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Showing 341 to 360 of 740 Records
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2008 (4) TMI 471
Cenvat Credit - The Commissioner (Appeals) has disallowed the Cenvat credit of service tax paid on input services namely, charge for getting cement brand price and overhauling of DG set installed in the power plant. Held that - Now the law is well settled that Cenvat credit used on inputs/capital goods used in power plant set up by the manufacturer is admissible if the final product is dutiable and therefore, in this case also the Cenvat credit of input ser vices for overhauling of DG set is admissible. Accordingly, the appeal is allowed on the above terms.
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2008 (4) TMI 470
Civil Construction – The assessee firm carried on the business of construction of roads. The case was reopened by issuing the notice under section 148 of the Act and the assessing officer rejected the accounts and the accounting system followed by the assessee while passing the assessment order u/s 143(3) of the Act. The Commissioner (Appeal) allow the appeal filed by assessee. Tribunal justified the of the Commissioner (Appeals) applying a net profit rate of 12 percent. It also held that the assessee was not entitled to depreciation since it had been allowed while determining the income by applying the net profit rate on the gross receipt. No appeal by revenue. Held that- there was no error in the order of Tribunal.
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2008 (4) TMI 468
Industrial undertaking – Commissioner initiate proceeding on the ground that since the manufacturing work was done by you on the machine hired by you and you have not got your own machines you are not entitled for deduction under section 80-I of the Act. The deduction was therefore wrongly allowed by Assessing officer. Held that- since it was found by the Tribunal that the machinery and plant used by the assessee were not new, the assessee was not entitled to the special deduction u/s 80I of the Act.
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2008 (4) TMI 467
Business Expenditure- . The assessee had incurred some expenditure towards product development. It appears that the assessee was not financially sound and was a loss making concern and therefore, instead of claiming the entire deduction for product development expenses as a revenue expenditure in one year, it claimed the deduction on a deferred revenue basis. The Assessing Officer passed an assessment order under section 143(3) of the Income Tax Act, 1961 and allowed 10 percent. of the expenses in the assessment year 1996-97. In the subsequent years, the Assessing Officer treated the assessee’s claim under section 35D of the Act and disallowed the expenditure claimed by the assessee as having been incurred in earlier years. The Commissioner (Appeals) confirmed the order of the Assessing Officer. The Tribunal held that the claim of the assessee was to be allowed as the expenditure was genuine and also that the claim under section 35D was for preliminary expenses and not for product development expenses. Held that-the expenditure having been found to be genuine, the expenditure not having been claimed under section 35D of the Act and the expenditure having been accepted earlier by the Assessing Office, the product development expenses were allowable.
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2008 (4) TMI 465
Business loss- The assessee had taken a loan in foreign exchange from the Citi Bank, UK. It appears that a part of the loan amount was utilized for purchase of capital equipment and that was included in capital work-in-progress. The remaining amount of was utilized by the assessee for its business purposes that is of money-lending and bill discounting. Due to fluctuation in the rate of foreign exchange the assessee suffered a loss and claim deduction. The Assessing officer as well as Commissioner (Appeals) held that since the amount borrowed on capital account the loss would not be treated as revenue loss. Tribunal reversed the order. Held that- though the assessee might have originally borrowed the amount for the purpose of import of capital goods or setting up of plant at the time when the amount was utilized the loan amount had undergone a change and had assumed a new character of stock in trade or circulating capital and, therefore any loss suffered by the assessee on account of Foreign Exchange fluctuation would have to be treated as revenue loss. Thus dismiss the appeal of revenue.
