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Showing 321 to 340 of 879 Records
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2010 (1) TMI 995
Issues involved: Appeal against disallowance of credit, challenge to denial of credit, condonation of delay in filing necessary declaration.
The Appellants filed an Appeal against the impugned order disallowing credit, with specific challenge to the denial of credit in relation to certain items. The denial was based on the Appellant availing credit before filing the necessary declaration and not seeking Condonation of Delay. The Tribunal had granted liberty to seek Condonation of Delay, which was subsequently granted by the Deputy Commissioner of Central Excise. The Appellants are not pressing the denial of credit for certain small amounts, but are challenging the denial in respect of the item mentioned at Sl. No. 1 in the Annexure to Order-in-Appeal.
The Revenue contended that the Appellant had availed credit without filing any declaration, justifying the impugned order disallowing the credit.
Upon examination, it was found that the Appellants were solely contesting the denial of credit for the item mentioned at Sl. No. 1 in the annexure to Order-in-Appeal. The denial was solely due to the failure to file necessary declarations and not seeking condonation of delay. With the Deputy Commissioner of Central Excise subsequently condoning the delay in filing the necessary declaration, the impugned order denying credit for the mentioned item was set aside, and the Appeal was allowed to that extent only. The Appellants were granted consequential relief, if any, in accordance with the law.
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2010 (1) TMI 994
Issues involved: Confiscation of electronic goods under Section 111(d) of the Customs Act, 1962 read with Section 3 of the Foreign Trade (Development & Regulation) Act, 1962, imposition of penalty under Section 112(a) of the Customs Act, 1962.
Confiscation of Goods: The Commissioner of Customs confiscated electronic goods valued at approximately Rs. 11 lakhs under Section 111(d) of the Customs Act, 1962, with an option of redemption on payment of a fine of Rs. 5 lakhs. A penalty of Rs. One lakh was imposed on the appellant under Section 112(a) of the Customs Act, 1962.
Facts and Circumstances: The goods were seized from a van intercepted by the police, and the appellant and the driver were arrested. The appellant admitted to regularly bringing and selling foreign goods without paying customs duty. Statements and evidence indicated the appellant's involvement in smuggling, supported by false bills and receipts.
Decision: The Tribunal found evidence, including retracted statements and false documents, pointing to the appellant's involvement in smuggling. The Department proved the goods were non-notified under Section 123 of the Customs Act, justifying confiscation. The fine in lieu of confiscation was reduced to Rs. 3,00,000, while the penalty of Rs. 1,00,000 was upheld. The appeal was partly allowed by reducing the fine amount.
Conclusion: The Tribunal upheld the confiscation of goods and penalty imposition under the Customs Act, 1962, based on evidence of smuggling activities and false documentation. The fine in lieu of confiscation was reduced, considering the value of goods and overall circumstances of the case.
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2010 (1) TMI 993
Issues involved: Allegation of abetting in filing fraudulent shipping bills, imposition of penalty under Section 114 of the Customs Act, 1962.
Summary:
The appeal was filed against the Order-in-Original imposing a penalty on the appellant for alleged involvement in fraudulent export activities by abetting in filing shipping bills through another entity. The appellant, a Customs House Agent (CHA), was accused of knowingly participating in mis-declaration of goods for export. The adjudicating authority imposed a penalty of Rs. 20 lakhs under Section 114 of the Customs Act, 1962.
The appellant contested the show cause notice, arguing that there was no evidence of mala fide intention or active participation in the fraud. The appellant claimed to have contested the notice and proceedings diligently.
The Revenue contended that the appellant had abetted mis-declaration of goods for ineligible benefits and had crucially participated in the fraudulent activities. Statements from involved parties were presented to support this claim.
The Tribunal considered the submissions and records to determine the appellant's liability under Section 114(i) of the Customs Act, 1962. The findings of the adjudicating authority were reviewed, focusing on the appellant's role in the export fraud.
The Tribunal observed that the adjudicating authority's findings lacked clear evidence of the appellant's awareness or active involvement in the fraud. The reliance on payments made to the appellant as proof of complicity was deemed insufficient without further details or evidence.
