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Showing 401 to 420 of 699 Records
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2008 (5) TMI 302
Issues Involved:
1. Taxability of Rs. 88 lakhs as income under the head "Salaries".
2. Validity of reopening assessment under section 147.
3. Inclusion of Rs. 35,008 and Rs. 14,000 as salary income.
Issue-wise Detailed Analysis:
1. Taxability of Rs. 88 lakhs as income under the head "Salaries":
The assessee challenged the finding that Rs. 88 lakhs received was taxable as income under the head "Salaries" under section 17(3)(i). The assessee argued that the amount was a non-compete fee, capital in nature, and not related to employment. The CIT(A) held that the agreement was a device to evade tax and that the payment was made to retain the assessee's services for the continuity of business, thus taxable as salary. The AO concluded that the payment coincided with the date the assessee became an employee of Bax and was therefore profit in lieu of salary under section 17(3)(i). The Tribunal noted that the non-compete agreement overlapped with the employment agreement, making it taxable as salary. The Tribunal distinguished this case from Saurabh Srivastava's case, where the non-compete agreement was independent. Thus, the Tribunal upheld the inclusion of Rs. 88 lakhs as salary income.
2. Validity of reopening assessment under section 147:
The assessee argued that the reopening was based on a mere change of opinion without new material. The CIT(A) held that the AO had a reason to believe that income had escaped assessment, which was sufficient for reopening under section 147. The Tribunal referred to the decision in Mahanagar Telephone Nigam Ltd., which stated that non-issuance of notice under section 143(2) does not disempower the AO from initiating reassessment if there is reason to believe income escaped assessment. The Tribunal found that the AO had material on record that the assessee received Rs. 88 lakhs, paid advance tax, and later claimed it as a capital receipt. This provided a rational nexus for reopening. The Tribunal dismissed the assessee's plea of non-issuance of notice under section 143(2) in reassessment proceedings, finding no rebuttal to the AO's assertion of issuing notices. Thus, the reopening of assessment was held valid.
3. Inclusion of Rs. 35,008 and Rs. 14,000 as salary income:
The assessee contended that these amounts were reimbursements of expenses and not taxable. The Tribunal noted that in reassessment proceedings, the AO can only assess income that escaped assessment or income found during reassessment, not make general enquiries. The Tribunal followed the decision in Vipan Khanna, which held that the AO cannot make fishing enquiries in reassessment. Thus, the Tribunal allowed the assessee's ground, holding that the AO did not have jurisdiction to add these amounts as salary income.
Conclusion:
The Tribunal upheld the inclusion of Rs. 88 lakhs as salary income and validated the reopening of assessment under section 147. However, it allowed the assessee's appeal regarding the inclusion of Rs. 35,008 and Rs. 14,000 as salary income, holding that the AO exceeded his jurisdiction in reassessment proceedings. The appeal was partly allowed.
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2008 (5) TMI 301
Disallowance made u/s 40A - business of financing second hand motor vehicles on hire-purchase basis - AO treated the cash payment as expenditure incurred on account of purchases made in respect of vehicles purchased for hire-purchase sale falling within the ambit of provisions of section 40A(3) - disallowed 20 per cent of such cash payments - CIT upheld the stand taken by AO - Assessee submitted that he is not a trader, but a financer -
HELD THAT:- In the light of decision of Hon'ble Kerala High Court in the case of Modern Plastics Industries [1982 (7) TMI 259 - KERALA HIGH COURT], we find that all the characteristics are in existence in the assessee's case. The assessee is not dealer in second hand motor cars he lets out. The entire amount is not financed by the assessee. A part of the purchase price is made by the hirer and the balance is financed by the assessee. Thus, his involvement is usually less than the price of the asset. His past behaviour also indicates that he does not intend to deal in the assets. The invoice is usually made in the name of user. The financier by entering into hire-purchase agreement makes itself prone to the loss on account of bad debts and also of defective vehicles, which might become its property due to hire-purchase transactions. The assessee does not earn any profit on purchase and sale of vehicles. It earns income on hire-purchase transactions.
Entries recorded in the books of account - It is settled law as held in the case of Kedarnath Jute Mfg. Co. Ltd.[1971 (8) TMI 10 - SUPREME COURT], that whether the assessee is entitled to a particular deduction or not will depend on the provisions of law relating thereto and not on the view which the assessee might take of his rights nor can the existence or absence of entries in the books of account be decisive or conclusive in the matter some misapprehension or mistake fails to make an entry in the books of account and if under the law, a deduction must be allowed by the AO, the assessee will not lose the right of claiming or will not be debarred from being allowed that deduction.
The word 'expenditure' has not been defined in Income-tax Act. As held in Indian Molasses Co. Ltd. v. CIT [1959 (5) TMI 5 - SUPREME COURT], 'expenditure' is what is 'paid out or away' and is something which is gone irretrievably. In the case before us, the assessee has not claimed the cost of vehicles debited in profit and loss account as expenditure which is set off by credit entries of equal amount. The assessee is receiving back the amount in instalments along with financial charges.
