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Case Laws
Showing 141 to 160 of 699 Records
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2008 (5) TMI 622
Provisional assessment - Held that:- The order of Tax Board remains unexceptionable and calls for no interference. Even when the assessing authority in the final assessment order has left the matter regarding penalty aside due to pendency of appeal before the Tax Board, paragraphs 21 and 22 (22 and 23 of VST) of the decision in Mahaveer Timber Mart [2007 (5) TMI 586 - RAJASTHAN HIGH COURT] operate squarely against the contention on competence of appeal in relation to the provisional assessment order after passing of final assessment order. The revision petition fails and is, therefore, rejected.
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2008 (5) TMI 621
Reassessment proceedings and orders passed under section 21 of the Act - Held that:- Section 15(c) of the Central Act provides reduction of tax leviable on the turnover of rice under the U.P. Trade Tax Act with the tax levied on the paddy out of which such rice was procured. It does not provide any reduction of tax under the Central Act by the tax paid on paddy under the State law out of which such rice was procured.
The proceedings under section 21 of the Act have been initiated without any material on the basis of which belief could be formed that there was escaped assessment, namely, that the tax levied on the interState sales of rice under the Central Act has been wrongly reduced by the tax levied on paddy under the U.P. Trade Tax Act out of which such rice was procured except on account of change of opinion.
The initiation of proceedings under section 21(1) of the Act on account of change of opinion are not permissible and, therefore, the initiation of proceedings under section 21 of the Act in the cases of the petitioners are bad in law.
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2008 (5) TMI 620
Whether furnace oil qualifies to be an "input" for the purpose of availing input tax credit?
Held that:- What is required is that consumables should be directly used in the manufacturing process for production of finished product. The expressions "directly go into composition of finished product" and "directly used in manufacturing or processing of finished product" are not one and the same thing. There is a clear distinction. In the former, while the goods directly go into composition of finished product, in the latter, the consumable is directly used in the manufacturing process of finished products. It has already been held that furnace oil is consumable which is directly used in the manufacturing process for production of finished product. Certainly it does not directly go into composition of finished product. In spite of the same, since "input" as defined under section 2(25) of the OVAT Act includes consumables which are directly used in manufacturing of finished products, furnace oil is nothing but an "input" and tax paid on purchase of such input shall qualify for set off against the output tax.
In that view of the matter furnace oil which is used in the process of manufacture of PSF is to be treated as an "input" as defined in section 2(25) of the OVAT Act and the input tax which has been paid on purchase of furnace oil can be claimed as input tax credit under section 2(27) of the OVAT Act against the tax payable on finished product, i.e., PSF. Accordingly, the impugned order dated June 28, 2006 (annexure 6) is quashed. W.P. allowed.
In the result, the writ petition is allowed. There will be no order as to costs.
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2008 (5) TMI 619
Whether the original assessment order dated March 23, 2005 passed by the assessing officer merged with the appellate order dated December 26, 2005 by operation of doctrine of merger?
Whether the appellate authorities in exercise of their power to enhance the assessment, can take into consideration the fresh or new material which was not before the assessing officer but has come to light only after completion of the assessment while disposing of the appeal arising out of the original assessment?
Whether by exercising power of revision the Commissioner can consider any new or fresh material which was not before the assessing officer, but came to light only after completion of the assessment?
Held that:- The original assessment order passed by the assessing officer merged with the appellate order by application of doctrine of merger. In spite of that the assessing officer assumes jurisdiction under rule 12(8) of the CST (O) Rules to assess the turnover escaped assessment from the original assessment by issuing notice under that rule on the basis of new/fresh material which was not the subject-matter in the original assessment, but comes to light only after completion of original assessment.
The appellate authorities while disposing of the appeal arising out of an assessment order cannot take into consideration any fresh or new material which was not before the assessing officer but subsequently comes to light after completion of the assessment for the purpose of enhancement of the assessment.
We are of the considered view that by exercising power of revision, the Commissioner cannot consider any new or fresh material which was not before the assessing officer and comes to light only after passing of the original assessment order. In the present case, the challenge is not only to the notice issued under rule 12(8) of the CST (O) Rules but also to the order of assessment made on the said notice. Since the assessment had already been made, challenge to the legality of the notice is really without any relevance.