Ultimately, the Tribunal concluded that the appellant could not be penalized under Section 114(i) due to the lack of concrete findings establishing the appellant's direct role in the mis-declaration of goods. The impugned order imposing the penalty was set aside, and the appeal was allowed.
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2010 (1) TMI 992
Valuation - equalized freight - includibility - whether during the period from 1-7-2000 to 1-8-03, the equalized freight was excludible from the assessable value of the goods? - Held that: - Since as per the provisions of Section 4(1)(a) as it stood during period w.e.f. 1-4-2000, the assessable value of the goods is the transaction value in respect of the sale for delivery at the time and place of removal, if the transaction value is for delivery at a place other than the place of removal, if the transportation cost from the place of removal to the place of delivery, the evidence about which has to be produced by the Assessee, has to be excluded from the assessable value.
The deduction of the freight charged by the Appellant from their customers on equalized basis and which is shown separately in the invoices cannot be disallowed on the ground that it is equalized freight.
Appeal allowed by way of remand.
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2010 (1) TMI 991
The judgment by Appellate Tribunal CESTAT Mumbai states that the matter was remanded for retesting of samples. The Commissioner sought modification as remnant samples were unavailable. The Tribunal directed the Commissioner to issue a fresh order based on the first test results and rejected the modification application by the Revenue.
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2010 (1) TMI 990
Issues involved: Appeal against order of Commissioner (Appeals) regarding confiscation and penalty on Indian wheat seized near Nepal border.
Analysis:
1. Failure to Appear: The appellant failed to appear for the appeal despite multiple notices. The ld. SDR represented the respondent, and the records were examined.
2. Background and Confiscation: The seized Indian wheat, intended for illegal export to Nepal, was auctioned after being confiscated. The Original Authority and Commissioner (Appeals) upheld the confiscation and imposed a penalty on the individual claiming ownership.
3. Legal Interpretation: The judge noted that while the wheat was rightfully liable for confiscation due to illegal export intentions, the absence of any prohibition on wheat export to Nepal raised questions. Section 125 of the Customs Act allows redemption for non-prohibited goods, and the judge highlighted the discretionary nature of this provision.
4. Judgment: The judge concluded that while confiscation was justified, the sale proceeds should be released upon payment of a redemption fine of Rs. 30,000. The penalty imposed was deemed reasonable, and the appellant was eligible for a refund after deducting the redemption fine and penalty amounts.
5. Disposition: The appeal was disposed of with the decision to release the sale proceeds after payment of the redemption fine and penalty, providing a clear resolution to the confiscation and penalty issues raised in the appeal.
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2010 (1) TMI 989
Issues:
- Appeal against the decision of Commissioner (Appeals) setting aside duty demand for Beta Blue Pigments
- Excess stock of finished goods and raw materials found during Central Excise officers' visit
- Reliance on notebooks of Ball Mill operator for demand of duty
- Lack of evidence supporting clandestine removal and case of Revenue
Analysis:
The judgment involves an appeal by the Revenue against the decision of the Commissioner (Appeals) regarding the demand of duty for 14471 Kgs. of Beta Blue Pigments manufactured by the appellants. The Central Excise officers discovered an excess stock of 1570 Kgs of finished Beta Blue Pigments and some raw materials during their visit, leading to separate show cause notices and proceedings. The Revenue's case heavily relied on two notebooks maintained by the Ball Mill operator, the statement of the excise clerk, and the excess stock of raw materials and finished goods.
The Tribunal heard both sides, where the learned DR for the Revenue highlighted the discrepancies in the stock found and the notebooks, indicating excess quantities beyond the RG-1 register. The excise clerk admitted that the excess stock was intended for clandestine removal. However, the Tribunal noted that the Commissioner (Appeals) had thoroughly analyzed the case, considering all aspects before concluding that the Revenue's case lacked merit. The partner's statement suggested that the excess stock of finished goods was for re-processing, and the Ball Mill operator's notebooks only reflected quantities sent for grinding, not the actual stock.
