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Showing 301 to 320 of 469 Records
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2003 (8) TMI 257
Issues:
1. Interpretation of Notification No. 506/86-Cus. for exemption of customs duty on specific computer equipment imports.
2. Classification of imported goods under different headings and their eligibility for duty exemption.
Issue 1: Interpretation of Notification No. 506/86-Cus.:
The appellant, a Small Scale Unit developing software, imported goods based on a Concessional Customs Duty Certificate (CCDC) issued by the Department of Electronics (DoE). The issue arose when additional duty was proposed due to alleged underpayment. The notification in question exempts specific computer equipment, software, and spares from customs duty, subject to DoE certification. The Tribunal clarified that only goods falling under specific headings mentioned in the notification are eligible for exemption. The Tribunal emphasized that the appellant's argument of goods being used as computer peripherals did not entitle them to the exemption. Approval from DoE alone does not suffice if the items do not fall under the specified headings. Therefore, the Tribunal found the appeal lacking merit and dismissed it.
Issue 2: Classification of Imported Goods:
The Tribunal examined the classification of various imported goods, including a Sound Mixer, Sony CD Player, Video Camera, Switcher, Video Enhancer, VCRs, Fax Machines, Photocopier, and Video Projector. None of these goods fell under the headings specified for exemption in the notification. The appellant's claim that the goods were essential for software production and used as computer peripherals was rejected. The Tribunal reiterated that entitlement to exemption must align with the specified headings in the notification. As the imported goods did not fall under the eligible headings, the appeal was dismissed for lacking merit.
In conclusion, the Tribunal upheld the decision to dismiss the appeal, emphasizing that the goods imported by the appellant did not qualify for the customs duty exemption as per the specific headings outlined in Notification No. 506/86-Cus. The judgment highlighted the importance of aligning imported goods with the criteria specified in exemption notifications to claim duty benefits.
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2003 (8) TMI 256
Issues:
1. Refusal to approve price list and payment of differential duty.
2. Rejection of refund claims by Assistant Commissioner.
3. Disposal of appeals by Collector (Appeals) and subsequent rejection by Assistant Collector.
4. Confirmation of Assistant Collector's order by Commissioner (Appeals).
5. Challenge of approved price list for seeking refund of duty paid under protest.
Analysis:
Issue 1: The appellants faced refusal to approve their price list by the Assistant Collector, leading to the direction to pay the differential duty between wholesale and retail prices. Despite paying duty under protest, the appellants submitted refund claims, which were rejected by the Assistant Commissioner citing non-challenge of the approved price list.
Issue 2: The rejection of refund claims by the Assistant Commissioner was based on the premise that since the appellants had not appealed against the approval of the price lists, the refund claims were deemed not maintainable. However, the appellate authority disagreed, citing legal precedents that allow for refund claims under Section 11B even without challenging the approved price list.
Issue 3: The Collector (Appeals) disposed of the appeals in favor of the appellants, setting aside the Assistant Collector's order and remanding the matter for reconsideration. Subsequently, the Assistant Collector rejected the claim again, reiterating the non-maintainability of refund claims due to the lack of challenge against the approved price list.
Issue 4: The Commissioner (Appeals) confirmed the Assistant Collector's order, leading to the aggrieved assessee filing appeals challenging the decision. The Commissioner (Appeals) upheld the rejection of refund claims, emphasizing the necessity of challenging the approved price list to seek a refund of duty paid under protest.
Issue 5: Upon hearing the appeals, the Tribunal noted the discrepancy in the Commissioner (Appeals)'s decision, where the earlier view that refund applications were maintainable without challenging the price list was contradicted. The Tribunal referenced legal precedents and ruled in favor of the appellants, setting aside the Commissioner (Appeals)'s order and allowing the appeals based on the established legal principles.
This comprehensive analysis of the judgment highlights the progression of the case, the legal arguments presented, and the final decision rendered by the Tribunal in favor of the appellants.