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2008 (5) TMI 618
Whether a person, other than one, who is registered under the Tripura Sales Tax Act, 1976 shall obtain permit, as prescribed in form XVIII, in terms of the provision of rule 46 read with rule 47 of the Tripura Sales Tax Rules, 1976 in order to enable such a person bring, into the State of Tripura, goods, which are taxable under the Act?
Held that:- What cannot be ignored is that though in para 6 of the writ petition, it had been clearly pointed out by the writ petitioner that she was not liable to obtain any permit in form No. XVIII, the respondents have, in their affidavit-in-opposition, seriously disputed such contention of the petitioner and asserted that obtaining of a permit, in terms of the provisions of the Rules, is a condition precedent for bringing taxable goods into the State of Tripura. Thus, the justification offered by the respondents for insisting obtaining of the permit leaves this court with no option, but to hold that the respondents have harassed the petitioner by illegally forcing her to make payment of the said sum of ₹ 17,761 and, in such circumstances, the respondents are liable to pay the interest for withholding the said amount.
Therefore it is hereby directed that the respondents shall pay the said sum of ₹ 17,761, within one month from today, with interest at six per cent per annum from October 8, 1998 until realisation of the said amount. This apart, in face of the peculiar facts and circumstances of the present case, the respondents shall also be held liable to pay a sum of ₹ 500 as minimum possible cost of the legal proceeding.
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2008 (5) TMI 617
Whether the trade discount given by the petitioner to its distributors and dealers through credit notes has rightly been disallowed and tax imposed thereon?
Held that:- Since the facts in this regard at not at all clear, it will be appropriate if the matter is dispassionately re-examined by the Joint Commissioner limited only to the question whether the petitioner has passed on the tax burden to its dealers and distributors or not. If it is found that the petitioner has passed on the tax burden, then, on the principles of unjust enrichment, the petitioner will not be entitled to a refund for that amount. But if it has not passed on the tax burden then, of course, the petitioner will be entitled to a refund. To this extent, while we quash the order No. 437 dated October 20, 2006 we direct the Joint Commissioner to take a decision within six weeks from today limited to the question whether, despite the trade discounts given by the petitioner, it has passed on the tax burden to its dealers and distributors or not. Of course, the petitioner will be entitled to produce all its documents to show that the tax burden has not been passed on to the dealers and distributors.
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2008 (5) TMI 616
Issues:
Refund of sales tax under the Delhi Sales Tax Act, 1975 on the ground of unjust enrichment.
Analysis:
The petitioner filed a writ petition seeking a refund of the amount deposited as sales tax under the Delhi Sales Tax Act, 1975. The petitioner claimed that the refund was due on merits but was denied based on the principle of unjust enrichment. The Sales Tax Officer rejected the refund application, stating that since the dealer had collected and deposited the tax with the Revenue, refunding it to the dealer would result in unjust enrichment. The issue of refund concerning unjust enrichment has been settled in previous judgments. The respondent referred to a Supreme Court decision highlighting that refunding excess tax paid would lead to unjust enrichment as dealers pass on the tax burden to consumers. The court agreed with this principle, emphasizing that unless the dealers prove they did not pass on the tax burden, refunding the tax would unjustly enrich them. The court cited another case where it was held that if taxes were collected from customers, refunding them to the dealer would be unjust enrichment. Since the petitioner did not dispute collecting taxes from customers, the court dismissed the writ petition, stating that refunding the tax would result in unjust enrichment, which is impermissible.
In conclusion, the court dismissed the writ petition seeking a refund of sales tax under the Delhi Sales Tax Act, 1975, on the grounds of unjust enrichment. The decision was based on the principle that refunding taxes to dealers who have already collected them from customers would lead to unjust enrichment, as established in previous judgments. The court emphasized the importance of proving that the tax burden was not passed on to customers before considering a refund. As the petitioner did not provide such proof, the court ruled against granting the refund to prevent unjust enrichment.
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2008 (5) TMI 615
Whether, on the facts and in the circumstances of the case, the declaration furnished by the selling registered dealer in form of ST-14 is sufficient compliance of the proviso of section 18 of the Act?
Whether, on the facts and in the circumstances of the case, the non-deposit of tax by the selling registered dealers during currency of their registration certificate makes the purchasing registered dealer liable to pay the tax, in spite of the fact that the selling registered dealer has furnished declaration to the effect that tax has been paid?
Whether, on the facts and in the circumstances of the case, the department can only proceed against the selling registered dealer in view of the fact the registered dealer has been furnished a false certificate and tax has been paid?