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2008 (4) TMI 462
Purchase of Immovable property- It is essential that the Appropriate Authority should first determine the “ fair market value” of the property in question in the light of the attending circumstances because without determining the fair market value it is not only difficult but impossible to state that the apparent consideration is lower than the market value by 15 percent. or more. Held that- the appropriate authority had not fixed any fair market value. The Appropriate Authority had not given any credence to the valuation report submitted by the petitioner as well as the comparable sale instances referred to by the petitioner. The Appropriate Authority ought to have furnished the copy of the valuation report to the petitioner which was admittedly not done in this case. Hence, the order was clearly violative of the principles of natural justice. The order of pre-emptive purchase was not valid.
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2008 (4) TMI 460
Business Expenditure-Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the expenditure incurred towards the foreign travel of the managing director as business expenditure when no proof or records were available to claim it as a business expenditure? Commissioner (Appeals) held that there was no evidence for claiming such expenditure thus confirm the demand. Tribunal allow the claim. Held that- the matter has to be heard in detail by the Tribunal with reference to the explanation offered on February 3, 1999, and fresh findings have to be recorded. Hence, the order passed by the Tribunal is hereby set aside and the matter is remitted back to the Tribunal for fresh consideration of the explanation offered by the assessee by way of note dated February 3, 1999, and pass appropriate orders.
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2008 (4) TMI 458
Search and seizure- block assessment- The respondent-assessee has been engaged in the business of hire purchase, leasing of assets and intercorporate deposits, etc. Between January 3, 1997 and February 28, 1997 a search was conducted under section 132 of the Act by the Income tax Department in the premises of the assessee. During the said search certain incriminating documents were found which transpired that the assessee-company had not disclosed its true and correct income in its returns for the preceding assessment. Therefore, notices under section 158BC of the Act were issued on January 13, 1997 and July 10, 1997 against the respective assessees requiring them to submit the returns of income disclosing therein their true and correct income for the block assessment period. Assessee filed appeals before the Tribunal contending that the block assessment order were barred by limitation. The revenue challenged the maintainability of the appeals. Held that- allowing the appeals, the assessee ought to have filed these appeals against the order of the block assessment before the Commissioner (Appeals) and not before the Tribunal and the Tribunal has no jurisdiction to entertain the appeals and its order could not be allowed to sustain in law. Since the search was initiated in both the case after January 1 1997, under section 158(1)(b), the limitation for completion of block assessment under section 158BC was two years. Therefore, the block assessment orders passed against the assessee were within the period of limitation.
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2008 (4) TMI 455
Unaccounted cash credit- “Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the Commissioner of Income-tax (Appeals) in deleting the addition of Rs.18,00,000 made by the Assessing Officer under section 68 of the Act, in respect of unaccounted cash credit?” held that- the Assessing officer was to verify whether the creditor had paid tax on the sum of Rs. 18 lakhs which had been added as cash credit in the hands of the assessee and which the Tribunal had directed to be deleted.
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2008 (4) TMI 452
Reassessment- The Assessing Officer reopened the assessment by notice issued under section 148 of the Act on the ground that the interest income and investments made in fixed deposits had escaped assessment within the meaning of section 147 of the Act. The Assessing officer completed the assessment making the various additions. The Commissioner (Appeals) confirmed the order of the Assessing Officer. The Tribunal held that the reopening of the assessment being based on mere suspicion and without any material the assessment was liable to be cancelled. Held that- it was clear that the statement by the asseseee under section 132(40 of the Act were retracted not once but twice and that the Department had accepted the retraction. No cogent and valid reason had been assigned by the Assessing Officer for reopening assessment. There was no good or sufficient reasons for reopening of the assessment under section 148 of the Act against the assessee.