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2003 (8) TMI 255
The Appellate Tribunal CESTAT, New Delhi considered an application by M/s. Kelvinator of India Ltd. for waiver of pre-deposit of an erroneous refund of Rs. 6,02,673.40. The Tribunal had previously allowed their appeal, but the refund was denied citing a Supreme Court decision. The Tribunal stayed the recovery of the demanded amount pending the final hearing of the appeal on 22-9-2003.
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2003 (8) TMI 254
The Commissioner of Customs filed a Miscellaneous Application requesting the CESTAT not to proceed with any application for implementing the Tribunal's order imposing a penalty of Rs. 50,000 on Shri Surendra Kumar Oswal. The CESTAT rejected the Commissioner's request as the penalty appeal was allowed without any deposit, and there was no application for implementation from Shri Oswal. The CESTAT also refused to stay the operation of the Tribunal's order, stating it would be unjust to deny the respondent the benefit of the appeal process. The CESTAT emphasized the need for careful consideration of requests before filing applications. The Miscellaneous Application filed by the Revenue was rejected.
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2003 (8) TMI 253
The Appellate Tribunal CESTAT, New Delhi upheld the Commissioner of Customs' order suspending the CHA Licence due to serious allegations of helping fictitious exporters. The Tribunal found the suspension justified under Regulation 21(2) and directed the competent authority to expedite the enquiry before passing a final order. The appeal was disposed of accordingly.
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2003 (8) TMI 252
Issues:
1. Whether the goods were liable for confiscation.
2. Whether penalties were imposable on the appellants.
Issue 1: The judgment dealt with the confiscation of goods and imposition of penalties based on the seizure of foreign origin silk yarn from a truck parked outside a godown. The goods were claimed by a cooperative society, but the ownership was disputed. The Commissioner ordered the confiscation of the goods and imposed penalties on the involved parties under the Customs Act. The appellant argued that they were not the owners but had the right to the goods for job work. The Tribunal held that without evidence of ownership or import, the appellant could not challenge the confiscation as an aggrieved party, citing the requirement of a direct legal interest in the goods.
Issue 2: The judgment also addressed penalties imposed on the appellants. One appellant, Munna, argued that he was not aware of the smuggled nature of the goods and should not be penalized under Section 112(b) of the Customs Act. Another appellant, Tiwari, claimed innocence based on lack of knowledge about the nature of the goods he transported. The Senior Departmental Representative alleged awareness based on circumstantial evidence. The Tribunal found no direct or indirect evidence proving the appellants' knowledge of the goods' illicit nature, overturning the penalties imposed on Munna and Tiwari. The judgment emphasized the necessity of concrete evidence to establish liability for penalties under the Customs Act.
In conclusion, the judgment analyzed the issues of confiscation and penalties in a case involving seized silk yarn. It highlighted the importance of evidence and legal interest in challenging confiscation and imposing penalties under the Customs Act. The decision overturned the penalties on the appellants due to a lack of proof of their knowledge regarding the smuggled goods, emphasizing the requirement for concrete evidence to establish liability in such cases.
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2003 (8) TMI 251
Issues:
Appeal against duty demand, confiscation, and penalty on imported medical equipment under Notification No. 64/88-Cus. without payment of duty.
Analysis:
The case involved an appeal against an order confirming a duty demand of Rs. 2,82,360 on medical equipment imported without payment of duty, along with confiscation and penalty. The proceedings originated from a show cause notice issued by the Department, alleging non-fulfillment of post-importation conditions under Notification No. 64/88-Cus. The original authority confiscated the goods with an option to redeem on payment of a fine but did not impose a penalty or enforce a duty demand. The Department appealed against this decision, leading to a series of orders and appeals resulting in the confirmation of duty demand, a redemption fine of Rs. 3 lakhs, and a penalty of Rs. 10,000. The appellant contested that the duty demand aspect was not raised before the original authority in the remanded proceedings and was time-barred, which was accepted by the Tribunal. The Tribunal found that the demand of duty confirmed under Section 28 of the Customs Act did not survive in this case, as the original authority exceeded its scope in confirming the duty demand. The Commissioner (Appeals) made observations regarding the demand of duty under Section 125 of the Customs Act, citing a Supreme Court judgment, indicating the Department's right to demand customs duty under this provision.
