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Showing 241 to 260 of 1052 Records
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2011 (4) TMI 1316
Issues involved: Rectification of apparent mistake in Tribunal's order u/s 254(2) of the Act.
Summary:
The assessee filed a Miscellaneous Application claiming mistakes in the Tribunal's order regarding the addition of Rs. 1.55 lakh based on two Fixed Deposit Receipts (FDRs) of Rs. 80,000 and Rs. 75,000. The assessee argued that the FDRs with different numbers were actually the same, supported by a certificate from Canara Bank. However, the Revenue contended that the application sought a revision of the order, not a rectification of a mistake, and should be rejected.
Upon review, the Tribunal noted that the appeal was partly heard on 3rd November, 2010, and adjourned for further hearing on 15th November, 2010. The assessee failed to present the facts and documents during the hearings, including the certificate from Canara Bank dated 24th November, 2010, which was after the conclusion of the hearing. Additionally, the assessee only provided a photocopy of the FDR from Punjab National Bank during the Miscellaneous Application proceedings, not earlier. Despite discrepancies in the Tribunal's order, they were not considered apparent mistakes eligible for rectification u/s 254(2). The Tribunal concluded that the assessee's request amounted to a review of the order, which is not permitted under the Act, leading to the dismissal of the Miscellaneous Application.
In conclusion, the Tribunal dismissed the assessee's Miscellaneous Application on 21st April, 2011.
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2011 (4) TMI 1315
Issues involved: Application for waiver of pre-deposit of duty demand, interest, and penalty; eligibility for SSI exemption; ownership of brand name RIAT; duty evasion allegations.
Summary:
The applications were filed u/s 35F of the Central Excise Act, 1944 seeking waiver of pre-deposit of duty demand, interest, and penalty confirmed against the appellant company. The duty demand was based on the appellant company's alleged misuse of SSI exemption and ownership of the brand name RIAT, which belonged to another entity. The Commissioner confirmed the duty demand and imposed penalties on the company and its Director. The appeals and stay applications were filed against this order.
The appellant argued that they were entitled to use the brand name RIAT as legal owners due to their association with the partnership firm owning the brand. They claimed the right to use the brand name transferred to them when they purchased the partnership firm's assets. They also contended that the duty demand was time-barred and penalties were unjustified due to lack of malafide intent.
The Departmental Representative opposed the waiver application, asserting that the brand name RIAT belonged to another entity and the appellant had not disclosed this fact while availing of the SSI exemption. They highlighted discrepancies in the appellant's use of the brand name and clearances made under different entities.
After considering the submissions and records, it was found that the appellant had not established a prima facie case in their favor. The ownership of the brand name RIAT was not proven to belong to the appellant, and there were indications of clearances being split to evade duty. The appellant was directed to deposit a specified amount towards duty demand within a set period, failing which the pre-deposit requirement would stand, and recovery would proceed.
In conclusion, the appellant's request for waiver was denied, and specific deposit instructions were provided to address the duty demand issue.
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2011 (4) TMI 1314
The Supreme Court upheld the decision of the Customs, Excise and Gold (Control) Appellate Tribunal, ruling that 'waste' and 'rejects' cleared by the assessee in the DTA are not included in the DTA sales entitlement of 50% of the FOB value of exports. The appeal was dismissed for lacking merit.
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2011 (4) TMI 1313
Issues involved: Appeal against order of Income Tax Appellate Tribunal regarding exemption claim under Section 80P (2) (a) (i) for interest earned from deposits made with a private limited company.
Summary:
The appellant, a Co-Operative Society engaged in banking business, filed a return seeking exemption on interest earned from deposits with a private limited company. The Assessing Officer, Commissioner of Income Tax (Appeals), and Appellate Tribunal disallowed the claim, stating the deposits were not made with a statutory Co-Operative Society or Bank. The main question of law was whether deductions under Section 80P(2)(a)(i) are available for investments in private limited companies.
It was noted that Section 80P allows deductions for income of Co-Operative Societies engaged in banking. The definition of "Banking" in the Banking Regulation Act, 1949 includes accepting deposits of money for lending or investment, which earn interest. The appellant had deposited excess money with a private limited company to earn interest. Referring to a previous case, the court held that interest earned on such deposits in any banking activity is exempted under Section 80P. Therefore, the court ruled in favor of the appellant, allowing the exemption claim.
This judgment clarifies the eligibility for deductions under Section 80P for Co-Operative Societies engaged in banking activities, emphasizing the definition of "Banking" and the exemption for interest earned on deposits made in banking activities.