Whether, on the facts and in the circumstances of the case, the Tribunal is right in law to maintain order of the Assessing Authority when the requirements of section 18 have been fully complied with by the petitioner-assessee?
Held that:- For claiming deduction from payment of tax on a subsequent sale of goods on which tax has been paid by the first seller, the dealer (second seller) has to furnish the certificate in the prescribed form and manner and signed by the registered dealer from whom the goods were purchased to the effect that the tax on such goods has been paid at the first stage. As per requirement of section 18 of the Act, there was no further step required to be taken by the petitioner to verify the payment of tax.
In view of the law laid down by the Madras High Court in Raichael Chacko's case [1983 (12) TMI 272 - MADRAS HIGH COURT] and Raman & Co. case [1990 (10) TMI 364 - Supreme Court of India] , the dealer is entitled to claim deduction from the payment of sales tax on a subsequent sale for goods on which tax has been paid at the stage of first sale and it is not the duty of the subsequent seller to pay tax if the first seller has not paid the tax. Thus, we are of the view that the aforementioned questions of law do arise in the present case and, therefore, we direct the Sales Tax Tribunal, Haryana to draw a statement of the case and refer to this court for its decision the questions of law as aforementioned which arise out of the order of the Tribunal dated February 10, 1992.
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2008 (5) TMI 614
Whether causes of action in terms of both the 1957 Act and the 1958 Act although may be different, would a suit be maintainable in a court only because it has the jurisdiction to entertain the same in terms of Section 62(2) of the 1957 Act?
Held that:- What then would be meant by a composite suit - A composite suit would not entitle a court to entertain a suit in respect whereof it has no jurisdiction, territorial or otherwise. Order II Rule 3 of the Code specifically states so and, thus, there is no reason as to why the same should be ignored. A composite suit within the provisions of the 1957 Act would mean the suit which is founded on infringement of a copy right and wherein the incidental power of the Court is required to be invoked. A plaintiff may seek a remedy which can otherwise be granted by the court. It was that aspect of the matter which never meant that two suits having different causes of actions can be clubbed together as a composite suit. Appeal dismissed.
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2008 (5) TMI 613
What would be the effect of a post dated cheque vis- a -vis prosecution in terms of Section 141 of the Negotiable Instruments Act, 1881 ?
Held that:- When post dated cheques are issued and the same are accepted, although it may be presumed that the money will be made available in the bank when the same is presented for encashment, but for that purpose, the harsh provision of constructive liability may not be available except when an appropriate case in that behalf is made out.
Section 140 of the Act cannot be said to have any application whatsoever. Reason to believe on the part of a drawer that the cheque would not be dishonoured cannot be a defence. But, then one must issue the cheque with full knowledge as to when the same would be presented. It appears to be a case where the appellant has taken undue advantage of the post dated cheques given on behalf of the company. The statute does not envisage misuse of a privilege conferred upon a party to the contract. Having found that the prosecution of the respondents being mala fide despite the fact that on technical grounds it may be lawful to set aside the order of the High Court, it, in our opinion, should not be done. Jurisdiction of this Court in terms of Article 136 of the Constitution of India need not be exercised only because it would be lawful to do so. Various factors including the conduct of the appellant will be relevant therefor. Having regard to the facts and circumstances of this case, it is not a fit case where we should allow the appellants to raise additional contentions which have not been raised before the courts below. Appeal dismissed.
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2008 (5) TMI 612
Whether in the facts and circumstances of the case, it was necessary to consult the Reserve Bank of India by the Central Government before issuing the impugned guidelines?
Held that:- There cannot be any doubt whatsoever where one authority is required to consult the another, such consultation must be meaningful. It must mean conscious and effective consultation but the same would apply where the consultation is necessary. As for the purpose of issuance of guidelines, no consultation was necessary to be made with the Reserve Bank of India by the Central Government, in our opinion, the impugned judgment cannot be sustained. Appeal allowed.
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2008 (5) TMI 611
Whether the allottee had failed to comply with the terms and conditions was required to be determined?
Held that:- Before us, several allottees had categorically made a statement that they are ready and willing to pay the prevailing price as fixed by the appellant- Corporation. Keeping in view the facts and circumstances of this cases, we are of the opinion that in the event, respondents offer the prevailing price as on the date of judgment of the High Court, the plot, in question, shall stand re-allotted and should be subject to the same terms and conditions. Such reallotment may be made even in cases where we have found the order of the High Court to be unsustainable.