The Tribunal noted the legal position established by the Supreme Court regarding the Department's right to demand customs duty under Section 125 of the Customs Act, without resorting to Section 28. The appellant stated they did not intend to redeem the goods, eliminating the need for duty payment. Regarding the fine and penalty, the Tribunal referred to a Larger Bench decision that settled these issues in favor of the Department, leading to the sustenance of the redemption fine and penalty. Consequently, the appeal was disposed of with the redemption fine and penalty being upheld based on the legal precedents and settled matters.
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2003 (8) TMI 250
Issues Involved:
1. Related persons and assessable value.
2. Small scale exemption eligibility.
3. Alleged clandestine removal of water meters.
4. Imposition of penalties.
Issue-wise Detailed Analysis:
1. Related Persons and Assessable Value:
The primary issue was whether the appellant, M/s. Progressive Thermal Control Pvt. Ltd., and their buyer, M/s. Schlumberger Industries India Ltd., were related persons under Section 4(4)(c) of the Central Excise Act, 1944, thereby affecting the assessable value of goods. The Commissioner held that the appellant and their buyer were related, leading to a short-payment of duty of about Rs. 60 lakhs. The reasons cited included exclusive supply and procurement relationships, equity participation, technical know-how provision, and brand name usage. However, the appellants contested these findings, arguing that the sale price was a commercial price and not influenced by the relationship. They relied on several judicial precedents, including the Supreme Court's decision in Union of India and Others v. M/s. Atic Industries Ltd., to support their stance. The Tribunal found merit in the appellants' submissions, stating that the minority shareholding and exclusive supply did not affect the commercial nature of the transactions. Therefore, the rejection of the sale price on the grounds of being related persons was deemed unsustainable.
2. Small Scale Exemption Eligibility:
The second issue concerned the duty demand of about Rs. 6 lakhs for the period 1-1-96 to 31-3-97, based on the claim that the appellant was affixing the brand name 'Precimag' on water meters, making them ineligible for small scale exemption. The Revenue relied on statements from company officials, but the appellants argued that they only started affixing the brand name from 1-4-97 and provided documentary evidence to support this claim. The Tribunal accepted the appellants' explanation, noting discrepancies in the statements and the consistency of the documentary evidence.
3. Alleged Clandestine Removal of Water Meters:
The third issue was the alleged clandestine removal of 552 water meters, leading to a short levy demand of about Rs. 31,000/-. The appellants argued that this allegation was based on incorrect verification of their buyer's records and that the discrepancy arose from returned defective meters being counted twice. They provided evidence, including D-3 returns filed with the Central Excise Authorities, to support their claim. The Tribunal found the appellants' explanation reasonable and noted that the statutory records had not been disproved or doubted, thus rejecting the allegation of clandestine removal.
4. Imposition of Penalties:
The impugned order imposed a penalty of about Rs. 59 lakhs on the appellant company and Rs. 2 lakhs on the Managing Director, citing knowledge and responsibility for duty evasion. Given the Tribunal's findings on the primary issues, the penalties were also set aside.
Conclusion:
The Tribunal concluded that the findings in the impugned order were not sustainable and set aside the duty demands and penalties, allowing the appeal with consequential relief to the appellants.
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2003 (8) TMI 249
Issues:
Refund claim entitlement and power of Commissioner (Appeals) to remand the matter.
Analysis:
The issue in this case pertains to a refund claim, specifically whether the customer is entitled to a refund. The Counsel argued that the Commissioner (Appeals) wrongly concluded that the customer is not entitled to a refund. Reference was made to the judgment of the Supreme Court in the case of Mafatlal Industries Ltd. v. Union of India, emphasizing the provisions allowing for refund if the burden of duty has been borne solely by the purchaser. Additionally, a Tribunal case of Ferrous Engineering v. Collector of Central Excise was cited, highlighting that the amended legislation permits buyers of duty-paid goods to claim refunds. The Counsel contended that the Commissioner (Appeals) lacked the power to remand the matter, although it was acknowledged that the order was issued before an amendment to Section 35A.
