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2009 (9) TMI 711

Demand and penalty - Recovery from the Director - Personal liability - held that:- The settled position in law is that liability for duty of the company cannot be fastened upon the director of a company unless there is a statutory provision to that effect. Such an issue came up for consideration before this court in the matter of Sunil Parmeshwar Mittal v. Dy. (Recovery Cell), CE [2005 (8) TMI 116 - HIGH COURT OF BOMBAY], wherein the court took a view that liability of members is limited to the extent of face value of shares subscribed by each member and the amount remaining unpaid on them for time being, former director of the company cannot be held responsible for payment of liabilities of company in the absence of any specific provision. - We are of the opinion that duty demand of the company cannot be recovered from the director in the absence of statutory provisions in the Central Excise Act, 1944.
2009 (9) TMI 710

Whether, on the facts and in the circumstances of the present case, the Tribunal was right in law in deleting the addition made on account of provision for warranty charges holding the same to be definite business liability allowable as deduction during the year under consideration ?
Held that:- The assessee-company is entitled to make a provision for the warranty charges holding the same to be a definite business liability allowable as a deduction during the years under consideration, since the same is based on a scientific basis and a consistent policy applied by the assessee- company throughout the world including India and that consistent application of the same principle over the years would remove any advantage which, according to the Revenue, the assessee may have by deferring of its income to the extent of warranty provision to the next year. The present appeals are accordingly dismissed.
2009 (9) TMI 709

Confiscation of vehicles - Cognizance of offences - Held that:- In the present case the Bench of two learned Judges has, in terms, doubted the correctness of a decision of a Bench of three learned Judges. They have, therefore, referred the matter directly to a Bench of five Judges. In our view, judicial discipline and propriety demands that a Bench of two learned Judges should follow a decision of a Bench of three learned Judges. But if a Bench of two Judges is so very incorrect that in no earlier judgment of three learned Judges is so very incorrect that in no circumstances can it be followed, the proper course for it to adopt is to refer the matter before it to a Bench of three learned Judges setting out, as has been done here, the reasons why it could not agree with the earlier judgment. If, then, the Bench of three learned Judges also comes to the conclusion that the earlier judgment of a Bench of three learned Judges is incorrect, reference to a Bench of five learned Judges is justified.
A plausible view on the power of the District Collector to order confiscation and lack of power on the Judicial Magistrates to entertain applications for interim custody confirmed.
2009 (9) TMI 708

Issues Involved:
1. Disclosure of information under RTI Act pertaining to qualifications, eligibility conditions, criteria for shortlisting candidates, and list of officers who opted for the post of Member, Central Board of Excise & Customs (CBEC) for the years 2006, 2007, and 2008.
2. Exemption from disclosure under Section 8(1)(i), 8(1)(e), and 8(1)(j) of the RTI Act regarding the list of officers empanelled as Members of CBEC.

Detailed Analysis:

Issue 1: Disclosure of Information Under RTI Act (Queries C to G)

The appellant had requested information regarding the qualifications, eligibility conditions, criteria for shortlisting candidates, and the list of officers who opted for the post of Member, CBEC for the years 2006, 2007, and 2008. The respondents contended that the information requested in queries C to G had been fully disclosed. The CPIO had provided the Recruitment Rules for the selection of Members of CBEC and the required lists through a communication dated 10-10-2008. Additionally, the Prime Minister's guidelines regarding the criteria for selection were also provided. The Commission concluded that the information pertaining to items C to G had been fully disclosed and directed that no further disclosure obligation for these items shall be cast on the respondents.

Issue 2: Exemption from Disclosure (Query H)

The appellant sought the list of officers who were actually empanelled as Members of CBEC for the years 2006, 2007, and 2008. The respondents declined to disclose this information, citing exemptions under Section 8(1)(i), 8(1)(e), and 8(1)(j) of the RTI Act. They argued that the empanelment list was classified as SECRET/CONFIDENTIAL and prepared with the approval of the Appointments Committee of the Cabinet (ACC). The respondents emphasized that the disclosure of such information could negatively impact organizational morale and interpersonal relationships and that the empanelment process involved a fiduciary relationship.

The Commission analyzed the respondents' arguments and found them unpersuasive. It noted that transparency in the process of selecting personnel for high offices was essential to remove doubts and apprehensions about the integrity of the processes. The Commission referred to its earlier decisions, which authorized the disclosure of Departmental Promotion Committee-related information, stating that transparency promoted organizational morale by improving trust between the organization and its employees.