Respondents shall deposit the amount within six weeks from date. Appellant shall hand over the possession of the plot, in question, within four weeks thereafter. The highest executive of Appellant - Corporation shall see to it that the order of this Court is complied with. It is, however, made clear that in the event of failure on the part of the respondents concerned in making payment in terms of this order, it would be open to the appellant to take recourse to such action as is permissible in law.
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2008 (5) TMI 610
Whether for appointment to the post of Principal, the qualifying experience as stipulated in the said ‘Note’ would apply or the one prescribed in the Appendix-A to Regulation I of Chapter II of the Regulations made under the Intermediate Act?
Held that:- Appeal allowed. It cannot be held that fixing of 6th August, 1993 as the cutoff date for regularization is arbitrary or whimsical, warranting interference by the Court. Moreover, the State is not obliged to regularize all ad-hoc appointments merely on the strength of their continuance on the post for a long period, particularly when their original appointments were not made by following a due process of selection as envisaged in the relevant rules.
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2008 (5) TMI 609
Issues involved:
The legal issue of validity of notices issued by the Assessing Officer under section 143(3)(ii) of the Income Tax Act.
Legal Issue: Validity of Notice under Section 143(2)(ii):
The assessee challenged the validity of the notice under section 143(2)(ii) as time-barred, contending that it was served after the prescribed time limit. The Tribunal analyzed the provisions of section 143(2) which required separate notices for limited scrutiny under section 143(2)(i) and regular scrutiny under section 143(2)(ii). The Tribunal held that the notice under section 143(2)(ii) was time-barred as it was served after the specified time limit, rendering the assessment under section 143(3)(ii) null and void. The Tribunal emphasized that limited scrutiny and regular scrutiny proceedings are independent of each other, and the time limits for issuing notices for both types of scrutiny must be adhered to strictly. Therefore, the Tribunal accepted the additional ground raised by the assessee and quashed the assessment.
Outcome:
The Tribunal allowed the appeal filed by the assessee on the basis of the quashed assessment due to the time-barred notice under section 143(2)(ii). As a result, there was no need to delve into the merits of the issue. The appeal was allowed in favor of the assessee, and the assessment under section 143(3)(ii) was declared null and void.
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2008 (5) TMI 608
Issues:
Appeal against quashing of proceedings under section 147 for assessment year 1997-98.
Analysis:
The appeal arose from the Commissioner of Income-tax (Appeals) order for the assessment year 1997-98. The Revenue challenged the quashing of proceedings initiated under section 147. The original assessment under section 143(3) was completed on March 31, 2000, determining the total income. The Assessing Officer issued a notice under section 148 based on various grounds, including customs duty, sales-tax, provision for interest, scientific research expenditure, and expenses/income from earlier years. The assessee challenged the validity of the notice under section 148, arguing it was outside the time limit provided in the proviso to section 147. The Commissioner of Income-tax (Appeals) annulled the assessment, concluding there was no failure on the part of the assessee to disclose all material facts necessary for assessment.
The main contention revolved around the interpretation of the proviso to section 147 and Explanation 2(c). The Revenue argued that underassessed income falls under the deeming provision of "income chargeable to tax has escaped assessment," allowing reassessment beyond four years. However, the Tribunal held that for the proviso to apply, there must be a failure on the part of the assessee to disclose all material facts necessary for assessment. The Tribunal emphasized the importance of distinguishing between general cases of income escaping assessment and cases falling under the proviso.
Upon examining the reasons for the notice under section 148, the Tribunal found that none of the grounds constituted a failure on the part of the assessee to disclose all material facts. The Tribunal noted that the Assessing Officer did not make additions on certain counts and was convinced by explanations provided by the assessee on others. Consequently, the Tribunal upheld the Commissioner's decision, ruling that the conditions of section 147 were not met. The appeal was dismissed, affirming the annulment of the assessment under section 147 for the assessment year 1997-98.
In conclusion, the Tribunal's detailed analysis focused on the interpretation of the proviso to section 147 and the requirement of failure to disclose material facts for reassessment beyond four years. The Tribunal scrutinized each ground cited for the notice under section 148 and determined that none constituted a failure on the part of the assessee. The decision underscored the significance of full and true disclosure by the assessee and upheld the annulment of the assessment under section 147 for the relevant assessment year.
