|
Advanced Search Options
Case Laws
Showing 261 to 280 of 678 Records
-
2007 (7) TMI 456
Penalty - Failure to meet export obligation by importer-company - Held that: - It is well settled that the rights and obligations of a limited company are the rights and obligations of that legal person and not of Managers or share holder. In such a case, the liability of a shareholder would be limited to his shareholding, be he a promoter or not - In the present case, the findings are that the Company failed to carry out its export obligation. Therefore, the liabilities will have to be borne only by the Company. There is no finding of fraud, or misappropriation against the present appellant. In such a case, penalty on the officer of the company is not permissible.
Section 112 of the Customs Act speaks of “any person, who in relation to any goods, does or omits to do any act”. In the present case, that person is the public limited company and not the individual person (appellant). Therefore, person who attracted the penalty is the limited company.
Appeal allowed.
-
2007 (7) TMI 455
Issues involved: Adjustment of cost audit fees against refund claim u/s Section 11 of the Central Excise Act, 1944.
Issue 1: Adjustment of cost audit fees against refund claim
The appeal was against the adjustment of Rs. 96,000, being the cost audit fees of one unit, against the refund claim of the appellant. The Commissioner (Appeals) had upheld the adjustment, leading to the appeal to the Tribunal. The Tribunal had remanded the matter back to the Commissioner (Appeals) for reconsideration in light of relevant decisions. The Commissioner (Appeals) reaffirmed the correctness of the adjustment, prompting the current appeal.
Details: The appellant disputed the cost audit fees raised by the cost auditor for one of its units and sought a refund from the Government. The Assistant Commissioner adjusted the fees against the refund claim, which was upheld by the Commissioner (Appeals). The Tribunal remanded the matter, but the Commissioner (Appeals) again upheld the adjustment, leading to the current appeal.
Issue 2: Interpretation of Section 11 of the Central Excise Act, 1944
The main issue revolved around the interpretation of Section 11 of the Central Excise Act, 1944, regarding the recovery of sums due to the Government. The appellant argued that the adjustment of dues from one division against the refund claim of another unit of the same company was not permissible under the law.
Details: The Tribunal analyzed Section 11 of the Central Excise Act, which allows for the recovery of sums due to the Government from any money owing to the person from whom such sums are recoverable. The Tribunal concluded that adjusting the dues of one division against the refund claim of another unit was not in line with the provisions of Section 11.
In conclusion, the Tribunal set aside the impugned order, allowing the appeal with any consequential relief. The decision was based on the finding that adjusting the cost audit fees of one division against the refund claim of another unit was not permissible under Section 11 of the Central Excise Act, 1944.
-
2007 (7) TMI 454
Issues:
1. Classification of goods as accessories or spares under EPCG scheme.
2. Admissibility of refund for excess duty paid.
3. Compliance with apex court's remand order and natural justice principles.
Issue 1 - Classification of goods as accessories or spares under EPCG scheme:
The appellants imported goods under an EPCG scheme license specifying various equipments with accessories. Some main equipments were imported with accessories as per the license, while others without specified accessories were cleared under relevant Bills of Entry. The assessing authority initially denied EPCG benefit for imported accessories and spares, leading to duty payment under protest. Subsequently, refund claims were filed, and the jurisdictional Asst. Collector allowed a refund for goods treated as accessories. However, a part of the refund was received, leading to a review of the order. The Commissioner (Appeals) held that refund was not admissible, leading to an appeal.
Issue 2 - Admissibility of refund for excess duty paid:
The Hon'ble Supreme Court remanded the case to the Commissioner (Appeals) for a fresh decision on the refund claims based on merits. The Commissioner (Appeals) set aside the Asst. Collector's order, stating that refund was not admissible to the assessee. The Tribunal found that the Commissioner (Appeals) did not properly follow the apex court's parameters and observations, leading to a lack of proper verification and examination of documents to determine whether the goods were accessories or spares.
Issue 3 - Compliance with apex court's remand order and natural justice principles:
The Tribunal directed a remand to the lower appellate authority with appropriate directions due to the failure to follow the Supreme Court's parameters. The Commissioner (Appeals) was criticized for not conducting a thorough examination of documents, including packing lists, to determine the classification of goods. The Commissioner's reliance on interpretation of terms and case law without proper verification was deemed insufficient. The Tribunal set aside the impugned order and directed the lower appellate authority to pass a speaking order after conducting proper verification as per the apex court's remand order, ensuring natural justice by providing copies of all relevant documents to the party.
-
2007 (7) TMI 453
Issues:
11 appeals against Commissioner (Appeals) orders involving identical issue.
