|
Advanced Search Options
Case Laws
Showing 321 to 340 of 781 Records
-
2009 (12) TMI 749
Valuation - HDPE resin - related party transaction - Held that: - while valuation done of sale price of RIL to RCIL of resin cannot be the starting point since RIL and RCIL are related persons - the valuation is to be done as per Rule 8 (i.e. 115% of cost of resin + manufacture of duct). Accordingly, the value arrived is much lower than the assessable value on which the duty has already been paid by RIL on duct. - appeal allowed.
-
2009 (12) TMI 748
The judgment concerns the classification of 'perfume sprays containing alcohol.' The issue was whether 'perfumes' fall under Heading 96.16 or within the ambit of the Medicinal and Toilet Preparations Act, 1955. The tribunal ruled that Heading 96.16 does not cover 'perfumes,' upholding the decision in favor of the respondents and rejecting the appeal of the Revenue.
-
2009 (12) TMI 747
The stay petition was filed for waiver of pre-deposit of penalty of Rs. 1000 imposed under Section 112(a) of the Customs Act. The penalty was imposed on presumptive grounds, and the appellant made out a prima facie case for waiver. The application for waiver of pre-deposit was allowed, and recovery stayed until the appeal's disposal.
-
2009 (12) TMI 746
Issues:
1. Denial of Cenvat credit amounting to Rs. 1,42,365 in respect of export consignments due to wrong declaration on ARE-1 forms.
2. Adjudication by Asstt. Commissioner confirming Cenvat credit demand, imposing interest, and penalty under Rule 13 of Cenvat Credit Rules, 2002.
3. Dismissal of appeal by Commissioner (Appeals) categorizing the wrong declaration as misdeclaration and invoking the extended period for recovery of Cenvat credit.
4. Interpretation of Rule 6(5)(vi) of Cenvat Credit Rules, 2002 regarding availability of Cenvat credit for goods cleared for export under bond.
5. Application of Rule 5 of Cenvat Credit Rules, 2002 for refund of accumulated Cenvat credit due to export without drawback claim or input duty rebate.
Analysis:
The case involved the appellant, a manufacturer of extended Aluminium Collabsable Tubes, who exported extruded aluminium printed tubes under a bond under Rule 19 of Central Excise Rules 2002 through a merchant-exporter under DEPB Scheme. The issue arose when the appellant availed input duty Cenvat credit but declared on ARE-1 forms that no Cenvat credit had been availed, leading to a show cause notice for denying Cenvat credit amounting to Rs. 1,42,365 for five export consignments. The Asstt. Commissioner confirmed the Cenvat credit demand, imposed interest, and penalty under Rule 13 of Cenvat Credit Rules, 2002. The Commissioner (Appeals) dismissed the appeal, considering the wrong declaration as a misdeclaration warranting the recovery of Cenvat credit within the extended period.
During the hearing, the appellant's counsel argued that Rule 6(5)(vi) of Cenvat Credit Rules, 2002 exempts goods cleared for export under bond from certain provisions, making Cenvat credit available even for duty-free exports. Referring to Rule 5 of the Cenvat Credit Rules, 2002, the counsel contended that refund of accumulated Cenvat credit is permissible for exports not under drawback claim or input duty rebate, which was the case for the appellant. Citing relevant Tribunal judgments, the counsel emphasized that denial of Cenvat credit was unwarranted in this scenario.
The respondent's representative defended the impugned order, supporting the findings of the Commissioner (Appeals). Upon careful consideration, the judge observed that despite the wrong declaration on ARE-1 forms, the goods were exported under bond without duty payment, and no input duty rebate or drawback claim was made. Relying on Rule 6(5)(vi) and Rule 5 of the Cenvat Credit Rules, 2002, the judge concluded that Cenvat credit could not be denied to the appellant as the conditions for refund were met. Referring to precedent cases, the judge highlighted that denial of accumulated Cenvat credit refund was only applicable when exports were under drawback claim or input duty rebate, which did not apply in the appellant's case. Consequently, the impugned order was set aside, and the appeal was allowed.
