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Showing 141 to 160 of 682 Records
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2007 (2) TMI 590
Issues:
1. Challenge to demand of commercial taxes due for assessment years 1989-90 to 2001-2002.
2. Company declared as a sick industrial company under SICA Act.
3. Winding up recommendation by BIFR and appeal to AAIFR.
4. Conversion of BIFR recommendation into a company petition under Companies Act, 1956.
5. Maintainability of the impugned demand during the pendency of the company petition.
Analysis:
1. The petitioner challenged a demand of Rs. 1,33,72,591 for arrears of commercial taxes due for various assessment years. The petitioner's company was declared a sick industrial company under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA Act) and a reference was made to the Board for Industrial and Financial Reconstruction (BIFR) for declaring it as such. The BIFR ultimately recommended winding up of the company, which was confirmed by the AAIFR. Subsequently, the BIFR recommendation was converted into a company petition under section 433(e) and (f) of the Companies Act, 1956. The petitioner argued that the impugned demand is not maintainable given the pending company petition.
2. The petitioner's counsel contended that during the pendency of the company petition before the court, it was not appropriate for the respondent to issue a notice. However, the counsel was unable to provide details about the stage of the company petition, raising uncertainty about the exact status of the legal proceedings. The petitioner's argument centered on the inappropriateness of the demand given the ongoing legal process related to the company's status and the recommendation for winding up by the BIFR and AAIFR.
3. The court considered the petitioner's submissions regarding the timing and validity of the demand in light of the company's declared status as a sick industrial company and the subsequent recommendation for winding up. The legal complexity arose from the interplay between the SICA Act and the Companies Act, 1956, leading to the conversion of the BIFR's recommendation into a company petition. The court needed to assess the legal implications of the ongoing legal proceedings and the impact on the demand for commercial taxes during this period of transition and potential winding up of the company.
4. The case highlighted the importance of procedural adherence and legal clarity in matters involving the financial health and viability of industrial companies. The court's decision would need to consider the legal frameworks of both the SICA Act and the Companies Act, 1956, to determine the appropriateness and maintainability of the impugned demand for commercial taxes amidst the backdrop of the company's declared status as a sick industrial entity and the recommendation for winding up by the relevant authorities. The resolution of these issues required a nuanced understanding of corporate law and insolvency proceedings to ensure a just and legally sound outcome.
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2007 (2) TMI 589
Issues Involved:
1. Levy of purchase tax under Section 7A of the TNGST Act on royalty paid for mining magnesite.
2. Applicability of concessional tax rate under Section 3(4) of the TNGST Act on exported goods.
3. Inclusion of packing and forwarding charges in taxable turnover.
Issue-wise Detailed Analysis:
1. Levy of Purchase Tax under Section 7A of the TNGST Act:
The petitioner, a Tamil Nadu Government undertaking, was granted a mining lease for magnesite and dunite. For the assessment year 1999-2000, the assessing officer issued a pre-assessment notice pointing out defects, including the excavation of raw magnesite from government land and its consumption in manufacturing other goods for sale. The officer assessed the value of the quarried mineral at Rs. 8,10,20,845 and levied a purchase tax at 11% under Section 7A of the TNGST Act. The petitioner argued that the quarried magnesite was their own and not purchased, thus Section 7A was inapplicable. The court, however, noted that the lease agreement required payment of royalty, which was considered purchase consideration under Section 7A. The court referenced the Supreme Court case of State of Tamil Nadu v. M.K. Kandaswami, which outlined the conditions for invoking Section 7A. The court concluded that the assessment order was within the competence of the statutory authority and should be challenged through the appellate mechanism provided under the TNGST Act.
2. Applicability of Concessional Tax Rate under Section 3(4) of the TNGST Act:
The assessing officer also pointed out that the petitioner purchased furnace oil at a concessional rate for manufacturing finished goods, part of which were exported. The officer determined that the petitioner was ineligible for the concessional rate under Section 3(4) and levied a differential tax of 1% on the exported turnover. The petitioner contended that Section 3(4) applied only to branch transfers or agents, not to direct exports. The court held that this issue, too, involved factual determinations best addressed by the appellate authority.