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2011 (4) TMI 1312
Claim for rebate u/s 88E - Securities Transaction Tax (STT) - HELD THAT:- the AO's interpretation implies that the appellant company is liable to tax of ₹ 2,43,83,654/- as per normal provisions of the Act, however, simply because after rebate u/s 88E on account of STT payment, there is no tax due and payable by the company it should be subjected to MAT at 10% of its books profits amounting to ₹ 81,76,903/- in addition to the normal tax payable and paid by the company. Taken together the tax payment by the company under normal provisions and under MAT totals up-to ₹ 3,25,60,557/- (Rs.2,43,83,654 + ₹ 81,76,903). It is my considered opinion that this was not the intent of the Legislature either with regard to provisions of section 115JB or with regard to imposition of STT. In light of the discussion, this ground of appeal is allowed and the AO is directed to delete the addition on account of MAT.
disallowance u/s 14A - HELD THAT:- The total tax payable by the appellant under normal provisions is ₹ 2,43,83,654/- whereas STT paid by the appellant is ₹ 3,37,07,299/-. Since the appellant is to be allowed credit for STT payment against any tax liability, the levy of tax on the disallowance of ₹ 10,566/- is not in order. The A.O. is directed to adjust STT already paid by the appellant.”
the issue involved in the grounds of appeal of the revenue is decided against the revenue and in favour of the assessee.
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2011 (4) TMI 1311
Denial of rebate claim - Assistant Commissioner (Rebate) Central Excise, Raigad held that the reversed of CENVAT credit cannot be teated as payment of duty eligible for rebate and that the subject machinery was not exported from the factory/warehouse of the manufacturer - It was further held that since the machinery had been in use for 7 years from the date of purchase, from 17.10.1997 the said rebate claim was not admissible against export of the capital goods which were used. It was further held that ARE-1 was not signed by the manufacturer of the said machinery and that it was barred by limitation.
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2011 (4) TMI 1310
CENVAT credit - final product subsequently got exemption from tax - Held that: - if the assessee has paid the duty on inputs prior to the date of exemption he is entitled to the Cenvat credit once the inputs are received prior to the exemption. What happens subsequently is immaterial.
The court in Commissioner of Central Excise, Bangalore-II, Commissionerate Versus Tafe Ltd. (Tractor Division) [2011 (3) TMI 67 - KARNATAKA HIGH COURT] has held that Cenvat credit availed on inputs till the date of exemption vest in the assessee and the assessee cannot be divested of that credit as the law does not provide for the same.
Appeal dismissed - decided against Revenue.
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2011 (4) TMI 1309
Issues:
1. Classification of stainless steel wire made from stainless steel rods.
2. Application of previous court decisions on similar cases.
3. Manufacturing process distinction between mild steel and stainless steel wire.
4. Legal interpretation of the transformation of materials in the context of excise duty.
5. Request for interim relief and payment of excise duty.
6. Permission for further consideration by the Central Board of Excise and Customs.
Analysis:
1. The primary issue in this case revolves around the classification of stainless steel wire made from stainless steel rods. The counsel argued that this product is different from mild steel wire and should not be subject to the same classification based on a previous Supreme Court decision.
2. The counsel referenced various court decisions, including the Collector of Central Excise v. Technoweld Industries, to support their argument that the previous judgments were specific to mild steel rods and wires, not applicable to stainless steel products. They highlighted a Special bench decision in Krishna Wire Industries, which affirmed the manufacturing process of stainless steel wire from stainless steel rods.
3. A critical aspect of the argument focused on the manufacturing process, emphasizing the complexity and distinct nature of producing stainless steel wire from hot rolled black wire rods compared to drawing mild steel wire from mild steel rods. The counsel highlighted the number of processes involved in manufacturing stainless steel wire to differentiate it from mild steel wire production.
4. The legal interpretation of the transformation of materials was discussed, citing the Empire Industries Ltd. v. Union of India case, which emphasized that if a material is transformed into a different commercial commodity with distinct characteristics, it constitutes manufacturing for excise duty purposes. Reference was also made to the UJagar Prints v. Union of India case, reinforcing the importance of commercial distinctiveness in determining manufacturing.
5. The court granted leave as prayed for and directed the respondents to permit the petitioners to pay excise duty on stainless steel wires manufactured from stainless steel hot rolled black wire rods until the final disposal of the case. The counsel for the petitioners also stated that they would not claim a refund if the company fails ultimately.