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2008 (5) TMI 607
Amount paid towards "Technical know-how" and 'Royalty' - "Revenue Expenditure" or "capital expenditure" - Disallowances of - customs duty - provision for warranty - the showroom price of Honda City car - prize under a sales promotion scheme - research and development expenses - provision under the head "Sales promotion expenses" - roof alteration/renovation expenses.
Amount paid towards "Technical know-how" and 'Royalty' - "Revenue Expenditure" or "capital expenditure" - whether the expenditure could not be considered as part of the initial expenditure or for setting up the business (as opposed to the setting up of the manufacturing facilities or plant)? - Technical collaboration agreement between the assessee and HMCL - treated as capital or revenue without obtaining the arm's length price from the Transfer Pricing Officer -
HELD THAT:- It may be seen that for setting up the manufacturing facilities and for the parts, separate agreements have been entered into by the parties and separate payments have been made by the assessee as consideration therefor. This makes the position clear that the impugned payment of lump-sum know-how fees and royalty are not part of the payment for setting up the plant which manufactures the Honda cars in India.
This aspect of the matter needs to be disposed of first. It is well-settled that initial expenditure incurred by a businessman to set up his business or expenditure incurred to install the frame-work of the business must be treated as capital. Reference in this connection may be made to the classic ruling of Lord Sands in IRC v. Granite City Steamship Co. Ltd. where it was observed: "Broadly speaking, outlay is deemed to be capital when it is made for the initiation of a business, for extension of a business, or for a substantial replacement of equipment".
The English case noted was applied in India with approval by the Supreme Court in Assam Bengal Cement Co. Ltd. v. CIT [1954 (11) TMI 2 - SUPREME COURT] but the final judgment, as observed by Kanga and Palkhivala, rested on another ground, viz., that the expenditure was incurred to acquire an asset or advantage of enduring benefit to the trade and was therefore of a capital nature.
It would thus appear that the test that is to be applied in such cases is only whether the assessee obtained any proprietary rights in the technical know-how or he merely obtained the right to use the same for the purpose of his business for a limited period of time, irrespective of whether the expenditure was incurred at the time of initiation of the business or at any point of time subsequent thereto.
In our humble opinion, the question has to be decided on the basis of the facts of the particular case with which we are dealing. We have referred to the common basic principle which runs through all the cases cited by both the sides and there is no need to repeat it. If that principle is applied to the facts of the present case and to the terms and conditions of technical collaboration agreement, it would be seen that the assessee obtained only the right to use, during the currency of the agreement, the technical know-how and information and the intellectual property rights relating to the manufacture of the Honda cars and did not secure any ownership rights over them. We, therefore, hold that the payment of the lump-sum fees for technical know-how and the royalty is allowable as revenue expenditure.
We have held, on a perusal of the terms and conditions of the collaboration agreement that the assessee was not the owner of the technical know-how or information and was merely licensed to use the same for its business during the currency of the agreement. It follows that the assessee cannot claim depreciation on the know- how.
The provisions of section 35AB, which were also referred to by the learned CIT (DR), are applicable only where the assessee pays lump-sum consideration for "acquiring" any know-how for use for the purposes of his business and since the assessee-company has been found by us to have been permitted only to use the know-how for a limited period for the purpose of its business and that it has not acquired any proprietary or ownership rights over the same these provisions are also not applicable.
Thus, we allow the first ground.
Treatment of Technical collaboration agreement between the assessee and HMCL - It seems to us that the submissions of Mr. Vohra should prevail, as they are logical and supported by the provisions of the Income-tax Act noticed above. The Transfer Pricing Officer is not concerned, nor is he competent to decide as to whether the payment under the collaboration agreement is capital or revenue. It is first necessary to determine the nature of the payment and decide whether it is capital or revenue.
If it is held to be capital, it is not allowable as deduction and the question of determining the arm's length price may not be necessary to be decided by the Transfer Pricing Officer. However, as we have held the payment to be revenue in nature and hence allowable, accepting the submission of Mr. Vohra, we direct that while giving effect to our order the Assessing Officer may, if so advised, refer the question of the arm's length price to the Transfer Pricing Officer for determination in accordance with law. The decision of the Tribunal regarding the nature of the payment cannot be deferred, as requested by the learned Commissioner of Income-tax- Departmental representative, to a stage after the Transfer Pricing Officer determines the arm's length price. Such a course is not contemplated by law. We, therefore, reject the preliminary objection raised by the learned Commissioner of Income-tax-Departmental representative.