-
2009 (12) TMI 745
Issues:
- Challenge to order allowing refund application
- Appropriation of interest amount by Original Authority
- Interpretation of Section 11AA of the Central Excise Act, 1944
- Merger of orders and liability to pay interest
- Application of interest on delayed payment of duty
- Contention regarding lack of demand for interest
- Adjustment of interest amount by the Lower Appellate Authority
Challenge to Order Allowing Refund Application:
The appellant challenged the order passed by the Commissioner (Appeals) allowing the appeal filed by the respondent regarding the interest amount of Rs. 42,00,801.35, which was sought to be deducted by the Original Authority while allowing the refund application. The Asst. Commissioner had appropriated this sum in terms of proviso to Section 11AA of the Central Excise Act, 1944.
Appropriation of Interest Amount by Original Authority:
The duty liability on pan masala Gutkha manufactured by the respondents was confirmed by the Adjudicating Authority, and the interest amount payable on the delayed payment of duty was appropriated by the Original Authority. The matter was carried in appeal before the Commissioner (Appeals) by the respondent, and the appeal was allowed under the impugned order.
Interpretation of Section 11AA of the Central Excise Act, 1944:
The appellant argued that the interest liability should commence from the date of determination of duty by the Original Authority, as confirmed by the Supreme Court. The respondent contended that the order of the Original Authority merged into the order of the Tribunal, and there was no demand for interest before the Apex Court's decision.
Merger of Orders and Liability to Pay Interest:
The Tribunal clarified that the order of the Supreme Court confirming the Original Authority's order fixed the duty liability from the date of determination by the Original Adjudicating Authority. The order of the Supreme Court became the executable order, and all rights and obligations arose from the date of the Original Authority's determination.
Application of Interest on Delayed Payment of Duty:
Section 11AA deals with interest on delayed payment of duty, and the liability to pay interest arises after three months from the date of determination of duty liability. The proviso explains the scenario when duty is not paid within three months from a specific date. The liability to pay interest by the assessee in this case was upheld based on the statutory provisions.
Contention Regarding Lack of Demand for Interest:
The contention that no demand for interest was made by the Department was not considered as it was not raised before the Lower Authority, and interest liability flows from the statutory provision itself.
Adjustment of Interest Amount by the Lower Appellate Authority:
The Lower Appellate Authority set aside the adjustment of interest solely based on the timing of the Supreme Court's order. However, this was not a valid ground for setting aside the Original Authority's decision. The appeal succeeded, and the impugned order was set aside, restoring the order passed by the Original Authority with consequential relief.
-
2009 (12) TMI 744
Issues: Eligibility for deemed credit under Notification No. 29/96-C.E. (N.T.) dated 3-9-96 for processed knitted fabrics chargeable to Central Excise duty Chapter 60 of the Central Excise Tariff from May 1998 to October 1998.
Analysis:
The appellant, a manufacturer of processed knitted fabrics, was denied deemed credit amounting to Rs. 20,85,801/- by the Deputy Commissioner under Rule 57-I(1)(iii) read with Rule 57-I(5) of the Central Excise Rules, 1944, for allegedly not filing the required declaration under Rule 57G. The Commissioner (Appeals) and CCE (Appeals) upheld the denial. The appellant appealed to the Tribunal, which remanded the matter for de novo decision. However, the CCE (Appeals) again dismissed the appeal. The main contention was the non-filing of the required declaration. The appellant argued that they had indeed submitted the declaration on 13-9-96, supported by various pieces of evidence, including a certified copy of the receipt register and a letter from the Deputy Commissioner. The Departmental Representative defended the impugned order. The Tribunal considered the submissions and evidence provided by the appellant and found that the denial of deemed credit based on the non-submission of the declaration was incorrect.
The lower appellant authority upheld the denial citing reasons such as the appellant not producing the original declaration with the receiving official's signature, discrepancies in dates on the receipt register, and alleged misrepresentation by the appellant. However, the Tribunal noted that the Divisional office's receipt register did show a "Modvat declaration" filed by the appellant on 17-9-96. The appellant produced a letter from the Deputy Commissioner confirming the receipt of the declaration on 13-9-96, endorsed to the Range Office with the Range Officer's initials. The Tribunal found that the appellant's declaration had indeed been received on 13-9-96, as confirmed by the Range Officer. The Deputy Commissioner's letter and the entry in the receipt register supported the appellant's claim, leading to the setting aside of the impugned order and allowing the appeal.
