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Showing 361 to 380 of 712 Records
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2008 (3) TMI 356
Issues Involved:
1. Validity of notice issued u/s 148.
2. Applicability of s. 150(2) regarding time-barred reassessment.
3. Assessment of enhanced compensation under s. 45(5).
Summary:
1. Validity of notice issued u/s 148:
The Tribunal held that the notice issued u/s 148 on 28th March 2003 was valid. The assessee contended that the notice was barred by time, but the Tribunal allowed the plea under r. 27 of the ITAT Rules, recognizing that service of a valid notice u/s 148 is mandatory for reassessment. The Tribunal cited the Supreme Court's position in Y. Narayana Chetty & Anr. vs. ITO, emphasizing that an invalid notice renders reassessment proceedings void.
2. Applicability of s. 150(2) regarding time-barred reassessment:
The Tribunal examined whether the reassessment notice was time-barred under s. 150(2). It was determined that on 22nd March 1990, the AO could have validly issued a notice u/s 148 for the asst. yr. 1980-81, as the time-limit under s. 149(1)(b)(iii) had not yet elapsed. The Tribunal rejected the assessee's contention that the law as of 28th March 2003 should govern the notice issuance. The Tribunal also discussed conflicting judgments from various High Courts but ultimately followed the Andhra Pradesh and Calcutta High Courts' view that the notice was valid.
3. Assessment of enhanced compensation under s. 45(5):
The Tribunal addressed the issue of assessing enhanced compensation received by the assessee. The CIT(A) had held that the enhanced compensation received in November 1985 should be assessed in the asst. yr. 1986-87 under s. 45(5). However, the Tribunal noted that s. 45(5) came into effect only from 1st April 1988 and was not applicable to the asst. yr. 1980-81. The Tribunal clarified that the enhanced compensation should be assessed under the law prevailing in the asst. yr. 1980-81. The matter was remanded to the AO to ascertain whether the enhanced compensation was received as income and the nature of the amounts received in November 1985.
Conclusion:
The appeal of the Department was partly allowed. The Tribunal upheld the validity of the notice issued u/s 148 and remanded the issue of assessing enhanced compensation to the AO for further examination.
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2008 (3) TMI 355
Deduction of tax at source under s. 194H - business of providing cellular mobile telephone services to subscribers - offers discount for prepaid calling services to its distributors - relationship of principal and agent between the assessee and PMA - HELD THAT:- It is clear that discount allowed on transactions resulting in outright purchases cannot be treated as brokerages or commission. There should be in existence the relationship of principal and agent in order to bring the discount in the ambit of commission or brokerage.
Sec. 182 of Indian Contract Act, 1872, defines the terms 'agent' and 'principal'. An agent is a person employed to do any act for another or to represent another in dealing with third person. The person for whom such act is done or who is so represented is called the principal. An agent in whom the principal places trust and confidence stands in a fiduciary position in relation to the principal.
Whether the PMAs were acting as agents of the assessee or were outright purchasers of goods supplied by the assessee - In the case before the goods are sold to the PMA who in turn transfers goods to retailer to be sold to the end users. The retailers are appointed by the PMA though with the approval of the assessee but they are working under the instructions of PMAs. Termination of the retailers is coterminus with the termination of the agreement with PMA. In our considered view the legal relationship between the assessee and PMA is that of seller and purchaser. We do not find any condition in the agreement from which it can be inferred that PMA stands in a fiduciary position in relation to the assessee. It is admitted by the Revenue that the agreement in substance is the agreements entered into between the assessee and the PMA is in the nature of contract to sale and not contract of the agency. Therefore, the discount allowed by the assessee to PMA will not fall in the definition of commission or brokerage.
The legal issue arising out of additional ground raised relates to the issue whether tax can be collected from the assessee when PMAs have paid tax on their income. It is a settled law as held by several Courts that same income cannot be subject to tax twice. Therefore, the additional ground of appeal raised by assessee is admitted being a question of law in view of decision of Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT [1996 (12) TMI 7 - SUPREME COURT]. However, since we have held that the discount allowed by the assessee to PMAs is not visited by the provisions of s. 194H, the issue becomes of mere academic interest and hence we do not consider it necessary to decide the same.