The Commission also considered the arguments regarding the first and second provisos of Section 8(1)(i) and concluded that the requested information did not attract the exemptions under Sections 8(1)(j) and 8(1)(e). The empanelment process and the approved list of empanelled officers were related to governance and not personal information of any third party. The Commission rejected the contention that the information attracted Section 8(1)(e), as there was no fiduciary relationship involved.

The Commission noted that the Government had removed all secrecy from the approved panels of IAS and IPS officers and saw no reason why the panels of IRS officers should remain excluded from the norms of transparency. Therefore, the Commission directed the respondents to furnish the information requested at Sl. H in the appellant's RTI-application within two weeks of receiving the order.

Decision:

The appeal was disposed of with the direction that the information requested at Sl. H in the RTI-application be furnished to the appellant within two weeks. Copies of the direction were to be sent to the parties involved.
2009 (9) TMI 707

Issues Involved:
1. Legality of the provisional assessment of anti-dumping duty.
2. Applicability of Section 9A(8) of the Customs Tariff Act regarding provisional assessment.
3. Validity of the bond executed for provisional assessment.
4. Timeliness of the demand under Section 28 of the Customs Act, 1962.
5. Nature of the imported goods and their classification under anti-dumping duty.
6. Retrospective application of anti-dumping duty under Section 9A of the Customs Tariff Act, 1975.
7. Procedural aspects of the anti-dumping duty demand and assessment.

Detailed Analysis:

1. Legality of the Provisional Assessment of Anti-Dumping Duty:
The appellant contended that there was no legal provision for insisting on a provisional assessment at the time of import, making the provisional assessment ab initio void. The Tribunal noted that provisional anti-dumping duty was imposed as per Notification No. 128/2001 dated 21-12-2001, which was effective until 20-6-2002. The goods were cleared provisionally pending determination of definitive anti-dumping duty. The Tribunal upheld the legality of the provisional assessment based on the statutory framework provided under Section 9A of the Customs Tariff Act, 1975.

2. Applicability of Section 9A(8) of the Customs Tariff Act:
The appellant argued that Section 9A(8) did not refer to provisional assessment at the relevant time, making the provisional assessment legally invalid. The Tribunal clarified that sub-section (8) of Section 9A was introduced by Section 89 of the Finance Act, 2000, and amended in 2004. The Tribunal held that the provisions of the Customs Act, 1962, including those relating to provisional assessment, applied to anti-dumping duty as per the amendment, making the provisional assessment valid.

3. Validity of the Bond Executed for Provisional Assessment:
The appellant claimed that the bond executed for six months had expired and was not renewed by the department, making the demand invalid. The Tribunal noted that the bond executed by the appellant was for the clearance of CFLs in respect of anti-dumping duty and that the appellant was aware of the ongoing investigation. The Tribunal found that the non-extension of the bond was not a fatal lapse and upheld the demand.

4. Timeliness of the Demand under Section 28 of the Customs Act, 1962:
The appellant contended that the demand under Section 28 was hit by limitation as it was not issued within six months from the date of payment of duty. The Tribunal referred to the apex Court's decision in Virgo Steels, which clarified that the mechanism of Section 28 of the Customs Act, 1962, applies to the recovery of anti-dumping duty. The Tribunal upheld the demand as valid and within the permissible time frame.

5. Nature of the Imported Goods and Their Classification:
The appellant argued that they had imported only fluorescent tubes for emergency lamps and not CFLs. The Tribunal found that the import documents disclosed the import of CFLs, making the goods liable to anti-dumping duty. The Tribunal upheld the classification of the imported goods under the anti-dumping duty regime.

6. Retrospective Application of Anti-Dumping Duty:
The appellant argued that Notification No. 138/2002-Cus., dated 10-12-2002, should not have retrospective operation. The Tribunal held that anti-dumping duty could be levied retrospectively from the date of the provisional duty notification (21-12-2001) as per the statutory provisions. The Tribunal referred to the decisions in Nitco Tiles Ltd. and Chhotu Lal Daga, which supported the retrospective levy of anti-dumping duty during the interregnum period.

7. Procedural Aspects of the Anti-Dumping Duty Demand and Assessment:
The appellant argued that no formal demand notice was issued by the department, making the demand invalid. The Tribunal found that the appellants were aware of the ongoing investigation and the provisional duty notification. The Tribunal held that the procedural aspects were adequately addressed, and the demand was valid.