Analysis:
The case involved 11 appeals against the orders of the Commissioner (Appeals) that all revolved around the same issue. The Department filed 11 cross-objections supporting the Commissioner (Appeals) orders. The appellants, who were importing fertilizers at Bhavnagar port, cleared several consignments paying duty, including "stevedoring and barge charges" in the assessable value as per the assessment orders. They did not appeal against the assessment orders but filed refund claims. The original authority rejected the refund claims, stating that the stevedoring charges were for transferring goods from the ship to the barge, not from the barge to the jetty.
The Commissioner (Appeals) held that the charges described by the appellants as stevedoring charges were actually transportation costs for bringing goods from the mother vessel to the land mass of India, not included in the CIF value. He determined that the cost of bringing goods from the barge to the land mass could not be considered stevedoring charges. The Department argued that since the appellants did not challenge the assessment orders by filing appeals, the rejection of the refund claims was justified. They cited the judgment of the Hon'ble Supreme Court in the case of M/s. Priya Blue Industries Ltd. v. CC (Prev.) to support their position.
The Tribunal considered the submissions and highlighted the importance of assessments in determining classification, exemption eligibility, and assessable value of goods under the Customs Act. They emphasized that appeals could be filed against orders of assessment, not just adjudication, under Section 128 of the Customs Act. Since the appellants did not appeal the assessment orders, the Asst. Commissioner handling the refund claim could not overturn the decisions made by the assessing authority. Referring to the judgment in the case of M/s. Priya Blue Industries, the Tribunal concluded that the officer considering a refund claim could not review an assessment order or sit in appeal over it.
Therefore, the Tribunal found no merit in the appeals and dismissed them, along with disposing of the cross-objections accordingly. The judgment was pronounced in court on 13-7-2007.
-
2007 (7) TMI 452
Issues: Authorization for filing appeal under Section 35B of Central Excise Act, 1944
In this judgment, the issue revolves around the authorization for filing an appeal under Section 35B of the Central Excise Act, 1944. The appeal was directed against Order-in-Appeal No. AT/641/Bel/2005, dated 30-11-2005. The respondent raised a preliminary objection against the appeal, arguing that the authorization for filing the appeal was signed by only one Commissioner, which was contrary to the provisions of sub-section (2) of Section 35B. The respondent relied on previous judgments to support this argument. On the other hand, the SDR contended that the authorization was correct as the same Commissioner held additional charges of Commissioner, Belapur, and Commissioner, Central Excise, Raigad. The Tribunal considered both sides' submissions and examined the records.
The Tribunal found that the authorization for filing the appeal was indeed signed by the Commissioner of Belapur Commissionerate, who also signed as the second Commissioner. Citing the Division Bench judgment in the case of Maikaal Fibres Ltd., the Tribunal held that if a Commissioner holds additional charge of two Commissionerates, they cannot sign as Commissioner of both while reviewing orders. The Tribunal noted that the SDR's reliance on a different case was misplaced as the Division Bench decision in Maikaal Fibres Ltd. was not cited before the Single Member Bench, rendering the other order per incuriam. Consequently, the appeal filed by the revenue was dismissed as non-maintainable, and the cross-objection filed by the respondent was also disposed of.
-
2007 (7) TMI 451
Issues involved: Duty demand, interest demand, penalty imposition on appellant-firm, penalty imposition on authorized signatory.
Duty Demand: The officers found a shortage of inputs at the appellant's factory, leading to a duty amount involving Cenvat credit being paid on the same day. The shortage was acknowledged by the authorized signatory and the proprietor. The Original Authority confirmed the duty along with interest and penalties. The Commissioner (Appeals) upheld the duty demand and penalties on the appellant-firm but set aside the penalty on the proprietor. The Tribunal found that the duty involved had been paid promptly upon detection of the shortage, and no evidence of clandestine removal was presented. Consequently, the Tribunal upheld the duty demand but set aside the penalties imposed on the appellant-firm and authorized signatory.
Interest Demand: The Tribunal noted that the duty on the shortage of inputs had been paid immediately upon discovery, and no evidence suggested clandestine removal. As such, the Tribunal found no justification for confirming the interest demand and set it aside.
Penalty Imposition on Appellant-firm and Authorized Signatory: The Tribunal determined that since there was no evidence of clandestine removal of inputs and the duty had been paid promptly, the imposition of penalties under section 11AC was unwarranted. Therefore, the penalties imposed on the appellant-firm and authorized signatory were set aside.
Conclusion: The Tribunal upheld the duty demand, set aside the interest demand, and revoked the penalties imposed on the appellant-firm and authorized signatory due to the prompt payment of duty and lack of evidence supporting clandestine removal. The appeals were disposed of accordingly.