3. Inclusion of Packing and Forwarding Charges in Taxable Turnover:
In the pre-assessment notice, the assessing officer proposed to include Rs. 60,63,294 towards packing and forwarding charges in the taxable turnover, citing Explanation 2(ii) of Section 2(r) of the TNGST Act. The petitioner objected, providing invoices to show that these charges were included in the sale price. The officer rejected the objections and confirmed the inclusion of these charges. The court noted that this factual finding should be contested before the appellate authority.
Conclusion:
The court dismissed the writ petitions, emphasizing that the petitioner should utilize the statutory appellate remedies provided under the TNGST Act. The court granted the petitioner two weeks to file an appeal from the date of receipt of the order. The court referenced multiple Supreme Court judgments, including State of Orissa v. Titaghur Paper Mills Co. Ltd. and Union of India v. Tata Engineering & Locomotive Company Limited, to support its decision that the issues raised were best addressed through the appellate process.
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2007 (2) TMI 588
Issues:
Imposition of penalty under section 12(5)(iii) for non-inclusion of turnover related to REP licenses in taxable turnover.
Analysis:
For the assessment year 1992-93, the petitioner, a manufacturer and seller of leather garments, reported a total and taxable turnover. The turnover included proceeds from the sale of REP licenses, which were not reported as taxable initially due to uncertainty regarding taxability. The assessing officer proposed a penalty for non-inclusion of REP license turnover, despite the petitioner's explanation of pending court proceedings and stay granted in their favor. The penalty was initially deleted but later proposed again, leading to appeals and ultimately imposition of penalty by the Appellate Tribunal.
The High Court considered the factual background and legal precedents regarding the imposition of penalties under section 12(5)(iii) of the TNGST Act. It was noted that the issue of taxability of turnover related to REP licenses was disputed and pending before the court. The court highlighted previous judgments where it was held that imposition of penalty was unwarranted if the assessee paid the tax promptly upon a court decision affirming tax liability. The court referred to various cases where penalties were set aside due to bona fide belief or lack of intentional violation of tax laws.
In light of the legal precedents and the factual circumstances of the case, the High Court concluded that the imposition of penalty was uncalled for and unwarranted. The petitioner had reported the turnover in total turnover, paid the tax promptly upon court decision, and had a stay granted by the Supreme Court. The court set aside the Tribunal's order imposing the penalty, thereby allowing the writ petition filed by the petitioner.
In conclusion, the High Court ruled in favor of the petitioner, setting aside the penalty imposed by the Appellate Tribunal. The court emphasized the importance of considering factual circumstances, legal precedents, and the absence of intentional violation in determining the imposition of penalties under tax laws.
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2007 (2) TMI 587
Petition for issuance of direction - release the payment deposited - manufacture of yarn - Rejection of refund application - Assessment order set aside - HELD THAT:- We find that the respondents have no right to retain the amount in the absence of any finding that the refund would adversely affect the recovery as per the provisions of section 12(6) of the 1948 Act. The reliance of the respondents on the order (R1), passed u/s 12(6) of the 1948 Act is wholly misplaced because the aforementioned order lacks complete application of mind and the primary requirements of section 12(6) of the 1948 Act remains unsatisfied.
A perusal of section 12(6), shows that power to withhold refund could be exercised in cases where appeal or further proceedings under the 1948 Act are pending and the Assessing Authority is of the opinion that the refund is likely to adversely affect the recovery then refund may be withheld and the case be referred to the Commissioner whose order is to be considered final. The order withholding refund is blissfully silent as to how the refund would adversely affect the recovery.
The order is absolutely laconic. There is not even a whisper of the material on the basis of which satisfaction has been recorded by the Commissioner. Accordingly the same cannot be sustained in the eyes of law nor can the same be relied upon for the purpose of defeating the claim of the petitioner. Thus, the writ petition is allowed. The order is set aside and a direction is issued to the respondents to refund the amount along with statutory interest expeditiously but not later than two weeks from the date a certified copy of this order is supplied to them.
The writ petition is disposed of in above terms.
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2007 (2) TMI 586
Issues:
1. Refund voucher issuance petition.
2. Withholding of refund based on VAT Act.
3. Legality and arbitrariness of withholding refund.
4. Pre-requisites for withholding refund under VAT Act.
5. Adverse effect on revenue justification.
6. Comparison with similar cases regarding refund.
Analysis:
1. The petitioner filed a petition seeking a writ of mandamus for the issuance of a refund voucher amounting to Rs. 1,57,93,514, determined as refundable by the Assessing Authority. The petitioner, a private limited company engaged in acrylic yarn manufacturing, was granted exemption under the Punjab General Sales Tax Act. The refund was withheld due to a special leave petition filed by the State of Punjab against a previous court judgment. The respondents admitted the refund determination but withheld it based on the Punjab VAT Act, section 41(1), citing potential adverse revenue impact.