Levy of interest under s. 201(1A) - Since we have held that discount paid by the assessee to PMA is not in a nature of commission or brokerage the provisions of s. 194H will not be applicable. Consequently, the assessee was not liable to deduct tax at source. Therefore, interest under s. 201(1A) cannot be levied on the amount of discount on which the tax was not deducted at source. The AO is directed to delete levy of interest under s. 201 (1A) of the Act.
Non-deduction of tax at source under s. 194J - payment of interconnect/port and toll charges by one mobile telephone service provider to another service provider - We find that issue is covered in favour of assessee by the order of Tribunal relied upon by the learned Authorised Representative of the assessee. In the case of HFCL Infotel Ltd.[2005 (12) TMI 217 - ITAT CHANDIGARH-B], payments of interconnect charges to BSNL for providing telephone communicating services to its subscribers were made by the assessee.
Since the decision is squarely covered by the decision of Hon'ble Madras High Court in the case of Skycell Communications Ltd. [2001 (2) TMI 57 - MADRAS HIGH COURT], and also by the decision of Tribunal Chandigarh and Delhi Benches, and no decision to the contrary relied upon by the assessee and learned CIT(A) have been cited by the Department, respectfully following the precedent it is held that payment made for interconnect services cannot be treated as payment for technical services as provided under s. 194J of the Act. Accordingly, it is held that learned CIT(A) was justified in deleting the addition.
In the result, appeals filed by assessee are allowed and appeal filed by the Revenue is dismissed.
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2008 (3) TMI 354
Issues Involved:
1. Direction for special audit under section 142(2A).
2. Validity of the assessment based on the special audit report.
3. Limitation period for completing the assessment.
Issue-wise Detailed Analysis:
1. Direction for Special Audit under Section 142(2A):
The assessee challenged the direction of the Assessing Officer (AO) for a special audit under section 142(2A), arguing that there was no complexity in the accounts requiring such an audit. The AO had observed discrepancies in the accounts, such as differences in expenses claimed and TDS amounts, discrepancies in outstanding amounts with certain parties, and intertwined accounts with sister concerns. Based on these observations, the AO directed a special audit with the previous approval of the Commissioner. The assessee argued that the direction was invalid as it was given without providing an opportunity of hearing, citing the Supreme Court judgment in Rajesh Kumar v. Dy. CIT [2006] 287 ITR 91. However, the Tribunal held that the direction for special audit is not appealable under section 246, and the validity of such direction cannot be challenged before appellate authorities. The Tribunal noted that the direction was given by the competent authority and was followed by the assessee, who did not challenge it by filing a writ petition. Consequently, the period for special audit must be excluded from the limitation period for completing the assessment.
2. Validity of the Assessment Based on the Special Audit Report:
The assessee contended that the assessment based on the special audit report was invalid as the direction for the special audit was not legally tenable. The Commissioner of Income-tax (Appeals) rejected this plea, holding that the special audit report is relevant material for assessment under section 143(3), as supported by the Delhi High Court in Addl. CIT v. Jay Engineering Works Ltd. [1978] 113 ITR 389 and the Rajasthan High Court in Pani Devi v. Union of India [2000] 245 ITR 798. The Tribunal upheld this view, stating that the special audit report was a crucial part of the assessment process, and the AO had made the assessment based on facts gathered by the special audit, not merely on the auditor's opinion.
3. Limitation Period for Completing the Assessment:
The assessee argued that the assessment was barred by limitation, as the direction for special audit was invalid and the period for special audit could not be excluded. The Tribunal noted that the direction for special audit was given on March 24, 2005, and served on March 28, 2005, with an initial period of 120 days for submitting the audit report, which was extended twice. The audit report was submitted on September 14, 2005, and the assessment was completed on November 10, 2005. The Tribunal held that the period for special audit must be excluded from the limitation period, as the direction for special audit was valid and in force. The Tribunal also rejected the argument that the extension of the audit period was invalid due to the application for extension being filed after the expiry of the initial period, citing the Supreme Court judgment in CIT v. Ajanta Electricals [1995] 215 ITR 114, which held that in the absence of specific provisions, applications for extension can be filed even after the expiry of the initial period. Consequently, the Tribunal concluded that the assessment was completed within the statutory period and dismissed the grounds of appeal raised by the assessee.
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2008 (3) TMI 353
Issues involved: Assessment of deduction on account of loss due to dacoity u/s 28 and bad debts u/s 36(2)(i) for the assessment year 2001-02.