Conclusion:
The Tribunal directed the appellant to pre-deposit the entire anti-dumping duty amount of Rs. 2,73,31,320/- within eight weeks from the date of hearing (7-9-2009) for the appeal to be heard. The Tribunal emphasized the importance of the anti-dumping duty mechanism in protecting domestic industries and upheld the validity of the provisional assessment, retrospective levy, and procedural aspects of the demand.
2009 (9) TMI 706

Issues:
Import of Indian origin goods under Advance Licence Scheme, denial of duty free benefit, applicability of Circulars and Notifications, waiver of pre-deposit of duty.

Analysis:
The case involved the import of a drug intermediate under an Advance Licence against duty-free benefit claimed under a specific Notification. The Ministry of Finance, in consultation with DGFT, decided that duty-free import of Indian origin goods should not be allowed under the Advance Licence Scheme. This decision was based on a Policy Circular and directions from the Ministry. The Customs authorities finalized the assessment without extending the duty-free benefit, leading to a demand for duty payment, which was challenged by the applicants before the Commissioner (Appeals) unsuccessfully.

The advocate for the applicants argued that the relevant Export-Import Policy and Notification did not prohibit the import of Indian origin goods under the Advance Licence. He also contended that a specific Policy Circular should not apply retroactively to licenses issued before its issuance date. He cited legal precedents to support his arguments.

The Tribunal referred to a judgment by the Hon'ble Calcutta High Court in a similar case where it was held that duty-free import cannot be denied based on subsequent Circulars if the license did not contain any such stipulation. The Tribunal noted that in the present case, the import was made before the issuance of the relevant Circular. It was emphasized that Circulars cannot override statutory Notifications. The Tribunal also referred to a Supreme Court judgment stating that Circulars contrary to statutory provisions have no legal standing.

Considering the arguments and legal precedents, the Tribunal found that the applicants had a strong case for the complete waiver of the duty demanded. Accordingly, the Tribunal dispensed with the pre-deposit of the duty and stayed the recovery pending the appeal's disposal. This decision was pronounced in court on 7-9-2009.
2009 (9) TMI 705

Issues Involved:
1. Necessity of previous sanction to prosecute a public servant under Section 12 of the Prevention of Corruption Act, 1988.
2. Interpretation of Section 19 of the Prevention of Corruption Act, 1988.

Issue-wise Detailed Analysis:

1. Necessity of Previous Sanction to Prosecute a Public Servant under Section 12 of the Prevention of Corruption Act, 1988:

The case revolves around whether previous sanction is required to prosecute a public servant for an offence under Section 12 of the Prevention of Corruption Act, 1988. The High Court of Bombay at Goa affirmed the Special Judge's conclusion that such sanction was necessary. The appellant challenged this decision, arguing that Section 12 does not require previous sanction for prosecution.

2. Interpretation of Section 19 of the Prevention of Corruption Act, 1988:

The appellant contended that Section 19 of the Act explicitly mentions the need for previous sanction for offences under Sections 7, 10, 11, 13, and 15, but not for Section 12. The respondents argued that since Section 12 involves abetment of offences under Sections 7 or 11, the requirement for sanction should extend to Section 12 as well.

Detailed Analysis:

Factual Matrix:

The Central Bureau of Investigation (CBI) initiated a preliminary enquiry against the respondent, a Commissioner of Customs and Central Excise, for allegedly causing a loss of Rs. 1.04 crores to the department by purchasing flats at an exorbitant price. Subsequently, an Inspector of Central Excise attempted to bribe the CBI Inspector to close the case. A trap was laid, and the respondent was caught offering the bribe.

Lower Courts' Decisions:

The Special Judge and the High Court concluded that previous sanction was necessary to prosecute the respondents under Section 12, interpreting that Section 12 is not independent of Sections 7 or 11, and thus, sanction was required.

Supreme Court's Analysis:

The Supreme Court analyzed Sections 12 and 19 of the Act. Section 12 deals with punishment for abetment of offences under Sections 7 or 11, while Section 19 specifies that previous sanction is necessary only for offences under Sections 7, 10, 11, 13, and 15. The Court emphasized that Section 12 is a distinct offence, and the abetment of an offence under Sections 7 or 11 does not require the actual commission of the offence.

Legal Principles:

The Court reiterated that legislative intent must be derived from the clear language of the statute. It is not the role of the judiciary to add or read into the statute provisions that the legislature has consciously omitted. The Court cited precedents emphasizing that courts should not rewrite statutes under the guise of interpretation.

Conclusion:

The Supreme Court concluded that the High Court erred in interpreting Section 19 to include Section 12 within its ambit. The legislature's omission of Section 12 from the requirement of previous sanction was intentional and clear. Therefore, no previous sanction is required for prosecuting offences under Section 12 of the Act.