2. The Commissioner's decision to withhold the refund was primarily based on the pending appeal of the court judgment forming the basis of the refund order and the substantial revenue involved. The petitioner argued that once the Assessing Authority determined the refund, it should be granted, and the withholding was arbitrary and unauthorized. The respondents defended their action, stating the judgment was under appeal, justifying the withholding due to substantial amount involved.
3. The High Court found the respondents' action of withholding the refund to be illegal, arbitrary, and in need of annulment. The court emphasized that the VAT Act's pre-requisites for withholding a refund were not met in this case. The order of refund was not under appeal or any other proceeding, and the revenue impact justification lacked supporting material. The petitioner's financial stability was also highlighted as a factor against adverse revenue impact.
4. Drawing parallels with a similar case, the court referenced a previous judgment directing the refund of tax paid by an assessee and rejected the State's plea for withholding. The court allowed the writ petition, setting aside the order to withhold the refund and directing the respondents to refund the amount with statutory interest within three months.
5. In conclusion, the court ruled in favor of the petitioner, emphasizing the lack of legal grounds for withholding the refund and ordering its release along with statutory interest. The judgment highlighted the importance of meeting legal pre-requisites and providing substantial justifications for withholding refunds under the VAT Act, ensuring fairness and adherence to legal procedures in such matters.
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2007 (2) TMI 585
Whether presumption stood rebutted or not?
Held that:- The High Court, saying is only on the premise that said Ramchandran Pillai and Thankamony had not been examined and the appellant did not exhibit the Deeds of Sale executed in their favour by the wife of the respondent opined that the said finding was perverse. The reasonings of the learned Trial Judge had not been met by the High Court.Nothing has been stated as to why the findings of the learned Trial Judge were not probable.
Having considered the entire fact situation obtaining in the present case, we are of the opinion that the defence case cannot said to be wholly improbable one. If it was probable, the findings of the learned Trial Judge could not have been thrown out without meeting the reasonings therefor. The High Court, therefore, in our opinion was not correct in interfering with the said Judgment.It is now well settled when two views are possible, the High Court while exercising its appellate power against a judgment of acquittal, shall not ordinarily interfere therewith.
The impugned judgment cannot be sustained, which is set aside accordingly. Appeal allowed.
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2007 (2) TMI 584
Whether a provision enabling a court to correct any clerical or arithmetical mistake, or error in the order arising from any accidental slip or omission, empowers the Labour Court to grant a relief of back- wages, which was not granted in the original award?
When the punishment of dismissal is substituted by a lesser punishment (stoppage of increments for two years), and consequently, the employee is directed to be reinstated, whether the employee is entitled to back-wages from the date of termination to date of reinstatement?
Whether on the facts and circumstances, the Labour Court was justified in interfering with the punishment of dismissal?
If the employer was otherwise entitled to relief, whether it could be denied on the ground that it had failed to reinstate the employee, in spite of the non-stay of the direction for reinstatement?
Held that:- The Labour Court had the power to amend the award. As the Labour Court found that a charge against the employee in respect of a serious misconduct was proved. It, however, felt that the punishment of dismissal was not warranted and therefore, imposed a lesser punishment of withholding the two annual increments. In such circumstances, award of back wages was neither automatic nor consequential. In fact, back wages was not warranted at all.
The charge established against the employee was a serious one. The Labour Court did not record a finding that the punishment was harsh or disproportionately excessive. It interfered with the punishment only on the ground that the employee had worked for four years without giving room for any such complaint. It ignored the seriousness of the misconduct. That was not warranted. The consistent view of this Court is that in the absence of a finding that the punishment was shockingly disproportionate to the gravity of the charge established, the Labour Court should not interfere with the punishment. We, therefore, hold that the punishment of dismissal did not call for interference. The contention of employer is that the first respondent did not report back to service, even though it was ready to reinstate him subject to final decision. Be that as it may. The mere fact that the first respondent was not reinstated in pursuance of the award of the Labour Court cannot result in dismissal of the writ petition challenging the award. Appeal allowed and set aside the order dated 28.7.2003 of the High Court as also the award dated 08.3.1983 (as modified on 29.6.1983) of the Labour Court and uphold the punishment of dismissal imposed upon the first Respondent.