Assessment of deduction on account of loss due to dacoity:
The assessee, a company engaged in the business as jewellers and bullion dealers, claimed a deduction of Rs. 60 lakhs as a result of dacoity during which cash was lost while being taken to the bank for deposit. The Assessing Officer disallowed the claim stating it did not relate to the assessment year under consideration. The Commissioner of Income-tax (Appeals) upheld the disallowance, questioning the ownership of the lost money and the genuineness of the claim. The Tribunal found that the loss belonged to another entity, Balaji Enterprises, and could not be claimed as a deduction by the assessee-company. The Tribunal emphasized that losses of one entity cannot be adjusted against the profits of another entity, as per the provisions of the Income-tax Act. The claim for deduction on account of loss due to dacoity was thus denied.
Assessment of deduction as bad debts u/s 36(2)(i):
The Tribunal observed that the amount of Rs. 60 lakhs, treated as an advance recoverable from Madan Jain by Umesh Chand Gupta, did not meet the conditions of being considered a bad debt u/s 36(2)(i). The amount was not a debt arising in the course of business and did not go to swell the profits of the assessee. Additionally, the alternative claim for the amount to be allowed as a business loss u/s 28 was rejected as the loss belonged to Balaji Enterprises, not the assessee. The Tribunal emphasized that losses of one entity cannot be adjusted against the profits of another entity, as per the specific provisions of the Income-tax Act. The claim for deduction as bad debts u/s 36(2)(i) was thus disallowed.
In conclusion, the Tribunal confirmed the disallowance of the deduction of Rs. 60 lakhs, upholding the orders of the income-tax authorities. The appeal of the assessee was dismissed with no order as to costs.
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2008 (3) TMI 352
Issues involved: Appeal against addition of hospital expenses u/s 143(3) for assessment year 2004-05.
Summary:
The appeal was filed against the addition of hospital expenses for the whole time director. The Assessing Officer considered the medical expenses as personal and not allowable u/s 37(1). The Commissioner of Income-tax (Appeals) upheld the addition. The appellant argued that the expenses were a contractual obligation and incurred for business purposes. The Tribunal found that the director's medical expenses were reimbursed as per a board resolution and were necessary for business purposes. The Tribunal referred to relevant case laws and held that the expenses were allowable as a business expenditure. The Tribunal noted the significant increase in turnover after the director's recovery, indicating the business benefits derived from the medical treatment. Consequently, the appeal was allowed, and the medical expenses were deemed to be incurred wholly and exclusively for the purpose of business.
The Tribunal's decision was based on the contractual obligation of the company to reimburse medical expenses and the commercial expediency of such payments. The Tribunal emphasized the benefits derived by the company from the director's services and the increase in turnover post-recovery. The Tribunal distinguished the present case from previous judgments cited by the lower authorities, highlighting the full-time director's contractual entitlement to medical reimbursement. The Tribunal also considered the principle that where two views are possible, the one in favor of the assessee should be adopted. Ultimately, the Tribunal concluded that the medical expenses were necessary for the business and should be allowed as a business expenditure.
The Tribunal's decision highlighted the importance of contractual obligations and commercial expediency in determining the allowability of medical expenses for a full-time director. The Tribunal emphasized the positive impact of the director's recovery on the company's turnover, supporting the argument that the expenses were incurred for business purposes. By considering the contractual terms, commercial benefits, and relevant case laws, the Tribunal concluded that the medical expenses were justified as a business expenditure and allowed the appeal.
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2008 (3) TMI 351
Issues Involved:
1. Taxability of the appellant's income under Article 8 of the DTAA between India and Netherlands.
2. Nature of receipts from CSC India P. Ltd. and their tax treatment.
3. Applicability of Section 57(iii) for deduction of expenses.
4. Consistency in tax treatment across different assessment years.
Detailed Analysis:
1. Taxability under Article 8 of the DTAA:
The appellant contended that it is not subject to tax in India per Article 8 of the DTAA between India and Netherlands, which stipulates that "profits from the operation of aircraft in international traffic shall be taxable only in the State in which the place of effective management of the enterprise is situated." The appellant's effective management is in the Netherlands, and thus, its profits from international air traffic operations should not be taxable in India. The Tribunal agreed with this interpretation, noting that the appellant's activities, including handling cargo, are integral to its business of operating aircraft in international traffic and are not separate business activities.