In conclusion, the Tribunal ruled in favor of the appellant, holding that the denial of deemed Modvat credit was not justified as the appellant had submitted the required declaration on time, as evidenced by official documents and confirmations. The discrepancies highlighted by the lower authorities were not substantial enough to negate the appellant's claim, leading to the setting aside of the denial and allowing the appeal.
-
2009 (12) TMI 743
Reversal of CENVAT credit - goods destroyed by fire - demand on the ground that no application has been made for remission of duty u/r 21 of CER, 2002 and the amount has been collected from the insurance company - Held that: - all the assessees are required to account for all the goods manufactured/produced and when some goods are destroyed because of fire accident or natural cause, in terms of provisions relating to accountal, assessee would be required to explain reasons for non-accountal. Therefore, demand for duty would be natural consequential action and when the appellant replies, the adjudicating authority would take into consideration the replies submitted by the assessee and come to a conclusion whether remission under Rule 21 is required or not - there was no requirement of application for remission in this case and the reply to the show cause notice is sufficient for claiming the remission if the appellant is otherwise liable for remission as per the legal provisions - appeal allowed - decided in favor of appellant.
-
2009 (12) TMI 742
Issues:
1. Appellant's grievance regarding the law not followed by the Commissioner (Appeals).
2. Whether the order suffered from legal infirmity.
3. Relief granted on penalty and the Revenue's appeal against it.
Issue 1: Appellant's grievance regarding the law not followed by the Commissioner (Appeals):
The Appellant contended that the law laid down by the Hon'ble High Court of Bombay and other decisions was not followed by the Commissioner (Appeals) in the order dated 24-12-2008. The Appellant argued that the Commissioner's observation on the duty liability during forfeiture period was contrary to the established legal precedents. The Appellant sought the expunging of the portion of the order that deviated from the law laid down by the above decisions. The Appellant's plea was based on the argument that if the conflicting observation was removed, there would be no grievance left. The Appellant emphasized the need to adhere to the legal principles established by previous judgments.
Issue 2: Whether the order suffered from legal infirmity:
The Tribunal acknowledged that while courts typically do not entertain appeals on academic questions, an order that deviates from legal principles and lacks judicial discipline cannot be sustained. The Tribunal recognized the importance of expunging any portion of the order that contradicted the established law. It was highlighted that failure to rectify such legal infirmities would perpetuate illegality. Therefore, the Tribunal decided to expunge the part of the order that stated duty during the forfeiture period should be discharged through account current. By doing so, the Tribunal aimed to uphold the integrity of the legal framework and ensure adherence to established legal principles.
Issue 3: Relief granted on penalty and the Revenue's appeal against it:
The Tribunal noted that the relief granted on penalty was not challenged by the Revenue in their appeal. The Joint CDR submitted that the appeal was primarily to address an academic question, rendering it infructuous in light of the relief on penalty not being contested. The Tribunal disposed of the appeal with the observation that the relief on penalty was not under dispute, emphasizing the limited scope of the appeal and the primary focus on addressing the legal infirmity in the order related to duty liability during forfeiture period.
In conclusion, the Tribunal addressed the Appellant's grievance regarding the deviation from established legal principles, expunged the conflicting portion of the order to rectify the legal infirmity, and noted the uncontested relief on penalty in the context of the Revenue's appeal. The judgment focused on upholding legal discipline and ensuring consistency with prior legal precedents.
-
2009 (12) TMI 741
Issues: Rebate claim rejection, imposition of penalty, applicability of Section 11AC, Rule 15(1) of Cenvat Credit Rules, 2004, appeal by Revenue.
Analysis:
1. Rebate Claim Rejection: The case involved a rebate claim submitted by M/s. Multiple Exports, which was partly allowed by the Department. However, a portion of the rebate claim amounting to Rs. 28,821/- was rejected due to non-receipt of raw materials from suppliers found to be non-existent.
2. Imposition of Penalty: The Assistant Commissioner, while rejecting the rebate claim, imposed a penalty of Rs. 28,821/- (equal to the rebate claim amount) and an additional penalty of Rs. 3,000 under Rule 25 of Central Excise Rules, 2002. On appeal, the Commissioner (Appeals) reduced the penalty to Rs. 2,882, holding that Section 11AC was not attracted as the appellants were not party to the fraud.
