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Showing 361 to 380 of 658 Records
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2007 (9) TMI 302
Interpretation of Statutes - Disallowance of deduction/exemption claimed u/s 10B and 80HHE - Profits derived in Industrial Undertaking - development and export of computer software - loss in initial assessment - In the assessment year under consideration, for the first time, the claim of exemption u/s 10A has been denied, ostensibly on the strength of the provisions of s. 80HHE(5) of the Act - whether the said action of the AO is justified or not.
HELD THAT:- In our humble opinion, this interpretation does not emerge from a plain reading of s. 80HHE(5) of the Act. Sub-s. (5) of s. 80HHE merely provides that where a deduction under s. 80HHE has been claimed and allowed in respect of profits of an eligible business, no deduction in relation to such profits be allowed under any other provision of the Act either for the same or any other assessment year. The interpretation placed by the Revenue, in our view, ignores the presence of the words "such profits" in the sub-s. (5) of s. 80HHE of the Act. The restriction sought to be carved out by the sub-section is that the profits which have been subjected to deduction under s. 80HHE should not again be subjected to any other deduction which the assessee may otherwise be entitled to claim, either for the same assessment year or in any other assessment year. The explicit language of sub-s. (5) of s. 80HHE cannot be read so as to mean that the assessee having once claimed deduction u/s 80HHE in respect to profits of an eligible business, would be debarred for all times to claim deduction under any other provisions of the Act in respect of the profits of such business for any other assessment year.
It is in this connection, we find that in the case of Legato Systems [2004 (11) TMI 294 - ITAT DELHI-E]. The Tribunal while considering the import of sub-s. (5) of s. 80HHE,observed that it was intended to avoid double deduction inasmuch as the profits calculated in accordance with sub-s. (1) of s. 80HHC for a particular assessment year cannot be claimed as a deduction either for the same or any other assessment year. Similar has been the reasoning adopted in the case of Jindal Exports (P) Ltd.[1989 (8) TMI 108 - ITAT DELHI-A] wherein it was held that deductions u/s 80HHC cannot be denied to the assessee simply because the assessee enjoyed exemption u/s 10A of the Act.
Thus, in our considered opinion, the claim of the assessee has been rightly upheld by the CIT(A). In the result, the assessee succeeds on this ground and the Revenue fails.
Sales aggregating as export sales - HELD THAT:- We find that the aforesaid factual findings arrived at by the CIT(A) remain uncontroverted by the Revenue in the grounds of appeal preferred by it and even in the course of hearing before us, no material or evidence has been brought on record to negate the factual findings of the CIT(A) on this ground. In fact, the findings of the CIT(A) are in line with the material which has been placed in the paper book filed before us by the assessee in this regard. As a consequence, we hereby affirm the decision of the CIT(A) on this issue. Accordingly, the Revenue fails on this ground.
Exemption u/s 10A - Profits earned from its Japan branch - HELD THAT:- Explanation 3 to s. 10A permits exemption u/s 10A on the profits derived by an assessee from a foreign branch with reference to onsite services, for development of computer software provided by the said company. In this light, the CIT(A) factually found the assessee to be eligible for the exemption u/s 10A in relation to the profits derived by the Japan branch, There is nothing to controvert the aforesaid finding of the CIT(A) before us. We, therefore, affirm the conclusion drawn by the CIT(A) on this issue.
In the result, the appeal of the Revenue is dismissed.
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2007 (9) TMI 301
Issues Involved:
1. Whether Fine Investments (P) Ltd. (FIPL) and Handsome Investments (P) Ltd. (HIPL) should be treated as paper or dummy entities and conduits of Xerox Modicorp Ltd. (IXS).
2. Validity of reassessment proceedings in the case of IXS.
Detailed Analysis:
Issue 1: Whether FIPL and HIPL should be treated as paper or dummy entities and conduits of IXS.
Background and Facts:
- FIPL and HIPL were incorporated as investment companies of the Modi Group.
- FIPL had investments and loans from IXS and other entities, and its directors were employees of sister concerns of IXS.
- HIPL had similar financial arrangements and investments.
- Both companies were assessed as paper entities of IXS for various assessment years, and their incomes were assessed in the hands of IXS on a substantive basis.
Arguments by the Assessee:
- FIPL and HIPL are separate legal entities with their own memorandum and articles of association.
- The companies operated independently, with investments and loans at arm's length.
- The directors of these companies were capable of managing their affairs without needing additional staff or separate office spaces.
- The transactions between these companies and IXS were at market rates and disclosed in their accounts.
- The companies were assessed independently from the assessment year 1997-98 onwards.
- There was no tax advantage or avoidance involved in the formation and operation of these companies.
Arguments by the Department:
- The AO argued that the corporate veil should be lifted, and FIPL and HIPL should be seen as conduits or dummies of IXS.
- The investments and loans were funded by IXS, and the companies did not have separate management or operational infrastructure.
- The ultimate beneficiary of the activities of these companies was IXS, as it received significant interest on deposits.
Tribunal's Findings:
- The Tribunal noted that it is common industrial practice to have investment arms, and these should be treated as separate entities if transactions are at arm's length.
- The companies were functioning through their directors, and decisions like the location of bank accounts or lack of employees were within their discretion.
- The Tribunal found no evidence of tax avoidance or improper benefit to IXS.
- The Tribunal held that FIPL and HIPL were not mere paper entities but separate legal entities conducting their business as per their memorandum of association.
Decision:
- The Tribunal directed the AO to recompute the income of FIPL and HIPL independently, treating them as separate legal entities.
Issue 2: Validity of reassessment proceedings in the case of IXS.
Background and Facts:
- The original assessments for IXS were completed under section 143(3) of the Act.
- The assessments were reopened beyond four years from the end of the relevant assessment years.
Arguments by the Assessee:
- The reassessment proceedings were barred by limitation as per the proviso to section 147 of the Act.
- There was no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment.
Arguments by the Department:
- The reassessment was in consequence of the findings in the assessments of FIPL and HIPL.
- The AO could form an opinion that income chargeable to tax in the case of IXS had escaped assessment only after the assessment of FIPL and HIPL.
Tribunal's Findings:
- The Tribunal found that complete details regarding investments and loans were disclosed by the assessee.
- There was no allegation that the assessee failed to disclose material facts fully and truly.
- The reassessment proceedings were not sustainable as they were beyond the four-year limitation period without any failure on the part of the assessee.
Decision:
- The reassessment proceedings in the case of IXS were canceled.
- The appeals of the Revenue became infructuous as a result.
Conclusion:
- The appeals of the assessee in the case of IXS were allowed, and the appeals of the Revenue were dismissed.