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2008 (4) TMI 449
Capital gains - “Whether capital value of such deemed interest to the extent it has been charged lesser than the market rate can be considered as consideration for grant of lease in respect of which the capital gains has to be computed?” - Commissioner (Appeals) has allowed the appeal of the assessee and set aside the order of the learned Assessing Officer, assessing capital gain at an amount of Rs. 51,39,366, on the ground of treating it to be the income derived by the assessee by way of capital gain, as the difference in the rate of interest on the security amount deposited with the assessee, which interest was stipulated to at the rate of 9 per cent. while, according to the assessing authority, interest rate was 18 per cent., therefore, this difference between 9 and 18 per cent. has been taken to be capital gain. – There is no evidence to show that market rate of interest more than 9 percent – Differential interest cannot be considered as capital gains -
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2008 (4) TMI 446
Interest on borrowed capital - Whether, Tribunal is right in law m upholding the order of the Commissioner of Income-tax (Appeals) in deleting the addition made by the Assessing Officer on account of notional interest on the money advanced by the assessee to their sister concerns, without charging any interest - In none of these cases, a finding has been recorded as to whether the interest free loan was given by the assessee to their sister concerns or their directors not as a measure of commercial expediency. Before disallowing the question of deduction of interest amount pertaining to the interest free loan advanced to the sister concerns or its directors, it is incumbent on the authorities to record such a finding. Therefore, we are of the opinion that the impugned orders, passed by the Income-tax Appellate Tribunal, are not sustainable and the same are, hereby, set aside. The matter is remitted to the Income-tax Appellate Tribunal to reconsider the matter in the light of the principle laid down by the Supreme Court in S. A. Builders Ltd. ‘s case
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2008 (4) TMI 443
Valuation as to whether the additional discount offered to holders of advance license can be included in the assessable value or not - . It is not disputed that the appellant was supplying the same materials at a higher price and in respect of advance licence holders who surrendered the rights to the appellant gave the same materials at a specially discounted price. - In this case, the additional discount given to the advance licence holders are clearly an additional consideration which influence the sale price - The value enhancement for the purpose of demand of duty is legal and proper. - The claim that the appellant was having a bona fide belief that the additional discounts are permissible has to be accepted and demand of duty has to be confined to duty within the normal period of limitation. No penalty will be justified. - In the present case, admittedly, the clearances in question were not effected by following the 2001 Rules, a requirement laid down under Notification 44/2001-C.E. (N.T.) for the purpose of claiming the benefit of Rule 19(2) of the Central Excise Rules, 2002. - I need not embark on further discussion on other conditions of Notification 44/2001. Where it is found that a mandatory condition was not satisfied by the assessee, he was not entitled to claim duty-free clearance of the goods under Rule 19(2). The issue is held against the appellants. – Held that benefit is not available - Rules in contradistinction from circulars, instructions etc. stand on a higher footing and hence can hardly be said to be hollow pieces of legislation. They are made to be complied with. In the present case, admittedly, the clearances in question were not effected by following the 2001 Rules, a requirement laid down under Notification 44/2001-C.E. (N.T.) for the purpose of claiming the benefit of Rule 19(2) of the Central Excise Rules, 2002. I can hardly consider that requirement to be relaxable. - Coming to revenue neutrality, I find that this issue has been debated by both sides with extensive reference to the provisions of EXIM Policy and the Handbook of Procedure. On the one hand, learned counsel has argued that, as the supply of goods in question to advance licence holders were ‘deemed exports’ under para 8.2(a) of Chapter 8 of EXIM Policy, 2002-07, the assessee was entitled to refund of terminal excise duty – Held that assessee as deemed exporter could not claim benefit of refund of terminal excise duty going by Handbook of Procedures – plea of revenue neutrality not sustainable – Appeal allowed
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2008 (4) TMI 441
The appellant-Deputy Commissioner of Income-tax has filed this appeal against the order passed by the learned Judicial Magistrate acquitting the accused under section 256 of the Criminal Procedure Code for non-appearance of the complainant. – Difference between discharging accused and acquitting accused - The learned Magistrate without understanding the procedure to be adopted by the court in this case and also invoking the wrong provision of section 256 of the Criminal Procedure Code, had acquitted the accused. This court holds that section 256 of the Criminal Procedure Code is not applicable to this case which is covered under Chapter XIX of the Criminal Procedure Code. The acquittal of the accused has to be set aside – Trial court ought not to have acquitted accused for absence of complainant - the criminal appeal is allowed