3. Applicability of Section 11AC: The Revenue appealed against the Commissioner's decision, seeking a penalty equal to the rebate amount denied to the respondents under Rule 15(2) of Cenvat Credit Rules, 2004, read with Section 11AC of the Central Excise Act, 1944. The Revenue argued that penalty should be imposed in accordance with the mentioned provisions.
4. Legal Arguments: The Revenue relied on a Tribunal decision and the Supreme Court ruling in a specific case to support their contention that penalty equal to duty is imposable. However, the advocate for the respondents argued that this case did not involve a demand but a rejection of part of the rebate claim, making the mentioned decisions inapplicable.
5. Judgment: The Tribunal found in favor of the respondents, agreeing with the advocate's arguments. It was held that the penalty under Section 11AC was not applicable in this case, and the penalty was rightly considered under Rule 15(1) of Cenvat Credit Rules, 2004. The appeal filed by the Revenue was deemed to have no merits and was consequently rejected.
-
2009 (12) TMI 740
Issues:
Confirmation of penalties under Section 11AC on the appellant company and under Rule 26 of Central Excise Rules, 2002 on their Finance Manager.
Analysis:
The case involved penalties imposed on the appellant company and their Finance Manager under Section 11AC and Rule 26 of the Central Excise Rules, 2002. The appellant company was availing the facility of fortnightly payment of Central Excise duty under Rule 8. The issue arose when a vehicle loaded with goods was intercepted, revealing discrepancies in dates on the accompanying documents. The officers detained the goods and vehicles, issued a show-cause notice, and confirmed duty, interest, and penalties. The Commissioner (Appeals) upheld the decision, leading to the appeal before the Tribunal.
The appellant's representative argued that the invoices were prepared on 30-6-2001 to meet sales targets for better loan facilities and that duty payment was made on 12-7-2001, within a reasonable timeframe. He contended that there was no allegation of goods being cleared without duty payment or of clandestine removal. Citing a precedent, he claimed that penalties under Section 11AC were not applicable for delayed payments under the fortnightly scheme without any mala fide intention to evade duty.
The Departmental Representative countered that the appellant had a history of delayed duty payments, indicating an intention to underpay duty, justifying the penalties imposed. After hearing both sides, the Tribunal analyzed Rule 8 of the Central Excise Rules, which mandated duty payment by the 20th of the month for goods removed in the first fortnight and by the 5th of the following month for goods removed in the second fortnight. As the duty was paid by 12-7-2001 for goods removed on 11-7-2001, within the permissible timeframe, the Tribunal concluded that there was no intention to evade duty. Noting the absence of allegations of clandestine removal, the Tribunal ruled that penalties under Section 11AC were not applicable. Consequently, the appeals by the appellants were allowed, with any consequential relief granted.
In conclusion, the Tribunal found that the appellant had complied with duty payment timelines as per Rule 8, dismissing the penalties imposed under Section 11AC due to the absence of intent to evade duty and the timely payment of duty within the prescribed period.
-
2009 (12) TMI 739
Issues:
Extension of stay application under Section 142 of Customs Act, 1962.
Analysis:
The case involved an appeal before the Appellate Tribunal CESTAT AHMEDABAD regarding an extension of stay application under Section 142 of the Customs Act, 1962. The appellant, represented by advocate Shri H. Modh, sought an extension of stay as the department had threatened to take action under Section 142 if the duty and penalty were not paid within a week. The appellant had already submitted an application for extension of stay, citing the possibility of the unit being closed down if action was taken under Section 142. The advocate highlighted that the Tribunal had previously granted a stay, which was extended once earlier, and requested a direction to the department not to proceed further until the stay application was considered.
The Tribunal, considering the shortage of members leading to irregular sittings of the Division Bench and the usual practice of granting extensions of stay, decided to direct the department not to proceed further until the stay application was listed, considered, and an appropriate order passed. The Tribunal acknowledged the need for an extension of stay due to the potential closure of the unit if action was taken under Section 142. The learned SDR, Shri Nagar, was requested to inform the department about this decision.
In conclusion, the Tribunal recognized the importance of granting an extension of stay in this case and directed the department to hold off on taking further action until the stay application was reviewed and a decision made. The decision aimed to ensure fairness and due process in the proceedings, considering the circumstances and potential consequences for the appellant.