-
2007 (7) TMI 450
The Appellate Tribunal CESTAT, Mumbai dismissed the application for condonation of delay in filing a stay application, stating that there is no time limit for filing a stay application, only for filing an appeal. The stay application was scheduled for a hearing on 19-7-2007.
-
2007 (7) TMI 449
Issues:
1. Levy of Special Additional Duty (SAD) under Section 3A of the Customs Tariff Act on imported goods cleared from warehouse.
Analysis:
The case involved the question of whether Special Additional Duty (SAD) under Section 3A of the Customs Tariff Act was recoverable on imported goods cleared from the warehouse. The appellants argued that since the duty was not levied when the goods were imported, it was not recoverable upon clearance from the warehouse. However, the learned Commissioner (Appeals) relied on the Supreme Court's judgment in Kiran Spinning Mills v. Collector of Customs, which established that the taxable event occurred when the goods crossed the customs barrier, not when they were initially imported. The appellants contended that the Kiran Spinning Mills decision was inapplicable as it pertained to countervailing duty.
The absence of representation from the appellants during the proceedings was noted, despite due notice and no request for adjournment. The tribunal considered the arguments presented and heard the learned Departmental Representative (DR).
Upon careful consideration, the tribunal found that the Supreme Court's decision in Kiran Spinning Mills was directly relevant to the present case. It was established that the taxable event for SAD occurred when the goods were physically cleared from the warehouse for home consumption, after the levy had come into effect. Despite the Kiran Spinning Mills case involving countervailing duty, the tribunal determined that the ruling was applicable to the current scenario. Therefore, the learned Commissioner (Appeals) correctly applied the Supreme Court's ruling to the case at hand.
Consequently, the tribunal upheld the impugned order, dismissing the appeal. The decision was dictated and pronounced in open court.
-
2007 (7) TMI 448
Issues:
1. Admissibility of benefit under Notification No. 5/99-C.E. for imported polyester fibre tips.
Analysis:
The case involved a dispute regarding the admissibility of the benefit of Notification No. 5/99-C.E. to polyester fibre tips imported by the respondents. The question was whether the benefit under this notification, which specified a nil rate of duty for ball point pens and parts thereof valued not exceeding Rs. 100 per piece, could be extended to the imported goods. The Revenue contended that the concessional rate of duty was meant for pens and parts manufactured in India, suggesting that traders like the respondents were not eligible for the benefit. However, the lower appellate authority had already determined that the value of the imported goods was below Rs. 100 per piece, making them eligible for the nil rate of duty under the notification.
The appellate tribunal noted that the Revenue's argument was unfounded as the appellant had not disputed the value assessment made by the lower authority. The tribunal emphasized that the case presented by the Revenue was peculiar, especially considering that the value of the goods was within the specified limit for the nil rate of duty. Consequently, the tribunal upheld the decision of the lower appellate authority, which had allowed the benefit of the nil rate of duty to the importer based on the value assessment of the goods. As a result, the tribunal dismissed the appeal brought by the Revenue, affirming the admissibility of the benefit under Notification No. 5/99-C.E. for the imported polyester fibre tips.
In conclusion, the judgment clarified that the benefit of a nil rate of duty under a specific notification could be extended to imported goods valued within the prescribed limit, irrespective of whether the importer was a manufacturer or a trader. The tribunal emphasized the importance of adhering to the value assessment made by the lower authority and rejected the Revenue's argument that the benefit was exclusively for domestically manufactured goods.
-
2007 (7) TMI 447
Issues:
1. Confirmation of demand of differential duty and penalty on manufacturer and General Manager.
2. Mis-declaration of value leading to differential duty on goods cleared.
3. Barred by limitation - applicability of extended period.
Analysis:
Issue 1: Confirmation of demand of differential duty and penalty
The appeals arose from the confirmation of a demand of differential duty and penalty on the manufacturer and General Manager by the Commissioner of Central Excise. The manufacturer was engaged in the production of various fabrics and yarn, including Polyester Tops, Wool Tops, and Blended Tops. The demand was based on the alleged mis-declaration of value and non-payment of duty for certain goods cleared between March 1994 and June 2000. The Assistant Commissioner confirmed the demand on yarn but held that Blended Tops used for captive consumption were exempted. The manufacturer's appeal against the demand on yarn was partially allowed by the Commissioner (Appeals), leading to further proceedings before the Tribunal.
Issue 2: Mis-declaration of value leading to differential duty
The mis-declaration of value for goods cleared by the manufacturer led to the demand of a significant amount of differential duty. The manufacturer had filed price declarations for yarn and tops under relevant rules, but show cause notices were issued for recovery of differential duty based on modifications in the declared value. Despite exemptions available for certain goods, the failure to claim such exemptions and file revised declarations resulted in penalties and demands for duty. The subsequent adoption of new valuation rules in 2000 further complicated the issue, leading to additional demands and penalties.