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2008 (4) TMI 436
Rejection of transaction value – order of tribunal - in view of the majority decision of the Tribunal, the appeal of the Revenue was allowed thus rejecting the transaction value as determined by the first appellate authority - It is settled law that unless transaction value is rejected for extraordinary or special reasons, the same has to be accepted. - Tribunal has fallen in error in taking a decision contrary to the principle laid down by this court in case of Eicher Tractors - Under the circumstances, the impugned order of the Tribunal and the adjudicating authority are set aside and that of the first appellate authority is restore. The appeal is allowed accordingly. – Tribunal’s order contrary to principle laid down by SC in precedent decisions, not sustainable
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2008 (4) TMI 432
Prohibited goods vis-avis Dutiable goods vis-à-vis Exempted goods - violation of the provisions of the Customs Act - Section 111 that the Act deals with “prohibited goods” and “dutiable goods” as two identifiable and separate categories. Goods which are dutiable but which are exempted from duty subject to conditions cannot become prohibited if these conditions are violated; they only become dutiable. Therefore, when it is accepted by both parties that the goods were imported as per Notification No. 20 of 1999, we are unable to see anything in the relevant clause in the said Notification which persuades us to come to the conclusion that the goods were prohibited – the goods in question are exempt from duty wholly or partially subject to certain conditions – The fact that subsequently a decision was taken because of the policy of the Government, which rendered the fertilizer plant unviable, would not justify a conclusion that the condition subject to which exemption from duty was granted had been violated - As per Section 125 of the Customs Act, if the goods are not prohibited, then the adjudicating officer shall give to the owner of the goods an option to pay in lieu of confiscation, such fine as the officer thinks it fit. It is only when it is a prohibited goods that the officer has the discretion and it is open to him not to give the option to pay fine in lieu of confiscation. Therefore, the finding of the learned Judge that the goods are prohibited is not correct - We only hold that the question whether there was suppression and fraud must be proved by one who alleges fraud; the question of collusion and conspiracy must also be proved by the one who alleges it. These are questions which have to be proved by adducing evidence.
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2008 (4) TMI 428
Deemed dividend - business transactions - assessee is engaged in the business of a travel agency - assessee was involved in the booking of resorts for the customers of two companies and entered into normal business transactions as a part of its day-to-day business activities - Assessing Officer came to the conclusion that because of the shareholding pattern, financial transactions would fall in the category of “deemed dividend” defined under section 2(22)(e) - Being a travel agency, it had regular business dealings with the concerns dealing with holiday resorts and the tourism industry. Therefore, since the transactions were normal business transactions, which were carried out during the course of the relevant previous year, they cannot be described as advances or loans, which form a distinct category of financial transactions. Under the circumstances, the Tribunal rightly came to the conclusion that since these transactions did not represent loans or advances, the provisions of section 2(22)(e) of the Act were not at all applicable. – Hence not taxable as deemed dividend
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2008 (4) TMI 424
Issues Involved:
1. Legitimacy of the receipt of Rs. 23,15,000 by the assessee.
2. Applicability of Section 69A of the Income Tax Act.
3. Compliance with Section 3(c) of the Foreign Exchange Management Act (FEMA), 1999.
4. Adequacy of evidence and independent enquiry by the Assessing Officer (AO).
5. Onus of proof and the right to cross-examine witnesses.
Issue-wise Detailed Analysis:
1. Legitimacy of the receipt of Rs. 23,15,000 by the assessee:
The Revenue concluded that the amount of Rs. 23,15,000 received by the assessee from Shri K. Mohd. Imran between November 2002 and January 2003 was escaped income for the assessment year 2003-04. The assessee claimed that the money was received on behalf of his brothers and brother-in-law for the construction of their houses. However, statements from his relatives, obtained by the AO, denied sending any money through non-bank channels. The CIT(A) held that the onus was on the assessee to explain the source of the funds, which he failed to do satisfactorily.