Disallowance of the customs duty - drawings imported under the technical collaboration agreement - The assessee has adduced evidence before us to show that the payment was made during the year under appeal. We are of the view that merely for the purpose of verification of the evidence for the payment, the matter should be restored to the Assessing Officer without any further directions. If the Assessing Officer is satisfied with the evidence, the payment should be allowed as a deduction. With this remark, we restore the issue to the Assessing Officer.
Disallowance on the provision for warranty - This issue is covered in favour of the assessee by the order of the Tribuna in Honda SIEL Cars India Ltd. v/s Asst. CIT, [2006 (7) TMI 258 - ITAT DELHI]. respectfully following the order of the Tribunal, we direct the Assessing Officer to allow the provision for the warranty as an ascertained liability. The ground is allowed.
Disallowance of commission - paid to HMCL in relation to the exports made to M/s. Honda Automobiles, Thailand - This issue is covered in favour of the assessee by the order of the Tribuna in Honda SIEL Cars India Ltd. v/s Asst. CIT, [2006 (7) TMI 258 - ITAT DELHI]. There is no dispute that the facts for the year under consideration are similar. Therefore, respectfully following the earlier order of the Tribunal, we direct the Assessing Officer to allow the commission as a deduction.
Disallowance on the showroom price of Honda City car - prize under a sales promotion scheme - In the perception of the assessee as a businessman, which is very important and should be the governing consideration in such cases, it would stand to benefit even though the main scheme was launched by Nerolac Paints. Expenditure incurred wholly and exclusively for the purposes of the business does not cease to be so merely because it also benefits some other persons.
For instance in CIT v. Birla Jute Manufacturing Co. Ltd.[1989 (5) TMI 27 - CALCUTTA HIGH COURT], where the assessee agreed to pay a certain amount to the electricity board to facilitate the laying of service-lines, it was held by the Calcutta High Court that the mere fact that the service-lines would be the property of the electricity board and can be used by other persons also would not come in the way of the expenditure being allowable in the hands of the assessee. So long as the expenditure benefits the assessee it should be allowed as a deduction. The CIT (A) has stated that there was no increase in the sales. This is not a relevant criterion.
The association of the assessee-company with the advertisement scheme launched by Nerolac Paints and the assurance of giving away a Honda car at its own cost to the winner may be beneficial to the assessee in the long run. It cannot be denied that it had advertisement value. Expenditure incurred on advertisement is undisputedly business expenditure. Thus, we direct the AO to allow the assessee's claim. The ground is allowed.
In the result, the assessee's appeal is partly allowed.
Disallowance on research and development expenses - It is well settled that every expenditure that confers some enduring advantage cannot be regarded as capital expenditure and reference in this connection may be made to the judgment of the Supreme Court in Gotan Lime Syndicate v. CIT [1965 (11) TMI 35 - SUPREME COURT]. If the expenditure has relation to the stock-in-trade, the sale of which is the business of the assessee, the mere fact that some enduring advantage results by the incurring of the expenditure does not mean that the expenditure must be treated as capital expenditure.
In the case before the Supreme Court, the royalty payment under a mining lease to obtain raw material was held to be revenue in nature because it had relation to the raw material to be obtained. Applying these principles to the present case, we are of the view that the CIT (A) has rightly held the expenditure to be revenue in nature. His decision is upheld and the ground is dismissed.
Disallowance of provision under the head "Sales promotion expenses" - If the provision has been made for a known liability that has already arisen during the relevant previous year, the same cannot be regarded as a provision for a contingent liability. We accordingly confirm the decision of the CIT (A) and dismiss the ground.
Disallowance on roof alteration/renovation expenses - Here, the object was to repair and restore the five year old roof to its original leak-proof condition. Thereby no capital asset was created. The ultimate object was to protect and preserve the plant and machinery on the shop floor. The mere fact that the life of the repaired roof was guaranteed to be for ten years does not mean that any asset of enduring nature was received by the assessee. The expenditure merely restored the roof to its original condition. In these circumstances, it is difficult to regard the expenditure as capital in nature. CIT (A) has rightly held it is revenue. We agree with his decision and dismiss the ground.
In the result, the appeal by the Department is dismissed.
To sum up Assessee's appeal is partly allowed and Department is dismissed.