2. Nature of Receipts from CSC India P. Ltd.:
The appellant received payments from CSC India P. Ltd. for the use of premises leased from the Airport Authority of India (AAI). The Assessing Officer and the Commissioner of Income-tax (Appeals) treated these receipts as income from other sources, arguing that the appellant had violated the terms of the licence agreement with AAI by allowing CSC to use the premises. However, the Tribunal found that the receipts were reimbursements for rent paid to AAI and not income. The Tribunal noted that the appellant had outsourced cargo handling to CSC, and the rent recovery from CSC was directly linked to the cargo handling business, thus falling under the scope of Article 8 of the DTAA.
3. Applicability of Section 57(iii):
The appellant argued that even if the receipts from CSC were considered income, they should be allowed as deductions under Section 57(iii) of the Income-tax Act, which permits deductions for expenses incurred wholly and exclusively for earning such income. The Tribunal agreed, noting that the rent paid to AAI and recovered from CSC were directly related and should cancel each other out, resulting in no taxable income.
4. Consistency in Tax Treatment:
The appellant pointed out that for other assessment years, similar additions were not made, invoking the principle of consistency. However, the Tribunal did not find this argument persuasive, noting that the principle of consistency or estoppel could not be applied merely because the additions were not made in earlier years.
Conclusion:
The Tribunal concluded that the appellant's receipts from CSC were not taxable in India under Article 8 of the DTAA, as they were integral to the appellant's business of operating aircraft in international traffic. Additionally, even if considered income, the receipts would be offset by corresponding expenses under Section 57(iii), resulting in no taxable income. The appeals were allowed, and the additions made by the Assessing Officer were deleted.
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2008 (3) TMI 350
Addition u/s 40A - Held that:- As per Departmental Representative that the necessary facts are not available on record to examine the contention of the assessee that its case falls in clause (k), (l) or (b) of Rule 6DD. We agree with the ld. Departmental Representative. The claim of the assessee would require examination of the facts with reference to the books of account so as to ascertain on which particular date payment was made and whether such date was bank holiday or not so as to ascertain the applicability of Rule 6DD(k). With regard to applicability of Rule 6DD(l) and Rule 6DD(b) also further facts are required to be examined. The learned counsel for the assessee has given the copy of the supply order issued by Sub-Divisional. Controller, Food and Supplies, Jangipur giving direction to the assessee to make the payment in cash. However, it was pointed out by the ld. Departmental Representative that these supply orders are dated 2007 and, therefore, will not be applicable to the year under consideration. What was the exact direction of the supply order in the accounting year relevant to assessment year under consideration would require to be examined. In view of the above, we deem it proper to set aside the orders of the authorities below on this point and restore the matter back to the file of the Assessing Officer.
Addition u/s 40A - Held that:- For the first time on 13-3-2006, the Assessing Officer asked the assessee to show cause why the payment exceeding ₹ 20,000 otherwise than by crossed or account payee cheque should not be disallowed under section 40A(3). The assessee furnished its explanation on 21-3-2006 claiming that its case falls within Rule 6DD(f)(ii). The Assessing Officer rejected the assessee's contention on the ground that the assessee could not prove that the parties, to whom the payment had been made, were either cultivators, growers or producers of raw hides and skins. However, it is evident that the Assessing Officer did not allow any opportunity whatsoever to the assessee to lead necessary evidence in support of its contention that the persons from whom hides and skins were purchased were the producers thereof. The CIT(A) has discussed the legal aspects of the issue at length, but the factual matrix of the case has not been examined even at his end. In view of the above, we set aside the orders of the authorities below on this point and restore the matter back to the file of the Assessing Officer and direct him to allow adequate opportunity to the assessee to produce necessary evidence in support of its contention.
Deduction u/s 80HHC - Held that:- Profits of business for the purpose of section 80HHC means the profits of business as computed under the head "Profits and gains of business or profession". Section 29 of the Income-tax Act provides that profits and gains of business shall be computed in accordance with the provisions contained in sections 30 to 43D of the Income-tax Act. Thus, whatever is the profits and gains of the business as computed by the Assessing Officer under the head "Profits and gains of business or profession", should be taken as profits of the business for the purpose of computation of deduction under section 80HHC. We, therefore, direct the Assessing Officer to recompute the deduction under section 80HHC as per our observation above.