2. Applicability of Section 69A of the Income Tax Act:
The AO assessed the amount under Section 69A of the IT Act, which pertains to unexplained money, bullion, jewelry, or other valuable articles. The Tribunal found that the AO did not make any independent enquiry about the cash balance, investments, or assets owned by the assessee for the relevant assessment year. The only evidence relied upon was letters signed by Shri Abdul Hameed on behalf of his brothers and brother-in-law, which were deemed to lack evidential value. The Tribunal concluded that the AO was not right in law in assessing the amount under Section 69A.
3. Compliance with Section 3(c) of the Foreign Exchange Management Act (FEMA), 1999:
Section 3(c) of FEMA prohibits receiving any payment by order or on behalf of any person resident outside India otherwise than through an authorized person. The assessee was charged under this section and penalized by the Directorate of Enforcement for receiving Rs. 23,15,000. The Tribunal noted that the charge and penalty under FEMA indicated that the amount was received on behalf of the assessee's relatives abroad, not as his own income.
4. Adequacy of evidence and independent enquiry by the Assessing Officer (AO):
The Tribunal criticized the AO for not conducting an independent enquiry and relying solely on documents and statements obtained from the Directorate of Enforcement. The AO did not verify whether the amount received by the assessee was diverted to his relatives or appropriated for himself. The Tribunal emphasized that the Revenue must rely on the entire set of documents from another authority, not just parts of it.
5. Onus of proof and the right to cross-examine witnesses:
The Tribunal observed that the assessee was not given the opportunity to cross-examine the persons whose statements were relied upon by the AO. The assessee's counsel argued that the statements from his relatives denying receipt of money through non-bank channels were made out of fear of penal action by the Directorate of Enforcement. The Tribunal found that the Revenue's reliance on partial documents from the Enforcement Directorate was unjustifiable and that the assessee should not be taxed unless it was proved beyond doubt that the income was generated for him alone.
Conclusion:
The Tribunal allowed the appeal filed by the assessee, concluding that the amount of Rs. 23,15,000 was not unexplained money belonging to the assessee for the assessment year 2003-04. The Tribunal found that the assessee acted as a conduit for the funds received on behalf of his relatives and that the AO's assessment under Section 69A of the IT Act was not in accordance with law. The Tribunal also highlighted the lack of independent enquiry and the improper reliance on partial evidence by the Revenue.
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2008 (4) TMI 422
Issues Involved:
1. Jurisdiction of the AO under Section 147 of the IT Act, 1961.
2. Deletion of addition of Rs. 4,93,739 on account of capital gains by CIT(A).
Detailed Analysis:
1. Jurisdiction of the AO under Section 147 of the IT Act, 1961:
Facts:
The assessee challenged the AO's assumption of jurisdiction under Section 147 for reassessment, arguing that the AO did not apply his mind while recording reasons for reopening the assessment. The AO had recorded facts contrary to the file and acted on mere assumptions.
Arguments by Assessee:
- No application of mind by the AO.
- The AO acted on assumptions and recorded incorrect facts.
- The reasons for reopening were based on directions from superior authorities without independent application of mind.
- Reliance on case laws: CIT vs. T.R. Rajakumari and Sheo Narain Jaiswal & Ors. vs. ITO.
Arguments by Department:
- The reasons recorded by the AO were independent and not influenced by superior authorities.
- The chronology of events does not indicate that the AO blindly followed superior directions.
Tribunal's Findings:
- The reasons recorded by the AO were independently made and did not show any blind following of superior directions.
- The assessee failed to demonstrate how the AO's reasons were influenced by superior authorities.
- The case of Asstt. CIT vs. Rajesh Jhaveri Stock Brokers (P) Ltd. was cited, emphasizing that "reasons to believe" means cause or justification, not established fact of escapement of income.