Moreover, the Ball Mill operator clarified that he was only concerned with the recorded processing quantities and not aware if the stock was for re-processing or fresh. The Tribunal observed a lack of evidence supporting clandestine removal, as no evidence of purchasers was presented other than the statement of the Ball Mill operator, which was deemed insufficient. Consequently, the Tribunal upheld the well-reasoned order of the Commissioner (Appeals) and rejected all appeals filed by the Revenue, emphasizing the absence of substantial evidence to support the Revenue's case.
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2010 (1) TMI 988
Issues involved: Delayed payment of duty, refund claim, deduction of interest, interpretation of Notification No. 39/2001-C.E., liability under Section 11AB.
In this case, the Appellate Tribunal CESTAT AHMEDABAD considered the appeal regarding delayed payment of duty and subsequent refund claim by the appellants. The Department instructed the appellants to deposit interest for the delayed payment of duty before processing the refund claim. The appellants requested the Department to deduct the interest amount while reserving the right to contest it. The lower authorities upheld the deduction of interest, leading to the appeal.
The main argument presented by the advocate for the appellants was based on Notification No. 39/2001, which exempts goods from payment of duty from the PLA. The advocate contended that since the exemption notification results in a revenue-neutral situation for the government, the appellants should not be liable to pay interest. Additionally, it was argued that interest under Section 11AB can only be demanded when there is an amount due to be paid under Section 11A, which was not the case due to the exemption notification.
Upon considering the submissions, the Tribunal referred to the relevant portion of Notification No. 39/2001, which indicated that the exemption granted is equivalent to the duty paid by the manufacturer, excluding Cenvat credit. The Tribunal concluded that the appellant is required to pay duty first, as there is no exemption from paying duty. Failure to discharge duty within the specified time attracts liability for consequences, including payment of interest. The Tribunal emphasized that the obligation to pay interest arises when duty is not paid within the stipulated time, regardless of whether a refund is granted. The deduction of interest from the refund claim does not alter the nature of the liability under Section 11AB. The Tribunal highlighted that the demand for interest under Section 11AB is a statutory obligation with no time limit, which must be fulfilled.
In light of the above analysis, the Tribunal found no merits in the appeals and consequently rejected all the appeals.
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2010 (1) TMI 987
Issues:
1. Whether the CPIO rendered himself liable to a penalty under Section 20 for denying information.
2. Whether the exemption under Section 8(1)(e) of the RTI Act applies in a case where the investigation is completed and closed.
Analysis:
Issue 1:
The appellant, Shri Reddy, sought information from the CPIO, CBI, regarding a specific case file. The CPIO initially stated that the file was not traceable, but later, upon appeal, claimed that the information was denied under Section 8(1)(e) of the RTI Act. The appellant alleged that the denial was based on false grounds and raised concerns about potential corruption. The CPIO explained that the file was found, but the information was denied due to exemption under Section 8(1)(e). The matter was referred to the Director, CBI, to investigate if there was any mala fide intent in denying the information.
Issue 2:
Regarding the application of Section 8(1)(e), the judgment referred to various legal precedents to define fiduciary relationships. It highlighted that the CBI cannot be considered a fiduciary concerning individuals under investigation. The judgment emphasized that the exemption under Section 8(1)(e) does not cover investigations of corruption complaints. Therefore, the decision of the Appellate Authority to deny the information under this section was set aside, and the CPIO was directed to provide the requested information to the appellant within a specified timeframe.
In conclusion, the judgment addressed the issues of penalty imposition on the CPIO and the application of the exemption under Section 8(1)(e) in cases where investigations are completed. The decision favored the appellant, directing the CPIO to provide the requested information, emphasizing the inapplicability of fiduciary relationships in this context.
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2010 (1) TMI 986
Issues:
Appeal against denial of information under RTI Act.
Analysis:
The appellant filed an appeal against the denial of information in response to his RTI application. The appellant requested inspection of various documents and note sheets related to disciplinary cases and vigilance matters. The CPIO denied the information citing exemption under Section 8(1)(g) of the RTI Act. The appellant contended that the denial was illegal and contrary to the spirit of the RTI Act, arguing that the information sought was not related to law enforcement or security purposes. The appellant also highlighted a previous order by the CIC directing full disclosure of information by the Directorate General of Vigilance in a similar case.