Upon careful consideration of the facts, the Tribunal found that the Commissioner (Appeals)'s assertion that the customer is not entitled to a refund was incorrect. The Tribunal, referencing the Supreme Court judgment and the Tribunal's previous decisions, ruled in favor of the customer's entitlement to a refund. The Tribunal directed the adjudicating authority to reexamine the refund claim without being influenced by the Commissioner (Appeals)'s observations and to make a decision based on merit, providing the party with an opportunity. The Tribunal upheld the impugned order while deleting the observation regarding the customer's entitlement to a refund, thereby disposing of the appeal accordingly.
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2003 (8) TMI 248
Issues Involved:
1. Clubbing of clearances of M/s. DPK and M/s. Glolite for determining benefits under Notification 175/86.
2. Disallowance of Modvat credit claimed by M/s. Glolite.
3. Confiscation of DG Sets and imposition of penalties on M/s. DPK and M/s. Glolite.
4. Validity of the remand order by CEGAT for de novo adjudication.
5. Evaluation of corroborative evidence and statements during de novo adjudication.
6. Eligibility of M/s. Glolite as an independent manufacturer.
Detailed Analysis:
1. Clubbing of Clearances:
The Revenue argued that M/s. DPK and M/s. Glolite should have their clearances clubbed to determine eligibility under Notification 175/86. The initial adjudication by the Collector confirmed this, but the Commissioner in the de novo adjudication found no corroborative evidence to support clubbing. The Tribunal upheld the Commissioner's finding, noting that the adjudicator had properly evaluated the material and concluded that the two firms were distinct entities entitled to separate benefits under Notification 175/86.
2. Disallowance of Modvat Credit:
The show cause notice proposed disallowing Modvat credit amounting to Rs. 17,16,577.37 availed by M/s. Glolite. The Commissioner in the de novo adjudication allowed the Modvat credit, which the Tribunal upheld, finding no valid grounds in the Revenue's appeal to challenge this conclusion.
3. Confiscation and Penalties:
The initial order included the confiscation of 8 DG Sets and penalties on M/s. DPK and M/s. Glolite. The Commissioner's de novo adjudication dropped the demands of duty and allowed Modvat credit but ordered confiscation of 3 DG Sets with a redemption fine. The Tribunal found no reason to disturb this finding, noting that the Commissioner had considered the totality of the evidence.
4. Remand Order Validity:
The Revenue questioned the remand order by CEGAT, arguing it was incorrect to remand the case when the witness avoided appearing. The Tribunal dismissed this ground, stating the remand order had attained finality and could not be altered. The Commissioner had complied with the remand order by conducting a cross-examination of Smt. Narmada Kumari and considering the consequences.
5. Evaluation of Evidence:
The Revenue contended that the Commissioner had not evaluated corroborative evidence such as unauthorized shifting of premises, lack of manufacturing facilities, and managerial control by M/s. DPK. The Tribunal found that the Commissioner had indeed evaluated these aspects in detail, noting that the units had separate registrations and there was no financial interdependence proving clubbing was necessary. The Tribunal rejected the Revenue's grounds, stating they were vague and unsupported by specific evidence.
6. Eligibility of M/s. Glolite as Independent Manufacturer:
The Tribunal noted that the Commissioner had recognized M/s. Glolite as an independent manufacturer, and this finding was not disputed by the Board. The Tribunal found no merit in the Commissioner (Appeals) remand order, which had set aside the Assistant Commissioner's order and remanded the case for a fresh decision. The Tribunal upheld the Commissioner's finding that M/s. Glolite was an independent manufacturer entitled to Modvat credit and dismissed the Revenue's appeal.
Conclusion:
The Tribunal dismissed the Revenue's appeal (No. E/1143/96) on the grounds that no valid points were made for decision. It also allowed the appeal by M/s. DPK Engineers (No. 1350/99), setting aside the Commissioner (Appeals) remand order and affirming the independent status of M/s. Glolite as a manufacturer. Both appeals were disposed of accordingly.