- The AO had sufficient cause or justification to believe that income had escaped assessment.
Conclusion:
The Tribunal rejected the assessee's grievance regarding the AO's assumption of jurisdiction under Section 147, stating that the AO had valid reasons to believe that income had escaped assessment.
2. Deletion of Addition of Rs. 4,93,739 on Account of Capital Gains by CIT(A):
Facts:
The AO added Rs. 4,93,739 as capital gains in the hands of the assessee, contending that the assessee sold a plot of land and failed to disclose the capital gain. The assessee argued that the plot was sold in February 1997, and the capital gain did not arise in the assessment year 2001-02.
Arguments by Department:
- The assessee's claim of selling the plot in February 1997 was not supported by documentary evidence.
- The AO relied on the statement of Shri Ramesh Kumar, which indicated that the assessee was the real owner of the plot until it was sold in April 2000.
Arguments by Assessee:
- The first power of attorney was executed in favor of Shri Vijay Kumar in February 1997.
- The assessee was the beneficial owner only until February 1997, and the plot was sold through a power of attorney, a legally recognized mode of transfer.
Tribunal's Findings:
- The CIT(A) held that the AO's case was based on the statement of Shri Ramesh Kumar, which was not confronted to the assessee, violating the principle of natural justice.
- The Department failed to establish that the income had escaped assessment.
- The transfer through power of attorney in February 1997 was a legally recognized mode of transfer.
- The capital gain did not arise in the assessment year 2001-02.
Conclusion:
The Tribunal affirmed the CIT(A)'s findings and held that the addition of Rs. 4,93,739 was rightly deleted, as the capital gain did not arise in the assessment year 2001-02.
Final Decision:
- The cross-objections filed by the assessee were partly allowed.
- The appeal filed by the Department was dismissed.
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2008 (4) TMI 420
Cancelling the society registration u/s 12AA(3) - Charitable Or Religious Trust - the registration granted to the assessee-Society on 14-1-1998.
HELD THAT:- We find from the record that for the AY 1997-98, this issue stands decided in favour of the assessee by the Tribunal (SMC). This was followed by the Division Bench of the Tribunal for the AY 1997-98 in the case of the assessee-Society.
Unquestionably, the onus for proving the existence of factors calling for cancellation granted to an institution is on the Department rather than on the institution. In the present case, as noticed, the CIT has miserably failed to discharge such onus.
Where a finding stands recorded that no part of the income of the Society was misutilised and the Society is a registered Society, registration cannot be refused. It has been so held in Dy. CIT v. Cosmopolitan Education Society [1999 (8) TMI 13 - RAJASTHAN HIGH COURT].
In the present case also, it is seen that there is no finding recorded by the learned Commissioner of Income-tax that the amount has been utilised by the members of the assessee-Society for their personal use and that withdrawal from the bank accounts have not been credited in the accounts of the assessee-Society. Thus, the cancellation of the registration granted to the assessee-Society has been erroneously ordered.
Therefore, we do not find any force in the order cancelling the registration already granted to the assessee-Society. The CIT's order is thus liable to be set aside and cancelled on merit. Ordered accordingly.
Assessee has raised an alternative contention that the provision in the Act regarding cancellation of registration, i.e., section 12AA was introduced with effect from 1-10-2004 and that this provision cannot be invoked retrospectively. On specific query, the learned counsel for the assessee stated at the bar that this ground has been raised only in the alternative, in the event of the merits of the case going against the assessee. Since the merits of the case have been dealt with and decided in favour of the assessee as above, this ground raised by the assessee is not being gone into by us.
Another alternative ground raised by the assessee, is that the learned CIT erred in cancelling the registration without providing reasonable opportunity of being heard to the assessee-Society. This ground stands rejected as withdrawn on the request of the learned counsel for the assessee.
In the result, the appeal of the assessee stands partly allowed, as indicated.
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