- The appeals of FIPL and HIPL were allowed for statistical purposes, with directions to recompute their income independently.
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2007 (9) TMI 300
Disallowance of bad debts - Written Off - sold and purchased units of mutual funds - earned dividend and commission as profit on trading of shares - HELD THAT:- In our considered opinion the debts in question have already been written off in the previous year relevant to the assessment year under consideration and in view of the amendment to s. 36(2) of the Act, the AO was not justified in rejecting the claim of the assessee merely on the ground that it was premature to write-off the debts in question. The decision of the learned CIT(A) on this issue cannot therefore, be sustained. This ground of appeal is allowed.
Interest accrued on loan advanced - Penal interest - HELD THAT:- As discussed there was no possibility of recovery of loan from SFL and ASTIL and we have therefore, allowed the claim of the assessee that the amount was required to be allowed as bad debt because the assessee has also written off the amount in view of the fact that the financial position of the aforestated two parties was very bad and there was no hope of recovery despite legal suit pending against them. We are, therefore, of the opinion that even if the assessee could have provided for the penal interest, the same was liable to be written off as irrecoverable.
In our considered opinion, since the principal itself was not likely to be recovered the question of providing for penal interest did not arise and, therefore, the lower authorities were not correct in making addition on account of penal interest on accrual basis. The decision of the learned CIT(A) on this issue cannot, therefore, be sustained. The addition is deleted. This ground of appeal is allowed.
Disallowance out of the total Court fees - pursuing civil proceedings for the recovery of bad debts - HELD THAT:- In our considered opinion, the expenditure has been incurred for filing the suit for recovery of debts before the amount was written off by the assessee, but the expenditure is not, admissible as business expenditure because the debts have been written off and the decisions of the lower authorities on this issue deserve to be sustained. This ground of appeal of the assessee is rejected.
Expenditure attributable to earning of dividend income - HELD THAT:- The amendment to s. 14A of the IT Act has been inserted by the Finance Act, 2006 w.e.f. 1st April, 2007 and the lower authorities were not correct in disallowing proportionate expenditure against the dividend income without establishing the nexus thereto. The addition is therefore, deleted. This ground of appeal is therefore, allowed.
As a result, the appeal of the assessee is partly allowed.
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2007 (9) TMI 299
Issues Involved:
1. Validity of initiation of reassessment proceedings u/s 147.
2. Compliance with statutory conditions prescribed u/s 147 to 151.
3. Validity of reassessment order based on a second notice u/s 148.
4. Justification of reassessment beyond four years from the end of the relevant assessment year.
Summary:
1. Validity of initiation of reassessment proceedings u/s 147:
The assessee challenged the validity of reassessment proceedings initiated u/s 147 via notice dated 31st March 2003. The original assessment was completed u/s 143(3) on 18th March 1999. A notice u/s 148 was issued on 28th March 2001, and another notice u/s 148 was issued on 31st March 2003. The CIT(A) upheld the reassessment proceedings, stating that the notice u/s 148 was issued within the stipulated period.
2. Compliance with statutory conditions prescribed u/s 147 to 151:
The assessee argued that the reassessment proceedings were initiated based on a mere change of opinion on the same set of facts and that statutory conditions u/s 147 to 151 were not complied with. The CIT(A) rejected this ground, observing that the notice u/s 148 was issued within the stipulated period and that no such contention was raised before the AO during the assessment proceedings.
3. Validity of reassessment order based on a second notice u/s 148:
The assessee contended that the second notice u/s 148 issued on 31st March 2003 was invalid as the proceedings initiated by the first notice u/s 148 dated 28th March 2001 were still pending. The Tribunal referred to the decision in CIT vs. Ram Kishan Leela (2007) 207 CTR (Raj) 463, where it was held that a second notice issued during the pendency of proceedings cannot be legally justified. The Tribunal accepted the assessee's argument and quashed the reassessment based on the second notice.
4. Justification of reassessment beyond four years from the end of the relevant assessment year:
The assessee argued that the second notice u/s 148 issued on 31st March 2003 was beyond the four-year period from the end of the relevant assessment year, and thus, the reassessment could only be justified if there was a failure on the part of the assessee to disclose fully and truly all material facts. The Tribunal noted that the assessee had disclosed all material facts during the original assessment. The Tribunal referred to the decision in CIT vs. Kelvinator of India Ltd. (2002) 256 ITR 1 (Del)(FB) and other authorities, concluding that the reassessment was based on a change of opinion and was therefore not legally justified. The Tribunal quashed the reassessment order on this ground as well.
Conclusion:
The Tribunal set aside the order of the CIT(A) and quashed the reassessment, allowing the assessee's appeal. The reassessment proceedings were found to be null and void due to the invalidity of the second notice u/s 148 and the reassessment being based on a change of opinion beyond the four-year period without any failure on the part of the assessee to disclose material facts.
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2007 (9) TMI 298
Issues Involved:
1. Disallowance of legal and professional charges.
2. Disallowance of foreign travel expenses.
3. Disallowance of ESI contribution.
4. Levy of interest under Sections 234A and 234B.
Issue-wise Detailed Analysis:
1. Disallowance of Legal and Professional Charges:
The first ground of appeal concerns the confirmation of the disallowance of Rs. 4,75,000 on account of legal and professional charges. The assessee company, engaged in manufacturing and trading of auto components, made a payment of Rs. 4,75,000 to IL&FS Merchant Banking Services Ltd. for the placement of preference shares and claimed it as business expenses. The AO disallowed this expense, treating it as capital expenditure for procuring an enduring benefit. On appeal, the CIT(A) upheld the AO's decision, stating the expenditure was for arranging funds for share capital, which provided an enduring benefit to the company. The Tribunal, referencing the case of Punjab State Industrial Development Corpn. Ltd. vs. CIT, agreed with the CIT(A) that the expenses were of a capital nature and upheld the disallowance.
2. Disallowance of Foreign Travel Expenses:
The second ground of appeal pertains to the disallowance of Rs. 4,79,016 on account of foreign travel expenses. The assessee claimed foreign travel expenses for Mr. Kireevshikh Louri and Dr. Reazoldary, but failed to provide detailed evidence for Rs. 4,79,016. The AO disallowed this amount due to lack of evidence. The CIT(A) sustained the disallowance, noting that despite opportunities, the assessee did not provide corroborative evidence to show the amount was spent on boarding and lodging. The Tribunal found no merit in the assessee's claim that details were not requested and upheld the CIT(A)'s decision.