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2003 (8) TMI 227
Issues Involved:
1. Eligibility for reward under the Guidelines.
2. Applicability of the amendment limiting rewards.
3. Interpretation of the Guidelines regarding the exclusion of certain officers.
4. Consideration of the reward as an ex gratia payment.
Detailed Analysis:
1. Eligibility for Reward under the Guidelines:
The respondent, an IPS Officer, supervised and executed an operation resulting in the seizure of 900 gold biscuits, leading to further seizures. Despite his significant role, no reward was sanctioned to him due to his rank being higher than that of Assistant Collector/Assistant Director, as per Clause 7.1 of the Notification dated 30-3-1985. The learned Single Judge directed the Department to consider the respondent's claims on merits, interpreting Clause 7.2 as excluding only officers above the specified level in certain departments from rewards based on seizure value, not others.
2. Applicability of the Amendment Limiting Rewards:
The appellant argued that the amendment issued in April 1989, which limited the total reward to Rs. 1 lakh per seizure and Rs. 10 lakhs in one's career, should apply. The High Court, however, deemed this amendment irrelevant as the seizure occurred on 24-12-1989, before the amendment. The Supreme Court clarified that reward being an ex gratia payment, no right to any sum accrues until it is determined and awarded, and should conform to the Guidelines in force at the time of consideration and actual grant, not at the time of seizure. Therefore, the amendment was relevant and applicable.
3. Interpretation of the Guidelines Regarding the Exclusion of Certain Officers:
The High Court's interpretation that Clause 7.1's restrictions applied only to officers of the Central Excise/Customs Department was rejected. The Supreme Court stated that the classification was between informers and Government servants as a whole, not specific to any department. The Guidelines must be applied uniformly, and equivalence in other departments must be determined based on the gradation of offices held.
4. Consideration of the Reward as an Ex Gratia Payment:
The Supreme Court emphasized that reward is purely an ex gratia payment, subject to the Guidelines and the discretion of the competent authority. It cannot be claimed as a matter of right and must be within the four corners of the Scheme. The High Court's assumption that Government servants should be shown the same consideration as informers was incorrect. The reward must be determined based on the Guidelines in force at the time of adjudication resulting in confiscation, not at the time of seizure.
Conclusion:
The Supreme Court set aside the High Court's judgment, highlighting the need for adherence to the Guidelines and the relevance of the amendment limiting rewards. Considering the respondent's efforts and the delay involved, the Court directed the payment of Rs. 2.50 lakhs as a special case, to be disbursed within sixty days, and ordered the appellant to pay Rs. 15,000/- for the respondent's costs.
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2003 (8) TMI 226
The Appellate Tribunal CESTAT, Mumbai upheld the Commissioner (Appeals) decision that the exemption in Notification 175/86 applied to Centrifugal booster fans. The department's appeal was dismissed as the classification of goods needed to be decided on merits. Appeal was dismissed.
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2003 (8) TMI 225
The appeal involved the question of excise duty on Spent Sulphuric Acid. The Appellants were manufacturing chemicals and using Oleum as an input. A Trade Notice clarified that spent sulphuric acid is not a manufactured product and should not be charged duty again. The Tribunal allowed the appeal, citing Supreme Court decisions that Circulars issued by the Department are binding on Revenue, even if they differ from court interpretations.
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2003 (8) TMI 221
Whether "mammoth ivory" imported in India answers the description of the words "ivory imported in India" contained in the Wild Life (Protection) Act, 1972 as amended by Act No. 44 of 1991?
Held that:- Appeal dismissed. The submission of Mr. Parikh that in a case of this nature a restrictive meaning should be attributed to the word "ivory" cannot be acceded to inasmuch as, in our opinion, the dictionary meaning should be adhered to for the purpose of giving effect to the purport and object of the Act. There is also no quarrel on the proposition of law laid down therein for the purpose of judging the constitutionality of the statutory provisions in the light of article 19 of the Constitution of India. The impugned Acts fulfil the said criteria.