6. Lastly, the court clarified that the pendency of the petition does not prevent the Central Board of Excise and Customs from considering the need for a distinction between the processes of drawing wires from mild steel rods and making stainless steel wires from stainless steel rods, as argued by the petitioners. The respondent No. 1 waived service of notice, while direct service was permitted for respondent Nos. 2 to 4, setting the stage for further legal considerations.
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2011 (4) TMI 1308
Issues Involved:
1. Deletion of addition on account of non-deduction of TDS u/s 40(a)(ia).
2. Applicability of Section 195 and Section 9 of the Income Tax Act, 1961.
3. Validity of CBDT Circulars and their withdrawal.
Summary:
1. Deletion of Addition on Account of Non-Deduction of TDS u/s 40(a)(ia):
The Revenue's appeal contested the deletion of Rs. 57,49,489 by the CIT(A) for non-deduction of TDS u/s 40(a)(ia). The assessee argued that the commission paid to foreign agents was not taxable in India and thus not subject to TDS u/s 195. The CIT(A) agreed, noting that the relevant CBDT circulars (No. 23 of 1969 and No. 786 of 2000) were in force during the assessment year, and their withdrawal in 2009 did not apply retrospectively.
2. Applicability of Section 195 and Section 9 of the Income Tax Act, 1961:
The AO disallowed the commission payments, arguing that the assessee was liable to deduct TDS u/s 195, as the payments were deemed income accruing in India u/s 9(1)(vii). However, the CIT(A) found no evidence that the foreign agents provided managerial, technical, or consultancy services that would fall under FTS as per Section 9(1)(vii). The CIT(A) concluded that the payments did not accrue or arise in India, thus not attracting TDS u/s 195.
3. Validity of CBDT Circulars and Their Withdrawal:
The CIT(A) and the Tribunal both emphasized that the CBDT circulars in force during the relevant assessment year (Circular No. 23 of 1969 and Circular No. 786 of 2000) clarified that commission payments to foreign agents were not taxable in India, and thus no TDS was required. The Tribunal cited the case of Dy.CIT-II, Kanpur vs. Shri Sanjiv Gupta, Kanpur, affirming that the withdrawal of these circulars in 2009 did not affect the assessment year 2007-08. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal.
Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s deletion of the addition for non-deduction of TDS on commission payments to foreign agents, based on the non-applicability of Section 195 and the validity of the CBDT circulars during the relevant assessment period.
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2011 (4) TMI 1307
Issues involved: Appeal against tribunal's judgement on cenvat credit for service tax paid on GTA service for onward transportation and place of removal of goods.
Cenvat credit on service tax paid on GTA service: The High Court considered whether the assessee was entitled to avail Cenvat credit on the service tax paid on GTA service for outward transportation of goods beyond the place of removal. The Court analyzed the definition of 'input service' under the Cenvat Credit Rules, 2004, which includes services used directly or indirectly in the manufacture of final products and clearance of final products from the place of removal. The Court held that outward transportation service qualifies as an input service as it is used for the clearance of final products from the place of removal. The Court emphasized that the expression 'includes' in the definition should not be used to limit the scope of services covered by the term 'input service'. Consequently, the Court dismissed the tax appeal based on the common issues involved.
Judgement: The High Court upheld the tribunal's decision regarding the entitlement of the assessee to avail Cenvat credit on service tax paid on GTA service for outward transportation of goods beyond the place of removal. The Court's interpretation of the definition of 'input service' under the Cenvat Credit Rules, 2004 supported the inclusion of outward transportation service as a qualifying service for Cenvat credit. The Court emphasized the broad and expansive nature of the definition, stating that the expression 'includes' should not be used to restrict the scope of services covered by the term 'input service'. As a result, the tax appeal was dismissed by the Court.
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2011 (4) TMI 1306
Release of seized goods - deposit of twice the tax leviable on the goods so seized - Held that: - it is only if the goods passing through the State of U.P. are not accompanied by the documents prescribed that a presumption of sale within the State would arise and not otherwise - It is not the case of the department that the goods were not accounted for or that they were not accompanied by the necessary documents prescribed or that the documents were not in order or not properly filled. It is not even the case that the goods were undervalued or that they were being loaded or unloaded in the State of U.P. which may have give a legitimate presumption of their being sold in U.P. It is also pertinent to note that the goods were detained prior to the expiry of the time of exit of the goods from U.P. as declared in the transit declaration form.