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2008 (5) TMI 606
Whether proceeding under Rule 12(8) of the CST (O) Rules can be initiated on the basis of any new materials which was not the subject-matter before the assessing officer at the time of original assessment?
Whether, on the facts and circumstances of the case, proceeding under Rule 12(8) read with Rule 10 of the CST (O) Rules can be initiated for the assessment year 2001-02 which was earlier completed and second appeal arising out of such assessment order is pending before the Tribunal?
Whether appellate authorities exercising their power to enhance the assessment while disposing of the appeal arising out of an assessment order can take into consideration any fresh or new material which was not before the assessing officer and subsequently comes to light only after completion of the assessment order ?
Held that:- Proceeding under Rule 12(8) of the CST (O) Rules can be initiated on the basis of any new materials which was not the subject-matter before the assessing officer at the time of original assessment.
For a particular year proceedings under Rule 12(8) of the CST (O) Rules can be initiated on the basis of the subject-matter which was not before the assessing officer at the time of original assessment in respect of which any appeal is pending either before the first appellate authority or second appellate authority. In the present case since the assessing officer has issued notice under Rule 12(8) of the CST (O) Rules on the basis of some new/fresh material alleging escapement of turnover relating to inter-State sale from the original assessment he was fully justified to take action under the said rule and issue notice under Rule 10 of the CST (O) Rules and to complete the reassessment on the basis of such notice.
The appellate authorities while disposing of the appeal arising out an assessment order cannot take into consideration any fresh or new material which was not before the assessing officer but subsequently comes to light after completion of the assessment for the purpose of enhancement of the assessment. the appellate authorities while disposing of the appeal arising out an assessment order cannot take into consideration any fresh or new material which was not before the assessing officer but subsequently comes to light after completion of the assessment for the purpose of enhancement of the assessment.
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2008 (5) TMI 605
Issues:
- Compliance with interim order for pre-deposit of penalty amount before appeal
- Opportunity to file stay application before dismissal of appeal
- Principles of Natural Justice in appeal proceedings
- Waiver of pre-deposit in similar cases
- Decision on merits after Tribunal's final verdict
Compliance with interim order for pre-deposit of penalty amount before appeal:
The Commissioner (A) dismissed the appeal for non-compliance with the interim order directing the appellants to pre-deposit the penalty amount confirmed in the Order-in-Original. The appellants argued that they had paid the Service Tax and interest before the show cause notice was issued, hence penalty imposition was not justified. They also contended that they were unable to file a stay application due to inadvertency and should have been given an opportunity to do so. The Tribunal found that the issue of waiver of interest in cases where tax was paid before the show cause notice had been addressed in previous judgments. The Tribunal set aside the impugned order and remanded the matter to the Commissioner (A) for reconsideration without insisting on pre-deposit of the penalty amount.
Opportunity to file stay application before dismissal of appeal:
The appellants argued that the Commissioner (A) should have allowed them an opportunity to file a stay application before dismissing the appeal. They claimed that the dismissal was not in line with the Principles of Natural Justice. The Tribunal acknowledged that the matter had not been decided on merits by the Commissioner (A) and therefore remanded the appeal for de novo consideration, directing the Commissioner (A) to wait for the Tribunal's final verdict before making a decision.
Waiver of pre-deposit in similar cases:
The learned Counsel highlighted that the Bench had previously granted waivers of pre-deposit in numerous appeals. They requested the Tribunal to allow the stay application and appeal, suggesting a remand of the case to the Commissioner (A) for a decision on merits after the Tribunal's final determination on the issue. The Tribunal noted that the issue regarding waiver of interest in cases where tax was paid before the show cause notice had been addressed in previous judgments and was under further consideration, with similar matters listed for final hearing.
Decision on merits after Tribunal's final verdict:
The Tribunal, after careful consideration of the submissions, concluded that the impugned order needed to be set aside, and the matter remanded for de novo consideration by the Commissioner (A) only after the Tribunal had given its final verdict on the issue. The Commissioner (A) was directed not to insist on pre-deposit of the penalty amount, emphasizing that the appeal should be reconsidered after the Tribunal's determination.
This judgment underscores the importance of compliance with interim orders, the application of Principles of Natural Justice, and the necessity for decisions to be made on merits following the Tribunal's final verdict in matters involving waiver of pre-deposit in tax-related appeals.
