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Showing 41 to 60 of 686 Records

• 2009 (6) TMI 992
  
  Issues involved: Appeal against order of learned CIT(A) regarding disallowance u/s 40A(2)(b) of the Act for assessment year 2005-06.
  
  Summary:
  The appellant appealed against the order of the learned CIT(A) regarding the disallowance made under section 40A(2)(b) of the Act for the assessment year 2005-06. The appellant had taken loans covered under the said section and paid interest at 18%, which the Assessing Officer (AO) found to be higher than the market rate of 11.5% to 12%. The AO disallowed the excess interest but allowed it at 12%. On appeal, the CIT(A) reduced the disallowance to 3% and allowed interest at 15%. The appellant argued that the loans were taken in the past at 24% interest, and by borrowing from relatives, they avoided paperwork and collateral requirements. The appellant cited relevant tribunal decisions in support. The Departmental Representative supported the CIT(A)'s order, stating that 15% interest already allowed covered the excess. The Tribunal noted that under section 40A(2)(b), excess amounts paid for services/benefits from covered entities are not deductible. Considering the lack of security for the loans, the flexibility in repayment, and the difficulties in obtaining bank loans, the Tribunal allowed the appeal and deleted the disallowance.
  
  In conclusion, the appeal of the assessee was allowed, and the disallowance u/s 40A(2)(b) was deleted.

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• 2009 (6) TMI 991
  
  Issues Involved:
  1. Indexed cost of property.
  2. Exemption u/s 54 of the IT Act.
  
  Summary:
  
  Issue 1: Indexed Cost of Property
  The assessee, a HUF, filed a return showing a business loss and claimed exemption u/s 54F for purchasing residential properties. The AO disputed the computation of capital gains (CG), particularly the indexed cost of the property sold. The AO argued that the market value of the property as on 1.4.1981 should be Rs. 1.35 lakhs as per wealth-tax records, not Rs. 38,86,200/- as adopted by the assessee. The CIT(A) upheld the AO's decision on this issue.
  
  Issue 2: Exemption u/s 54 of the IT Act
  The AO also disputed the exemption claimed u/s 54F, stating that no evidence was produced to show that four residential properties were acquired. The CIT(A) verified the facts and concluded that only one property (No. 16) had a residential structure, allowing exemption for Rs. 11.60 lakhs but not for the claimed development charges of Rs. 17.00 lakhs.
  
  Revenue's Appeal:
  The Revenue argued that the CIT(A) erred in allowing exemption for one property, contending that the mud structures were temporary and not suitable for human habitation. The AO's report, which included physical verification, supported this view. The AO found no substantial structures or facilities like water and electricity, and the properties were registered as vacant plots.
  
  Assessee's Appeal:
  The assessee contended that the CIT(A) should have allowed exemption for all four properties. The assessee relied on a Karnataka High Court decision, arguing that the CIT(A) should have considered the development charges and the existence of residential structures.
  
  Tribunal's Decision:
  The Tribunal upheld the AO's findings, stating that the assessee is not entitled to exemption u/s 54 for any of the properties. The Tribunal noted the lack of substantial evidence for the existence of residential structures and the improbability of the claimed development charges. The Tribunal also referenced relevant case laws, including decisions from the Delhi and Punjab & Haryana High Courts, which supported the AO's stance.
  
  Conclusion:
  The Tribunal allowed the Revenue's appeal and dismissed the assessee's appeal, restoring the AO's decision that the assessee is not entitled to exemption u/s 54 of the IT Act for any of the properties.

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• 2009 (6) TMI 990
  
  Issues: Confiscation of goods, redemption fine under Section 125, penalty under Section 114
  
  Confiscation of Goods and Redemption Fine under Section 125:
  The Commissioner of Customs ordered the confiscation of goods covered by a shipping bill and allowed the exporter to redeem the goods on payment of a fine under Section 125 of the Customs Act. The Tribunal's Larger Bench decision in Shiv Kripa Ispat Pvt. Ltd. vs. CCE was cited, stating that no redemption fine could be imposed if the offending goods were not available for confiscation unless allowed to be cleared against a bond or undertaking. As the goods in this case were not physically available for confiscation and not cleared under any bond, the redemption fine was vacated following the Larger Bench decision.
  