Issue 3: Barred by limitation - applicability of extended period
The Tribunal considered the issue of limitation and found merit in the appellants' argument that the demand was barred by limitation. The appellants had declared the value of tops in 1996 under specific rules, and the department was aware of this declaration. Despite issuing show cause notices and confirming duty demands on yarn, no such action was taken for tops until later. The Tribunal concluded that the demand on tops was time-barred, as the department failed to act within the prescribed period. Consequently, the demand and penalties were set aside based on the finding that the extended period of limitation could not be applied due to the department's inaction and the lack of intent to evade duty payment.
In conclusion, the Tribunal allowed the appeals, setting aside the demand and penalties imposed on the manufacturer and General Manager, emphasizing the importance of adherence to valuation rules, timely actions by the department, and the limitations on the applicability of the extended period for demanding duty.
-
2007 (7) TMI 446
Issues Involved:
1. Whether the applicant's settlement applications can be admitted despite not filing returns/declarations during the disputed period.
2. Interpretation of Clause (a) of the First Proviso to Section 32E(1) of the Central Excise Act, 1944.
3. Applicability of judicial precedents cited by the applicant.
Issue-wise Detailed Analysis:
1. Non-filing of Returns/Declarations During the Disputed Period:
The applicant was engaged in manufacturing 'Dies' and 'Moulds' used in footwear production, classified under specific sub-headings of the Central Excise Tariff Act, 1985. The applicant was accused of clandestinely removing goods without paying Central Excise duty and without registration, despite exceeding the SSI exemption limit. The investigation revealed suppressed production and unaccounted transactions aimed at evading duty. The evaded duty amounted to Rs. 13,31,059/-, and the applicant had voluntarily paid Rs. 15,00,000/- during the investigation. The applicant admitted the duty liability but had not filed returns during the disputed period (1-4-2005 to 13-3-2006). The returns were filed only on 14-4-2007, after the issuance of the Show Cause Notice (SCN) on 12-3-2007.
2. Interpretation of Clause (a) of the First Proviso to Section 32E(1) of the Act:
Clause (a) of the First Proviso to Section 32E(1) mandates that an application for settlement can only be made if the applicant has filed returns showing production, clearance, and Central Excise duty paid in the prescribed manner. The Bench noted that the statutory provision is mandatory and imperative, as indicated by the negative formulation "No such application shall be made unless...". The Special Bench of the Settlement Commission in the case of M/s. Emerson Electric Company (India) Pvt. Ltd. held that a consolidated return filed just before or along with the application does not satisfy the condition of Clause (a). Returns must be filed on a monthly/quarterly basis as prescribed, and belated or consolidated returns do not meet the statutory requirements.
3. Applicability of Judicial Precedents:
The applicant cited the Delhi High Court's judgments in the cases of Rohit Bal Designers Pvt. Ltd. and Bharat Industrial Works, arguing that filing returns before approaching the Settlement Commission should suffice. However, the Bench observed that these judgments did not interpret the statutory provisions of Section 32E(1) but provided relief in specific cases under writ jurisdiction. The Bench emphasized that the only decision examining the statutory provision was the Special Bench's decision in Emerson Electric, which clearly stated that returns must be filed in the prescribed manner during the disputed period.
Conclusion:
The Bench concluded that the applicant did not meet the requirements of Clause (a) in the First Proviso to Section 32E(1) of the Act, as no returns were filed during the disputed period. The applications were rejected under Section 32F(1) of the Act due to non-fulfillment of the statutory condition.
-
2007 (7) TMI 445
The Appellate Tribunal CESTAT, New Delhi ruled that "Shortening" is not similar to Margarine based on HSN notes and the Prevention of Food Adulteration Act. The stay application was allowed, and the case will be listed for early hearing along with other related appeals.
-
2007 (7) TMI 444
Adjudication - Natural justice - Adjournment - Multiple dates of hearings - Held that: - the above approach of the Commissioner is not in accordance with the right interpretation of the provisions of Section 33A. Giving choice of three dates for personal hearing in one letter and seeking of adjournment by the appellant by one month, would not amount to the fact as the adjournments have been sought three times. As such, we are of the view that the adjudicating authority’s approach is not in accordance with the principle of natural justice
-
2007 (7) TMI 443
Limitation period prescribed u/s 153(2) - Computation of Capital gains - Transactions not regarded as transfer - Income escaping assessment - Depreciation on actual cost of assets.