Judgment:

The judgment of the High Court was set aside, and the appeal was allowed, clarifying that previous sanction is not necessary for taking cognizance of an offence under Section 12 of the Prevention of Corruption Act, 1988.
2009 (9) TMI 704

Issues involved: Interpretation of Sections 8(1)(h) and 8(1)(g) of the RTI Act in the context of disclosure of information related to a closed vigilance enquiry against a former Commissioner of Central Excise.

Summary:
The appellant filed an RTI application seeking details, inspection, and copies of information related to a former Commissioner of Central Excise, including vigilance case records. The CPIO provided a reply, and the Appellate Authority decided on the matter. The appellant appealed the decision, arguing that the requested information should be disclosed as the vigilance enquiry was closed, and there was no reason for non-disclosure under Section 8(1)(h) or 8(1)(g) of the RTI Act. The Commission agreed with the appellant, noting that in completed enquiries, Section 8(1)(h) does not apply, and in this case, even Section 8(1)(g) was not applicable as similar information had been provided by the CBI. Consequently, the Commission directed that the appellant be allowed inspection of the requested files and documents, with the opportunity to take copies on payment of the prescribed fee. The appeal was disposed of with these directions, and the parties were to be informed accordingly.
2009 (9) TMI 703

Issues Involved:
1. Denial of information under Sections 8(1)(d), 8(1)(g), and 8(1)(h) of the RTI Act, 2005.
2. Examination of the applicability of exemptions claimed by the CPIO.
3. Application of Section 10 of the RTI Act regarding partial disclosure.
4. Justification for denial of information related to cases pending adjudication and adjudicated cases.
5. Request for penalty imposition on the CPIO under Section 20 of the RTI Act.

Issue-wise Detailed Analysis:

1. Denial of Information under Sections 8(1)(d), 8(1)(g), and 8(1)(h):
The appellant requested copies of the 335J register, a list of cases pending adjudication, and a list of adjudicated cases. The CPIO denied the information citing exemptions under Sections 8(1)(d), 8(1)(g), and 8(1)(h) of the RTI Act, 2005. The appellant contested this denial, arguing that the information sought does not fall within these exemptions and that the CPIO did not provide a proper justification for the denial.

2. Examination of the Applicability of Exemptions Claimed by the CPIO:
The CPIO argued that disclosing the 335J register would endanger the life or physical safety of officers involved in gathering information and impede ongoing investigations. The appellant countered that the information sought does not harm the competitive position of any third party or endanger anyone's safety. The appellate authority found that the CPIO failed to show reasonable grounds for claiming these exemptions and that the mere entries in the 335J register do not necessarily prove the culpability of the offenders.

3. Application of Section 10 of the RTI Act Regarding Partial Disclosure:
Section 10(1) of the RTI Act allows for partial disclosure of information if only part of the record is exempt. The appellate authority directed the CPIO to examine the 335J register afresh and apply the doctrine of severability, providing information that does not impede the investigation process. The CPIO was instructed to furnish the information within 10 days of receipt of the decision.

4. Justification for Denial of Information Related to Cases Pending Adjudication and Adjudicated Cases:
The CPIO denied information on the grounds that it would harm the competitive position of third parties and impede investigations. The appellate authority found this reasoning insufficient, noting that the appellant only sought details about cases pending adjudication and adjudicated cases, which do not fall under the claimed exemptions. The CPIO was directed to furnish this information within 10 days.

5. Request for Penalty Imposition on the CPIO under Section 20 of the RTI Act:
The appellant sought penalties against the CPIO for mala fide denial of information. The appellate authority clarified that only the Central Information Commission or the State Information Commission has the power to impose penalties under Section 20 of the RTI Act. The appellate authority found no deliberate intention by the CPIO to deny the information and thus did not justify the imposition of penalties.

Conclusion:
The appeal was disposed of with the following directions:
- The CPIO is to re-examine the 335J register and provide non-exempt information within 10 days, applying the doctrine of severability.
- The CPIO is to furnish the requested information about cases pending adjudication and adjudicated cases within 10 days.
- The request for penalty imposition on the CPIO was denied as the appellate authority is not vested with such powers, and no mala fide intention was found.
2009 (9) TMI 702

Issues:
1. Denial of information under the Right to Information Act, 2005 by the Central Excise department regarding the 335J register, pending adjudication cases, and adjudication orders.