  Penalty under Section 114:
  Evidence supported penalties imposed on the exporter, shipping line, and Customs House Agent (CHA) under Section 114 of the Act. The goods were exported without proper customs supervision, shipping bill, or "Let Export Order" from the customs officer. The exporter handed over the consignment to the CHA, who filed the shipping bill without completing customs procedures. The shipping line loaded the goods onto the vessel without proper customs clearance documentation. The Commissioner found that the actions of the exporter, CHA, and shipping line rendered the goods liable to confiscation under Section 113 for breaching Section 51 and other Customs Act provisions. It was clarified that actual confiscation of goods is not necessary for a penalty under Section 114 if the goods are liable to confiscation. The penalties imposed were deemed excessive, and the penalty amounts were reduced to Rs. 2,00,000 for the shipping line and Rs. 1,00,000 each for the exporter and CHA. The judgment upheld the penalties but adjusted the amounts based on the circumstances of the case.
  
  Conclusion:
  The judgment addressed issues related to the confiscation of goods, redemption fine under Section 125, and penalties under Section 114 of the Customs Act. It applied legal precedents to determine the appropriateness of the redemption fine and penalties imposed on the parties involved in the export process. The decision provided a detailed analysis of the legal provisions and actions of the exporter, CHA, and shipping line, ultimately adjusting the penalty amounts to be fair and reasonable based on the circumstances of the case.

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• 2009 (6) TMI 989
  
  Issues involved:
  The issues involved in this judgment are the application of Rule 8D of the Income Tax Rules for making disallowance u/s 14A of the Income Tax Act for assessment years 2004-05 and 2005-06.
  
  Details of the Judgment:
  
  Issue 1: Application of Rule 8D for disallowance u/s 14A:
  The Assessing Officer (AO) required the assessee to justify why proportionate expenses related to exempt income should not be disallowed u/s 14A of the Income Tax Act. The AO estimated the expenditure incurred in relation to exempt income and made a disallowance of Rs. 5 lakhs. In the first appellate proceedings, the CIT(A) directed the assessee to provide the working of disallowance as per Rule 8D, resulting in a higher disallowance of Rs. 10,21,210. The CIT(A) held that Rule 8D is applicable retrospectively and that disallowance u/s 14A was necessary based on the managerial and administrative decisions made by the assessee regarding investments yielding exempt income.
  
  Issue 2: Challenge to the CIT(A) order:
  The counsel for the assessee challenged the CIT(A) order, arguing that the CIT(A) directly referred to a specific case without considering the AO's satisfaction u/s 14A of the Act. The counsel contended that the AO should have given a finding regarding the working of the disallowance if not satisfied with the claim of the assessee. The counsel also highlighted that the assessee is a debt-free company and the attributable expenditure is minimal.
  
  Issue 3: Interpretation of Section 14A and Rule 8D:
  The Tribunal analyzed Section 14A(2) of the Act, emphasizing that the determination of expenditure in relation to income not includible in the total income is subject to the AO's satisfaction with the correctness of the claim of the assessee. Rule 8D is the prescribed method for such determination, to be invoked only if the AO is not satisfied with the claim. The Tribunal noted that the satisfaction of the AO is crucial for the determination of the expenditure under Section 14A.
  
  Conclusion:
  The Tribunal remitted the matter back to the AO to record his satisfaction or dissatisfaction u/s 14A(2) and examine the correctness of the assessee's explanation regarding the expenditure related to income not included in the total income. Both appeals of the assessee were treated as allowed for statistical purposes.
  
  This judgment clarifies the application of Rule 8D for disallowance u/s 14A and underscores the importance of the AO's satisfaction in determining such expenditure.

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• 2009 (6) TMI 988
  
  The High Court of Bombay dismissed the appeal as no search was conducted against the assessee due to non-compliance with the provisions of the Income Tax Act. The Tribunal found the searches invalid and illegal. No substantial question of law was involved in the appeal.

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• 2009 (6) TMI 987
  
  The Bombay High Court dismissed the appeals as no substantial question of law was found regarding the conduct of search during assessment under the Income Tax Act. The Tribunal found the search invalid and illegal due to non-compliance with Act provisions. No search was conducted on the assessee's premises.

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• 2009 (6) TMI 986
  
  The Bombay High Court dismissed the appeal as the issue raised was covered by a previous judgment. No costs were awarded.