3. Disallowance of ESI Contribution:
The third ground of appeal involves the disallowance of Rs. 31,381 out of ESI contribution. The AO disallowed Rs. 36,337 for late payment of employer's contributions to PF and ESI. The CIT(A) sustained the disallowance of Rs. 31,381, noting that payments were made late. However, the Tribunal, referencing the jurisdictional High Court's decision in CIT vs. Avery Cycle Industries (P) Ltd., held that since the payments were made before the due date for filing the return under Section 139(1), the same is allowable. The Tribunal directed to delete the disallowance.
4. Levy of Interest Under Sections 234A and 234B:
The fourth ground of appeal relates to the levy of interest under Sections 234A and 234B. The AO levied interest based on the tax liability computed under Section 115J. The CIT(A) held that the charging of interest under these sections is mandatory, referencing the Supreme Court's decision in CIT vs. Anjum M.H. Ghaswala. The Tribunal discussed the applicability of these provisions in the context of Section 115JA, referencing the Karnataka High Court's decision in Kwality Biscuits Ltd. vs. CIT, which was affirmed by the Supreme Court. The Tribunal concluded that the rationale for non-charging of interest under Section 115J equally applies to Section 115JA, and thus, no interest under Sections 234B and 234C is chargeable. The Tribunal reversed the lower authority's order and held in favor of the assessee.
Conclusion:
The appeal was partly allowed, with the Tribunal upholding the disallowance of legal and professional charges and foreign travel expenses, but allowing the ESI contribution and reversing the levy of interest under Sections 234A and 234B.
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2007 (9) TMI 297
Prayer for Quashing the Assessment Order - Absence of mandatory service of notice u/s 143(2) - Best judgment order passed u/s 144 - Validity of Notice by affixture - HELD THAT:- According to the reverse of the notice u/s 143(2) the notice server had the knowledge that the assessee was residing in 55/28 Sector, Faridabad; since this address has been noted therein and despite having such knowledge, the notice was served by affixture on the Kalkaji address. This clearly shows that reasonable diligence was not shown by him i.e. the serving officer. When he knew that the assessee had moved to Faridabad from Kalkaji he ought to have proceeded to Faridabad o serve the notice. Thus, the contention based on r. 17 is also to be upheld.
There is no evidence to show that the notice server (Shri Babulal) was required to file an affidavit or that he was examined by the AO on oath. Such procedural irregularities do invalidate the service of the notice as held by the Kerala High Court in M.O. Thomas vs. CIT [1962 (2) TMI 88 - KERALA HIGH COURT]. It is also seen that no reasonable attempts were made by the AO or the serving officer to find the assessee before serving the notice by affixture.
Thus, we are of the view that the notice served on the assessee on 31st Oct., 2002 in its Kalkaji address was not validly served as required by s. 282(1) of the IT Act.
There is no acknowledgment on record. There is no other evidence from which it can be definitely asserted that the notice was served on the assessee at the aforesaid address. The record produced before us does not contain any order-sheet entry on 8th Nov., 2002, the date on which the assessee was required to appear before the AO by the notice issued on 25th Oct., 2002 by registered post. This is one pointer to the fact that the said notice was not served on the assessee.
Hence, we hold that there is no valid service of notice on the assessee u/s 143(2) either by affixture or by post. In this situation, we have no option but to quash the assessment on the basis of the judgments of the Hon'ble Delhi High Court in Lunar Diamonds [2005 (3) TMI 33 - DELHI HIGH COURT], Vardhman Estates (P) Ltd.[2006 (9) TMI 128 - DELHI HIGH COURT] and Bhan Textiles [2006 (9) TMI 129 - DELHI HIGH COURT]. We direct accordingly and allow ground Nos. 2 and 3.
In the result, the assessment is cancelled and the appeal is allowed.
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2007 (9) TMI 296
Validity of the block assessment order - Search And Seizure - pre-requisite condition for completing the assessment u/s 158BD - Notice u/s 143(2) - HELD THAT:- From the order of learned first appellate authority it is clear that even before him the Department could not produce the satisfaction recorded by the AO in the case of person searched. From the said order it is also clear that intimation regarding undisclosed income of the assessee was given to the AO of the present assessee after the issuance of notice. Thus, on facts the argument of the learned counsel for the assessee have remained uncontroverted.
So far as the legal position is concerned, in the case of Manish Maheshwari [2007 (2) TMI 148 - SUPREME COURT], the Hon'ble Supreme Court has held that satisfaction is a pre-requisite condition for completing the assessment u/s 158BD.
The ld DR has not been able to cite any authority, contrary to the decisions referred. Hence, we hold that the assessment order passed in the instant cases without making compliance of the pre-requisite condition i. e., recording of satisfaction, cannot be legally justified. Hence on this basis itself the assessment is liable to be quashed. We, accordingly, quash the assessment order.
Time limitation for issuance of Notice u/s 143(2) - In view of the authority, the Tribunal Delhi Bench in the case of Smt. Tulika Mishra (to which both of us were parties)[2007 (3) TMI 747 - ITAT DELHI], has quashed the assessment order on the ground that the notice u/s 143(2) was not served upon the assessee within the prescribed period. On this ground we have held the assessment order to be null and void in that case. Hence following the same decision, we declare the assessment order as null and void in this case also because notice u/s 143(2) was not served upon the assessee within the prescribed period. Hence on this ground also the assessment order is liable to be quashed. The same is accordingly quashed.
Thus, the legal grounds taken in the cross-objection stand allowed - Since we have quashed the assessment order by allowing legal grounds raised by the assessee, we are not required to consider other grounds raised in the cross-objection.
In the result, appeal of the Revenue stands dismissed and the cross-objection of the assessee is allowed.
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2007 (9) TMI 295
Business Expenditure - Travelling expenditure - disallowance under rule 6D - HELD THAT:- In the present case, it has nowhere been brought on record by the Assessing Officer that the expenditure was not incurred for the purpose of the business of the assessee-company. The sole basis for disallowance of the expenditure was that the expenditure was incurred by the persons other than employees of the assessee-company. In our opinion, the disallowance made by the Assessing Officer was not justified and the ld. CIT(A) has rightly deleted the same.
Ad hoc disallowance - Considering the facts of the assessee's case and the arguments of both the sides, we do not find any justification for 1 per cent disallowance on ad hoc basis out of the travelling expenditure incurred by the assessee. We, therefore, hold that the CIT(A) was justified in deleting such disallowance. Accordingly, the order of the CIT(A) on this point is sustained and ground No. 3 of the revenue's appeal is rejected.