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2003 (8) TMI 220
Constitutional validity of the Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1979 and the notifications issued by the State Government in exercise of its powers conferred by section 3 of the said Act challenged
Held that:- Appeal dismissed. In these appeals, no contention is raised to the effect that levy of tax on goods by the impugned notification discriminates between the goods imported from other States and similar goods manufactured or produced within the State. Hence, it would be difficult to accept the contention that the sanction of the President was required to be obtained before amending and enacting Act No. 8 of 1993 whereby for the words "by the State Government, by notification from time to time", the words "retrospectively or prospectively by the State Government by notification and different dates" were substituted. Addition of words "retrospectively or prospectively" in section 3(1) would not make the section restrictive which can be hit by article 301 of the Constitution nor the said part of the legislation could be held to be discriminatory.
Once it is conceded that imposition of tax was compensatory or regulatory in nature, there is no question of obtaining the assent of the President under article 304(b) of the Constitution.
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2003 (8) TMI 211
Right to appeal – conditional or unconditional – powers of the legislature to impose conditions Held that: - It is true that right to appeal is a substantive right granted by the Legislature but the right is not absolute. While granting such a right, the Legislature is competent to subject the right to certain pre-conditions. Section 129-E of the Act stipulates that no appeal under Chapter XV is competent unless the duty or penalty and interest in dispute is deposited. The condition is mandatory. - , in the instant case, except for financial difficulty, no other point is urged - the plea that an unconditional stay should be granted to them cannot be accepted
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2003 (8) TMI 209
Issues Involved:
1. Disallowance of bad debt claims.
2. Restriction of deduction under Section 80M.
3. Levy of interest under Section 234B.
4. Provision for laying and jointing expenses.
Detailed Analysis:
1. Disallowance of Bad Debt Claims:
*Assessment Year 1991-92:*
The assessee's appeal against the disallowance of bad debts amounting to Rs. 26,36,854 was considered. The AO and CIT(A) disallowed the claims for various reasons, including the lack of evidence that the debts had become bad and the relationships between the debtor and the directors of the assessee. The Tribunal noted that the debts were written off in the books of accounts, fulfilling the conditions under Section 36(1)(vii) post the amendment effective from 1st April 1989. It was held that the mere writing off of the debt as bad was sufficient, and the assessee need not prove that the debt had become bad. The Tribunal directed the deletion of the disallowance for amounts due from:
- M/s New Sahyadri Industries (Rs. 12,36,412).
- Vignahar Sahakari Pani Puravatha Sanstha (Rs. 75,000).
- Jalvahini Krishi Udyog (Rs. 85,488).
*Assessment Year 1992-93:*
The Tribunal considered a similar issue for the bad debt claim of Rs. 9,73,064 due from M/s New Sahyadri Industries. The facts and circumstances were identical to the previous year, and the Tribunal directed the AO to delete the addition following the same rationale.
2. Restriction of Deduction under Section 80M:
The assessee's claim for a deduction under Section 80M was restricted by the CIT(A) to Rs. 1,74,217 against the claimed Rs. 2,45,898. The Tribunal upheld the CIT(A)'s decision, citing the Bombay High Court's ruling in CIT vs. Maganlal Chhaganlal (P) Ltd., which mandates that the deduction under Section 80M should be calculated after deducting interest on monies borrowed for earning such income.
3. Levy of Interest under Section 234B:
The assessee contested the levy of interest under Section 234B on disputed additions. The Tribunal referred to its previous decision in Deshmukh Consultants vs. Dy. CIT and the Supreme Court's ruling in CIT vs. Anjum M.H. Ghaswala, which held that charging of interest under Section 234B is mandatory and consequential. Thus, the Tribunal dismissed this ground of appeal for both assessment years.
4. Provision for Laying and Jointing Expenses:
For the assessment year 1992-93, the assessee claimed a provision of Rs. 91,577 for laying and jointing expenses, which was disallowed by the AO and CIT(A) on the grounds that the liability was not ascertained. The Tribunal remanded the matter back to the AO for fresh consideration, allowing the assessee to present evidence to prove that the liability was ascertained and incurred in the normal course of business.