Analysis:
1. The applicant sought information under the RTI Act regarding the 335J register, which contains details of duty evasion cases. The CPIO denied the information citing third-party confidentiality. However, the CPIO erred in denying the information without proper justification. The information in the 335J register is not third-party information but a record of public action. The CPIO should have considered exemptions under Section 8(1) or Section 9 before denying the information. The matter is remanded to the CPIO to provide relevant pages of the register after excluding exempted information under Section 8(1) of the RTI Act, 2005.

2. The applicant also requested details of pending adjudication cases, which are statistical information not covered under any exemptions of the RTI Act. The CPIO is directed to provide the requested information as it does not fall under Section 8(1) exemptions.

3. Additionally, the applicant sought information on adjudication orders passed during a specific period. This information does not constitute personal third-party information and is not exempted under Section 8(1) of the RTI Act. Therefore, the CPIO is directed to provide this information to the applicant as well.

In conclusion, the appeal filed by the applicant is disposed of with directions to provide the requested information related to the 335J register, pending adjudication cases, and adjudication orders, as they do not fall under the exemptions of the RTI Act.
2009 (9) TMI 701

SSI Exemption - Brand name - Held that: - Both the respondents can only be said to have used their own brandnames, one of them having used their own registered brandname and the other having used a brandname assigned to them - demand set aside - appeal dismissed - decided against Revenue.
2009 (9) TMI 700

Issues involved: Alleged diversion of duty-free materials, poor quality of exported consignments, violation of principles of natural justice, involvement of different parties in fraudulent activities.

Alleged diversion of duty-free materials:
The main applicant, a 100% EOU, imported duty-free materials for manufacturing and exporting garments. However, during a visit to their premises, no records related to the materials were found, and it was revealed that the materials were diverted for other purposes. The original authority confirmed a demand of around Rs. 2.5 crores towards the diverted material and imposed penalties on the involved parties.

Poor quality of exported consignments:
The Revenue argued that the exported consignments were of sub-standard quality and not manufactured from the duty-free materials. Discrepancies in declared values and weights of the exported garments were highlighted, indicating a mismatch with the imported consignments. The involvement of different parties in handling the materials and exports was also emphasized.

Violation of principles of natural justice:
The appellant claimed a violation of natural justice due to delays in responding to the show cause notice and alleged lack of personal hearing intimations. However, the Tribunal found no prima facie evidence of such violation, noting that communications were sent as per legal requirements.

Involvement of different parties in fraudulent activities:
It was observed that one of the involved parties knowingly participated in the illegal diversion of duty-free materials and exporting sub-standard items to fulfill export obligations. The seriousness of the allegations and findings led the Tribunal to view claims of poor financial status with skepticism, especially due to lack of concrete evidence supporting such claims.

Judgment:
The Tribunal disposed of the stay petition by directing the main applicant to deposit a specified amount towards duty and penalty, along with similar directives for the other involved parties. Failure to comply would result in dismissal of the appeals. The matter was scheduled for compliance reporting on a specified date.
2009 (9) TMI 699

Issues: Appeal against order upholding refund sanctioning and crediting to Consumer Welfare Fund due to lack of evidence for unjust enrichment.

The judgment pertains to an appeal against the order of the Commissioner (Appeals) upholding the refund sanctioning and crediting the amount to the Consumer Welfare Fund due to the absence of documents for verification of unjust enrichment. The appellant had imported bearings from SKF, and a dispute arose regarding the quantum of discount applicable to such imports, which was resolved in favor of the importers by the Commissioner (Appeals). During the adjudication and appeal proceedings, the appellant imported several consignments and received lower discounts, resulting in higher duty payments made under protest. Subsequently, a refund was claimed. The eligibility of the refund claim was not disputed, but the original authority credited the amount to the Consumer Welfare Fund due to the lack of evidence for unjust enrichment. The appellant submitted evidence such as a balance sheet, a certificate from a Chartered Accountant, and ledger extracts before the Commissioner (Appeals), but these were not admitted under Rule 5(1) of the Customs (Appeals) Rules. The appellant argued that they were unable to promptly respond to the original authority's request for documentary evidence due to year-end preparations, requesting a remand to submit proof of no unjust enrichment.

The learned Advocate for the appellant contended that they appeared before the original authority and made submissions regarding the eligibility of cash refund. However, due to year-end obligations and delayed response to the original authority's request for evidence, a decision was made to credit the refund to the Consumer Welfare Fund. The appellant later submitted evidence to the Commissioner (Appeals), which was not entertained. The appellant sought a remand to provide proof of no unjust enrichment. The learned JDR argued that the Commissioner (Appeals) rightly rejected the appellant's plea to produce evidence due to their failure to do so before the original authority, despite specific directions. The Tribunal considered both sides' submissions and acknowledged that the appellant was delayed in finalizing their annual accounts, preventing timely submission of evidence to the original authority. In the interest of justice, the Tribunal set aside the orders of the Commissioner (Appeals) and the original authority, remanding the matter for fresh consideration. The appellant was granted one month to submit the relied-upon evidence, after which the original authority would reassess the refund claim eligibility, providing a reasonable opportunity for the appellants to be heard.