The judge considered the contentions of the appellant and found that the CPIO did not adequately address the request, merely relying on the exemption clause without providing sufficient reasoning. It was noted that the files in question pertained to vigilance status/clearance rather than disciplinary cases, rendering the grounds for denial invalid. The judge emphasized that the CPIO's approach should be proactive, and any claim for exemption must be supported by a well-reasoned order. Consequently, the case was remanded back to the CPIO with a directive to reconsider the request and provide a detailed response within two weeks from the date of the order.
The judge also mentioned that an appeal against this order could be made to the Central Information Commission within 30 days from the receipt of the order. The judgment highlighted the importance of a thorough and reasoned decision-making process in handling RTI requests, emphasizing the need for transparency and proper application of exemptions under the law.
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2010 (1) TMI 985
Issues:
Interpretation of provisions under SEZ Act regarding supplies to SEZ units, applicability of Cenvat Credit Rules, exemption notifications for supplies to SEZ, and imposition of penalties.
Analysis:
The judgment involves a dispute where the Department demanded 10% of the value of excisable goods supplied to SEZ Developers by an applicant with a unit in the Domestic Tariff Area, citing Rule 6(3)(b) of Cenvat Credit Rules due to the lack of separate accounts for inputs supplied to SEZ units. The appellant argued that the supplies made should be considered as exports under Section 2(m) of the SEZ Act and referenced a circular clarifying that supplies from DTA to SEZ units should be treated as exports. The appellant contended that since the goods were not supplied to SEZ units availing any exemption benefits, they should not be classified as exempted goods.
The respondent drew attention to an amendment in the Cenvat Credit Rules related to clearances made to SEZ units. After considering the submissions and records, the judge held that the supplies made to SEZ units by the applicant should not be treated as supply of exempted goods. Consequently, the provisions of Cenvat Credit Rules 6(3)(b) were deemed inapplicable, leading to the waiver of pre-deposit of dues and the stay of recovery until the disposal of the appeals.
This judgment clarifies the interpretation of the SEZ Act provisions regarding supplies to SEZ units, the application of Cenvat Credit Rules in such scenarios, and the impact of exemption notifications on supplies to SEZ units. It emphasizes the importance of maintaining separate accounts for inputs supplied to SEZ units and the implications of such practices on the classification of goods as exempted or non-exempted. The judgment provides guidance on how supplies from DTA to SEZ units should be treated and highlights the significance of relevant circulars and amendments in determining the tax implications of such transactions.
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2010 (1) TMI 984
Issues involved: Classification of imported goods as removable or exchangeable under CTH 8471 70 30 or 8471 70 20, reliance on expert opinion, consideration of technical aspects, granting of stay based on exemption notification.
Classification Issue: The Department contended that the imported hard disc drives were removable or exchangeable under CTH 8471 70 30, while the appellant classified them under 8471 70 20 for non-removable drives. The original adjudicating authority based its decision on visual inspection, concluding the goods were removable/exchangeable. However, the Commissioner (Appeals) delved into technicalities, noting the goods were not removable or exchangeable. The Commissioner relied on IBM's expert opinion. The Tribunal found the original authority lacked expert advice and deciding solely based on visual inspection was inadequate. In contrast, the Commissioner considered the nature of goods, relevant circulars, and Tribunal decisions, leading to the dismissal of the Department's stay application.
Expert Opinion: The Commissioner (Appeals) considered technical aspects, including the circular issued by the Board and Tribunal decisions, before concluding the hard disc drives were not removable or exchangeable. The Tribunal emphasized the importance of expert opinion in such matters and criticized the original authority for not seeking expert advice before making a decision based on visual inspection.
Exemption Notification: The Tribunal noted that the exemption notification covered goods classifiable under CTH 8471 70, including hard disc drives. As the notification was at a six-digit level, both removable/exchangeable and non-removable drives fell under the exemption. However, neither lower authority addressed this aspect. Consequently, the Tribunal rejected the stay application, as no sufficient case was presented for granting a stay based on the exemption notification.
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2010 (1) TMI 983
Issues:
Application of section 50C of the Income-tax Act, 1961 to a property transaction, Transfer of property based on an agreement with a developer, Interpretation of capital gains computation, Relevance of registered sale deeds, Invocation of deeming provisions of section 2(47) of the Act, Applicability of legal precedents in similar cases.