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• 2009 (6) TMI 985
  

  Penalty u/s 271(1)(c) - validity of order passed beyond the period of limitation - the assessee was engaged in agricultural activities in the name and style of M/s Bloosom Floriculture eligible to exemption u/s. 10(1) - failed to produce any bills/vouchers for agricultural income/activities -

  Condonation of delay filing appeal - HELD THAT:- We are of the view that although the explanation given by the assessee may not be sufficient to condone the delay but the assessee may raise the legal issue as per r. 27 of the ITAT Rules, 1963.

  The question of jurisdiction raised by the assessee goes to the root of the matter and does not require further investigation into the facts, so we are of the view that the same is required to be entertained and decided. We are also fortified by the decision of the Tribunal, Lucknow Bench ‘B’ in the case of U.P. State Bridge Corpn. Ltd. v. Dy. CIT [2008 (2) TMI 900 - ITAT LUCKNOW].

  We are of the confirmed view that plea taken by the assessee, vide which jurisdiction of the AO in levying the penalty u/s. 271(1)(c) has been challenged, deserves to be admitted.

  From the provisions contained in the proviso to sec 275(1)(a) it is crystal clear that if an order is passed by the CIT(A) on or after the 1st day of June, 2003 then an order imposing penalty shall be passed before the expiry of the financial year in which the proceedings in the course of which action for imposition of penalty has been initiated, are completed or within one year from the end of the financial year in which the order of the CIT(A) is received whichever is later.

  Here, CIT(A) passed the order on 11th March, 2005, the penalty proceedings were initiated by the AO in March, 2004 when the assessment order was passed on 23rd March, 2004. The learned CIT(A) had passed the order dt. 11th March, 2005 so the penalty order was to be passed within one year from the end of the financial year in which the order of the CIT(A) was received by the AO. the appeal was filed by the Department in Tribunal in the month of May, 2005, therefore the order must have been received before the said date, hence the relevant financial year ended on 31st March, 2006, as such the penalty order was to be passed upto 31st March, 2007.

  However, the AO has passed the penalty order levying the penalty u/s. 271(1)(c) on 20th April, 2007 therefore, the penalty order passed was barred by limitation and does not survive. Accordingly, the plea taken by the assessee is allowed.

  We have quashed the penalty order for another reason i.e., by considering the limitation period as provided in proviso to s. 275(1)(a), in that view of the matter, we do not see any merit in the appeal of the Department.

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• 2009 (6) TMI 984
  
  Issues Involved:
  1. Deletion of addition made u/s 2(24)(x) read with section 36(1)(va) for late payment of employees' contribution to PF and ESI.
  2. Allowance of depreciation on let out building.
  3. Deletion of addition for security expenses of directors.
  4. Deletion of addition for late payment of employees' and employer's contribution to PF, EPF, and FPF.
  5. Deletion of addition for under-valuation of stock.
  6. Deletion of addition for car expenses.
  7. Confirmation of addition for interest paid to parties for delayed payments.
  
  Summary:
  
  1. Deletion of addition made u/s 2(24)(x) read with section 36(1)(va) for late payment of employees' contribution to PF and ESI:
  The Tribunal upheld the CIT(A)'s decision to delete the addition made by the AO for late payment of employees' contribution to PF and ESI. The Tribunal relied on the Delhi High Court judgment in the case of P.M. Electronics Ltd., which allowed such contributions if paid before the due date of filing the return.
  
  2. Allowance of depreciation on let out building:
  The Tribunal upheld the CIT(A)'s decision to allow depreciation on the let out building. The CIT(A) verified that only 10% of the building was let out and disallowed depreciation proportionately. The Tribunal found no infirmity in the CIT(A)'s order.
  
  3. Deletion of addition for security expenses of directors:
  The Tribunal upheld the CIT(A)'s decision to delete the addition made by the AO for security expenses of directors. The CIT(A) found that the expenses were incurred for business purposes and were supported by sufficient evidence, including police reports and newspaper cuttings.
  
  4. Deletion of addition for late payment of employees' and employer's contribution to PF, EPF, and FPF:
  The Tribunal dismissed the revenue's appeal, following its decision for the assessment year 1999-2000, and upheld the CIT(A)'s order allowing the deduction for late payment of employees' and employer's contribution to PF, EPF, and FPF.
  
  5. Deletion of addition for under-valuation of stock:
  The Tribunal upheld the CIT(A)'s decision to delete the addition made by the AO for under-valuation of stock. The CIT(A) found that the Local Area Development Tax (LADT) was not attributable to the purchase of goods and could not be included in the closing stock valuation.
  