In conclusion, the appeal was allowed by way of remand, with the Tribunal emphasizing the importance of considering the evidence now presented by the appellant to determine the refund claim's validity after affording the appellants a fair hearing.
2009 (9) TMI 698

Refund - Confiscation of goods – non-resident Indian imported used household articles under the Transfer of Residence Rules - redemption fine of Rs. 1,40,000/- in lieu of confiscation. He also imposed a penalty of Rs. 60,000/- on the petitioner - petitioner remitted the said sum of Rs. 2,00,000 – Held that:- Petitioner’s liability to pay redemption fine and penalty stands limited to the sum of Rs. 1,00,000 - petitioner is entitled to refund of the excess sum of Rs. 1,00,000/- paid by him as redemption fine and penalty
2009 (9) TMI 697

Disallowance of modvat credit on the ground that the appellant had claimed the duty erroneously without ensuring themselves about the eligibility conditions for the said amount on inputs, semi finished goods and finished goods lying in stocks – Held that:- Manufacturer is entitled to credit of the duty paid on inputs received by him immediately before obtaining the duty of the acknowledgment of the declaration made under Rule 57G if he satisfies such inputs are lying in stock or received in the factory on or after 1st day of March 1994 or such inputs are used in the manufacture of final products which are cleared from the factory on or after 1st day of March 1994 and that no credit has been taken by the manufacturer in respect of inputs under any other rule or notification - while giving the declaration, the manufacturer has given particulars of the stocks lying at various stages though in law he was not required to furnish the same, It is in that context the authorities seem to think that sufficient evidence is not given to show the material, which was in process, and therefore, they have disallowed the claim - This approach has no legal basis and is not supported by the aforesaid provisions - matter is remitted back to the Original Authority
2009 (9) TMI 696

Issues:
Whether the CIT(A) is justified in allowing depreciation at the rate of 25 per cent in respect of office interiors for exhibition/sample purpose.

Analysis:
The judgment involves a dispute regarding the allowance of depreciation at a specific rate for office interiors utilized for exhibition/sample purposes. The appellant, a partnership firm engaged in interior designing, claimed depreciation at 25%, contending that the interiors were installed for exhibition to prospective clients. Initially, the Assessing Officer allowed only 10% depreciation, considering the interiors as mere 'furniture and fittings.' The CIT(A) supported the appellant's claim, citing precedents where similar office interiors were categorized as "plant."

The Departmental Representative argued that the interiors were akin to 'furniture and fittings,' warranting 10% depreciation, aligning with the Assessing Officer's stance. Conversely, the appellant's Authorized Representative emphasized the temporary nature of the decoration work, essential for showcasing designs to clients. The representative asserted that such activities constituted an exhibition of the firm's work, qualifying as "plant" eligible for 25% depreciation. The representative also highlighted past approvals of depreciation and cited relevant court decisions to support the claim.

Upon review, the Tribunal acknowledged the appellant's business nature and the purpose of utilizing office space for display. The Tribunal noted that the decoration work was integral to the firm's operations, aimed at showcasing designs to potential clients. Consequently, the Tribunal concluded that the work did not align with 'furniture and fittings' but rather qualified as "plant" for business purposes. Upholding the CIT(A)'s decision, the Tribunal dismissed the Revenue's appeal, affirming the allowance of 25% depreciation for the office interiors utilized for exhibition purposes.

In essence, the judgment delves into the classification of office interiors for depreciation purposes, emphasizing the distinction between 'furniture and fittings' and assets considered essential for business operations. The decision underscores the business-centric approach in determining depreciation rates, highlighting the significance of the purpose and function of assets within the firm's operations.
2009 (9) TMI 695

Disallowance of expenditure u/s 37 - Payment of penalty for excess load - ''compensatory in nature and not penal''- Gujarat Government has come out with a scheme of Gold Card which entitles every transporters to have overloaded vehicle for that particular month on payment of additional fees fixed for that Gold Card - AO rejected this contention of the assessee that it was normal business expenditure as corresponding income for the same was billed to the parties and that Gujarat Government has come out with a scheme of Gold Card which entitles every transporters to have overloaded vehicle for that particular month on payment of additional fees fixed for that Gold Card. AO also rejected this contention of the assessee that the overloading penalty cannot be equated with the penalty for infringement of law or otherwise, as per the provisions of IT Act. AO took the view that it cannot be held that Gold Card holder can violate the law and claim the expenditure thereof.