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2008 (3) TMI 349
Issues Involved:
1. Computation of deduction u/s 80HHC with reference to export incentives including DEPB.
2. Whether profit on the sale of DEPB entitlement constitutes income chargeable to tax.
3. Determination of profit on the sale of DEPB entitlement.
4. Whether the entire sale proceeds of DEPB should be considered for proportionate increase of profits derived from exports.
Summary:
Issue 1: Computation of Deduction u/s 80HHC with Reference to Export Incentives Including DEPB
The assessee, engaged in the manufacturing and export of textile goods, claimed a deduction u/s 80HHC. The AO excluded 90% of export incentives (DEPB) while computing 'profits of business', resulting in a negative profit and denial of deduction u/s 80HHC. The CIT(A) confirmed the AO's order. However, subsequent amendments to s. 80HHC allowed the assessee to claim deduction on the profit from the sale of DEPB entitlement, leading to a revised computation of eligible profits.
Issue 2: Whether Profit on the Sale of DEPB Entitlement Constitutes Income Chargeable to Tax
The assessee contended that profit on the sale of DEPB entitlement should not be considered income as it is not included in the definition of income u/s 2(24). The Tribunal rejected this contention, citing Supreme Court judgments that the definition of 'income' is inclusive and not exhaustive. The profit on the sale of DEPB entitlement falls within the ambit of 'profits and gains' and is chargeable to tax.
Issue 3: Determination of Profit on the Sale of DEPB Entitlement
The assessee argued that only the profit, not the entire receipt from the sale of DEPB entitlement, should be taxed. The Tribunal agreed that profit should be determined after deducting any expenditure incurred. However, in this case, the assessee failed to prove any specific expenditure incurred in obtaining DEPB credit. The Tribunal held that the entire sale proceeds of DEPB entitlement should be considered as profit since no specific expenditure was incurred.
Issue 4: Whether the Entire Sale Proceeds of DEPB Should Be Considered for Proportionate Increase of Profits Derived from Exports
The Revenue's appeal contended that the entire sale proceeds of DEPB should be considered for proportionate increase of profits derived from exports. The Tribunal found this ground misconceived and prejudicial to the interests of Revenue, dismissing it as the Departmental Representative could not substantiate the argument.
Conclusion:
The Tribunal dismissed the appeal and cross-objection of the assessee, upheld the CIT(A)'s revised computation of eligible profits, and rejected the Revenue's appeal as misconceived. The profit on the sale of DEPB entitlement is chargeable to tax, and the entire sale proceeds should be considered as profit in the absence of specific expenditure incurred.
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2008 (3) TMI 348
Issues involved: Assessment of short term capital gains u/s 143(3) and 263 of the Income-tax Act, 1961; Maintainability of appeal before CIT(A); Computation of short term capital gains u/s 50 of the Income-tax Act.
The appeal was filed by the assessee against the order of the CIT(A)-XIII at Mumbai, challenging the assessment completed u/s 143(3) read with section 263 of the Income-tax Act, 1961 for the assessment year 2001-02. The CIT found that short term capital gains of Rs. 1,00,38,704 had escaped taxation, leading to the assessment being set aside for re-examination by the Assessing Officer.
The CIT(A) dismissed the appeal filed by the assessee, stating that the order appealed was to give effect to the direction of the CIT(A), and only the Tribunal had the authority to review the CIT(A)'s order. However, the ITAT found that the order of the Assessing Authority was passed in compliance with the CIT's direction and should have been reviewed on merit by the CIT(A), making the appeal maintainable.
Regarding the computation of short term capital gains u/s 50 of the Income-tax Act, the ITAT observed that the assessee had not claimed depreciation for several years, resulting in a high written down value of assets. The Assessing Officer applied notional depreciation, leading to the computation of short term capital gains. However, based on legal interpretations and precedents, the ITAT concluded that since no actual depreciation was allowed, there was no short term capital gains liability, and thus, deleted the addition of Rs. 1,00,38,704.
In conclusion, the ITAT allowed the appeal filed by the assessee, emphasizing that the written down value should be computed based on actual depreciation allowed, and since no depreciation was claimed or allowed, there was no short term capital gains liability.