Entertainment expenses - disallowance u/s 37(2) - Since the assessee has not been able to submit any details or evidence in support of its contention that these expenditures were wholly and exclusively incurred for the employees and staff of the assessee-company and possibility of outsiders being entertained with lunch/refreshment and at club cannot be ruled out, in our considered opinion, some disallowance is called for. The Assessing Officer has worked out such disallowance at 25 per cent of payment to clubs and expenditure for lunch and refreshment, which is in our opinion on higher side. In our considered opinion, disallowance of 10 per cent in case of each of the expenditure will meet the end of justice.
We, therefore, direct the Assessing Officer to disallow only 10 per cent of expenditure incurred for lunch/refreshment and for payment of club and then work out the disallowance u/s 37(2). We hold and direct accordingly and accept the Ground No. 4 raised by the revenue for statistical purposes.
Expenditure for sponsorship, prize money, etc. - It is not in dispute that the assessee had also incurred the expenditure by sponsorship of events/sports for the purpose of advertising its product/corporate image. Such expenditure is the revenue expenditure incurred for the purpose of business. The Assessing Officer has not given any cogent reason for disallowing such expenditure. Hon'ble Delhi High Court in the case of Delhi Cloth & General Mills Co. [1999 (7) TMI 40 - DELHI HIGH COURT] has upheld the order of the Tribunal allowing the expenditure on Football tournament incurred by the assessee. No contrary decision is referred to by the revenue. In view of the above, considering the facts of the case and the arguments of both the sides, in our opinion, the CIT(A) has rightly deleted the disallowance of expenditure on sponsorship of the events made by the Assessing Officer. We uphold the order of the CIT(A) in this regard and reject ground No. 5 of the revenue appeal.
Sales promotion expenses included under the head 'Advertisement expenditure' - HELD THAT:- We find that the assessee-company has made an expenditure on the sponsorship of various events like golf, polo, football, cricket, racing, badminton, etc. for the purpose of advertisement of its product. We have also noted down the fact that the Department has not disputed the identical expenditures in any of the previous year and the auditors have also not pointed out that any such expenses was not related or incidental to the business needs of the assessee and, therefore, in our considered opinion, the action of Assessing Officer in disallowing 10 per cent of such expenditures without bringing any material evidence on record was not justified and the ld. CIT(A) has rightly deleted the addition. We, therefore, uphold the order of ld. CIT(A) in this regard and reject the ground raised by the revenue.
Expenditure on repairs to buildings - repairs to machinery - repairs to others - HELD THAT:- The assessee is a company and any benefit and facility provided to the Directors/Executives even for their personal benefit cannot be said to be personal expenditure of the assessee-company because the company and the employees are two different entities. Such facility, benefit or amenities would be perquisites in the hands of the employees. But so far as the company is concerned, it would be allowable as business expenditure because those facilities or benefits have been provided to the employees to retain their services for the purpose of business of the company. Furthermore, providing such facility to the employees is necessary to attract/retain the skilled and experienced human resources. Thus, we are of the opinion that CIT(A) was justified in deleting the disallowance made by the Assessing Officer.
Disallowance of expenditure - re-installation of a loga machine - The machinery from Saharanpur have been shifted to Bangalore unit and substituting is made for efficient utilization of the machinery apart from the fact that shifting of such machinery from one unit to another for its efficient use has not resulted into any addition in the assets of the assessee-company and, therefore, in our considered opinion, such expenditure cannot be treated as capital expenditure and in these circumstances, the ld. CIT(A) has rightly deleted the addition. Accordingly, we uphold the order of ld. CIT(A) on this ground and reject the Ground Nos. 7 and 9 raised by the revenue.
Damaged and destroyed stock of cigarettes - Considering the facts involved in the present case, the above ratio laid down by the Hon'ble Apex Court rather supports the claim of the assessee as the assessee is following such system of making provision since long and the value and quantity claimed by the assessee has also not been proved as false by the revenue except deferring such claim by one year and since in the present case, the assessee has not concealed any particulars regarding such damaged stocks and such provision has been made at the end of year which is based on the expected damaged stocks on the sales made by it during the year under consideration. Such action of assessee cannot be held either bogus or illegal in nature keeping in view the fact that the assessee itself reversed such entry in the immediately following year and avails the deduction only which is being claimed by the dealers.
Disallowance of contribution to Provident Fund/Pension Fund - After considering the arguments of both the sides, we deem it proper to restore the matter back to the file of the Assessing Officer for verification of actual date of payment in this regard and thereafter recalculate the disallowance u/s 43B/36(1)(va), if any, as per our observation above. Needless to mention that the Assessing Officer will allow adequate opportunity of being heard to the assessee. Accordingly, ground No. 10 of the revenue's appeal is deemed to be allowed for statistical purposes.
Workmen and staff welfare expenses - From the details of such expenditures, it is evident that these expenditures were incurred for the purpose of maintaining healthy and cordial relationship with the staff and workers of the assessee-company, which in turn result in earning high profit and efficiency of the resources. The reimbursement of fuel/soft coke for staff and mill workers has also been made as per contractual agreement with the staff and hence, purely incidental to the business.
We, therefore, on the basis of aforesaid facts and documents placed on record, are of the opinion that such expenditures were necessary for commercial expediency and, therefore, are to be allowed as held by the Hon'ble Supreme Court in its landmark decision in the case of Shahzada Nand & Sons v. CIT. Thus, the expenditures incurred by the assessee were necessary for commercial expediency and hence were incidental to the business needs and in these circumstances, the ld. CIT(A) was justified in deleting the addition made by the Assessing Officer. We, therefore, uphold the order of ld. CIT(A) and reject the ground No. 11 raised by the revenue.
Disallowance under the head 'Miscellaneous Expenses' - (a) Social responsibility (public relation) - It was not the case of the Assessing Officer that the assessee could not furnish relevant details/evidence in support of incurring such expenditure. In view of the above, considering the facts of the case and the arguments of both the sides, in our opinion, the CIT(A) has rightly deleted the disallowance of expenditure on social responsibility made by the Assessing Officer We, therefore, uphold the order of the CIT(A) on this issue.
(b) Souvenir advertisement - Assessing Officer in this case did not raise any question about non-furnishing of evidence in support of the claim. The Hon'ble Bombay High Court in the case of Century Spg. & Mfg. Co. Ltd. v. CIT [1991 (4) TMI 124 - BOMBAY HIGH COURT] has held that the expenditure for advertisement in souvenir is not disallowable in view of CBDT Circular No. 200, which is binding on income-tax authorities in view of section 119 of the Act. In view of the above, we hold that the addition made by the Assessing Officer on this account was unwarranted and the CIT(A) has rightly deleted the same.