AO also mentioned that during the course, for AY 2004-05, AO on the similar issue in other case falling in his jurisdiction had called for information u/s 133(6) from the RTO office to ascertain correct nature of penal action. AO further relying upon certain decisions of the Courts held that in the present case of the assessee, the nature of penalty is not compensatory but is for the violation of rudimentary law.

AO concluded that this being a cognizable offence and infringement of law and payment being penal in nature and not incidental to the assessee’s regular business. He, therefore, disallowed the amount. The CIT(A) confirmed the addition.

HELD THAT:- In our considered view, the authorities below have not correctly appreciated the facts of the present case. In fact, they have grievously erred in observing that "scheme of Gold Card introduced by the Government of Gujarat entitled the transport carriers to carry overload by payment of additional fees was strange in a way there is no Government machinery would encourage violation of infringement of legal provisions.

It is evident from the record that on payment of additional amount already fixed by RTOs, they have allowed vehicles to move further which itself shows that amount collected by the RTOs was not payment towards infringement of law but in the nature of compensation. It is pertinent to state here that Government of Gujarat has allowed to carry such excess load and collected only compensatory amount from the assessee which cannot be termed as payment towards infringement of law. It is also relevant to state that laws of State Government allowed the transporters to carry excess load in vehicles in relevant years and hence such payment is not in violation of any law.

Thus, Payment of penalty for excess load carried was not for infringement of law but in the nature of compensation in the business activities of transportation of goods.

Therefore, Addition made by the AO and confirmed by the CIT(A) is not sustainable and accordingly, we delete the addition. Accordingly, we dismiss (sic—allow) the ground Nos. 1 to 3 of the appeal.

Penalty proceedings u/s 271(1)(c) - CIT(A) held that the appellant has really concealed/furnished inaccurate particulars of its income - HELD THAT:- We find that the observations of the CIT(A) are unwarranted, unjustified, and hence not sustainable in law.

In the instant case, CIT(A) was not required to make such comments because he was deciding the quantum appeal and not the penalty appeal. In our view, the CIT(A) has exceeded his jurisdiction while making such observations. In fact, the CIT(A) should have observed that this ground of appeal is premature and hence I reject the same.

Accordingly, we quash the above observations of the CIT(A) on the ground that the same are without jurisdiction and uncalled for. This ground of appeal is allowed.
2009 (9) TMI 694

The Appellate Tribunal ITAT MUMBAI, consisting of P.M. JAGTAP AND SMT. P. MADHAVI DEVI, JJ., heard an appeal against a CIT(A) order confirming the addition of an unexplained cash credit under section 68. The assessee received a gift of Rs. 2,00,000 from a relative, which was disputed by the Assessing Officer. The donor's statement raised doubts about the authenticity of the gift, leading to the addition under section quest 68. The CIT(A) upheld this decision, prompting the appeal to the tribunal.

During the proceedings, the assessee claimed the gift was genuine, supported by the donor's statement. However, the tribunal ruled that the gift was not made out of love and affection, as the donor's brother-in-law, a chartered accountant, influenced the decision. The tribunal cited a Supreme Court case, emphasizing the burden on the assessee to prove the nature and source of the credited sums. The tribunal found the explanation unsatisfactory, as the gift lacked the necessary elements of a voluntary, affectionate gesture.

Ultimately, the tribunal dismissed the assessee's appeal, upholding the decisions of the lower authorities. The assessee failed to establish the gift's authenticity, leading to the addition under section 68. The tribunal's decision was based on the lack of evidence supporting the gift as a genuine, voluntary transaction.
2009 (9) TMI 693

Issues:
1. Deletion of addition of Rs. 80,731 made by the Assessing Officer under section 154 of the Act.

Detailed Analysis:
The appeal before the Appellate Tribunal ITAT Delhi concerned the deletion of an addition of Rs. 80,731 by the Assessing Officer under section 154 of the Income-tax Act. The CIT(A) had deleted this addition, leading to the revenue's appeal. The Assessing Officer rectified the initial order under section 143(1) by adding the loss on sale of assets as not allowable deduction, based on a show-cause notice to the assessee. However, the CIT(A) disagreed, stating that the Assessing Officer did not have the power to make adjustments to the return income during that year under review, as per the provisions of section 143(1) at that time. The CIT(A) highlighted that such powers for prima facie adjustments were restored by the Finance Act, 2007, from the assessment year 2008-09 onwards, making the Assessing Officer's action unjustified.