The order of seizure dated 10.2.2011, the order dated 22.2.2011 rejecting the representation under Section 48(7) of the Act and that of the tribunal dated 30.3.2011 to be illegal and without jurisdiction - Once the seizure is held invalid, the issue as to whether the tribunal was justified in directing for release of the goods on deposit of cash security twice the amount of tax leviable in place of 40% of the estimated value of the goods, as provided under the Act, fails into oblivion and, as such, need not be addressed - revision allowed - decided in favor of revisionist.
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2011 (4) TMI 1305
Whether the Cabinet decision dated 18.07.2009 which is a subsequent event and quashing the same when the writ petitioner has not pleaded or amended the original prayer in the writ petition?
Whether without appreciating the stand of the State in modifying the "policy" the High Court not only quashed the Cabinet decision but also issued various directions which are all unacceptable?
Whether on the principle of 'legitimate expectation', the State is not justified in altering the policy to promote private institutions for vocational training on various subjects?
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2011 (4) TMI 1304
Non compliance of the order directing pre-deposit - The order directing pre-deposit was a subject matter of challenge in Writ Petition. During the pendency of the said petition, appeal was dismissed by the Tribunal vide order dated 11th June, 2010 for non-compliance of the order of pre-deposit.
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2011 (4) TMI 1303
Application of stay - penalty under Rule 25 and 26 of the Central Excise Rules, 2002 - Differential duty - Notification No. 4/2006-C.E., dated 1-3-2006 - The only dispute sought to be raised is in relation to the duty amount, that is, whether it would be ₹ 350/- per tonne or ₹ 400/- per tonne - the clearance of the product is not on retail basis and in terms of the agreement between the parties, there is no requirement of printing of MRP on the packages in which the product is packed.
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2011 (4) TMI 1302
Issues involved: Appeal against Tribunal's order deleting penalty u/s 271E for violation of provisions u/s 269T of the Income Tax Act, 1961.
The judgment pertains to the levy of penalty u/s 271E of the Income Tax Act, 1961. The Assessing Officer imposed a penalty on the assessee for receiving certain amounts in cash, which was considered a breach of Section 269T of the Act. The CIT [A] deleted the penalty, and the Revenue appealed to the ITAT, which upheld the CIT [A]'s decision.
The Counsel for the Revenue argued that the mode of accepting and returning cash for property transactions was not credible, as the properties were never sold and cancellations were made years after the initial cash acceptance. The Assessing Officer believed there was a breach of Section 269T of the Act.
However, the CIT [A] noted that the transactions were genuine, with no dispute on the source of funds. The delay in cancellations due to an earthquake did not invalidate the earlier sale and purchase transactions. It was concluded that the cash receipts and payments were not considered loans or deposits, hence not violating Section 271T of the Act, and thus no penalty under Section 271E should have been imposed.
The Tribunal agreed with the CIT [A]'s findings, stating that the Assessing Officer failed to provide evidence that the transactions were not genuine. The transactions for property purchase and sale were not deemed as loan transactions, further supporting the decision that no breach of Section 269T occurred.
Both the CIT [A] and the Tribunal found that the cash receipts from property sales did not violate Section 269T of the Act as they were not considered loan transactions. Consequently, no substantial question of law arose, leading to the dismissal of the Tax Appeal.
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2011 (4) TMI 1301
Liability of tax - service of consulting finance - appellant's case is that they are the recipients of the service and therefore, there is no liability in law on a recipient of a service to pay the service tax - Held that: - similar issue decided in the case of Commissioner of Central Excise & Service Tax, Large Taxpayer Unit Versus Micro Labs Ltd. [2011 (1) TMI 461 - KARNATAKA HIGH COURT], where it was held that from 18-4-2006 the service provided by a person who is outside the country and who has no fixed establishment or permanent address in the country, such a taxable service shall be treated as if the recipient of service had himself provided the service in India and accordingly all the provisions of this Chapter shall apply. Therefore, prior to 18-4-2006 the service tax was not payable by the recipient, in the event the service provider was outside the country and he had no permanent address or place of business within the country - As the period for which the service tax was claimed is anterior to the above said amendment, the recipient of the service has no obligation to pay the service tax - appeal dismissed - decided against Revenue.
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2011 (4) TMI 1300
Issues Involved:
1. Interpretation and application of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA).
2. Validity of orders of forfeiture passed under SAFEMA in respect of properties standing in the names of relatives of the detenue/convict.
3. Compliance with legal requirements and principles of natural justice in the issuance of notices under Section 6(1) of SAFEMA.