  6. Deletion of addition for car expenses:
  The Tribunal upheld the CIT(A)'s decision to delete the addition made by the AO for car expenses. The CIT(A) found that the company is a separate legal entity, and any disallowance for personal use of cars should be made as a perquisite in the hands of the directors, not the company.
  
  7. Confirmation of addition for interest paid to parties for delayed payments:
  The Tribunal dismissed the assessee's appeal, refusing to admit additional evidence regarding the status of parties as SSI units. The Tribunal found no merit in the assessee's justification for the admission of additional evidence and upheld the disallowance made by the AO.
  
  Order pronounced in the open court on 19th June, 2009.

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• 2009 (6) TMI 983
  
  Issues involved:
  The issue in this case is whether a charitable institution is entitled to claim depreciation under section 11 of the Income-tax Act.
  
  Summary:
  
  Issue 1: Entitlement to claim depreciation by a charitable institution under section 11 of the Income-tax Act
  
  The Appellate Tribunal ITAT Delhi heard an appeal by the revenue against the order of CIT(A) regarding the entitlement of a charitable institution to claim depreciation of Rs. 15,21,994 under section 11 of the Income-tax Act for the assessment year 2006-07. The Assessing Officer allowed the benefit of section 11 to the assessee, resulting in nil income assessment. However, a controversy arose when the Assessing Officer disallowed the deduction of depreciation, claiming it would result in double deduction as the amount invested in the capital asset was treated as an application of income. The revenue relied on the decision of the Hon'ble Supreme Court in the case of Escorts Ltd. v. Union of India [1993] 199 ITR 431 to support its claim that depreciation should not be allowed.
  
  Issue 2: Application of income vs. computation of income for a charitable institution
  
  The Tribunal analyzed the concept of application of income versus computation of income for a charitable institution. It emphasized that the provision relating to compulsory application of income is distinct from the computation of income and should be considered only after the income is determined. The Tribunal referred to previous decisions, including ITO v. Trustees of Marathi Mission [1982] 1 ITD (Bom.) 539, to support the view that determination of income and application of income are separate concepts. The Tribunal rejected the argument that allowing depreciation would result in double deduction, stating that application of income is a condition for exemption and not a deduction from income.
  
  Conclusion:
  
  The Tribunal upheld the order of CIT(A) and dismissed the revenue's appeal, confirming that the charitable institution was entitled to claim depreciation under section 11 of the Income-tax Act.

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• 2009 (6) TMI 982
  

  Application for Registration u/s 12AA - activity for charitable purpose in terms of Section 2(15) - “charitable purpose” charity is soul of the expression - CIT after examine the copies of the accounts and expenditure, held that assessee society is not carrying any charitable activity u/s 2(15), as it was in a profit making business and rejected the application - ITAT allowed the said application.

  HELD THAT:- Clause (a) of sub- section (1) of Section 12 AA , makes it clear that the CIT is not supposed to allow the registration with blind eyes. We agree with the argument advanced on behalf of the appellant that mere imparting education for primary purpose of earning profits cannot be said to be charitable activity as interpreted by the Apex Court in MCD Vs. Children Book Trust [1992 (4) TMI 237 - SUPREME COURT], we are unable to agree with the ITAT that since word “education” is not qualified in Section 2(15), as such, every application received by a society, who is engaged in the business of imparting “education” is bound to be registered under Section 12 AA. If that view is accepted in that case, CIT will be failing in its duty to comply the provision of law contained in clause (a) of sub-section (1) of Section 12 AA.

  In expression “charitable purpose” charity is soul of the expression. Mere trade and commerce in education cannot be said to be a charitable purpose. Thus, Appeal is allowed.

  The order passed by ITAT is hereby set aside and order passed by CIT is restored.

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• 2009 (6) TMI 981
  

  Levy of Penalty u/s 271D - Nature of receipt of Share application money in cash - Applicability of provisions of ss. 269SS on receipt - CIT(A) deleted the penalty with regard to receipt for which addition was made by the AO u/s. 68 and he confirmed the balance penalty in connection with receipt of share application money in cash - contentions raised is that s. 269SS is not applicable on receipt of share application money in cash

  HELD THAT:- We find that there are two judgments of two different High Courts available on this issue out of which one judgment of Hon'ble Madras High Court is in favour of the assessee whereas the other Judgment of Hon'ble Jharkhand High Court is against the assessee. Under these facts, we have to decide as to which judgment should be followed by us, Under this situation, we are guided by Hon'ble apex Court and as per the judgment in the case of Vegetable Products Ltd [1973 (1) TMI 1 - SUPREME COURT] held by Hon'ble apex Court that if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted.