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2008 (3) TMI 347
Issues Involved:
1. Rectification of Tribunal's order regarding the addition of speed money as undisclosed income.
2. Opportunity for cross-examination of Shri S. Srinivasan.
3. Levy of surcharge on the assessed income.
Issue-wise Detailed Analysis:
1. Rectification of Tribunal's order regarding the addition of speed money as undisclosed income:
The assessee filed miscellaneous applications seeking rectification of the Tribunal's common order dated 25th Aug., 2006, which had treated the speed money of Rs. 83,29,518 as undisclosed income under s. 158BC of the IT Act, 1961. The Tribunal initially upheld this addition based on the Explanation below s. 37(1) and the retrospective amendment by the Finance Act, 2002. However, upon reconsideration, it was noted that the speed money was recorded in the regular books of account and was not found to be false or untrue. The Tribunal acknowledged the distinction between "unlawful expenses" and "false expenses" and concluded that the speed money, although inadmissible under s. 37(1), could not be treated as undisclosed income under s. 158B(b). Consequently, the Tribunal rectified its earlier order and deleted the addition of Rs. 83,29,518 from the undisclosed income.
2. Opportunity for cross-examination of Shri S. Srinivasan:
The assessee contended that the Tribunal had erred in rejecting its ground for cross-examination of Shri S. Srinivasan, whose deposition was relied upon by the AO to make the addition of speed money. The Tribunal had initially rejected this ground, stating that the assessee did not request cross-examination at the assessment stage. However, the assessee argued that the AO had not informed them of the intention to use Srinivasan's deposition. The Tribunal did not delve into this issue further, as the rectification of the speed money addition rendered it moot.
3. Levy of surcharge on the assessed income:
The Tribunal had initially deleted the levy of surcharge based on the decision of the Hyderabad Special Bench in Merit Enterprises vs. Dy. CIT. However, the Supreme Court's decision in CIT vs. Suresh N. Gupta clarified that the proviso to s. 113 is clarificatory and retrospective, thereby justifying the levy of surcharge. Recognizing this, the Tribunal corrected its earlier order to uphold the levy of surcharge, provided there was any tax demand in the modified order.
Conclusion:
The Tribunal allowed the assessee's miscellaneous application to the extent of deleting the addition of Rs. 83,29,518 as undisclosed income and upheld the levy of surcharge in light of the Supreme Court's ruling. The issue of cross-examination was not further examined due to the rectification of the primary issue. The Tribunal's rectified findings were incorporated into the original order dated 25th Aug., 2006.
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2008 (3) TMI 345
Whether a non-resident Indian on transfer of his residence to India can be permitted to bring more than one firearm under the provisions of the Arms Act or the Rules framed thereunder or the existing Baggage Rules.
Held that:- Rule 8 stipulates that a person who is transferring his residence to India shall be allowed free of duty clearance of certain articles in his bona fide baggage to the extent mentioned in Column 1 of Appendix 'F' subject to the conditions mentioned in the corresponding entry in Column 2 of Appendix 'F'.
As crystal clear from the aforesaid provisions that only upto one firearm can be cleared on production of a valid licence under the Arms Act and on payment of the appropriate duty on the said firearm, in view of exclusion of firearms under Rule 8 read with Appendix 'F' of the Baggage Rules and para 2 of the notification No. 137/90-Cus. dated 20th March, 1990. The release of this one firearm is by virtue of the exercise of powers by the Central Government, as vested in the Central Government under Section 11 of the Arms Act, and the Central Government having by circular No. 63/95-Cus. dated 7-6-1995 permitted the release of one firearm under the "Transfer of Residence Form Revision" to the person concerned.
The learned Single Judge has correctly dismissed the writ petition as being without merit, and permitting the appellant to take back the detained firearms. It was further rightly ordered by the learned Single Judge that on the appellant's exercising such an option, the said firearms would be released to him as and when he chose to go abroad with the condition that he would not be permitted to bring the same into India. Appeal dismissed.
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2008 (3) TMI 344
Issues:
1. Non-payment of duty and penalty by respondent No. 2 as per Tribunal's order.
2. Compliance with undertaking given before the High Court.
3. Extension of stay against attachment of future manufacture/export of goods.
4. Consideration of stay application by the Tribunal.
Issue 1: Non-payment of duty and penalty by respondent No. 2 as per Tribunal's order
The case involved the petitioners, Commissioner of Central Excise and Customs, Surat-II, and Assistant Commissioner of Central Excise and Customs, Division-I, Ankleshwar, alleging that respondent No. 2, Tonira Pharma Ltd., had not paid the duty and penalty as directed by the Tribunal's order challenged in Tax Appeal No. 1102 of 2007. The petitioners were prepared to pay any outstanding amount against the duty or penalty liability in accordance with the judgment if needed.