-
2009 (12) TMI 738
Issues involved: Detection of clearance of 8 ml. and 100 ml. shampoo without payment of duty, confirmation of demand, penalty imposition, registration discrepancies, clandestine manufacture, duty reworking, penalty re-quantification, imposition of interest.
Summary:
1. Demand Confirmation and Penalty Imposition:
The case involved the detection of clearance of 8 ml. and 100 ml. shampoo without duty payment, leading to a demand confirmation of Rs. 2,11,874/- and penalties under Section 11AC and Rule 173Q of the Central Excise Act, 1944. The lower appellate authority set aside most of the demand, resulting in an appeal by the Department.
2. Arguments by Department:
The Department argued that the Order-in-Appeal should be set aside as it did not consider voluntary statements admitting clearance without duty payment. It was highlighted that the respondents were registered only for 8 ml. shampoo, not for 100 ml. shampoo, and discrepancies in records indicated clandestine activities.
3. Respondents' Defense:
The respondents contended that statements by the Director should not be relied upon, and they raised concerns about the denial of cum-duty assessment and input duty credit by the original authority.
4. Tribunal's Findings:
Upon review, the Tribunal found admissions of clandestine activities by the respondents during the investigation. The explanations provided for defective sachets and re-trading of 100 ml. shampoo lacked supporting evidence like D3 intimation and proper record-keeping, leading to the quashing of the lower appellate authority's order.
5. Tribunal's Decision:
The Tribunal upheld the original authority's order, requiring reworking of duty amount with cum-duty price assessment. The penalty under Section 11AC was upheld but needed re-quantification, while the penalty under Rule 173Q was set aside. Interest under Section 11AB was deemed applicable. The matter was remanded to the original authority for re-quantification of duty, penalty, and interest.
6. Conclusion:
The appeal was partly allowed for remand as per the specified terms, ensuring a comprehensive review and reworking of duty, penalties, and interest in accordance with the law.
-
2009 (12) TMI 737
Issues involved: Appeal against denial of credit u/s Rule 9A of Cenvat Credit Rules, 2002 for late filing of declaration.
Summary:
The appeal was heard by the Appellate Tribunal CESTAT CHENNAI where the appellant sought relief from the denial of credit under Rule 9A of Cenvat Credit Rules, 2002 due to a delay in filing the required declaration. The appellant's advocate argued that despite the delay, the appellants had the stock of inputs on the specified date and should not be denied the credit. On the other hand, the respondent supported the impugned order, emphasizing the non-compliance with the deadline for filing the declaration. The Tribunal noted that Rule 9A is a transitional provision with two conditions: filing a declaration of stock of inputs by a specified date and providing documents evidencing payment of duty. In this case, although the necessary declaration was filed late, the documents proving duty payment were available. Considering the circumstances, the Tribunal held that while the appellants could be penalized for the late filing, they should not be denied the credit. The impugned order denying credit was set aside, and a reduced penalty was imposed. The appeal was partly allowed, and the second appeal was allowed by setting aside the order passed due to the credit denial in the first appeal.
(Order dictated and pronounced in the open Court)
-
2009 (12) TMI 736
Issues:
- Proper scrutiny of vakalatnama by the Registry of CESTAT
- Compliance with guidelines issued by the Apex Court regarding vakalatnama
- Ensuring proper representation of litigants by advocates
- Judicial discipline and prevention of future grievances
Analysis:
The appellant raised concerns regarding the scrutiny of vakalatnama by the Registry of CESTAT. He emphasized the importance of following the guidelines set by the Apex Court to prevent any judicial indiscipline in the future. The appellant argued that a careful examination of the vakalatnama is crucial to avoid any defects in representation by litigants, as the document establishes a binding relationship between the litigant and the advocate. He stressed that proper scrutiny by the Registry would prevent litigants from suffering due to the failure of advocates to file a correct vakalatnama, thus ensuring justice for all parties involved.
The appellant requested that the Registry adhere to the guidelines issued by the Apex Court and suggested that a proper procedure be established for the scrutiny of vakalatnama. He also proposed that any defects found during scrutiny should be promptly communicated to the parties for rectification before the next hearing date. The appellant believed that by following these procedures diligently, litigants would not face any inconvenience, and the purpose of the application would be fulfilled, thereby ending any cause of action.