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2007 (2) TMI 583
Issues Involved:
1. Levy of purchase tax under Section 7A of the TNGST Act on royalty paid for mining minerals.
2. Differential tax under Section 3(4) of the TNGST Act on exported goods.
3. Inclusion of packing and forwarding charges in the taxable turnover.
Detailed Analysis:
1. Levy of Purchase Tax under Section 7A of the TNGST Act on Royalty Paid for Mining Minerals:
The petitioner, a Government of Tamil Nadu undertaking, was granted a lease for mining magnesite and dunite. The second respondent (assessing officer) issued a pre-assessment notice pointing out that the petitioner had excavated raw magnesite, a taxable good, from government-owned land and consumed it in manufacturing other goods for sale. The consideration paid for the mineral was deemed to be purchase consideration and assessed to tax at 11% under Section 7A of the TNGST Act. The petitioner argued that since the raw magnesite was quarried from their leasehold land, it was their own good, and there was no element of purchase, thus Section 7A should not be invoked.
The court held that the issue of whether the royalty paid for the consumption of minerals amounts to purchase tax under Section 7A must be determined by examining the lease agreement and the factual context. The court referred to the Supreme Court case of STATE OF ORISSA AND OTHERS VS. TITAGHUR PAPER MILLS CO.LTD. AND ANOTHER (1985) 60 STC 213, which dealt with the imposition of purchase tax on standing trees and bamboos agreed to be severed. However, the court found that the facts of the present case were different, as it involved a lease agreement rather than a license.
The court also referenced the Supreme Court's decision in THE STATE OF TAMIL NADU VS. M.K.KANDASWAMI AND OTHERS (1975) 36 STC 191, which outlined the conditions for invoking Section 7A. The court concluded that the factual aspects related to the lease agreement and the grant order must be considered by the appellate authority to determine the correctness of the purchase tax levy.
2. Differential Tax under Section 3(4) of the TNGST Act on Exported Goods:
The second respondent pointed out that the petitioner had purchased furnace oil at a concessional rate under Form XVII for manufacturing finished goods. A portion of these goods was exported, making the petitioner ineligible for the lower tax rate under Sections 3(3) and 3(4). The petitioner was liable to pay the differential tax of 1% on the turnover.
The petitioner contended that Section 3(4) applies only to goods dispatched outside the state by branch transfer or to an agent, not to direct export sales made under Form H. The court held that this issue could be raised before the appellate authority, as it involved factual determinations about the nature of the transactions and the applicability of the tax provisions.
3. Inclusion of Packing and Forwarding Charges in the Taxable Turnover:
The second respondent proposed to include packing and forwarding charges in the taxable turnover, as per Explanation 2 of Section 2(r) of the TNGST Act, which states that the amount for which goods are sold includes any sums charged for anything done by the dealer in respect of the goods sold at or before delivery. The petitioner objected, claiming that these charges were included in the sale price.
The assessing officer initially omitted this inclusion in the assessment order but later issued a notice confirming the inclusion and levying a penalty under Section 12(3)(b) of the TNGST Act. The court found that this was a factual issue that could be contested before the appellate authority.
Conclusion:
The court dismissed the writ petitions, granting the petitioner liberty to file an appeal before the appellate authority. The court emphasized that the factual and legal issues raised, including the applicability of Section 7A, the differential tax under Section 3(4), and the inclusion of packing and forwarding charges, should be decided by the appellate authority. The court provided two weeks for the petitioner to file an appeal and directed the return of original orders upon request.
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2007 (2) TMI 582
Whether the order of cancellation dated 13.4.2005 passed by respondent No.2 was illegal and that respondent No.1 was entitled to further time to furnish the bank guarantee after the order granting exemption in terms of Section 81(3)(b) of the Kerala Land Reforms Act, 1963?
Held that:- Appeal allowed. An implied warranty, or as it has been called, a covenant in law, as distinguished from an express contract or express warranty is really founded on the presumed intention of the parties and upon reason. The implication which the law draws from what must obviously have been the intention of the parties, it draws with the object of giving efficacy to the transaction and preventing such failure of consideration as cannot have been within the contemplation of either side. In view of what we have stated above, it is not necessary to deal with the grievance raised by the State Government in its belated Special Leave Petition.