Issue 2: Compliance with undertaking given before the High Court
The Assistant Solicitor General highlighted the statement made by the petitioners before the High Court, where they expressed readiness to pay the entire duty and penalty amount as per the impugned order. The Tribunal was directed to consider the stay application of Tonira Pharma Ltd. only after the payment of the duty and penalty as per the Tribunal's order dated 1-11-2006. The ad-interim stay against attachment of future manufacture/export of goods was subject to compliance with the payment.
Issue 3: Extension of stay against attachment of future manufacture/export of goods
The Tribunal had granted an extension of stay against the attachment of future manufacture/export of goods for Tonira Pharma Ltd. based on the undertaking given before the High Court. However, the petitioners argued that the company should not be allowed to continue enjoying the ad-interim stay without fulfilling their commitment to pay the dues as per the order decided against them.
Issue 4: Consideration of stay application by the Tribunal
The High Court directed that the Tribunal should not consider the stay application of Tonira Pharma Ltd. for extending beyond a specified date unless the company paid the duty and penalty amount as per the Tribunal's order. The ad-interim stay would cease to operate if the company paid the required amount, and direct service of the order was permitted on the same day.
This judgment emphasized the importance of compliance with tribunal orders and undertakings given before the court, ensuring that parties fulfill their financial obligations as directed by the legal authorities.
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2008 (3) TMI 343
Whether any discretion vests on the authorities under the Central Excise Act in quantifying the penalty imposable under Section 11AC of the Central Excise Act, 1944?
Whether in appeal filed by the Revenue against the order of the Commissioner of Central Excise (Appeals) setting aside the penalty levied against the assessee, the Tribunal was justified in not entertaining the plea of the assessee that in case appeal is allowed, the quantum of penalty may be reduced, on the ground that no cross-examination has been filed?
Whether mens rea in any form is part of consideration before penalty under Section 11AC can be imposed?
Held that:- On the face of a combined reading of provisions of Sections 11A(2B) and (2C), in view of the fact, that the matter relates to the period subsequent to receipt of the assent of President to the Finance Bill, 2001, in view of the fact, that leviable duty has been deposited immediately on 8-10-2001, while show cause notice was issued on 1-4-2002 only, no penalty under Section 11AC could be imposed. Appeal allowed.
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2008 (3) TMI 342
Stay/Dispensation of pre-deposit - Undue hardship - Held that:- As the Tribunal dismissed the application on 23-1-2001 and therefore, the petitioner moved this Court in March 2001. It cannot, therefore, be said that this petition suffers from delay, laches and acquisance. Even otherwise, looking to the injustice done to the petitioner-company, this is a fit case where this Court would entertain this petition.
Since the petitioner's appeal was dismissed only on the ground of non-compliance with the condition stipulated in the stay order, in the facts and circumstances of the case, we are inclined to set aside the order dismissing the petitioner's appeal and also the stay order dated 20-6-1997 and we are inclined to direct the Tribunal to hear the petitioner's appeal on merits and consider the petitioner's submission whether the petitioner is entitled to the benefit of judgment of the Tribunal rendered on 25-9-2000 as confirmed by the Hon'ble Supreme Court on 19-4-2006. Petition is allowed.
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2008 (3) TMI 341
Issues: Application for anticipatory bail under the Customs Act for alleged offenses related to importing a costly car without proper explanation of sources.
Analysis:
1. Issue of Investigation Completion:
The petitioner sought anticipatory bail due to the fear of arrest for alleged offenses under the Customs Act related to importing a costly car without clarifying the sources. The respondent argued that the investigation was incomplete and the petitioner needed to be arrested. The respondent highlighted suspicions of tampering with the car's engine and chassis numbers, suggesting the petitioner's involvement in illicit car imports. The court acknowledged the need for further investigation before granting anticipatory bail.
2. Source of Car Import and Duty Payment:
The respondent contended that the petitioner, previously employed abroad in a rent-a-car firm, imported a high-value car into India without clarifying the source of the car or how the duty was paid. Concerns were raised about possible tampering with the car's identification numbers and the petitioner's role in facilitating illicit car imports. The court agreed that detailed investigations were necessary before considering anticipatory bail.