After hearing both sides and examining the records, the Assistant Registrar's explanation was found satisfactory. The Tribunal directed the Registry to strictly adhere to the guidelines set by the Apex Court regarding vakalatnama, as well as the decision of the Hon'ble High Court of Delhi in a related case. The Tribunal issued specific directions to ensure proper scrutiny of vakalatnama, including providing guidance to relevant branches and zones, and immediate notification of any defects to the parties for rectification. The Tribunal emphasized the importance of maintaining judicial discipline and preventing future grievances by following these directives diligently. Consequently, the appeal was disposed of as no further cause of action existed, and the appellant expressed satisfaction with the outcome.
-
2009 (12) TMI 735
Issues:
- Denial of credit on EPBAX system
- Entitlement for Modvat credit on EPBAX system
The judgment involves a case where the appellant sought Modvat credit on an EPBAX system used in their factory premises. The Commissioner (Appeals) had denied the credit based on previous tribunal judgments, stating that the EPBAX system was not used in the manufacturing process. The appellant challenged this denial, leading to the current appeal.
The main issue in this case was whether the appellant was entitled to Modvat credit on the EPBAX system installed and used in their factory premises. The appellant had availed the credit on the EPBAX system, which was the subject of contention.
Upon review, the judge noted that the Commissioner had relied on the Usha Ispat Ltd. case where the EPBAX system was considered to be only for communication purposes and not directly related to production. However, the appellant provided an Affidavit stating that the EPBAX system was installed and used within the factory premises and was connected to the manufacturing process. The judge found that the EPBAX system facilitated communication between different departments within the factory, indirectly contributing to the manufacturing of the final product.
Therefore, the judge concluded that the EPBAX system, being used within the factory premises and connected to the manufacturing process, made the appellant eligible for Modvat credit on the system. As a result, the impugned order denying the credit was set aside, and the appeal was allowed with consequential relief granted to the appellant.
This judgment highlights the importance of establishing a direct or indirect connection between the equipment for which credit is sought and its contribution to the manufacturing process to determine the eligibility for Modvat credit.
-
2009 (12) TMI 734
Issues involved: Application for waiver of pre-deposit and stay of recovery u/s 35F of Central Excise Act for duty and penalty demanded by Commissioner.
Issue 1: Denial of benefit of Notification No. 64/95-C.E.
The appellant, a PSU, sought waiver of pre-deposit and stay of recovery for duty and penalty demanded by the Commissioner for the period July to October 2007. The dispute arose as the benefit of Notification No. 64/95-C.E. was denied to the appellant in relation to HSD oil supplied to the Indian Navy through M/s. Indian Oil Corporation Ltd.'s pipeline system. The Commissioner held that direct supply to the Navy was necessary for the Notification's benefit. The appellant cited a similar case involving M/s. Hindustan Petroleum Corporation Ltd. and M/s. Bharat Petroleum Corporation Ltd. where waiver was granted subject to producing bonds covering the duty liability. Reference was made to the High Court's order in a writ petition filed by M/s. BPCL. The Tribunal considered these arguments.
Issue 2: Comparison with previous cases and High Court judgments
The Revenue argued that a previous stay order involving M/s. HPCL should be followed, requiring the appellant to pre-deposit a reasonable amount of duty. The Revenue distinguished the High Court judgments in BPCL's and HPCL's cases, stating they were specific to those cases' circumstances. The Tribunal noted that a similar case involving the same assessee had resulted in a direction to pre-deposit a specific amount. The appellant urged following a stay order passed in a batch of appeals by M/s. HPCL and M/s. BPCL, but the Revenue successfully differentiated those cases from the present one.
Issue 3: Consideration of relevant legal provisions
The Tribunal examined an amending Notification (No. 37/07) adding a new entry granting exemption to oil companies supplying fuels directly or indirectly to the Indian Navy/Coast Guard for use on vessels. This new entry clarified that benefits could not be claimed for indirect supplies under the original Notification. The Tribunal directed the appellant to pre-deposit a specific amount towards the duty demand, considering all relevant aspects and legal provisions.
Conclusion
The Tribunal held that the appellant must pre-deposit a specified amount within four weeks. The request for an extension was not supported by sufficient evidence. The Tribunal emphasized that decisions in previous cases were not necessarily precedents for the present case, and each case's circumstances must be considered individually. Compliance was required by a specified date.