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2007 (2) TMI 581
Scheme of appointment of dependents of deceased employees - Held that:- Allow the appeal filed by the appellant the Bank in this case.
The High Court erred in deciding the matter in favour of the respondent applying the scheme formulated on 04.08.2005, when her application was made in 2000. A dispute arising in 2000 cannot be decided on the basis of a scheme that came into place much after the dispute arose, in the present matter in 2005. Therefore, the claim of the respondent that the income of the family of deceased is Rs.5855/- only, which is less than 40% of the salary last drawn by Late Shri. Sukhbir Inder Singh, in contradiction to the 2005 scheme does not hold water.
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2007 (2) TMI 580
Issues involved: Interpretation of the retroactive effect of a proviso to section 113 of the Income-tax Act, 1961 in a block assessment case.
In the case, the Revenue challenged an order passed by the Income-tax Appellate Tribunal related to a block assessment period from April 1, 1989, to July 27, 1999, where surcharge was levied post rectification of the block assessment order u/s 154 of the Act due to the incorporation of a proviso to section 113 of the Act. The main contention was whether the proviso had a retroactive effect from June 1, 2002, or not.
Block Assessment and Surcharge Issue:
The Revenue rectified the block assessment order to levy surcharge based on the proviso to section 113 of the Act inserted by the Finance Act, 1999, effective from June 1, 2002. The Tribunal correctly held that the proviso did not have retroactive effect, and surcharge could not be levied for the period prior to June 1, 2002. The interpretation that the proviso would operate from the date of the search in 1999 was deemed incorrect and an attempt to give retrospective effect, which was not intended by Parliament.
Debatable Nature and Rectification Issue:
The Commissioner (Appeals) considered the matter debatable, indicating that surcharge could not have been levied through a rectification order u/s 154 of the Act. The Tribunal concurred, emphasizing that the proviso to section 113 did not apply retroactively and could not be enforced through rectification proceedings. The Tribunal's decision was upheld as no substantial question of law was found to arise from the case.
This judgment clarifies the non-retroactive nature of the proviso to section 113 of the Income-tax Act, 1961, and establishes that surcharge cannot be imposed for a period before the proviso's effective date, even in block assessment cases.
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2007 (2) TMI 579
Issues Involved:
1. Classification of income from lease of business/commercial assets.
2. Addition u/s 41(1) of the Income-tax Act, 1961, on the basis of cessation of liability to creditors.
3. Determination of annual value of property u/s 23(1)(a) of the Income-tax Act, 1961.
Summary:
Issue 1: Classification of Income from Lease of Business/Commercial Assets
The assessee, a private limited company, leased out its commercial assets and claimed the rental income as business income. The Assessing Officer (AO) and the Commissioner of Income-tax (Appeals) (CIT(A)) assessed it as income from house property. The AO observed that the assessee had sold all its plant and machinery and had not carried out any business activity during the year. The CIT(A) confirmed this, stating that disposing of plant, machinery, and stocks indicated no intention to revive business activity. The Tribunal upheld the CIT(A)'s decision, noting that the facts did not support the assessee's claim of intending to restart its business. The Tribunal also referenced the Supreme Court's decision in Universal Plast Ltd. v. CIT [1999] 237 ITR 454, which held that income from leasing out business assets is not business income.
Issue 2: Addition u/s 41(1) of the Income-tax Act, 1961
The AO added Rs. 23,47,626 as cessation of liability to creditors u/s 41(1), citing the Supreme Court's decision in CIT v. T. V. Sundaram Iyengar and Sons Ltd. [1996] 222 ITR 344. The CIT(A) deleted this addition, stating that liability does not cease merely because it is barred by limitation and that the decision in T. V. Sundaram Iyengar and Sons Ltd. was distinguishable. The Tribunal confirmed the CIT(A)'s order, noting that the amounts received by the assessee were not trading transactions and were neither written off nor transferred to the profit and loss account. The Tribunal also referenced the Supreme Court's decision in Chief CIT v. Kesaria Tea Co. Ltd. [2002] 254 ITR 434, which held that liability ceases only when the assessee unequivocally expresses an intention not to honor it.