  Respectfully following this judgment, we are of the considered opinion that we are bound to follow the judgment of Hon'ble Madras High Court rendered in the case of Rugmani Ram Raghav [2007 (7) TMI 237 - MADRAS HIGH COURT] because this judgment is in favour of the assessee and no judgment of Hon'ble apex Court or of Hon'ble jurisdictional High Court on the issue before us was brought to our notice. It was held by the Hon'ble Madras High Court that receipt of share application money is neither loan nor deposit.

  Once we hold and accept that receipt of share application money is neither loan nor deposit, the provisions of ss. 269SS and 271D are not applicable because the provisions of s. 269SS are in connection with acceptance of the loan and deposit and the provisions of s. 271D are in connection with violation of s. 269SS.

  We, therefore, hold that since in the present case, the alleged amount was received by the assessee in cash on account of share application money, penalty u/s. 271D cannot be levied because the receipt of share application money is neither loan nor deposit and hence the impugned receipt is not governed by s. 269SS.

  We therefore, delete the penalty. In the result, the appeal of the assessee is allowed.

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• 2009 (6) TMI 980
  
  The petitioner challenged the requirement to obtain registration for importing boric acid under the Insecticides Act. The court ruled that import for non-insecticidal purpose is permitted with an import permit from the Central Insecticide Board. The petitioner can import boric acid for non-insecticidal purpose by obtaining the necessary permit.

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• 2009 (6) TMI 979
  
  Issues:
  Questioning the order passed by the revisional authority in relation to the assessment made under the Karnataka Tax on Entry of Goods Act, 1979 for the years 2003-04, 2004-05, 2005-06 regarding the levy of entry tax in respect of bitumen emulsion.
  
  Analysis:
  The petitioner argued that bitumen (asphalt) and bitumen emulsion are distinct commodities, with different manufacturing processes and uses. The petitioner relied on a State Government notification specifying bitumen (asphalt) for entry tax, emphasizing the differences between bitumen and bitumen emulsion. The petitioner cited legal precedents emphasizing popular meaning over technical definitions in commodity classification. The petitioner contended that the revisional authority erred in equating bitumen (asphalt) with bitumen emulsion, urging the court to rule in favor of the assessee.
  
  The respondent defended the revisional authority's decision, highlighting the utility of both bitumen (asphalt) and bitumen emulsion in road construction despite differing manufacturing processes. The respondent referred to legal precedents supporting interpreting commodities based on popular meaning and commercial sense. The respondent argued that the entry tax should apply to bitumen emulsion considering its utility, even if different from bitumen (asphalt).
  
  The court analyzed the definitions of bitumen and bitumen emulsion, noting their distinct characteristics and uses in road construction. The court referenced legal precedents emphasizing popular understanding in commodity classification and interpreting statutory entries. The court found that both bitumen (asphalt) and bitumen emulsion serve the same purpose in road construction, supporting the revisional authority's decision. Consequently, the court ruled against the assessee, affirming the order of the revisional authority.
  
  In conclusion, the civil revision petitions challenging the assessment under the Karnataka Tax on Entry of Goods Act, 1979 were dismissed based on the court's analysis of the distinctions between bitumen (asphalt) and bitumen emulsion, their utility in road construction, and legal precedents regarding commodity classification and statutory interpretation.

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• 2009 (6) TMI 978
  
  Issues involved:
  1. Whether the Tribunal was right in deleting additions relating to prize winning lottery tickets and unsold tickets?
  2. Whether the admission of concealed income in a statement on oath u/s.131 is good evidence for making an addition?
  
  Issue 1 - Prize Winning Lottery Tickets and Unsold Tickets:
  The Tribunal deleted additions of Rs. 5,53,83,730 and Rs. 3,51,48,008 for prize winning lottery tickets and unsold tickets respectively. The Assessing Officer presumed the assessee paid for the tickets, but the Tribunal found no evidence of monetary transactions with suppliers. Relying on a letter and evidence, the Tribunal concluded no purchase transactions occurred, similar to a previous case. The High Court upheld the Tribunal's decision, citing consistency with a previous ruling.
  