Limitation period prescribed u/s 153(2) - assumption of jurisdiction - issue of notice u/s 148 - assessment/re-assessment reopened u/s 147 - HELD THAT:- Under the 1961 Act, notice u/s 148 can be issued within the period prescribed under the Act. It is not provided unlike the 1922 Act that it should be served within the period of limitation. It has been held in the following cases that if the notice has been issued within the limit prescribed under the Act then, the Assessing Officer will have jurisdiction to make re-assessment irrespective of the fact that the notice was served beyond the period of limitation.
The attention is drawn towards section 282 of the Income-tax Act. This section provides the service of notice. In case the issue is to be equated with the service then, there was no need of providing section 282 in the Income-tax Act. One is required to make harmonious interpretation of the provisions of the Act and considering this aspect, it is clear that the word ‘served’ as appearing in section 153(2) of the Income-tax Act cannot be equated with the word ‘issue’. Hence, it is held that the order passed by the Assessing Officer is within the time prescribed u/s 153(2) of the Income-tax Act and the finding on this issue as given by the learned CIT(A) is upheld.
Computation of Capital gains - Transactions not regarded as transfer - Income escaping assessment - whether any time limit is provided for compliance of conditions mentioned in proviso to section 47(xiii), one has to consider the provisions of section 47A - HELD THAT:- It is clearly mentioned in the statement of fact by the assessee-firm that the assessee has transferred the assets other than goodwill and software to the company at a price of Rs. 2,21,72,950 as against written down value of Rs. 1,50,53,446. The software was transferred at Rs. 14 lakhs and goodwill valued for the purpose of transfer of Rs. 48,24,210. On account of these revaluations of the assets at the time of succession of business of the firm by the company, the firm has earned capital gain and the same is to be considered for exemption u/s 47(xiii). Hence, this profit of the firm was to be allocated amongst the partners in the profit-sharing ratio. In the memorandum of the association of the company it is clearly mentioned that main object of the company was to takeover the assets and liabilities of the assessee firm. The partnership firm can be constituted to carry a business and if the business is transferred, then the firm is to be treated as dissolved.
Section 42 of the Partnership Act says that the partnership firm will stand dissolved, if the adventure or undertaking for which, it was constituted has been completed. When the assets have been sold, the final account of the firm, are to be ascertained on the basis of the value of the assets, at which, these have been transferred to the company. It is, therefore, held that shares in the company should have been allotted in the ratio as given in Col. 4 and, therefore, it is held that clause (b) of proviso to section 47(xiii) is not satisfied.
Ascertain the implication of non-compliance of clause (b) of proviso to section 47(xiii) - If one is required to harmoniously interpret section 47(xiii) and 47A(3), it is to be inferred that if all the conditions mentioned in proviso to section 47(xiii) are not satisfied at the time of succession, then capital gain will be chargeable in the hands of the firm and section 45 will not be excluded. However, if any of the conditions mentioned in the proviso to section 47(xiii) is not complied then, section 47A will be applicable. In the instant case, shareholders of the company are the persons who are partners of the assessee-firm.
In the grounds of appeal, it has been mentioned that if there is non-compliance of conditions of section 47(xiii), then the tax should be charged on the successor-company. In order to decide the issue of charging of capital gain, when condition as mentioned in clause (d) of proviso to section 47(xiii) is not complied, then it is necessary to give finding that such capital gain will be chargeable in the hands of the successor. Accordingly, it is held that capital gain is not chargeable in the hands of the assessee-firm.
Depreciation on actual cost of assets - HELD THAT:- In the immediately preceding year, WDV of the assets in the hands of company at the close of year is based on the value of assets taken by the firm for the purpose of depreciation. Hence, for assessment year 2001-02, WDV of block of assets is to be taken as closing W.D.V. in the hands of company for assessment year 2000-01 subject to adjustments as mentioned in section 43(6)(c). Since we had already held that section 45 is not applicable for charging capital gain in the hands of the firm, therefore, the cost of assets as acquired by the company cannot be taken at the revalued figure. However, finally if it is held that capital gain is chargeable either in the hands of the firm or in the company, then the assessee-company will be entitled to depreciation on the revalued value of assets. Looking to the finding given in the case of the firm, it is held that learned CIT(A) is justified in holding that depreciation will be allowable on the value of the assets, as per the written down value in the case of the firm.
In the result, the appeal in the case of the firm is allowed, while appeals in the case of the company are dismissed.
-
2007 (7) TMI 442
Issues:
1. Whether the department should have filed the appeal before the Tribunal considering the tax effect.
2. Applicability of CBDT instructions on old references with minimal tax effect.
3. Binding nature of CBDT instructions on income-tax authorities.
Analysis:
Issue 1: The judgment highlighted that the tax effect in the appeal was less than Rs. 2 lakhs, contrary to CBDT Instruction No. 2, dated 24-10-2005, which advised against filing such appeals. Reference was made to the decision in the case of Shri Vikram Bhatnagar by ITAT Delhi Bench, emphasizing compliance with the instructions.