Issue 3: Determination of Annual Value of Property u/s 23(1)(a) of the Income-tax Act, 1961
The AO increased the rent received by the assessee by 10% of the interest-free advance taken from the tenant. The CIT(A) deleted this addition, relying on the Calcutta High Court's decision in CIT v. Satya Co. Ltd. [1997] 140 CTR 569, which held that section 23 does not permit any addition to the annual value, such as notional interest on interest-free deposits by tenants. The Tribunal upheld the CIT(A)'s order, noting that section 23 does not provide for any addition to the annual value and rejecting the Department's appeal on this ground.
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2007 (2) TMI 578
Issues Involved:
1. Disallowance of deduction under section 32AB of the Income-tax Act, 1961.
2. Allocation of operating and other expenses for the purposes of computation of deduction under sections 80HH and 80-I of the Income-tax Act in respect of profits of the Medak unit.
Issue-wise Detailed Analysis:
1. Disallowance of Deduction under Section 32AB:
The assessee claimed a deduction under section 32AB for profits from the business of oil of olay and crest tartar control toothpaste. The Assessing Officer (AO) observed that the assessee did not reduce profits from eligible business and non-business receipts. The AO noted that the assessee got these products manufactured on a job work basis and was involved in the manufacture of cosmetics and toiletry preparations listed in the Eleventh Schedule, which are prohibited items for deduction under section 32AB.
The assessee argued that it did not manufacture the products but got them manufactured by small scale industrial undertakings, which should make the profits eligible for deduction under section 32AB. The Commissioner of Income-tax (Appeals) [CIT(A)] directed the AO to verify if the products were manufactured or only traded by the assessee and decide accordingly. The CIT(A) confirmed the AO's decision to exclude 50% of interest from IDBI and other sources, and dividend income.
The CIT(A) held that the assessee was a manufacturer as it controlled the manufacturing process, despite not owning the plant and machinery. The CIT(A) concluded that the assessee was not eligible for deduction under section 32AB as it was not a small scale unit, and the SSI status of the job workers was irrelevant.
The Tribunal reviewed the agreements between the assessee and the small scale industries, noting that the assessee provided raw materials, packaging, and quality control, thus exercising significant control over the manufacturing process. The Tribunal concluded that the assessee was indeed a manufacturer under the provisions of section 32AB and ineligible for the deduction since the items were listed in the Eleventh Schedule.
2. Allocation of Operating and Other Expenses:
The assessee contended that the CIT(A) did not adjudicate ground No. 2(d) regarding the allocation of operating and other expenses for computing deductions under sections 80HH and 80-I for the Medak unit. The AO had allocated all operating expenses to the Medak unit based on sales, contrary to the directions in the CIT(A)'s earlier order, which specified that only "common operating expenses" should be allocated based on sales.
The Tribunal found the assessee's contention valid and remanded the issue back to the CIT(A) to adjudicate on the merits with a speaking order.
Conclusion:
The Tribunal concluded that the assessee was a manufacturer of the items listed in the Eleventh Schedule and thus ineligible for deduction under section 32AB. The issue regarding the allocation of operating and other expenses was remanded to the CIT(A) for adjudication. The appeal was partly allowed.
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2007 (2) TMI 577
Prospecting and mining for diamonds and other minerals - Exploration over a large area carried out by geophysical methods - Company entered into an agreement for performing airborne geophysical services, process the data acquired during the survey and provide necessary reports - Consideration paid under the agreement as falling within the definition of " fees for technical services" ? - Liable to deduct TDS? - Deemed to permanent establishment in India - DTAA between India and Netherlands - HELD THAT:- There is no doubt that “Fugro” performed the services using substantial knowledge and expertise but such technical experience, skill or knowledge has not been made available to “De Beers”. As stated, as per the protocol signed between India and Netherlands, the memorandum of understanding entered into between India and USA would apply mutatis mutandis to article 12 of Indo Netherlands Double Taxation Avoidance Agreement.
Thus we concur with the findings of the first appellate authority and answer the first sub-question in favour of the assessee and against the Revenue by holding that the payment made for “fees for technical services” does not fall within the ken of article 12(5)(b) of the Double Taxation Avoidance Agreement between India and Netherlands, for the reason that “Fugro” has not made available technical knowledge, experience, skill, know-how or process to “De Beers” while providing the service. Thus, this question is answered in the negative in favour of the assessee and against the Revenue.