  Issue 2 - Admission of Concealed Income:
  The Tribunal considered the statement made by the assessee during a search operation, but found no material to support a claim of concealed income of Rs. 85 lakhs. The assessee had declared income of Rs. 44,54,000 and paid taxes accordingly. Due to lack of evidence, the Assessing Officer's claim of concealed income was deemed unjustified. Consequently, the High Court ruled in favor of the assessee on this issue as well.
  
  In conclusion, the Tax Appeal was dismissed based on the Tribunal's decisions in favor of the assessee on both issues.

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• 2009 (6) TMI 977
  
  Issues involved: Interpretation of Board Circular No.701/17/2003 CX, applicability of additional duty of excise on exported goods, rebate of duty paid, and refund of credit availed on inputs for exported goods.
  
  Interpretation of Board Circular: The appellant argued that Circular No.701/17/2003 CX does not apply to the case as it concerns a different type of duty, and cannot have retrospective effect. The issue at hand involves accumulated credit of additional duties of excise on textiles, not goods of special importance as mentioned in the Circular.
  
  Applicability of additional duty on exported goods: It was contended that the goods exported were not subjected to the levy of additional duty of excise on textiles and textile articles, which is a crucial point in the case.
  
  Rebate of duty paid and credit availed: The appellant had availed rebate of duty paid on exported goods, involving the same inputs for which benefits under specific rules had been allowed. This raised questions regarding the eligibility and proper utilization of such refunds.
  
  Refund of credit on inputs for exported goods: The case involved the interpretation of Rule 5/AC(7) of the Central Excise Rules and Notification No.35/2000CE (NT) regarding the refund of credit availed on inputs when final products are cleared for export under bond.
  
  In a similar case with analogous facts and legal issues, Central Excise Appeal No.49 of 2005 was decided by the court, providing detailed reasons for the decision. The court found that the present Appeals are covered by the same reasoning and thus dismissed all the Appeals with no order as to costs.

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• 2009 (6) TMI 976
  

  Interpretation of statute - the decision in the case of HOME SOLUTION RETAIL INDIA LTD. Versus UOI & ORS [2009 (4) TMI 14 - DELHI HIGH COURT] contested, where it was held that Section 65(105)(zzzz) does not in terms entail that the renting out of immovable property for use in the course or furtherance of business of commerce would by itself constitute a taxable service and be exigible to service tax. But if there is some other service, such as air conditioning service provided alongwith the renting of immovable property, then it would fall within Section 65(105)(zzzz) - Held that: - issue os notice ordered.

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• 2009 (6) TMI 975
  
  Issues Involved:
  1. Classification of services provided by the appellant.
  2. Applicability of service tax on the services.
  3. Legitimacy of penalties imposed.
  
  Summary:
  
  Issue 1: Classification of Services Provided by the Appellant
  The primary issue was whether the appellant's activities, as outlined in the appointment letter from M/s. Finolex Industries Ltd., fell under the category of "Consulting Engineer Services" as defined u/s 65(25) of the Finance Act, 1994. The appellant was responsible for tasks such as maintenance of HT and LT systems, installation of HT and LT equipment, liaison with MSEB authorities, and monitoring electrical energy. The court found that these activities did not involve advice, consultancy, or technical assistance, which are essential criteria for classification as "Consulting Engineer Services."
  
  Issue 2: Applicability of Service Tax on the Services
  The court examined the definition of "Consulting Engineer" and concluded that the appellant's role as "Executive (Electrical)" did not meet the criteria for service tax under "Consulting Engineer Services." The appellant was performing tangible work rather than providing consultancy or technical advice. The court also noted that the appellant was paid a monthly professional fee and was entitled to leave, which is inconsistent with the nature of a service provider.
  
  Issue 3: Legitimacy of Penalties Imposed
  The court found several inconsistencies in the penalties imposed. The initial SCN invoked penalty provisions u/s 78, but the OIO dated 6-11-2006 imposed a penalty u/s 77. The impugned OIO introduced a new section, 76, and imposed an additional penalty. The court held that the Assistant Commissioner had exceeded the scope of the SCN, making the penalties unsustainable. However, since the appellant succeeded on merit, the question of penalties did not arise.
  