Analysis:
The case involved a dispute regarding the application of section 50C of the Income-tax Act, 1961 to a property transaction. The assessee contended that the sale was completed when possession was handed over to a developer based on an agreement, thus urging that capital gains should be calculated accordingly. However, the Assessing Officer invoked section 50C due to the variance between stamp duty valuation and consideration in sale deeds. The Commissioner of Income-tax (Appeals) rejected the assessee's argument, emphasizing the importance of registered sale deeds executed by the power of attorney holder. The Tribunal noted that the assessee failed to provide evidence supporting the completion of the transfer as claimed, leading to the dismissal of the appeal.
In analyzing the situation, the Tribunal highlighted the significance of registered sale deeds in determining the capital gains, especially when the stamp duty valuation exceeds the consideration in the deeds. The Tribunal emphasized the need for proper documentation to substantiate claims of property transfer completion. While citing legal precedents, the Tribunal differentiated the current case from previous judgments, underscoring the importance of adhering to registration requirements for invoking section 50C. The Tribunal upheld the Assessing Officer's decision, concluding that the sale transaction was not adequately proven to have been completed as claimed by the assessee.
The Tribunal's decision rested on the lack of concrete evidence supporting the completion of the property transfer as asserted by the assessee. The Tribunal emphasized the importance of adhering to registration requirements and producing relevant documentation to substantiate claims in property transactions. By upholding the Assessing Officer's decision and the Commissioner of Income-tax (Appeals) ruling, the Tribunal underscored the need for accuracy and compliance with legal provisions in determining capital gains arising from property transactions. The dismissal of the appeal signified the Tribunal's stance on the necessity of fulfilling legal requirements and providing substantial evidence in tax matters.
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2010 (1) TMI 982
Issues:
Appeal against order under section 263 of the Income-tax Act for AY 2003-04 regarding deduction under section 80HHC for quota sales as export incentives.
Analysis:
The appeal was against the order of the Commissioner of Income-tax under section 263 of the Income-tax Act for the assessment year 2003-04. The assessee claimed deduction under section 80HHC, including a sum for quota sales as export incentives. The Commissioner found the assessment order erroneous and set it aside for a de novo assessment. The assessee argued that the Central Board of Direct Taxes Circular supported their claim for deduction. The Departmental representative contended that the Assessing Officer did not apply his mind to the deduction issue. The ITAT Chennai Bench, after reviewing the submissions and the Circular, held that the assessment order was not erroneous. They reasoned that since the Circular was available and the deduction was accepted, it cannot be said that the Assessing Officer did not apply his mind. They emphasized that non-application of mind to income items would be an error, but in this case, the Circular guided the claim. The ITAT agreed with the Departmental representative that the Circular's existence made further details unnecessary from the assessee. Consequently, they set aside the Commissioner's order under section 263 and reinstated that of the Assessing Officer.
In conclusion, the ITAT Chennai allowed the appeal filed by the assessee, finding no error in the assessment order and emphasizing the relevance of the Central Board of Direct Taxes Circular supporting the deduction claim. The judgment was delivered on January 19, 2010.
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2010 (1) TMI 981
Issues Involved:
1. Deemed dividend u/s 2(22)(e) of the Income-tax Act, 1961.
2. Disallowance of interest on borrowings u/s 36(1)(iii) of the Income-tax Act, 1961.
3. Disallowance of depreciation on office premises u/s 32 of the Income-tax Act, 1961.
Summary:
1. Deemed Dividend u/s 2(22)(e):
The issue raised by the assessee was against the treatment of unsecured loan as deemed dividend u/s 2(22)(e). The Assessing Officer treated the loan of Rs. 88,25,000 taken from M/s. Cavim Reality Pvt. Ltd. by the assessee-company as deemed dividend. The Commissioner of Income-tax (Appeals) upheld this decision. However, the Tribunal found that the issue is covered by the decision of the Special Bench in Asst. CIT v. Bhaumik Colour P. Ltd. [2009] 313 ITR (AT) 146, which held that deemed dividend can be assessed only in the hands of a person who is a shareholder of the lender-company. Since the assessee-company was neither a registered shareholder nor a beneficial shareholder in the lending company, the provisions of section 2(22)(e) were not applicable. Thus, this ground of appeal raised by the assessee was allowed.