Addition made u/s 40A(2)(a) - The Assessing Officer himself has recorded the finding that M/s. EEL had brought forward the opening stock which was at the rate of 62.52 per kg. which was sold to the assessee at the rate of 68.92 per kg. The sister concern has incurred the expenditure by way of godown charges and interest, etc., in keeping huge stock of tobacco and, therefore, the gross margin of approximately 10 per cent charged by the sister concern to meet the cost of expenditure for carrying of stock and also for the profit for the services rendered by them cannot be said to be excessive or unreasonable. Thus, we are unable to agree with the revenue that the Assessing Officer had a sufficient material to form an opinion that the payment to the sister concern for purchase of tobacco was unreasonable or excessive having regard to the fair market value of tobacco. Accordingly we uphold the order of the ld. CIT(A) in this regard and reject the ground raised by the revenue.
Deduction u/s 80HHD - In our opinion, the alphabet 'a' is used here only as an Article and cannot be interpreted as 'one'. If the alphabet 'a' used before the word 'Hotel' is interpreted as 'one', the result would be that an assessee who is running one Hotel or an assessee who is operating one tour would only be entitled to deduction u/s 80HHD and not the persons who are running more than one Hotel or a tour operator who is operating more than one tour would not be entitled. It cannot be the intention of the Legislature. Therefore, we are of the considered opinion that the alphabet 'a' used before the word 'Hotel' cannot be interpreted as one.
The business of a Hotel which is approved by the prescribed authority has to be considered as a whole being the business which is entitled for deduction u/s 80HHD(1). Therefore, we hold that the deduction under sub-section (3) of section 80HHD has to be computed by taking the profits of the Hotel business approved by the prescribed authority. To clarify, if the assessee had ten Hotels and seven Hotels are approved for the purpose of section 80HHD(1) and three Hotels are not approved then the profit of all these seven Hotels would amount to the profits of the business of the Hotel approved for the purpose of section 80HHD(1).
Therefore, the Assessing Officer has to compute the deduction u/s 80HHD(3) by taking the profits of all the Hotels approved by the prescribed authority. The same is to be multiplied by the receipts in convertible foreign exchange for the services provided to foreign tourists by all these Hotels and is to be divided by the total receipts of all the approved Hotels. We hold accordingly.
In the result, the appeal filed by the revenue is partly allowed.
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2007 (9) TMI 294
Indexed cost of acquisition - Long-term capital gain from sale of immovable property - Disallowance u/s 48 - Expenses incurred on transfer of the asset.
HELD THAT:- We are in agreement with the contentions of the learned counsel for the assessee that the reference to the DVO can be made u/s 55A of the Act only when the AO is of the opinion that the value claimed by the assessee is less than its fair market value. In the case on hand the DVO valued the property at Rs. 6,06,046 which is less than the fair market value claimed by the assessee and the AO accepting the same proves that the AO referred it to the Valuation Officer as he was of the opinion that the assessee's claim was more than its fair market value. Therefore, we are satisfied that the ratio propounded in the case of Ms. Rubab M. Kazerani v. Jt. CIT [2004 (7) TMI 649 - ITAT MUMBAI] is applicable to the case in hand. Respectfully following the decision, we dismiss this ground of appeal raised by the Revenue.
Disallowance u/s 48 - Expenses incurred on transfer of the asset - HELD THAT:- We find that the assessee's claim of incurring expenses for the transfer of the asset is accepted by the authorities below and the AO has allowed 50 per cent of expenses. The CIT(A) has restricted it to the actual payment made by the assessee. We find that the CIT(A) has considered the factual matrix of the case and also the bank account of the assessee to arrive at the figure of Rs. 10,70,000. It has also been observed that the expenses have been incurred out of the bank account of the assessee and out of the sale consideration received and that the other joint owners have not claimed any deduction on account of such expenditure over and above Rs. 10,70,000. Therefore, we do not see any reason to interfere with the order of the CIT(A) as the assessee has not been able to file any evidence before us either, in support of her claim for the balance of the expenditure. In the result, this ground of appeal of the assessee is rejected.
Cross-objection is partly allowed.
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2007 (9) TMI 293
Issues Involved:1. Whether the notional credit on account of revaluation of deferred sales-tax liability should be reduced for the purpose of calculating 'book profit' u/s 115JA of the IT Act, 1961. Summary:Issue 1: Notional Credit on Revaluation of Deferred Sales-Tax LiabilityThe assessee company, engaged in manufacturing, availed a sales-tax deferral scheme from the Government of Maharashtra. Under this scheme, the sales-tax collected from buyers was deferred for ten years without interest. The company valued this deferred liability at its present value using a discounting factor and credited the difference to the P&L account as "Revaluation of deferral sales-tax". The assessee argued that this credit entry was not actual income but a notional figure for accounting purposes and should be excluded from book profit u/s 115JA. The AO and CIT(A) disagreed, including the differential amount in the book profit, asserting it was income for the assessment year. The assessee cited various Tribunal decisions, including Hitkari Fibres Ltd. vs. Jt. CIT, which held that notional entries for accounting purposes should not be treated as real income for book profit calculations u/s 115JA. The Tribunal examined the legislative intent of s. 115JA and the Supreme Court's decision in Apollo Tyres Ltd. vs. CIT, which emphasized that adjustments to book profits should only include items enumerated in the Explanation to s. 115JA. The Tribunal noted that extraordinary items not having the character of income for the concerned year should not form part of book profits, even if credited in the P&L account. In the present case, the Tribunal found that the revaluation of future liability was an accounting exercise and not actual income. The surplus from revaluation did not form part of the P&L account by the Companies Act's dictum and should be excluded from book profit calculations u/s 115JA. The Tribunal concluded that the assessee was justified in excluding the amount of Rs. 2,84,76,657 from the computation of book profits. Conclusion: The appeal filed by the assessee was allowed, and the notional credit on account of revaluation of deferred sales-tax liability was excluded from the book profit calculation u/s 115JA.
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2007 (9) TMI 292
Issues Involved:
1. Legality of reopening the assessment under section 148 of the Act.
2. Disallowance of the claim for deduction under section 80HHC of the Act.
3. Disallowance related to the cost of purchase of ball pens.
4. Levy of interest under sections 234B and 234C of the Act.
Issue-wise Detailed Analysis:
1. Legality of Reopening the Assessment under Section 148 of the Act:
The assessee opted not to press this ground. Consequently, the ground was dismissed as not pressed.