In the present case “Fugro” compiles the data and process them for error correction and deliver it to De Beers in a computer readable media. Using the raw input data provided by “Fugro”, the recipient assessee i.e. De Beers using further process in software technology (which are not owned or provided by “Fugro”) generates a report to determine probable targets. Thus the payments to “Fugro” cannot be considered to the payments for technical, plan and design much less, for the development and transfer of them. “Fugro” is engaged in providing services relating to collection and processing of data which always belonged to “De Beers”. The purpose of agreement is, for provision of services and not for supply or transfer of technical plan or design. The reports and maps are only an additional mode of report of data and cannot be construed as technical plan or technical design.
The payments made to “Fugro” cannot be considered as “fees for technical services” as such payments are not in consideration for the development and transfer of technical plan and technical design.
The agreement between “De Beers” and “Fugro”, the ownership of all information and data was always with “De Beers” and “Fugro” is bound by confidential clause. When the ownership of data is always with “De Beers”, there cannot be transfer of property from “Fugro” to “De Beers”. “Fugro” has not developed or transferred any technical plan or design to “De Beers” so as to attract article 12(5)(b) of the India and Netherlands Double Taxation Avoidance Agreement. Thus on this issue also we agree with the findings of the first appellate authority. Thus we answer the second question is in the negative, in favour of the assessee and against the Revenue.
In the result all the appeals of the Revenue are dismissed.
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2007 (2) TMI 575
Registration procedure - Whether registration under section 12AA does not necessarily entitle assessee to get income excluded from income of previous year for purpose of determination of tax liability, but it only entitles assessee to claim such exemption, which otherwise could not be claimed in absence of registration - Held that:- If trust or institution is not registered under section 12AA, it would not be able to claim any exemption or exclusion of its income from total income of previous year, even if such income is otherwise liable to be excluded under any of clauses of section 11 or section 12.
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2007 (2) TMI 574
Issues involved: Denial of benefit of notification u/s 108/95-C.E. dated 28-8-95 due to project financing by Japan Bank for International Cooperation, which is not a notified international organization. Limitation period for show cause notice issued beyond normal period.
The judgment by the Appellate Tribunal CESTAT, AHMEDABAD addressed the denial of benefit of notification u/s 108/95-C.E. dated 28-8-95 to the appellants because the project was being financed by Japan Bank for International Cooperation, not a notified international organization. The impugned order was challenged on the ground of limitation as the show cause notice issued on 12-1-2004 for the period 31-3-2001 to 30-5-2001 exceeded the normal limitation period.
The appellants contended that there was no suppression of facts from the Revenue regarding the project financing by Japan Bank for International Cooperation. They argued that certificates were issued by proper officers under a bona fide belief that the bank was a notified international organization. Referring to previous decisions, including Danke Electricals Ltd. v. CCE, Vadodara and Jyoti Structures Ltd., the Tribunal held that the longer period of limitation cannot be invoked when the Revenue was aware of the financing situation and the appellants acted in good faith based on the certificates issued. Consequently, the Tribunal ruled that the demand was barred by limitation, setting aside the impugned order and allowing the appeal with consequential relief.
The judgment highlights the importance of proper examination by the Revenue of the status of international organizations involved in project financing to avoid disputes regarding the applicability of notifications and the invocation of longer limitation periods.
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2007 (2) TMI 573
Issues involved: Classification of product "Rootz Oil" as Hair Oil or Ayurvedic medicine u/s Central Excise Tariff.
Summary:
The appeal by the Revenue challenges the classification of "Rootz Oil" by the Commissioner as Ayurvedic medicine instead of Hair Oil under the Central Excise Tariff. The Commissioner accepted the assessee's claim based on various factors, leading to the Revenue's appeal.
The assessee's submissions highlighted in the impugned order emphasized the medicinal properties of "Rootz Oil," including its formulation with Ayurvedic herbs, therapeutic value, prescription by physicians, certification as an effective Ayurvedic medicine, and sale in medical stores. The product was manufactured under a license from the Food & Drug Authorities and met the requirements of the Drugs and Cosmetics Act, 1940.