2. Disallowance of Interest on Borrowings u/s 36(1)(iii):
The assessee claimed interest on term loan paid to Global Trust Bank Ltd. for acquiring property, which was disallowed by the Assessing Officer on the ground that the asset was not put to use. The Commissioner of Income-tax (Appeals) upheld this disallowance. The Tribunal, however, noted that the assessee was already in the business of real estate and brokerage, and the asset was acquired for business purposes. Citing the Supreme Court's decision in Deputy CIT v. Core Health Care Ltd. [2008] 298 ITR 194, which clarified that Explanation 8 to section 43(1) does not apply to section 36(1)(iii), the Tribunal held that the assessee is entitled to deduction under section 36(1)(iii). The amendment to section 36(1)(iii) was also noted to be prospective from April 1, 2004. Therefore, this ground of appeal was allowed.
3. Disallowance of Depreciation on Office Premises u/s 32:
The assessee claimed depreciation on office premises, which was disallowed by the Assessing Officer on the ground that the premises were not put to use. The Commissioner of Income-tax (Appeals) upheld this decision. The Tribunal found that the assessee failed to produce any evidence to support its claim that the premises were used for business purposes. As section 32 requires the asset to be used for business or profession to claim depreciation, the Tribunal confirmed the order of the Commissioner of Income-tax (Appeals) and dismissed this ground of appeal.
Conclusion:
The appeal filed by the assessee was partly allowed. The Tribunal allowed the grounds related to deemed dividend and interest on borrowings but dismissed the ground related to depreciation on office premises. The order was pronounced on January 12, 2010.
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2010 (1) TMI 980
Expenditure towards repairs and maintenance - Compensation received - exclusive marketing rights - Payment made to staff club - MAT - Bad and doubtful debts to the book profit - Interest levied u/s 234D.
Expenditure towards repairs and maintenance - Nature Of Expenses ''Capital Or Revenue'' - HELD THAT:- The assessee being a petroleum refinery, it is very essential to carry out routine inspection as a safety measure. The cost incurred by the assessee-company for the repairs and replacements on the basis of inspection report have been spent not to create any new asset or to substitute the old one with a new asset. These are repairs and replacements of part of the machinery and not the entire machinery itself. There is no reason to hold that the said expenditure is capital in nature, following the principles established in the assessee’s own case for earlier years on similar replacements and repairs of the tank. We direct the Assessing Officer to allow the sum as revenue expenditure. The ground is allowed in favour of the assessee.
Nature of Compensation received - exclusive marketing rights for both controlled and decontrolled products - HELD THAT:- As seen from the facts of this case, first of all the assessee had no exclusive marketing rights over the controlled products and secondly, out of the decontrolled products also the assessee has not given any exclusive marketing rights to IOC whereas it has retained certain marketing rights over both the controlled and decontrolled products on its own vide article 3. In view of this it cannot be stated that the assessee has surrendered its entire marketing rights. On the principles established in the abovesaid decision, it can only be concluded that the amount was received by the assessee towards loss of income and not loss of source of income, which is in the revenue field.
Suffice to say that on the present set of facts since the assessee has no exclusive marketing rights over the controlled products and composite agreement was entered for supply of fixed quantity to IOC which was also marketing its products earlier exclusively, the amount of compensation received can only be considered as revenue and not capital receipt. Accordingly we uphold the order of the Assessing Officer and the Commissioner of Income-tax (Appeals) on this issue. The ground is rejected.
Payment made to staff club - HELD THAT:- In the case of CIT v. Bharat Petroleum Corporation Ltd.[2001 (3) TMI 20 - BOMBAY HIGH COURT] wherein it was held that reimbursement of club expenses does not constitute contribution to any funds u/s 40A(9) of the Act so as to attract restricted provisions of this section. Respectfully following the same, we hold that the payments to staff club are not covered by the provisions of section 40A(9) and accordingly they are to be allowed as expenditure incurred wholly and exclusively for the purpose of business u/s 37(1). The Assessing Officer is directed to allow the expenditure. Ground No. 3 is allowed.