-
2009 (12) TMI 733
Issues Involved:1. Deletion of disallowance of Rs. 34,04,667 being prior period expenses. 2. Assumption of jurisdiction for framing reassessment u/s 147 of the Income-tax Act, 1961. Summary:Issue 1: Deletion of Disallowance of Prior Period ExpensesThe Revenue challenges the deletion of disallowance of Rs. 34,04,667 being prior period expenses allowed in this year. The Assessing Officer (AO) had disallowed these expenses on the grounds that they pertained to an earlier year and should not be allowed in the current year. However, the learned Commissioner of Income-tax (Appeals) held that the expenses were genuine and deductible, citing the jurisdictional High Court's decisions in CIT v. Vishnu Industrial Gases P. Ltd. and CIT v. Shri Ram Pistons and Rings Ltd. The Commissioner noted that the AO did not provide detailed reasons for deviating from the original assessment, which allowed these expenses, and thus, the disallowance was deleted. The Tribunal upheld this view, stating that the expenses were genuine and deductible, and there was no tax implication as both years resulted in a loss. Issue 2: Assumption of Jurisdiction for Reassessment u/s 147The assessee challenged the assumption of jurisdiction for framing reassessment u/s 147 of the Act. The original assessment was completed u/s 143(3) on December 30, 2005, at a loss of Rs. 8,21,41,827. The AO sought to reopen the assessment based on an audit objection regarding the disallowance of prior period expenses. The learned Commissioner of Income-tax (Appeals) held that the reassessment was valid as it was within four years from the end of the relevant assessment year, and the AO had jurisdiction if prima facie it was noticed that some income had escaped assessment. However, the Tribunal found that the AO did not agree with the audit objection and merely changed his opinion, which is not a valid ground for reassessment. Citing various judicial precedents, including CIT v. Kelvinator of India Ltd. and Jindal Photo Films Ltd. v. Deputy CIT, the Tribunal held that reassessment based on a mere change of opinion is not permissible. Conclusion:The Tribunal dismissed the Revenue's appeal and allowed the assessee's cross-objection, holding that the deletion of disallowance of prior period expenses was justified and the reassessment u/s 147 was invalid due to being based on a mere change of opinion. Pronounced in the open court on December 11, 2009.
-
2009 (12) TMI 732
Issues Involved:
1. Classification of income from money lending as business income.
2. Allowance of miscellaneous expenditure.
3. Determination of income from IFCI Bonds.
4. Disallowance of long-term capital loss on shares.
Detailed Analysis:
1. Classification of Income from Money Lending as Business Income:
The Department challenged the Commissioner of Income-tax (Appeals) [CIT(A)]'s decision to classify the assessee's income from money lending as business income. The CIT(A) had noted that in preceding and succeeding years, such income was consistently treated as business income. The Tribunal upheld the CIT(A)'s decision, stating that the Department failed to provide any material evidence to contradict the CIT(A)'s findings. Thus, the Tribunal dismissed the Department's grounds on this issue.
2. Allowance of Miscellaneous Expenditure:
The Department contested the CIT(A)'s allowance of Rs. 5,71,091 as miscellaneous expenditure, arguing that these expenses were claimed against exempt income, income from house property, and income from other sources. The CIT(A) had allowed Rs. 5,33,028 after disallowing certain personal expenses. The Tribunal agreed with the CIT(A), noting that the expenses were incurred for earning income and should be allowed under section 57(iii). The Tribunal dismissed the Department's grounds on this issue.
3. Determination of Income from IFCI Bonds:
The Department disputed the CIT(A)'s direction to assess the income from IFCI Bonds at Rs. 11,02,439 instead of Rs. 72,76,930. The CIT(A) relied on Circular No. 2 of 2002 by the Central Board of Direct Taxes, which states that for intermediate purchasers, the difference between the redemption price and the cost of the bond is taxable. The Tribunal upheld the CIT(A)'s decision, finding it in line with the circular and dismissed the Department's ground on this issue.