The Tribunal, considering the facts, the Larger Bench decision in Himtaj Ayurvedic Udyog Kendra case, and the Supreme Court's ruling in Sharma Chemicals case, upheld the classification of "Rootz Oil" as Ayurvedic medicine. The product's formulation to treat various hair diseases and its therapeutic value supported this classification, despite the Revenue's argument regarding the absence of specific dosage directions by physicians.
Ultimately, the Tribunal rejected the Revenue's appeal, affirming the Commissioner's classification of "Rootz Oil" as Ayurvedic medicine under the Central Excise Tariff.
(Operative part pronounced in the Open Court.)
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2007 (2) TMI 572
The application for recalling the final order was rejected by the Appellate Tribunal CESTAT, Ahmedabad. The Tribunal found no justification as the appellants did not make efforts to send a representative or seek adjournment during the hearing. The order was passed on merits and the appellants have the right to challenge it before a higher appellate forum. The application was accordingly rejected.
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2007 (2) TMI 571
Issues:
1. Extension of Stay Petition.
2. Availing small scale exemption for goods manufactured in Kolkata and Delhi units.
Extension of Stay Petition:
The Appellate Tribunal CESTAT, Kolkata, allowed the Miscellaneous Application filed by the appellants for extension of Stay Petition. The order was passed by Member (T) Chittaranjan Satapathy.
Availing small scale exemption for goods manufactured in Kolkata and Delhi units:
The case involved the appellants having two units in Kolkata and Delhi jurisdiction. The Delhi unit did not have SSI Registration, leading to duty payment without claiming small scale exemption. On the other hand, the Kolkata unit had SSI Registration and availed the small scale exemption under Notification 1/93. The Department contended that since exemption was not availed for the Delhi unit, the Kolkata unit cannot benefit from the small scale exemption. The appellant cited Tribunal decisions allowing small scale units to avail exemption for part of the goods. After considering the arguments and case records, the Tribunal found that Notification 1/93 permits small scale manufacturers to pay duty at their discretion. Referring to the Larger Bench's decision in a similar case, the Tribunal concluded that the appellants were eligible for small scale exemption for the Kolkata unit's clearances as the total clearances from both units did not exceed the exemption limit. Consequently, the impugned order was set aside, and the appeal was allowed with relief for the appellants.
This judgment highlights the interpretation of Notification 1/93 regarding small scale exemption for manufacturers, emphasizing the discretion given to them in paying duty. It also underscores the Tribunal's reliance on precedent cases to support the appellants' eligibility for exemption despite clearances from multiple units. The decision showcases the importance of understanding statutory provisions and legal precedents in tax matters to determine the applicability of exemptions and duties accurately.
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2007 (2) TMI 570
Issues:
1. Inclusion of wrapping paper value in assessable value of paper.
2. Quantification of proforma credit for wrapping paper.
3. Denial of Special Excise duty benefit for proforma credit.
Analysis:
1. The dispute in the case revolved around whether the value of wrapping paper used for packing paper should be added to the assessable value of the paper. The Commissioner (Appeals) had already decided against the appellants on this issue, and it was accepted that the wrapping paper value should be included. The appellants were granted the benefit of proforma credit under Rule 56A, subject to quantification by the adjudicating authority.
2. The Assistant Commissioner quantified the proforma credit for the period between February 1981 and June 1983, the period under appeal. The appellants contended that the credit should have been allowed for a broader period from April 1980 to March 1984. However, the Tribunal found no merit in this argument, stating that the credit was appropriately limited to the period under consideration. Any claim for periods outside the appeal timeframe could be pursued independently based on the status of ongoing proceedings.
3. The appellants were denied the benefit of Special Excise duty under Rule 56A, as it was argued that only Basic Excise duty was eligible for proforma credit. The appellants referenced a Tribunal decision suggesting that Special Excise duty could also be considered for proforma credit. However, the Tribunal noted that the specific notification supporting this argument was not applicable to the relevant period in the appeal. Consequently, the matter was remanded to the adjudicating authority for a fresh decision on the credit of Special Excise duty in alignment with the Tribunal's judgment and the relevant notification.
In conclusion, the appeal was partly rejected and partly allowed based on the issues discussed above. The Tribunal upheld the inclusion of wrapping paper value in the assessable value of paper, confirmed the quantification of proforma credit for the specific period, and remanded the decision on Special Excise duty benefit for further review in light of the applicable legal provisions and precedents.
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