3. Petitioner's Innocence and Cooperation:
The petitioner's counsel argued for anticipatory bail, asserting the petitioner's innocence and willingness to cooperate with the investigating officers. It was emphasized that any impropriety in the car import could be addressed under the Customs Act without the need for arrest and detention. The petitioner's willingness to cooperate was highlighted as a reason for granting anticipatory bail.
4. Court's Decision on Anticipatory Bail:
After hearing arguments from both sides, the court found merit in the respondent's opposition to granting anticipatory bail. The court believed that the respondent needed sufficient time for a thorough investigation into the alleged offenses, including the suspected tampering with the car's identification numbers and the circumstances of the car import. Consequently, the court dismissed the petition for anticipatory bail.
5. Discretion under Section 438 of Cr.P.C.:
The court, after considering all relevant aspects of the case, concluded that there were no compelling reasons to grant anticipatory bail under Section 438 of the Criminal Procedure Code. The court agreed with the Public Prosecutor that the petitioner should appear before the investigating officer or the Magistrate and seek regular bail through the standard legal process. The court emphasized the importance of following the ordinary course of law in such cases.
6. Final Verdict and Surrender Instructions:
In the final decision, the court dismissed the petition for anticipatory bail. The court directed the petitioner to surrender before the investigating officer or the Magistrate and apply for bail through the proper legal channels. It was emphasized that the Magistrate should promptly and fairly consider the bail application after notifying the Prosecutor, ensuring a lawful and expeditious process.
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2008 (3) TMI 340
Stay/dispensation of pre-deposit - Held that:- Since the Tribunal itself had granted an indulgence to the petitioners of furnishing Bank Guarantee of ₹ 2.25 lacs on 26-7-2007 and since the petitioner had already furnished a Bank Guarantee for further amount of ₹ 2.75 lacs on 17-10-2007, we have permitted the petitioners to make deposit towards duty demanded by Order in Original to the extent of ₹ 5 lacs including the Bank Guarantee of ₹ 2.75 lacs which shall be submitted before the Tribunal by 19-3-2008. The remaining amount of ₹ 5 lacs towards the duty shall be paid in cash within a period of one month from today.
The impugned order dated 5-12-2007 of the Tribunal is set aside and the Bank Guarantee for total amount of ₹ 5 lacs plus deposit of ₹ 5 lacs in cash in the aggregate ₹ 10 lacs in all shall be treated as the pre-deposit under Section 35F of the Act.
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2008 (3) TMI 339
The High Court of Judicature at Bombay upheld the decision of the CESTAT regarding a customs case. The court noted that the department did not challenge the Enquiry Officer's report, leading to the dismissal of the appeal. The appeal was dismissed based on the non-challenge to the findings of the Enquiry Officer.
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2008 (3) TMI 338
The High Court of Judicature at Bombay dismissed the appeal regarding a penalty under Section 112, citing a previous judgment where the court chose not to interfere as the question of law did not arise. The court found the provision to be mandatory, leading to the dismissal of the appeal.
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2008 (3) TMI 337
Kar Vivad Samadhan Scheme - meaning of the word 'pending' in Section 95(i)(c) of the said scheme - Held that:- Even irregular or incomplete filing of the appeal would come within the purview and ambit of Section 95(ii)(c) of the Act, the order of the learned single judge has to be set aside and is set aside. The appeals are allowed. No costs.
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2008 (3) TMI 336
Whether the Settlement Commission, without considering all the relevant documents pertaining to their claim regarding deduction of freight, which documents had been seized by the Excise Authorities and were in their possession, gave a finding that it was not possible to accept any deduction towards freight from the assessable value as claimed by the petitioners?
Held that:- The documents at Exhibit-1 and Exhibit-2 to the affidavit-in-reply dated 24-10-2007 which are described in the said affidavit as "actual profit & loss account of the petitioners for the period from May-1999 to November-2001" and the summary sheet for 21 files containing the details of month wise transactions ought to have been considered.
In the net result, while confirming all other findings of the Settlement Commission, we remand the matter to respondent no. 2 for the purpose of re-evaluating the question of grant of deduction to the petitioners in respect of freight charges after considering the aforesaid documents at Exhibit-1 and Exhibit-2 and any other relevant documents in this regard which already form a part of the record before the Tribunal.
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