2. Disallowance of the Claim for Deduction under Section 80HHC of the Act:
The assessee claimed a deduction under section 80HHC amounting to Rs. 36,03,895. The AO issued a letter requiring details such as purchase register, bank statement, and the production of the supplier, M/s Divya Enterprises. The assessee submitted a letter but did not produce the supplier. The AO issued a show-cause notice questioning the rate of 70 paise per piece for ball pens and considering Rs. 9,23,437 as income from undisclosed sources due to lack of verification from M/s Divya Enterprises.
The AO was not convinced by the explanations provided by the assessee and noted that the Directorate of Revenue Intelligence (DRI) investigated the case, proving that the exported goods did not reach Russia but were diverted to Cyprus and destroyed. Statements from Shri V.C. Kamdar and Shri Chetan Kamdar confirmed this modus operandi. Consequently, the AO disallowed the deduction under section 80HHC.
The CIT(A) upheld the AO's decision, noting that the goods had not reached the desired destination and were destroyed. The CIT(A) observed that the black money was sent to Dubai through hawala channels, and US dollars were routed to Russia from Dubai, making the exports only paper transactions. The CIT(A) cited McDowell & Co. Ltd. vs. CTO, emphasizing that tax planning within the law is legitimate, but colourable devices are not.
The Tribunal examined the assessee's contention that once goods are exported out of India, the deduction under section 80HHC should be allowed. The assessee argued that the export was complete once the goods left Indian shores by 50 nautical miles. However, the Tribunal noted that the goods were destroyed at the high sea at the instance of the assessee, and there was no sale of the exported goods. The Tribunal concluded that the assessee did not fulfill the essential ingredients for claiming deduction under section 80HHC, which include export of goods, sale of the exported goods, and receipt of sale proceeds in convertible foreign exchange. Therefore, the assessee was not entitled to the deduction.
3. Disallowance Related to the Cost of Purchase of Ball Pens:
The AO observed that the purchase cost of ball pens was shown at Rs. 3.40 per piece, whereas it was accepted by Shri V.C. Kamdar to be 70 paise per piece. This resulted in a disallowance of Rs. 9,23,437, later rectified to Rs. 35,61,826. The CIT(A) upheld this disallowance.
The Tribunal noted that the assessment was reopened based on information from the DRI. The customs authorities initially treated the purchases as non-genuine, but the Addl. Commr. of Customs later dropped the proceedings, concluding that the Department had not satisfactorily proved overvaluation. The AO relied on the customs authorities' investigation and did not conduct an independent inquiry. The Tribunal found that the statement of Shri V.C. Kamdar was not sufficient evidence to disallow the purchases, especially since the customs authorities had exonerated the assessee. Therefore, the Tribunal set aside the CIT(A)'s order and deleted the addition.
4. Levy of Interest under Sections 234B and 234C of the Act:
This issue was not specifically addressed in the detailed judgment provided.
Conclusion:
The appeal by the assessee was partly allowed. The Tribunal upheld the disallowance of the deduction under section 80HHC but deleted the addition related to the cost of purchase of ball pens.
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2007 (9) TMI 291
The Appellate Tribunal ITAT BOMBAY-J dismissed the Revenue's appeal regarding a loss on derivative trading for the assessment year 2001-02. The CIT(A) ruled that derivative trading does not qualify as speculation loss as it does not involve purchase or sale of shares. The appeal was dismissed, upholding the CIT(A)'s decision.
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2007 (9) TMI 290
Transfer of a capital asset - Depreciation for residential buildings and non-residential buildings - Purchase of Shares - Whether the assessee can exercise the rights of the owner in his own right to the exclusion of others - Deemed Owner u/s 27 - HELD THAT:- We are of the view that order of learned CIT(A) must be upheld on this issue. There is no dispute that in order to claim the depreciation in respect of any property it is the condition precedent that assessee must be the owner of that property and the same is used for the purpose of business. The word 'owner' has not been defined in the IT Act and, therefore, the question arises as to what meaning should be assigned to the word 'owned' used by the Legislature in section 32 of the Act.
In the case of Mysore Minerals Ltd.[1999 (9) TMI 1 - SUPREME COURT] with reference to the word 'owned' in section 32 of the Act with which we are also concerned in the present case. The legal position emerging from discussion is that the word 'owned' in section 32 of the Act has to be understood in a wider sense and not in the legal sense in terms of the provisions of Transfer of Property Act. The true test would be whether the assessee can exercise the rights of the owner in his own right to the exclusion of others. If the answer is in affirmative, then assessee would be entitled to depreciation under section 32 of the Act.
AO has observed that purchase of shares cannot be equated with the purchase of property. There cannot be any dispute that generally, mere purchase of shares in a company would not entitle the shareholder to enjoy the rights of an owner in respect of the properties owned by the company since both the entities are distinct and separate. However, Articles of Association of a company engaged in the business of real estate may provide that shareholder of particular shares would be entitled to exercise the rights of owner in respect of properties owned by the company. Such mode of transfer is duly recognized by the Legislature in the provisions of section 2(47)(vi), section 27(iii) and section 269UA(d)(ii) of the Act. It is because of the provisions of section 269UA(d)(ii) that assessee was required to obtain no objection certificate from the competent authority prescribed under Chapter XX of the Act. All these provisions, if read together, lead to the only inference that Legislature has accepted the fact of transfer of property through the transfer of shares of a company. Therefore, the objection of the Assessing Officer that property cannot be transferred through the transfer of shares cannot be sustained.
Whether in the present case, the assessee can exercise the rights of an owner in its own rights in respect of the property acquired by it through the purchase of shares of Yerrowda Investments Ltd. - A bare reading of the aforesaid articles shows that by virtue of holding of particular Nos. of shares having particular distinctive Nos., the holder would be entitled to have exclusive possession of a particular No. of flat so as to have exclusive use and occupation of the said flat. Thus, ownership of a flat is attached with a particular and specific share having specified distinctive Nos. Therefore, if that share is transferred then the absolute ownership of that flat is automatically transferred to the other party and the company has no power to refuse the transfer of such share from one person to another. This is an acceptable mode of transfer of property in the case of a company and is duly recognized by section 2(47)(vi), section 27(iii) as well as section 269UA(d) of the Act. Thus, we are of the view that assessee had become the owner of the properties by virtue of holding of shares of Yerrowda Investments Ltd. and consequently it was entitled to claim depreciation in accordance with the law. The order of the learned CIT(A) is, therefore, upheld on this issue.
In the result, all the appeals are partly allowed.