MAT - Bad and doubtful debts to the book profit - HELD THAT:- Once the Assessing Officer invokes the normal provisions of tax, it indirectly means that he has compared the computation u/s 115JA and decided that the income under normal provisions was more. In that situation it is to be presumed that the provision was added back to the book profit of that year. Even by means of Explanation (g) introduced to section 115JA by the Finance (No. 2) Act, 2009, with retrospective effect from April 1, 1998 the provision for bad and doubtful debts would be deemed to have been added back in computing the book profit in that year and so the amount, now credited to the profit and loss account, is to be reduced by virtue of the provision of section 115JB. In view of this there is justification in the assessee's contention in claiming the provision as deduction in the computation of book profit in this year.
On the fact that the assessee had been disallowed in that year under the normal computation and by virtue of the amendment now brought with retrospective effect from April 1, 1998, the provision for bad debt is deemed to have been added back in that year withdrawal and crediting into the profit and loss account now results in double taxation. Consequently, the assessee is correct in excluding the amount while computing the income u/s 115JB. Accordingly the ground is allowed.
Interest levied u/s 234D - HELD THAT:- In Delhi Special Bench decision on ITO v. Ekta Promoters P. Ltd.[2008 (7) TMI 452 - ITAT DELHI-E] wherein it was held that the provisions of section 234D are applicable from 1st June 2003 and not with retrospective effect, hence, the same should not be applicable in the assessee's case for the assessment year 2001-02 wherein the refund was issued before June 1, 2003. In line with the decision of the Special Bench the assessee's ground is allowed. The Assessing Officer is directed to work out the interest u/s 234D, if any, in line with the decision of the Special Bench (supra). Ground is considered allowed for statistical purposes. The appeal is partly allowed.
In the result, all the appeals are partly allowed.
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2010 (1) TMI 979
Issues:
1. Whether the findings of the Tribunal regarding the assessee ceasing to carry on any business and land/building not being part of trading assets are correct.
2. Whether the Tribunal correctly rejected the claim for carry forward business losses to be set off against lease rentals.
3. Whether the Tribunal's decision was based on a mistake apparent from the record under section 254(2) of the Act.
Analysis:
1. The Tribunal found that the assessee had ceased business during the relevant year, supported by the absence of manufacturing activity and sale of machinery. The assessee failed to prove a temporary lull in business or resumption of possession. The Tribunal's order was in line with precedents emphasizing that rectification is for obvious errors, not debatable points. The Supreme Court's rulings clarified that rectification is limited to clear mistakes on the face of the record. The Tribunal correctly applied this principle, dismissing the assessee's claim of rectification based on the cessation of manufacturing activity and retention of business assets.
2. The Tribunal rejected the assessee's claim to set off carry forward business losses against lease rentals. The Tribunal cited precedents where carry forward losses could be set off against specific income, emphasizing the necessity of the income being part of the business. The Tribunal found that the land and building were not part of the trading assets, as the assessee had ceased business and sold machinery. This decision was based on the statutory provision that losses can only be set off against profits from a business being carried on, which the assessee was not.
3. The Tribunal's power under section 254(2) is limited to rectifying clear mistakes apparent from the record. The Bombay High Court's ruling highlighted that rectification cannot be used to review or re-decide matters beyond obvious errors. The case distinguished from a Rajasthan High Court judgment, clarifying that overlooking arguments or grounds does not constitute a rectifiable mistake. The Tribunal's failure to consider non-jurisdictional judgments or arguments does not qualify as a rectifiable error. The Tribunal correctly dismissed the assessee's petition as it did not present a clear mistake on the face of the record.
In conclusion, the Tribunal's decision was based on the assessee ceasing business activities, the ineligibility of land/building as trading assets, and the limitations of rectification under section 254(2). The Tribunal's adherence to legal principles and precedents led to the dismissal of the assessee's claim for rectification.
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2010 (1) TMI 978
Whether the writ petitioners are "Public Authorit(ies)" within the meaning of the term under Section 2(h) of the said Act?