4. Requirement of establishing a link or nexus between the property sought to be forfeited and the illegally acquired assets of the convict/detenue.
5. Validity of proceedings and orders of forfeiture based on defective notices under Section 6(1) of SAFEMA.
Detailed Analysis:
1. Interpretation and Application of SAFEMA:
SAFEMA was enacted to provide for the forfeiture of illegally acquired properties of smugglers and foreign exchange manipulators. The Act applies to relatives of detenues/convicts and aims to prevent smuggling and clandestine operations by depriving such persons of their illegally acquired properties. The relevant provisions include definitions, prohibition of holding illegally acquired property, notice of forfeiture, burden of proof, and powers of the competent authority and Appellate Tribunal.
2. Validity of Orders of Forfeiture:
The constitutional validity of SAFEMA and its application to relatives and associates of detenues/convicts was upheld by the Supreme Court in Attorney General of India vs. Amratlal Prajivandas. The Court held that the Act's purpose is to reach properties of the detenue/convict, wherever they are held, and not to forfeit independent properties of relatives/associates unless they are linked to the convict's illegal activities.
3. Compliance with Legal Requirements and Principles of Natural Justice:
The issuance of notices under Section 6(1) of SAFEMA must satisfy three conditions: the value of the property, the known sources of income or assets of the person concerned, and any other relevant information. The reasons for issuing the notice must be recorded in writing and should establish a link between the property and the convict's illegal activities. Failure to meet these requirements renders the notice and subsequent proceedings invalid.
4. Requirement of Establishing a Link or Nexus:
The competent authority must establish a link or nexus between the property sought to be forfeited and the illegally acquired assets of the convict/detenue. The burden of proof lies on the relative/associate to disprove the allegation once the link is established. A roving enquiry is not permitted under the Act, and the reasons for belief must be based on materials gathered during the investigation.
5. Validity of Proceedings and Orders Based on Defective Notices:
In the cases examined, the notices issued under Section 6(1) were found to be defective due to non-application of mind, failure to establish the required link or nexus, and lack of specific details about the value of the property and sources of income. The use of printed formats without striking off irrelevant portions indicated non-application of mind. Consequently, the orders of forfeiture based on such defective notices were set aside.
Case Analysis:
W.P.No.26466 of 2001:
The petitioner, a relative of the convict, challenged the forfeiture of properties. The notice under Section 6(1) was a printed format with irrelevant portions not struck off, indicating non-application of mind. The reasons recorded did not establish a link between the properties and the convict's illegal activities. The Court held that the notice did not satisfy the legal requirements and set aside the forfeiture order, allowing the respondents to initiate fresh proceedings if advised.
W.P.No.7609 of 2001:
The petitioner, the wife of the detenue, challenged the forfeiture of properties. The notice under Section 6(1) was found to be defective as it did not establish the required link or nexus. The reasons recorded were insufficient, and the proceedings were held to be vitiated. The Court set aside the forfeiture order, emphasizing the need for scrupulous compliance with statutory requirements.
Conclusion:
The judgments underscore the importance of adhering to legal requirements and principles of natural justice in forfeiture proceedings under SAFEMA. The competent authority must establish a clear link between the properties and the convict's illegal activities, and any defect in the notice under Section 6(1) invalidates subsequent proceedings. The orders of forfeiture were set aside, with liberty to initiate fresh proceedings if done in accordance with the law.
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2011 (4) TMI 1299
Issues involved:
The appeal under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal regarding penalty under Section 271D for the assessment year 2002-03.
Issue 1:
Whether the Tribunal's confirmation of the penalty under Section 271D for Rs. 1,70,000 was perverse?
The assessee filed its return declaring nil income, but accepted loans/deposits in violation of Section 269SS. The Assessing Officer imposed a penalty of Rs. 6,38,000, later reduced by the CIT(A). The Tribunal upheld part of the penalty. The assessee argued that the payment had reasonable cause under Section 273B, citing relevant case laws.
Issue 2:
Whether the penalty under Section 271D was justified without finding malafide or tax evasion?
The Tribunal confirmed the penalty under Section 271D, but the assessee contended that the transaction was genuine and there was no tax evasion. The Supreme Court's interpretation of Sections 269SS and 273B was cited to support the argument that penalties should not apply to genuine transactions.
Issue 3:
Whether the Tribunal was correct in upholding the penalty under Section 271D despite no dispute on the transaction's genuineness?
The CIT(A) concluded that the transaction was genuine and bonafide, with no loss to the revenue. The Tribunal erred in reversing this finding, as the circumstances justified the cash transaction, offering reasonable cause under Section 273B.