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2007 (9) TMI 289
Issues Involved:
1. Reopening of assessment under section 147/148 of the Income-tax Act.
2. Commencement of the assessee's investment and financing business.
3. Allowability of Rs. 1,51,668 incurred on renovation of furniture as revenue expenditure.
4. Disallowance of 50% of expenses claimed in respect of payments made to employees.
5. Allowability of Rs. 6,21,250 paid to Little & Co. as legal expenses.
6. Allowability of Rs. 13,98,467 out of traveling expenses incurred by the assessee.
7. Allowability of telephone expenses of Rs. 8,76,195 and miscellaneous expenses of Rs. 3,64,762.
Issue-wise Detailed Analysis:
1. Reopening of Assessment under Section 147/148:
The assessee challenged the reopening of assessment on two grounds: (i) the pendency of proceedings under section 154; and (ii) reassessment being initiated on account of a change of opinion. The Tribunal held that the Assessing Officer had powers to issue notice under section 148 even though notice under section 154 was issued. However, the Tribunal concluded that the reopening of the assessment was based on a change of opinion, which is not permissible under the law. The Hon'ble Third Member agreed with the Accountant Member that the reopening was justified, leading to the dismissal of this ground.
2. Commencement of the Assessee's Investment and Financing Business:
The assessee claimed that it had commenced its business of investment and financing. The Tribunal noted that the Board of Directors had passed a resolution on 3-4-1993 to treat ancillary objects as the main objects of the company. The Tribunal held that the assessee was entitled to adopt such a resolution, and the income earned from these activities should be treated as business income. The Hon'ble Third Member agreed with the Judicial Member that the investment and financing business of the assessee had commenced in the assessment year in question.
3. Allowability of Rs. 1,51,668 Incurred on Renovation of Furniture as Revenue Expenditure:
The Tribunal found that the expenditure was incurred for the renovation of existing furniture and no new asset was brought into existence. Therefore, it was held to be revenue in nature and allowable as such. The Hon'ble Third Member concurred with this view.
4. Disallowance of 50% of Expenses Claimed in Respect of Payments Made to Employees:
The Tribunal observed that the assessee had provided detailed information about the employees and their salaries. Given that there was no allegation of payments to relatives and considering the nature of the assessee's business, the Tribunal allowed the full claim of salary expenses. The Hon'ble Third Member agreed with the Judicial Member, allowing the expenses in full.
5. Allowability of Rs. 6,21,250 Paid to Little & Co. as Legal Expenses:
The Tribunal noted that the legal expenses were incurred for fund management agreements and other business-related activities. It was held that these expenses were incurred wholly and exclusively for business purposes and should be allowed. The Hon'ble Third Member agreed with the Judicial Member, allowing the expenses as business expenditure.
6. Allowability of Rs. 13,98,467 Out of Traveling Expenses Incurred by the Assessee:
The Tribunal found that the traveling expenses were incurred in connection with the assessee's business activities. Complete details were provided, and there was no allegation of personal use. The Tribunal allowed the expenses in full. The Hon'ble Third Member agreed with this view, allowing the expenses.
7. Allowability of Telephone Expenses of Rs. 8,76,195 and Miscellaneous Expenses of Rs. 3,64,762:
The Tribunal observed that the assessee had provided detailed information regarding these expenses. The disallowances were made on an ad hoc basis without proper justification. The Tribunal allowed the expenses in full. The Hon'ble Third Member agreed with the Judicial Member, allowing these expenses.
Conclusion:
In view of the majority opinion, the appeal filed by the assessee was partly allowed. The reopening of the assessment was upheld, but the Tribunal allowed the assessee's claims regarding the commencement of business, renovation expenses, employee expenses, legal expenses, traveling expenses, and other business expenses.
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2007 (9) TMI 288
Issues Involved:
1. Applicability of Section 38A of the Central Excise Act to actions taken under Rules 96ZO and 96ZP after their omission.
2. Whether the omission of Section 3A of the Central Excise Act can be considered a 'repeal' under Section 6 of the General Clauses Act, 1897.
Issue-wise Analysis:
1. Applicability of Section 38A of the Central Excise Act:
- The core controversy in the appeals revolves around the effect of the omission of Section 3A of the Central Excise Act, 1944, and Rules 96ZO and 96ZP of the Central Excise Rules, 1944.
- The assessees argued that the omission of Section 3A without a saving clause meant that obligations and liabilities incurred under Rules 96ZO and 96ZP did not survive beyond 11-5-2001.
- They contended that Section 6 of the General Clauses Act, 1897, could not be invoked as it applies to 'repeals' and not 'omissions'.
- The department argued that the liabilities incurred during the currency of Section 3A and Rules 96ZO and 96ZP were saved by Section 38A, introduced simultaneously by the Finance Act, 2001.
- Section 38A provides that amendments, repeals, or omissions do not affect previous operations, obligations, liabilities, penalties, or legal proceedings.
- The Tribunal concluded that Section 38A, a comprehensive saving clause, applies to the omission of Rules 96ZO and 96ZP, thus preserving the obligations and liabilities incurred under these rules.
- The liabilities incurred under these rules while Section 3A was in force can be enforced as per Section 38A, regardless of the subsequent omission of Section 3A.
2. Whether the Omission of Section 3A Constitutes a 'Repeal':
- The assessees argued that 'repeal' and 'omission' are distinct concepts, with 'omission' not being protected under Section 6 of the General Clauses Act.
- They cited Supreme Court decisions in Rayala Corporation (1969) and Kolhapur Canesugar Works (2000), which held that Section 6 only applies to repeals of Central Acts or Regulations, not rules.
- The department countered that there is no real distinction between 'repeal' and 'amendment', and that Section 6 should apply to omissions as well.
- The Tribunal noted that Section 38A specifically addresses amendments, repeals, supersessions, and rescindments, thus encompassing omissions.
- The Tribunal found it unnecessary to delve into the controversy regarding the meaning of 'repeal' under Section 6 of the General Clauses Act, as Section 38A sufficiently covers the scenario.
Conclusion:
- The Tribunal held that Section 38A of the Central Excise Act applies to obligations and liabilities incurred under Rules 96ZO and 96ZP before their omission.
- The question of whether the omission of Section 3A constitutes a 'repeal' under Section 6 of the General Clauses Act does not survive due to the applicability of Section 38A.
- The reference was answered accordingly, and the appeals were to be placed before the regular bench for final hearing.
