
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2011 (11) TMI 732
Issues involved: Addition of commission and partial disallowance of expenditure under various heads.
Addition of Commission:
The appeal was against the addition of Rs. 2 lacs out of commission received from BSNL on sale of mobile sim cards. The assessee claimed to have passed on about 80% of the commission to retail customers as cash discount. The Assessing Officer disallowed Rs. 2 lacs of the commission paid as it was noted that the commission was passed on via cash sale vouchers, which were not fully verifiable. The CIT (Appeals) upheld the disallowance. However, the assessee provided evidence showing that the commission was not paid in cash but was adjusted by reducing the value of the products. The ITAT found merit in the claim and restricted the disallowance to Rs. 50,000, partly allowing ground No.1 raised by the assessee.
Partial Disallowance of Expenditure:
The Assessing Officer had disallowed a portion of expenses under various heads for personal use, such as car running, insurance, depreciation, telephone, advertisement, entertainment, and staff welfare. The ITAT ruled that while personal use could not be ruled out entirely, the disallowance for personal use was restricted to 1/10th of the total expenditure for car-related expenses and Rs. 10,000 for entertainment expenses. The disallowance made out of staff welfare expenses was reversed. The appeal on this issue was partly allowed.
In conclusion, the ITAT Chandigarh partially allowed the appeal of the assessee concerning the addition of commission and the partial disallowance of expenditure under various heads on account of personal use.
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2011 (11) TMI 731
Issues involved: The judgment deals with the issue of whether the sales-tax exemption granted by the Government of Gujarat to the assessee for three assessment years is a capital receipt or a revenue receipt.
Summary:
Issue 1: Sales-tax exemption classification
The revenue filed appeals challenging the CIT(A)'s order granting sales-tax exemptions totaling Rs. 3,09,40,235 for AY 1991-92, Rs. 5,66,12,692 for AY 1992-93, and Rs. 2,83,05,017 for AY 1993-94. The assessing officer considered the exemptions as revenue receipts, not meant for setting up units. The CIT(A) decided in favor of the assessee, holding the receipts as capital in nature. The Tribunal upheld the CIT(A)'s decision based on the purpose test, emphasizing the incentives were for industrial development in a backward area, not for business operations.
Key Points:
- The purpose of the incentives was to promote capital investment and industrial development in the earthquake-affected district.
- The Tribunal referred to the Supreme Court's principle that subsidies are classified based on the purpose for which they are granted.
- The Tribunal distinguished a similar case involving a different scheme, emphasizing the specific objectives and benefits tied to the capital investment in the present case.
- The Tribunal upheld the CIT(A)'s decision, considering the incentives as capital receipts aimed at setting up new units and generating employment in a backward area.
Decision:
The Tribunal dismissed the revenue's appeals and upheld the CIT(A)'s order, affirming that the sales-tax exemptions were capital receipts.
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2011 (11) TMI 729
Demand - Interest - while filing the ST-3 returns for the period ending September 2001 and March 2002 and March 2003, the appellant had submitted a covering letter indicating the amounts received by them from UNDP for rendering services and had also claimed exemption under Notification No. 48/98 dated 24-4-98 - Once the appellant intimated the fact to the department, the suppression of fact or misdeclaration cannot be alleged - In view of the above position, appellant has a very strong prima facie case in their favour and therefore unconditional stay against the recovery of the service tax and penalty is allowed after waiving pre-deposit.
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2011 (11) TMI 728
Issues:
1. Writ petition filed to quash a decision under the Right to Information Act, 2005.
2. Rejection of information request under Section 8(1)(h) of the Act.
3. Competency of the Public Information Officer to challenge appellate orders.
4. Maintaining the exempted category under Section 8(1)(h) of the Act.
Analysis:
1. The writ petition was filed to challenge a decision under the Right to Information Act, 2005. The petitioner, a Public Information Officer at Syndicate Bank, rejected an information request made by respondent No. 2, citing exemption under Section 8(1)(h) of the Act. The request sought details related to accounts, classification status, and notices issued under the SARFAESI Act. The rejection was based on ongoing proceedings for recovery of dues. Subsequent appeals led to the current petition.
2. The rejection of the information request under Section 8(1)(h) was challenged by respondent No. 2 through appeals. The General Manager directed the petitioner to provide more information regarding the One Time Settlement proposal. The final decision by respondent No. 1 favored respondent No. 2, emphasizing the Public Information Officer's obligation to justify denial of information under Section 19(5) of the Act. The court found the information sought did not impede any investigation or prosecution, hence not falling under the exempted category.
3. The court addressed the competency of the Public Information Officer to challenge appellate orders. It clarified that the Officer, while acting in a quasi-judicial capacity, cannot challenge orders passed by appellate authorities. The Officer's role is to handle information requests and provide reasonable assistance, subject to appeals. The court deemed the Officer incompetent to question the appellate authority's decision, stating only the public authority or a party directly affected can challenge such orders.
4. Regarding the exempted category under Section 8(1)(h) of the Act, the court ruled that the information sought by respondent No. 2 did not impede any investigation, apprehension, or prosecution of offenders. Even if the information related to pending disputes before a Tribunal, it did not fall under the exempted category. Consequently, the court dismissed the writ petition, emphasizing that the Officer's role does not extend to challenging appellate decisions, and the information requested was not exempted under the Act.
In conclusion, the court dismissed the writ petition, highlighting the dual role of the Public Information Officer and the inadmissibility of challenging appellate orders. The decision emphasized that the information requested did not impede any investigative or legal processes, thus not falling under the exempted category of the Act.
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9911796707