Issue 2: The judgment referenced the Hon'ble Bombay High Court's observations in the case of CIT v. Pithwa Engg. Works, stressing the need for uniform application of the monetary limits set by the CBDT circulars, even for old references with negligible tax impact. It further cited the case of Asstt. CIT v. Rajoo Engineers Ltd., emphasizing the relevance of earlier circulars in determining the applicability of current instructions.
Issue 3: The judgment extensively discussed the binding nature of CBDT instructions on income-tax authorities as per Section 119 of the Income-tax Act. It emphasized that such instructions are mandatory for the authorities to follow, provided they do not interfere with the discretion of the authorities in specific cases. Various judicial precedents were cited to support the argument that CBDT instructions are legally binding and must be adhered to by the revenue authorities.
The judgment also referenced the ITAT Hyderabad Bench's stance on following CBDT instructions to reduce litigation and costs, highlighting the duty of revenue authorities to comply with policy decisions. Additionally, the judgment acknowledged the importance of judicial continuity in adhering to decisions of co-ordinate benches and recent Supreme Court rulings emphasizing the binding nature of executive instructions on tax authorities. Ultimately, the judgment dismissed the appeal of the revenue due to the tax effect being below the prescribed limit of Rs. 2 lakhs, in line with CBDT instructions and legal precedents.
-
2007 (7) TMI 441
Issues Involved:
1. Reopening of assessment u/s 148.
2. Computation of exemption u/s 10B.
3. Levy of interest u/s 234B and 234C.
Summary:
Reopening of Assessment u/s 148:
The assessee argued against the reopening of the assessment for AY 1998-99, claiming it was beyond four years. However, since the original assessment was processed u/s 143(1) and not u/s 143(3), the Tribunal upheld the reopening as valid, applying the judgment of the Apex Court in Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500.
Computation of Exemption u/s 10B:
For AY 1998-99, the Tribunal held that income from the sale of import licenses does not qualify as "profits and gains derived from 100 per cent EOU" and thus is not eligible for exemption u/s 10B, referencing CIT v. Sterling Foods [1999] 237 ITR 579.
For AY 2000-01, the Tribunal addressed multiple grounds:
- Interest Income: Interest from deposits and advances is taxable under "Income from business" but not eligible for exemption u/s 10B as it is not derived from the export-oriented undertaking.
- Professional Fees: The Tribunal found that professional fees received for developing and implementing ICRM modules are operational income and should be included in the total sales for exemption computation.
- Training Income: Training income was deemed intrinsically connected to the software development business and thus eligible for exemption u/s 10B.
- Alternative Ground: The Tribunal agreed that if certain incomes are excluded from exemption, only the net income after deducting related expenses should be considered.
Levy of Interest u/s 234B and 234C:
The Tribunal dismissed the assessee's grounds against the levy of interest u/s 234B and 234C, stating it is mandatory and consequential.
Conclusion:
The appeal for AY 1998-99 was dismissed, while the appeal for AY 2000-01 was allowed in part.
-
2007 (7) TMI 440
Issues Involved:
1. Classification of payment for Feasibility Study Report as fees for technical services.
2. Applicability of Section 5(2) and Section 9(1)(vii) of the Income-tax Act, 1961.
3. Application of Double Taxation Avoidance Agreement (DTAA) between India and France.
4. Determination of the rate of tax applicable on fees.
Issue-wise Detailed Analysis:
1. Classification of Payment for Feasibility Study Report as Fees for Technical Services:
The primary issue was whether the payment made for the Feasibility Study Report should be classified as fees for technical services. The assessee argued that the amount was paid for the outright purchase of the Feasibility Study Report and should not be considered as fees for technical services. The Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] disagreed, holding that the services provided by the assessee were of a managerial, technical, and consultancy nature, thus falling under the definition of fees for technical services as per Article 13(4) of the DTAA between India and France. The Tribunal, however, found that the services were rendered entirely outside India and did not constitute technical services as defined under the DTAA.
2. Applicability of Section 5(2) and Section 9(1)(vii) of the Income-tax Act, 1961:
The AO argued that as per Section 5(2) of the Income-tax Act, the income of a non-resident includes income from sources within India. The AO concluded that the payment made within India for technical services is taxable under Sections 5 and 9 of the Act. The Tribunal, however, referred to the Supreme Court decision in Ishikawajima-Harima Heavy Industries Ltd. v. Director of Income-tax, which stated that for income to be taxable in India, it must be utilized and rendered in India. Since the services were rendered outside India, the Tribunal held that Section 5(2) and Section 9(1)(vii) were not applicable.