(pronounced in open Court on 13-9-2007)
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2007 (9) TMI 287
Issues Involved:
1. Liability of outgoing partners to pay excise duty assessed against a dissolved partnership firm.
2. Validity of service of show cause notice.
3. Evidence of clandestine production and removal of excisable goods.
4. Applicability of provisions of the Central Excise Act to dissolved firms.
5. Imposition of penalties under Section 11AC and Rule 209A of the Central Excise Rules.
Issue-wise Detailed Analysis:
1. Liability of Outgoing Partners to Pay Excise Duty:
The core issue was whether outgoing partners are liable to pay excise duty assessed against a registered partnership firm that was dissolved. The judgment clarified that under the Central Excise Act, a partnership firm is not treated as a distinct legal entity separate from its partners. Therefore, the partners are jointly and severally liable for the excise duty liabilities incurred during the firm's operation. The Tribunal held that the partners continued to be liable for the excise duty liability incurred before the dissolution of their firm, and assessment proceedings do not frustrate by its dissolution. The Tribunal emphasized that the Central Excise Act does not recognize a partnership firm as a separate assessable entity, unlike the Income Tax and Sales Tax laws, where firms are treated as distinct legal entities.
2. Validity of Service of Show Cause Notice:
The Tribunal examined whether the show cause notice was properly served. It was noted that the show cause notice dated 10-8-2001 was sent to the partnership firm and all its partners. The Commissioner found that the notices were duly served, and this finding was not disputed during the arguments. The Hon'ble High Court of Madhya Pradesh had directed the partners to file their reply to the show cause notice, which they did, indicating proper service of notice.
3. Evidence of Clandestine Production and Removal:
The Tribunal assessed the evidence regarding clandestine production and removal of excisable goods. The Commissioner relied on private records, including two note-books titled "Daily report tin factory" and "Daily production report," seized from the factory premises. These records contained details of production and clearance of tin containers not reflected in the statutory records. The Tribunal found that the authenticity of these documents was admitted by the involved parties, and the evidence established clandestine production and removal beyond doubt. The Tribunal held that no further corroboration was required given the clinching nature of the oral and documentary evidence.
4. Applicability of Provisions of the Central Excise Act to Dissolved Firms:
The Tribunal discussed the applicability of the Central Excise Act provisions to dissolved firms. It was argued that the Central Excise Act does not contain provisions for post-dissolution assessment of a dissolved firm for its pre-dissolution clearances. The Tribunal held that the partners are liable for the firm's excise duty liabilities incurred before dissolution, and the assessment proceedings do not cease due to the firm's dissolution. The Tribunal distinguished the Central Excise Act from the Income Tax and Sales Tax laws, which specifically recognize firms as distinct assessable entities.
5. Imposition of Penalties:
The Tribunal upheld the imposition of penalties under Section 11AC of the Central Excise Act and Rule 209A of the Central Excise Rules. The demand of Rs. 46,53,866/- was confirmed against the appellant-assessees, and a penalty of the like amount was justified under Section 11AC along with interest under Section 11AB. Additionally, a penalty of Rs. 5 lacs imposed on the managing partner under Rule 209A was deemed appropriate due to his involvement in the clandestine activities.
Conclusion:
The appeal was dismissed, confirming the duty demand and penalties imposed. The Tribunal's decision emphasized the joint and several liabilities of partners for excise duty, the validity of the service of notices, and the sufficiency of evidence for clandestine production and removal of excisable goods.
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2007 (9) TMI 286
The High Court of Karnataka at Bangalore, with Justice Cyriac Joseph, C.J. and Anand Byrareddy, J., dismissed the writ petition as devoid of merit. The petitioner had availed exemption under Notification 9/2003 but was bound by conditions not to withdraw the option during the financial year.
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2007 (9) TMI 285
Issues:
Challenge to Tribunal's order for pre-deposit amount of Rs. 50 lakhs against duty demand of Rs. 1,14,67,020/- for hearing appeal on merits.
Consideration of financial hardship in pre-deposit requirement under Section 35F of the Central Excise Act.
Interpretation of whether pre-deposit under Section 35F can be insisted when proceedings are pending before the BIFR.
Applicability of the decision in Metal Box India Ltd. v. Commissioner of Central Excise regarding pre-deposit requirements.
Analysis:
The petitioners challenged the Tribunal's order directing them to pre-deposit Rs. 50 lakhs against a duty demand of Rs. 1,14,67,020/- for the appeal to be heard on merits. Initially, the Commissioner (Appeals) had directed a pre-deposit of Rs. 5 lakhs due to hardship, but eventually upheld the adjudicating authority's decision against the petitioners. Subsequently, the Tribunal ordered the petitioners to deposit Rs. 50 lakhs, which was later extended by six weeks despite a modification request by the petitioners. The petitioners argued that no pre-deposit should be insisted when proceedings are pending before the BIFR, and that the Tribunal did not consider their financial hardship. They cited the Texplast Engineers Ltd. v. Union of India case in support.
In response, the Court referred to the Metal Box India Ltd. v. Commissioner of Central Excise case, where it was held that pre-deposits under Section 35F do not fall under the categories mentioned in the Sick Industrial Companies (Special Provisions) Act. This means that even if a party is before the BIFR, the Tribunal can require a pre-deposit before hearing the appeal on merits. The Court noted that the duty amount is essentially government revenue collected by the manufacturer and that financial hardship should not prevent the deposit of such amounts. In this case, the Tribunal's direction to deposit Rs. 50 lakhs out of a total demand of Rs. 1,14,67,020/- was considered reasonable.
Based on the above legal principles and precedents, the Court found no reason to interfere with the Tribunal's order. However, taking into account the circumstances of the case and the counsel's request, the Court extended the time for depositing the Rs. 50 lakhs by one month. Failure to comply would result in the Tribunal dismissing the appeal for non-compliance with Section 35F of the Act. Ultimately, the petition was dismissed with this direction.
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2007 (9) TMI 284
Clandestine removal - Proof - Held that:- It appears that the alleged transactions of the booking register have been connected with the applicant merely on surmises and conjuncture without any specific material in this regard. It is settled principle of law that in case, if the Revenue wants to rely upon the entries of the document seized from the premises of third party, the burden lies upon the Revenue Authority to prove the genuineness and authenticity of the said entry and to connect the said entry with the dealer, in case, if the dealer denies to have any connection with such entry. In the present case, Revenue has failed to prove that such entries are related to the present applicant. In the circumstances, the view taken by the Tribunal and the authorities below connecting the entries of the booking register with the applicant is merely based on surmises and conjuncture.
In the result, revision is allowed. The order of the Tribunal is set aside and the applicant is declared non-taxable under the Central Sales Tax Act.
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2007 (9) TMI 283
The High Court dismissed the appeal as the Tribunal found that not supplying the record of cross-examination to the noticees amounted to a violation of natural justice and fair play. The Tribunal also mentioned a previous decision in Decent Dyeing Co. case. The appeal was dismissed.
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