Held that:- On a consideration of all the factors, this court holds that the school fulfils the essential elements of being a non-government organization, under Section 2(h) of the Act, which is substantially financed by the Central Government, through various departments, and agencies. It is therefore, covered by the regime of the Act.
Educating, clothing and providing shelter, employment and basic health care to all the people are non- derogable priorities. The model chosen by the government of ensuring spread of welfare and its benefits, include functioning through non-government agencies, who are tasked and assisted for this purpose. The crucial role of access to information here cannot be understated. It is in this context that Section 2 (h) recognizes that non-state actors may have responsibilities of disclosing information which would be useful, and necessary for the people they serve, as it furthers the process of empowerment, assures transparency, and makes democracy responsive and meaningful.
In view of the above conclusions, in relation to each petition, the court holds that the reliefs sought cannot be granted; each of the petitioners is a public authority, and therefore bound to give effect to provisions of the Act. They are granted 30 days time to set up appropriate mechanisms to enable access to information held and required to be held by them
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2010 (1) TMI 977
Issues:
1. Interpretation of technical services for tax deduction.
2. Applicability of tax deduction on accrual entries.
Analysis:
1. The first issue pertains to the interpretation of technical services for tax deduction under section 194J of the Income-tax Act, 1961. The case involved the assessee-company making payments to internet service providers without deducting tax at source. The Revenue contended that these payments constituted technical fees falling under section 194J. The Assessing Officer imposed a demand under section 201(1) and interest under section 201(1A) based on this interpretation. However, the learned Commissioner of Income-tax (Appeals) ruled in favor of the assessee, stating that the payments were not for technical services. The Tribunal noted conflicting arguments regarding the nature of services provided by the internet service providers. The Tribunal emphasized the importance of the specific contract between the parties in determining the true nature of the services. As the contract details were not adequately discussed, the Tribunal remanded the issue back to the Commissioner for a fresh decision based on the specific contract, setting aside the earlier ruling.
2. The second issue revolved around tax deduction on accrual entries made by the assessee for various expenses. The Assessing Officer contended that tax should have been deducted at the time of crediting these entries. However, the appellant argued that tax deduction was not required until the payee was known, citing legal precedents. The learned Commissioner of Income-tax (Appeals) allowed the appeal based on the appellant's arguments without providing detailed reasoning. The Tribunal found the order lacking in explanation and directed the Commissioner to pass a speaking order considering the Assessing Officer's reasoning. Consequently, the Tribunal allowed the appeal of the Revenue for statistical purposes.
In conclusion, the judgment addressed the issues of tax deduction on technical services payments and accrual entries, emphasizing the need for a clear understanding of service contracts and proper application of tax laws. The Tribunal's decision highlighted the importance of specific contractual terms in determining tax liability and underscored the necessity for reasoned orders in tax assessments.
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2010 (1) TMI 976
Issues involved: Dispute regarding allowability of exemption u/s 10A of the Income-tax Act for the assessment year 2005-06.
Summary:
The appellant, a business engaged in manufacturing and sales of combs and hair accessories, had two units - M/s. Presto Industries at Mumbai and M/s. Presto Manufacturing and Trading Co. at Kandla, which was a new 100% export unit eligible for deduction u/s 10A. The Assessing Officer compared costs between the two units and made additions to the new unit's expenses, which the appellant disputed.
The appellant argued that the comparison was not valid due to different locations and business models of the units. They explained that the new unit's lower costs were due to various factors like production as per orders received, lower input costs for export market, and economies of scale. The Commissioner of Income-tax (Appeals) accepted the appellant's explanation, noting the new unit's modern export-oriented nature and different profitability considerations.
Upon hearing both parties, the Tribunal found no evidence that the appellant had incurred unaccounted expenses in the new unit. The Assessing Officer's additions were based on hypothetical computations without concrete evidence of unexplained expenditure. The Tribunal upheld the Commissioner's decision to delete the additions, emphasizing that the burden was on the Revenue to prove actual unexplained expenses, which was not done in this case.
Ultimately, the Tribunal dismissed the Revenue's appeal, affirming the Commissioner's decision to delete the additions as there was no evidence of unaccounted expenses in the new unit.
The order was pronounced on January 11, 2010.
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9911796707