Issue 4:
Whether imposing a penalty under Section 271D for a technical mistake is sustainable?
The CIT(A) found that the technical breach did not attract penalties as the transactions were genuine and no tax evasion was involved. The Tribunal's decision to uphold the penalty was deemed unsustainable based on the circumstances and legal principles.
Issue 5:
Whether there was a reasonable cause for receiving loans and deposits in cash instead of by account payee cheque or bank draft as required under Section 269SS?
The CIT(A) accepted that the transaction was genuine and bonafide, with no loss to the revenue. The Tribunal's reversal of this finding was deemed incorrect, as the circumstances justified the cash transaction under Section 273B.
Issue 6:
Whether the Tribunal's confirmation of the penalty under Section 271D was unjustified based on settled laws of the Supreme Court and various High Courts?
The Tribunal's decision to uphold part of the penalty was challenged by the assessee, citing legal principles and case laws to support the argument that penalties should not apply to genuine transactions without tax evasion. The appeal was allowed in favor of the assessee.
In conclusion, the High Court allowed the appeal by the assessee, finding merit in the argument that the penalty under Section 271D was not justified due to the genuine and bonafide nature of the transaction, with no tax evasion involved. The Court emphasized the importance of reasonable cause under Section 273B and the need to interpret tax laws in a manner that does not oppress taxpayers.
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2011 (4) TMI 1298
The Appellate Tribunal CESTAT CHENNAI granted waiver of pre-deposit of Service Tax and penalty, along with interest, based on a strong prima facie case presented by the assessees. The decision was influenced by a previous Final Order related to a similar case. Recovery of the amounts in question was stayed pending the appeals.
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2011 (4) TMI 1297
Issues Involved:
1. Taxability of the amount received for outright supply of technical documentation.
2. Interest charged u/s 234A and 234B.
3. Adoption of the rate of conversion of foreign currency.
4. Taxability of the amount received for procurement services.
Summary:
1. Taxability of the amount received for outright supply of technical documentation:
The main issue was whether the amount of DM 7,15,000 received by the assessee from M/s. Madras Fertilizers Ltd. for the outright supply of technical documentation was taxable. The Tribunal observed that similar issues had been decided in favor of the assessee in earlier years, concluding that the payments were not covered within the expression of "royalty" u/s 9(1)(vi) of the Income Tax Act. Consequently, the Tribunal deleted the addition made by the Assessing Officer and confirmed by the CIT(A) for A.Y. 1991-92. Similar conclusions were drawn for the assessment years 1992-93, 1993-94, 1994-95, and 1996-97, leading to the dismissal of the revenue's appeals for these years.
2. Interest charged u/s 234A and 234B:
The assessee challenged the interest charged u/s 234A and 234B. The Tribunal directed the Assessing Officer to allow consequential relief for interest charged u/s 234A. For interest charged u/s 234B, the Tribunal followed the decision of the Hon'ble Bombay High Court in Director of Income-tax (International Taxation) vs. N.G.C. Net Work Asia (313 ITR 187), which held that no advance tax was payable by the assessee when the entire income was liable to deduction of tax at source. Consequently, the interest charged u/s 234B was deleted.
3. Adoption of the rate of conversion of foreign currency:
The revenue challenged the CIT(A)'s direction to adopt the rate of conversion of foreign currency as on the date of receipt of payment by the assessee instead of the exchange rate as per Rule 115 of the I.T. Rules, 1962. The Tribunal upheld the CIT(A)'s order, relying on the judgment of the Hon'ble Supreme Court in Chawgule & Co. v. CIT (218 ITR 384), which affirmed that Rule 115 could not be invoked for sale proceeds credited to the bank account in Indian rupees.
4. Taxability of the amount received for procurement services:
The revenue contended that the amount of Rs. 8,28,30,293 received by the assessee for procurement services was taxable u/s 9(1)(vii) as "fees for technical services." The Tribunal referred to its earlier decision in the assessee's case and the case of "Linde A.G. v. Income tax Officer" (62 ITD 330), concluding that procurement services were commercial activities and not technical services. Therefore, the amount received was not taxable in India as it represented business profits exempt under the Double Taxation Agreement.
Conclusion:
The assessee's appeal for A.Y. 1991-92 was partly allowed, and the revenue's appeals for A.Y.s 1991-92, 1992-93, 1993-94, 1994-95, and 1996-97 were dismissed. The order was pronounced in the open court on April 27, 2011.
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