4. Disallowance of Long-term Capital Loss on Shares:
The assessee appealed against the disallowance of a long-term capital loss of Rs. 45,69,287 on the purchase and sale of shares of R. B. Credits P. Ltd. The CIT(A) and the Assessing Officer (AO) had questioned the valuation of the shares, with the AO using the intrinsic value method to determine the share value. The Tribunal noted the lack of material evidence to justify the purchase and sale prices of the shares. Therefore, the Tribunal remanded the matter back to the AO to provide appropriate findings after giving a reasonable opportunity of hearing to the assessee.
Conclusion:
The Tribunal dismissed the Department's appeal and allowed the assessee's appeal for statistical purposes, directing the AO to re-examine the issue of long-term capital loss on shares. The order was pronounced in the open court on December 30, 2009.
-
2009 (12) TMI 731
Issues:
(i) Ex parte order to charge TDS and interest without notice.
(ii) Time-barred order to charge TDS.
(iii) Liability to pay interest for late payment on TDS.
Analysis:
(i) Ex parte order to charge TDS and interest without notice:
The Assessing Officer issued a show-cause notice on August 26, 2004, detailing the lacunae and shortcomings, allowing the assessee to respond by September 10, 2004. The counsel for the assessee acknowledged the receipt of the notice, dismissing the contention of lack of notice. Therefore, this issue was dismissed.
(ii) Time-barred order to charge TDS:
Referring to a judgment by the Delhi High Court, it was established that the assessments for the financial years 1998-99, 1999-2000, and 2000-01 were time-barred as four years had elapsed from the initiation of proceedings. Following the court's decision, the Tribunal quashed the assessments for those years.
(iii) Liability to pay interest for late payment on TDS:
The counsel for the assessee argued that as per a CBDT circular, no interest was payable on late TDS deposit if the tax was deductible by the Government. However, the Tribunal found that the payments in question did not fall under the mentioned categories, hence the circular did not apply. The counsel also contended that as the contracts were for the supply of goods, TDS deduction was not required. The Tribunal, considering the provisions of section 201 and 201(1A) of the Income-tax Act, held that the assessee was liable to pay interest if tax was deducted but not deposited. Therefore, this issue was decided in favor of the Revenue.
In conclusion, the Tribunal partially allowed the appeals by the assessee, dismissing the issue of lack of notice for TDS and interest, quashing the time-barred assessments, and ruling in favor of the Revenue regarding the liability to pay interest for late TDS payment.
-
2009 (12) TMI 730
Issues:
Challenge to annulment of block assessment order by Commissioner of Income-tax (Appeals) due to time limitation under section 158BE(1)(b) of the Income-tax Act.
Analysis:
The appeal by the Revenue challenges the annulment of the block assessment order by the Commissioner of Income-tax (Appeals) based on the time limitation issue under section 158BE(1)(b) of the Income-tax Act. The crux of the matter revolves around the legality of the assessment framed under section 158BC, which was contended to be beyond the prescribed time limit. The appellant argued that the assessment, passed on June 3, 2005, was barred by limitation as per the provisions of section 158BE of the Act, citing the Supreme Court's judgment declaring the order directing audit under section 142(2A) as illegal and without authority of law.
The Commissioner of Income-tax (Appeals) extensively deliberated on the issue, considering the Supreme Court's decision and the absence of any communication confirming a stay on the Supreme Court's judgment. The Commissioner concluded that the block assessment order, dated June 3, 2005, had become time-barred as per the provisions of section 158BE of the Income-tax Act, as the extended period provided under the proviso to Explanation 1 to section 158BE(2) would not be available to the Assessing Officer. Consequently, the Commissioner annulled the assessment order due to being barred by limitation.
Upon appeal, the Tribunal referred to a Special Bench decision that analyzed similar issues and Supreme Court judgments. The Tribunal disagreed with the Commissioner's annulment of the assessment order, following the principle that the assessment should be set aside to the Assessing Officer for a fresh assessment after affording a reasonable opportunity of being heard to the assessee. The Tribunal held that the assessment cannot be annulled but should be restored back to the Assessing Officer for a fresh assessment, aligning with the decisions of the Supreme Court and the Tribunal's previous rulings.
In conclusion, the Tribunal allowed the Revenue's appeal for statistical purposes, restoring the matter to the Assessing Officer for framing a fresh assessment in compliance with the legal provisions and principles outlined in the judgments and decisions referenced during the proceedings.
............
|
9911796707