Moreover, the revenue argued that despite the tax effect being below the threshold set by the CBDT for filing an appeal before the Tribunal, they filed the appeal due to the acceptance of the revenue audit objection by the Department. The Departmental Representative contended that the Assessing Officer correctly assumed jurisdiction under section 154 to rectify the mistake apparent from the record, citing the case of CIT v. Shree Manjunathesware Packing Products & Camphor Works [1998] 231 ITR 53 (SC). However, the Tribunal analyzed the situation, emphasizing that the Assessing Officer's conclusion regarding the claim of loss on the sale of assets as a prima facie mistake was not conclusive. The Tribunal referenced legal precedents to support its stance that the nature of the transaction should be considered beyond mere descriptions in the accounts.

Furthermore, the Tribunal delved into the provisions of section 154 of the Income-tax Act, emphasizing that the mistake apparent from the record mentioned in this section must be read in conjunction with the order of assessment or intimation. The Tribunal highlighted that section 154 does not provide an alternative to the assessment procedure under section 143(1). Citing legal decisions and a Board Circular, the Tribunal concluded that what cannot be done directly under section 143(1) cannot be achieved indirectly through section 154. The Tribunal upheld the CIT(A)'s order, dismissing the revenue's appeal.

In conclusion, the Tribunal's detailed analysis focused on the lack of jurisdiction for the Assessing Officer to make adjustments under section 154 based on the circumstances of the case and legal interpretations of relevant provisions and precedents. The decision highlighted the importance of adhering to the statutory framework and established legal principles in tax matters.
2009 (9) TMI 692

Issues Involved:
1. Applicability of Section 41(1) regarding cessation of liability.
2. Consideration of arguments and evidence, specifically the Sales Tax Tribunal's order.
3. Nature of the payment made under the sales-tax deferral scheme.

Issue-wise Detailed Analysis:

1. Applicability of Section 41(1) regarding cessation of liability:
The primary issue was whether Section 41(1) of the Income Tax Act was applicable, which concerns the cessation or remission of a trading liability. The assessee argued that Section 41(1) was not attracted since there was no cessation of liability. The Tribunal found that the sales-tax liability was converted into an interest-free loan payable in five annual installments starting from April 2010. The Tribunal concluded that the conversion of sales-tax liability into a loan liability amounted to actual payment of the statutory liability under Section 43B of the Act. The Tribunal held that the settlement of such liabilities by a one-time payment of a lesser amount resulted in an income under Section 41(1) of the Act. The Tribunal reasoned that the sales-tax liability was a trading liability, and the difference between the settled amount and the total loan liabilities was the income of the assessee for the previous year.

2. Consideration of arguments and evidence, specifically the Sales Tax Tribunal's order:
The assessee contended that the Tribunal failed to consider the order of the Maharashtra Sales Tax Tribunal, which stated that the payments made to M/s. SICOM could not be deemed a discharge of its sales-tax liability due to procedural issues. The Tribunal acknowledged that the Sales Tax Tribunal had noted the payments were made under the scheme and had a nexus towards sales-tax payment. However, it was also noted that the proper documentation was required for these payments to be considered valid under the Bombay Sales Tax Act. The Tribunal concluded that whether the order of the Sales Tax Appellate Tribunal resulted in the continuation or revival of the liability was a debatable question, not amenable to rectification proceedings. The Tribunal held that the arguments and evidence were considered, and the conclusion reached was a possible view, thus not warranting rectification.

3. Nature of the payment made under the sales-tax deferral scheme:
The assessee argued that the payment made under the deferral scheme was the net present value of future installments and should not be considered as a benefit. The Tribunal noted that the sales-tax liability was initially a current liability, later converted into a long-term liability, and then discharged at a lesser amount. The Tribunal held that the payment of the net present value of future installments resulted in a benefit to the assessee. The Tribunal emphasized that the nature of the receipt as a trading receipt did not change, and the benefit arising from the settlement fell within the purview of Section 41(1) of the Act.

Conclusion:
The Tribunal dismissed the Miscellaneous Application filed by the assessee, holding that there was no mistake apparent from the record warranting rectification. The Tribunal concluded that the view taken in the original order was a possible view, and the arguments and evidence presented by the assessee were considered. The Tribunal emphasized that the assessee was effectively seeking a review of the order under the guise of a rectification proceeding, which was not permissible.