Conclusion:
The Tribunal partly allowed the appeals for both assessment years, directing the deletion of disallowances for bad debts while upholding the restrictions on Section 80M deductions and the levy of interest under Section 234B. The issue regarding the provision for laying and jointing expenses was remanded for fresh consideration.
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2003 (8) TMI 208
Taxability of the amount received by the assessee on retirement from the firm as long-term capital gains - HELD THAT:- From a perusal of the aforesaid observations of the Hon’ble Bombay High Court in the case of N.A. Mody vs. CIT [1985 (10) TMI 52 - BOMBAY HIGH COURT], it is quite evident that the factual position involved in the case of Mohanbhai Pamabhai [1987 (2) TMI 59 - SC ORDER] was found to be distinguishable by their Lordships from the facts in the case of N.A. Mody inasmuch as the mode of retirement adopted in the case of Mohanbhai Pamabhai was different in the sense that the amount of retiring partner’s share in the net partnership assets after deduction of liabilities and prior charges was determined on taking accounts and as further observed in para No. 19 of the order, although there was a document in the form of minutes under which the partner retired, the same contained no assignment of his interest to the continuing partner. The Hon’ble Bombay High Court thus laid great emphasis on the particular mode employed to effect and bring about the retirement of the assessee from the partnership and having regard to the fact that lumpsum consideration was received by the retiring partner in the case of N.A. Mody as consideration for assignment of his share in a firm to the retiring partners, came to the conclusion that there was a transfer within the meaning of s. 2(47) giving rise to capital gain.
We also do not find merits in his contention that when a partner retires from the firm, it is a case of realization of his pre-existing rights and not the case of extinguishments or relinquishment of his rights within the meaning of s. 2(47), since as already discussed, observations to this effect were made by the Courts in the different context and as held by the Hon’ble Bombay High Court, the same cannot be applied or read as a proposition of law in the context of taxability of amount received on retirement as long-term capital gain. As a matter of fact, it appears from the decisions relied upon by the learned counsel for the assessee that neither the Hon’ble Supreme Court nor the other High Courts have disapproved the proposition laid down by the Hon’ble Bombay High Court having regard to the particular mode of retirement.
In the present case, however, heavy reliance has been placed by the Revenue on the said decision and having come to the conclusion that the said decision of Hon’ble jurisdictional High Court is squarely applicable to the facts of the case, we are bound to follow the same. Moreover, it is also observed a Special Bench of the Tribunal was constituted at Bangalore to decide a similar issue and in it’s decision rendered in the case Mrs. Arathi Shenoy & Ors. vs. Jt. CIT [2000 (7) TMI 207 - ITAT BANGALORE], it was held by the Tribunal that interest in a firm is an asset as any other asset as recognized by the Act that defined a capital asset to include extinguishment of interest and the partners having surrendered/extinguished their rights in such asset on retirement from the firm, there was a transfer within the meaning of s. 2(47) giving (rise) to capital gain exigible to tax.
Explaining further, the Tribunal observed that in situation where a partner receives for giving up his rights and interest in the firm at a price that is equated with reference to the market value of the assets of the firm, his rights and interest have been valued at the market price and when this price exceeds the cost, s. 45 comes into operation to treat the difference between the market price and the cost being gains on account of transfer of capital asset leading to levy of tax on such capital gains. It was, therefore, held by the Tribunal in the said case that the outgoing partners of the firm having surrendered their rights and interest in the firm in consideration of the amount paid to them by the other partners who took over the business in an auction in accordance with the terms of the partnership deed, there was a transfer of capital asset and the resultant capital gain was liable to tax as long-term capital gain in the hands of each partner.
In the result, the appeal of the assessee stands dismissed.