3. Application of Double Taxation Avoidance Agreement (DTAA) between India and France:
The assessee contended that under Article 7 of the DTAA, the profit from the sale of the Feasibility Study Report should be considered business profit and not taxable in India as the assessee did not have a permanent establishment in India. The AO and CIT(A) held that Article 13 of the DTAA, which deals with fees for technical services, was applicable and thus taxable in India. The Tribunal, however, concluded that since the services were rendered outside India and the assessee had no permanent establishment in India, the income could not be taxed in India under the DTAA.
4. Determination of the Rate of Tax Applicable on Fees:
The assessee argued that even if the payment was considered as fees for technical services, the rate of tax should be 15% instead of 20%, as per the provisions of the DTAA. The Tribunal did not delve into this issue extensively as it concluded that the income was not taxable in India under the provisions of the Income-tax Act and the DTAA.
Conclusion:
The Tribunal allowed the appeal of the assessee, holding that the payment for the Feasibility Study Report did not constitute fees for technical services under the DTAA and was not taxable in India. This decision was based on the fact that the services were rendered entirely outside India and the assessee did not have a permanent establishment in India. The Tribunal relied heavily on the Supreme Court's judgment in Ishikawajima-Harima Heavy Industries Ltd. v. Director of Income-tax to reach its conclusion.
-
2007 (7) TMI 439
Issues:
1. Correction of demand amount in the Final Order.
2. Consideration of important grounds in the Final Order.
3. Applicability of the proviso to Section 28(1) of the Customs Act.
4. Finalization of provisional assessment and duty demand.
5. Mutually exclusive nature of provisional assessment and demand under Section 28(1).
Correction of Demand Amount:
The RoM application sought correction of errors in the Final Order regarding the demand amount, which was mistakenly indicated twice. The Tribunal accepted this correction, stating that the demand should be shown only once, amounting to Rs. 75,78,417 for both orders.
Consideration of Important Grounds:
The appellant raised concerns about the Final Order not addressing crucial grounds in Para 4, including the applicability of certain legal provisions. The Tribunal acknowledged these grounds and provided detailed analysis and findings on each point raised by the appellant.
Applicability of Proviso to Section 28(1):
The issue revolved around whether the proviso to Section 28(1) of the Customs Act applied in the case, considering the absence of evidence implicating the importer in fraud. The Commissioner had directed the finalization of provisional assessment, leading to a dispute on the demand confirmation. The Tribunal examined the legal aspects and upheld the Commissioner's decision, emphasizing the Revenue's interest and duty recovery.
Finalization of Provisional Assessment and Duty Demand:
The Tribunal delved into the necessity of finalizing the provisional assessment due to forged DEPB scrips used for duty-free clearance. It highlighted the Revenue's obligation to recover lost revenue and justified the Commissioner's order for finalization, emphasizing the importance of protecting the exchequer's interests.
Mutually Exclusive Nature of Provisional Assessment and Demand:
The Tribunal addressed the argument that provisional assessment under Section 18 and demand under Section 28(1) proviso were mutually exclusive. It agreed with the appellants on this point and clarified that the Commissioner's decision to finalize the assessment was appropriate given the circumstances, ensuring duty liability enforcement.
In conclusion, the Tribunal rectified the demand amount error and rejected other prayers in the RoM application, providing detailed reasoning for each issue discussed. The judgment emphasized the legal obligations, revenue protection, and the necessity of finalizing provisional assessments in cases involving fraud or forged documents.
*(Pronounced in open Court on 10-7-2006)*
-
2007 (7) TMI 438
Issues Involved:
1. Rectification of Tribunal's Order
2. Claim of Bad Debts and Advances Written Off
3. Applicability of Section 36(1)(vii) and Section 36(2)
4. Applicability of Section 28/37
5. Precedence of Judicial Decisions
Summary:
1. Rectification of Tribunal's Order:
The assessee filed a Miscellaneous Application seeking rectification of the Tribunal's order dated 31-8-2006 in ITA No. 1948/Mum./2003 for the assessment year 1998-99, claiming certain mistakes apparent from the record.
2. Claim of Bad Debts and Advances Written Off:
The assessee had written off Rs. 23,93,882 as bad debts under "Project advances" and written back Rs. 8,75,799, resulting in a net write-off of Rs. 15,18,083. Additionally, the assessee claimed bad debts of Rs. 34,51,801 for advances given for packing materials and raw materials, with a net write-off of Rs. 4,44,088 after writing back Rs. 30,07,313. The Assessing Officer disallowed these claims, stating that the primary condition of section 36(2) was not satisfied and that the advances were not irrecoverable.