  Conclusion
  The appeal was allowed, and the impugned OIO passed by the Assistant Commissioner, Central Excise, Ratnagiri Division, was set aside. The court concluded that the appellant's activities did not fall under "Consulting Engineer Services" and thus were not liable for service tax.

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• 2009 (6) TMI 974
  
  The High Court of Madras, in the 2009 case of V. Ramasubramanian and D. Hariparanthaman, JJ., reviewed an appeal against a CESTAT order involving a manufacturer of patent and proprietary medicines. The respondent had not registered with the Central Excise Department during the financial years 1994-1995 and 1995-1996, claiming exemption due to their turnover being below the Small Scale Industries limit of `30 lakhs. Following an investigation, the Joint Commissioner imposed a duty of `71,587 after considering free samples and expired returned goods. The Commissioner of Central Excise later determined that a 40% discount on free goods and samples was applicable, concluding that the total turnover fell within the exemption limit. The CESTAT dismissed the Department's further appeal, leading to the present appeal. The High Court upheld the previous decisions, noting that both the Appellate Authority and the Tribunal had established the respondent's entitlement to discounts on free samples and other items, leaving no grounds for interference under Section 35G of the Central Excise Act. Consequently, the appeal was dismissed.

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• 2009 (6) TMI 973
  
  Issues Involved:
  1. Validity of the seizure of goods due to incomplete Form 38.
  2. Applicability of the circular issued by the Commissioner of Trade Tax.
  3. Requirement of intent to evade tax for seizure and penalty under the VAT Act.
  4. Interpretation of Section 50 of the VAT Act in light of previous judgments.
  
  Detailed Analysis:
  
  1. Validity of the Seizure of Goods Due to Incomplete Form 38:
  The applicant, a registered dealer, was involved in the manufacture and sale of Industrial Filters/Filtration Systems and received purchase orders from UOP India (Pvt.) Limited for the supply of piping and valve skid, which included imported automatic valves provided by Gujarat Refinery. These goods were intercepted and seized by the Mobil Squad, Gautam Budh Nagar, because Form 38 was incomplete, specifically column No. 6, which required the mention of bill, cash memo, or challan numbers. The Tribunal upheld the seizure on the grounds that the incomplete form indicated an intention to evade tax, as the form could potentially be reused for importing the same quantity, weight, and value of goods.
  
  2. Applicability of the Circular Issued by the Commissioner of Trade Tax:
  The applicant argued that the circular dated 3.2.2009 issued by the Commissioner of Trade Tax should apply, which states that if columns 2 and 3 are filled, other unfilled columns may be completed, and the goods should not be seized. However, the court clarified that the circular did not apply to column No. 6, which was left unfilled in this case. The circular was intended for columns 2 and 3, and thus, the seizure was deemed appropriate.
  
  3. Requirement of Intent to Evade Tax for Seizure and Penalty under the VAT Act:
  The court examined Section 50 of the VAT Act and Rule 54 of the VAT Rules, which mandate that importers must carry duly filled declaration forms and other relevant documents. The court emphasized that the seizure of goods under Section 50(4) requires a finding of an attempt to evade tax. The court referenced the Division Bench decision in Jain Shudh Vanaspati Ltd. vs. State of U.P., which held that goods could not be seized merely for not being accompanied by declaration forms unless there was an attempt to evade tax. This principle was reaffirmed, indicating that the seizure must be based on evidence of intent to evade tax.
  
  4. Interpretation of Section 50 of the VAT Act in Light of Previous Judgments:
  The court analyzed the decisions of the Supreme Court in Guljag Industries vs. CTO and Assistant Commercial Tax Officer vs. Bajaj Electricals Limited, which dealt with similar issues under the Rajasthan Sales Tax Act. These cases established that carrying goods with incomplete declaration forms constituted a serious lapse, justifying the imposition of penalties. However, the court noted a distinction in the VAT Act, where the intent to evade tax is a prerequisite for seizure and penalty, unlike the Rajasthan Act, which imposes strict liability without requiring proof of intent.
  
  Conclusion:
  The court concluded that the seizure of goods was justified due to the incomplete Form 38, which indicated a potential intent to evade tax. The circular issued by the Commissioner did not apply to the unfilled column No. 6. The court upheld the Tribunal's decision and emphasized that the applicant could raise all relevant defenses during the penalty proceedings. The demand for security was also deemed appropriate, and the revision was dismissed.

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