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2003 (8) TMI 206
Block assessment in search cases - levy of surcharge on tax calculated on undisclosed income for the block period - whether proviso to s. 113 inserted by Finance Act, 2002, w.e.f. 1st June, 2002, is to be made applicable retrospectively or prospectively - HELD THAT:- It is a fundamental rule of law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act or arises by necessary and distinct implication. It is a cardinal principle of construction that every statute prima facie prospective unless it is expressly or by necessary implication made to have retrospective operation. In the absence of the words in the statute sufficient to show the intention of the legislature to affect existing rights, it is deemed to be prospective only. On the other hand, in contrast to statutes dealing with substantive rights, statutes dealing with merely matters of procedure are presumed to be retrospective unless such a construction is textually inadmissible. If the new Act affects matters of procedure only, then, prima facie, it applies to all actions pending as well as future. In stating the principle that a change in the law of procedure operates retrospectively and unlike the law relating to vested right is not only prospective and legislation imposing liability is generally governed by the normal presumption that it is not retrospective and it is a cardinal principle of the tax law that the law to be applied is that in force unless otherwise provided expressly or by necessary implication. So far as fiscal statutes are concerned, the position is not different and imposition of liability is generally governed by the normal presumption that it is not retrospective and it is a cardinal principle of the tax law that the law to be applied is that in force unless otherwise provided expressly or by necessary implication. The above rule applies to the charging section and other substantive provisions and does not apply to machinery or procedural provisions of a taxing Act which are generally retrospective and apply even to pending proceedings. A taxing statute is to be strictly construed.
A good summary of the principles about retrospectivity has been given by the Hon’ble Supreme Court in the case of Mahadeo Prasad Singh vs. Ram Lochan[1980 (9) TMI 294 - SUPREME COURT].
Considering the language of the relevant provisions in the light of elucidation and discussion as held above, the insertion of proviso to s. 113, which is a part of charging provision as it imposes additional liability upon the assessee for payment of surcharge in addition to tax chargeable on the undisclosed income, the same, being not a beneficial provision nor meant to remedy any unintended consequences and having been made effective from a particular date i.e., 1st June, 2002, cannot be held to be either procedural, declaratory or clarificatory in nature. Therefore, in my considered view, it is prospectively effective. Since search in this case was conducted prior to 1st June, 2002, therefore, charging of surcharge by the AO and its confirmation by the learned CIT(A) is found to be not legally correct. As such, levy of surcharge in the case of the assessee is quashed.
As a result, the appeal of the assessee gets accepted.
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2003 (8) TMI 201
Issues:
- Appeal against penalty under section 273(1)(b) of the IT Act, 1961 for asst. yr. 1987-88.
Analysis:
1. The appeal was filed by the assessee against the penalty of Rs. 96,737 under section 273(1)(b) of the IT Act, 1961 for the assessment year 1987-88. The issue revolved around the assessee's failure to furnish the statement of advance tax or statement in lieu of such statement. The assessee's argument was based on a bona fide belief that due to carry forward of losses, the income for the relevant year would be below the taxable limit, thus exempting them from filing the estimate. However, the AO and CIT(A) held that the latest assessed income of Rs. 13,52,370 for the assessment year 1983-84 should have been the basis for filing the statement. Consequently, the penalty was imposed and upheld by the lower authorities.
2. The Departmental Representative contended that the penalty was justified as per the provisions of the IT Act. They emphasized that the obligation was to file the statement based on the latest assessed income, which in this case was for the assessment year 1983-84. The argument was made that even if a loss return was filed for the subsequent year, it did not exempt the assessee from filing the estimate based on the latest assessed income. Therefore, the penalty imposition by the AO was deemed appropriate.
3. On the other hand, the Authorized Representative of the assessee relied on a decision of the Bombay High Court to support their argument. They highlighted that the failure to submit the statement as required by the Act could lead to the levy of interest and penalty. The contention was that since the returned income for the relevant year was a loss, the assessee genuinely believed there would be no tax liability due to the carried forward losses. Thus, the estimate of tax was not filed under section 209A(1)(a) in good faith.
4. After reviewing the arguments and circumstances of the case, the Tribunal found that the assessee had filed a return of loss for the relevant year and genuinely believed there would be no tax liability. The subsequent increase in income exceeding the non-taxable limit was due to unforeseen rebates and adjustments. Considering these factors, the Tribunal concluded that the assessee acted in good faith and was not required to file the advance tax estimate. Therefore, the penalty of Rs. 96,737 was set aside, and the appeal of the assessee was allowed.
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