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2008 (5) TMI 604
Issues Involved:
1. Retrospective effect of Section 140 of the Motor Vehicles Act, 1988.
2. Application of Section 6 of the General Clauses Act, 1897.
3. Interpretation of statutory provisions and legislative intent.
Detailed Analysis:
1. Retrospective Effect of Section 140 of the Motor Vehicles Act, 1988:
The primary issue in this case was whether Section 140 of the Motor Vehicles Act, 1988, which increased the compensation amount under "no fault liability" from Rs. 15,000 to Rs. 50,000, should be applied retrospectively. The accident in question occurred on 8.01.1983, under the Motor Vehicles Act, 1939, which stipulated a compensation of Rs. 15,000. The Supreme Court held that the 1988 Act does not have retrospective effect. The Court emphasized that a statute is presumed to be prospective unless explicitly stated otherwise. The Court stated, "A substantive law is presumed to be prospective. It is one of the facets of rule of law." The liability under the Act is a statutory liability, and such liability can only be made retrospective by explicit legislative provision.
2. Application of Section 6 of the General Clauses Act, 1897:
The respondents argued that Section 6 of the General Clauses Act should apply, which preserves rights and liabilities under repealed laws unless a different intention appears in the new statute. The Supreme Court disagreed, stating that Section 140 of the 1988 Act does not appear in the clauses of Section 217(2) of the 1988 Act, which contains the repeal and saving clause. The Court noted, "Section 6 of the General Clauses Act inter alia saves a right accrued and/or a liability incurred. It does not create a right." Therefore, the existing rights must be determined based on the statute applicable at the time of the accident, not under the new Act.
3. Interpretation of Statutory Provisions and Legislative Intent:
The Court examined various precedents and principles of statutory interpretation. It reiterated that changes in substantive law do not affect pending litigation unless explicitly stated by the legislature. The Court cited Garikapati v. Subbaiah Chowdhary, stating, "The golden rule of construction is that, in the absence of anything in the enactment to show that it is to have retrospective operation, it cannot be so construed as to have the effect of altering the law applicable to a claim in litigation at the time when the Act was passed." The Court also referred to Gajraj Singh and Others v. State Transport Appellate Tribunal and Others, emphasizing that the effect of repeal is to obliterate the Act completely from the record of Parliament as if it had never existed, except for past transactions.
The Court concluded that the 1988 Act does not have retrospective operation and overruled the decisions of the Kerala and Punjab & Haryana High Courts, which had held otherwise. The appeal was dismissed, with no costs awarded, as the State did not seek any relief against the respondents.
Conclusion:
The Supreme Court held that Section 140 of the Motor Vehicles Act, 1988, does not have retrospective effect. The rights and liabilities of the parties must be determined based on the law as it stood before the new Act came into force. The application of Section 6 of the General Clauses Act was found to be misplaced in this context, and the decisions of the Kerala and Punjab & Haryana High Courts were overruled.
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2008 (5) TMI 603
Issues:
1. Denial of credit of service tax paid on insurance cover for aircrafts and vehicles.
2. Interpretation of the definition of 'input service' under the Cenvat Credit Rules, 2004.
3. Comparison of Tribunal decisions regarding the inclusion of insurance cover as an input service.
Analysis:
Issue 1: The judgment addresses the denial of credit of service tax paid on insurance cover for aircrafts and vehicles, amounting to Rs. 17,06,132, on the basis that they were not used in or related to the manufacture of the final product.
Issue 2: The definition of 'input service' under Rule 2(l) of the Cenvat Credit Rules, 2004 is crucial in this case. The appellant argues that services used in relation to business activities should be considered as input services. Citing the Tribunal decision in Manikgarh Cement v. C.C.E. & Customs, Nagpur, it is contended that since the vehicles and aircrafts were used for business purposes, the insurance cover should be included in the definition of 'input service'.
Issue 3: The judgment contrasts the arguments by referring to another Tribunal decision in India Cements Ltd. v. C.C.E., Salem, where it was held that an insurance policy for a colony building of a factory cannot be deemed an input service. However, the Tribunal emphasizes that the definition of input service is broad enough to encompass activities related to business. The decision in Manikgarh Cement is favored as it was a final decision, unlike the interim decision relied upon by the respondent.
In conclusion, the Tribunal rules in favor of the appellant, allowing the stay petition unconditionally based on the interpretation of the definition of 'input service' and the precedent set by the decision in Manikgarh Cement. The judgment highlights the importance of considering business-related activities in determining what constitutes an input service under the Cenvat Credit Rules, 2004.
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