3. Applicability of Section 36(1)(vii) and Section 36(2):
The CIT(A) allowed the assessee's claim, treating the write-off as a business loss u/s 28 read with section 37. However, the Tribunal restored the matter to the CIT(A) for fresh decision, emphasizing that a debt can be written off only when it is in the revenue field as per section 36(2). The Tribunal noted that the amounts written off could not be allowed under the general provisions of section 37 when specific provisions in section 36(1)(vii) read with section 36(2) existed.
4. Applicability of Section 28/37:
The assessee argued that the loss could be claimed under sections 28/37, citing the judgment in T.J. Lalvani v. CIT [1970] 78 ITR 176 (Bom.). The Tribunal, however, maintained that section 36(1)(vii)/36(2) being a special provision would apply, not the general provisions of section 37. The Tribunal also highlighted that the loss eligible for allowance under section 28/37 is only a trading loss and not a capital loss.
5. Precedence of Judicial Decisions:
The assessee contended that the Tribunal erred in preferring the judgment of the Hon'ble Madras High Court in South India Surgical Co. Ltd. v. ACIT [2006] 287 ITR 62 (Mad.) over the decision of a Special Bench of the Tribunal in Dy. CIT v. Oman International Bank, SAOG [2006] 100 ITD 285 (Mum.). The Tribunal clarified that in a hierarchical system, the decisions of higher courts like High Courts must be accepted over those of Tribunals.
Conclusion:
The Tribunal dismissed the assessee's Miscellaneous Application, stating that the issues raised were matters of debate requiring elaborate reasoning and could not be addressed u/s 254(2). The matter was already restored to the CIT(A) for a fresh decision, and the CIT(A) was directed to independently examine all relevant aspects of the case uninfluenced by the observations made in this Order.
-
2007 (7) TMI 437
Issues Involved:
1. Denial of exemption under Article 15 of the DTAA between India and Russian Federation.
2. Non-allowance of exemption under Section 10(6)(vi) of the Income-tax Act, 1961.
3. Grossing up of income of salary by adding the amount of tax payable by the employer in India.
4. Alleged procedural unfairness and lack of opportunity for the appellant to be heard.
Detailed Analysis:
1. Denial of Exemption under Article 15 of the DTAA:
The primary issue revolves around whether the remuneration earned by the assessees, who are technicians employed by a Russian company, during their stay in India, is exempt from tax under Article 15 of the DTAA between India and the Russian Federation. The conditions under Article 15.2(c) require that the remuneration should not be borne by a permanent establishment (PE) or fixed base in India. The Assessing Officer and CIT(A) concluded that since the employer, Zarubezhneft, had a PE in India and was assessed under section 44BB of the Income-tax Act, the remuneration was borne by the PE. The appellant argued that the remuneration was not borne by the PE and cited the case of Sedco Forex International Inc. v. CIT [2005] 279 ITR 11 (Uttaranchal) to support their claim. The Tribunal found that the interpretation of Article 15.2(c) in the DTAA with Russia differs from that in the DTAA with France, as interpreted in the Sedco case. Therefore, the Tribunal directed the CIT(A) to re-examine whether the remuneration was indeed borne by the PE, giving the appellant an opportunity to prove their claim.
2. Non-Allowance of Exemption under Section 10(6)(vi) of the Income-tax Act, 1961:
The appellant contended that the remuneration received during their stay in India, which did not exceed 90 days, should be exempt under Section 10(6)(vi) of the Income-tax Act. However, the CIT(A) did not allow this exemption. Since the main issue regarding Article 15 of the DTAA was restored to the CIT(A) for re-determination, the Tribunal did not adjudicate on this issue separately. It noted that this issue would be relevant only if the main issue was decided against the assessee.
3. Grossing Up of Income of Salary:
The appellant challenged the CIT(A)'s decision to gross up the salary income by adding the amount of tax payable by the employer in India. The CIT(A) presumed that as per international norms, expatriates are protected from tax liability by their employer. The appellant argued that they were personally liable to pay tax on the remuneration received. The Tribunal did not decide on this issue separately, as it was contingent on the resolution of the main issue regarding the DTAA exemption.
4. Procedural Unfairness and Lack of Opportunity:
The appellant claimed that the CIT(A) dismissed their contention without giving them an opportunity to be heard, thus violating the principles of natural justice. The Tribunal acknowledged this procedural lapse and directed the CIT(A) to provide the appellant a reasonable opportunity to present their case and prove that the remuneration was not borne by the PE in India.
Conclusion:
The Tribunal restored the main issue regarding the DTAA exemption to the CIT(A) for re-determination, instructing the CIT(A) to allow the appellant to prove that the remuneration was not borne by the PE in India. The Tribunal did not adjudicate on the other issues, noting that they would be relevant only if the main issue was decided against the appellant. The appeals were considered allowed for statistical purposes in the manner directed.
............
|
9911796707