Thus, the amount paid by assessee to the purchaser of a vehicle is not gone irretrievably. The assessee is holding the vehicles as movable assets and not as trading commodity. When amounts paid have not been claimed as deductible expenditure while computing business income, provisions of section 40A(3) cannot be applied. Mere entries in the books of account as observed earlier will not change the character of financial transactions.
We may also like to say that the provisions section 40A(3) are not attracted where parties are identified and there is no material on record to doubt about the genuineness of payment. It is not the case of AO that the transactions were not genuine. Therefore, the assessee's case is squarely covered by the decision of Hon'ble Delhi High Court in the case of Ramditya Investment [2003 (5) TMI 56 - DELHI HIGH COURT] and the decision in the case of Walford Transport (Eastern India) Ltd. [1999 (10) TMI 59 - GAUHATI HIGH COURT].
Therefore, the authorities below were not justified in invoking the provisions of section 40A(3) in respect of vehicles against which the money was advanced by the assessee. We, accordingly, set aside the orders of the authorities below and direct the AO to delete the addition made u/s 40A(3) of the Act.
In the result, the appeal filed by the assessee is allowed.
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2008 (5) TMI 300
Issues Involved:
1. Applicability of Section 194A vs. Section 192 for tax deduction at source on interest credited to ex-employees.
2. Consideration of Section 17(3)(ii) in determining the nature of the interest credited.
Summary:
Issue 1: Applicability of Section 194A vs. Section 192 for Tax Deduction at Source
The Tribunal initially held that the assessee fund was liable for deduction of tax at source u/s 194A of the IT Act for credits made to the accounts of members who ceased to be employees of ONGC, thus making the assessee in default u/s 201/201(1A) for the financial years under consideration. The assessee argued that the interest on the accumulated balance representing the employer's contribution should be taxed u/s 192 at the time of payment, not u/s 194A at the time of credit.
Issue 2: Consideration of Section 17(3)(ii)
The assessee contended that the Tribunal's order contained a mistake as it did not consider the provisions of Section 17(3)(ii), which defines "profits in lieu of salary" and includes payments from an employer or a provident fund. The assessee argued that the interest received by former employees on contributions made by ONGC should be considered as part of the salary, thus attracting Section 192 and not Section 194A.
Tribunal's Analysis and Conclusion:
The Tribunal acknowledged that Section 17(3)(ii) was not brought to its attention during the original hearing but agreed that it should have been considered. The Tribunal referred to various judgments, including the Supreme Court's decision in Honda Sid Power Products Ltd. vs. CIT, which emphasized rectifying manifest errors to avoid prejudice. The Tribunal also noted that the proceedings before it are not adversarial but aim to correctly adjust the taxpayer's liability.
The Tribunal concluded that the omission of Section 17(3)(ii) constituted a mistake apparent from the record, justifying rectification u/s 254(2). The Tribunal held that the interest credited to the accounts of ex-employees attributable to the employer's contribution should be taxed u/s 192 at the time of payment, not u/s 194A at the time of credit. The AO was directed to verify the figures and regulate the tax deduction accordingly.
Final Decision:
The miscellaneous applications were allowed, and the Tribunal's order was rectified to apply Section 17(3)(ii) r/w Section 192 for the interest credited to the accounts of ex-employees, thereby holding the assessee fund liable to deduct tax only at the time of payment of the interest.
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2008 (5) TMI 299
Penalty levied u/s 271(1)(c) - Concealment Of Income - Whether addition made in the quantum proceedings actually represents the concealment on the part of the assessee as envisaged in section 271(1)(c) - CIT imposed penalty in respect of addition of sum made by him to the total income of the assessee by way of enhancement on account of security deposit received by it from DMIL under memorandum of understanding treating the same as the income accrued to the assessee in the year under consideration -
HELD THAT:- In the case of Delhi Development Authority v. Durga Chand Kaushish [1973 (8) TMI 161 - SUPREME COURT] held that in considering the document, one must have regard to the meaning of the words it has used and not to the presumed intention of the parties. If the memorandum of understanding between the assessee and DMIL especially the relevant clauses, i.e., clauses 8 to 11 thereof, is interpreted by applying this principle laid down by the Supreme Court, it can be seen that the interpretation given by the assessee to the said document while taking the stand that the amount in question was its security deposit and did not represent any income accrued during the year under consideration, was a possible one and the stand so taken was bona fide.
We are of the view that the claim of the assessee treating the amount in question received from DMIL as security deposit was bona fide as the same was based on the interpretation given to the memorandum of understanding especially the relevant clauses which was possible as discussed and although the said claim was not found to be acceptable in the quantum proceedings on the merits, it was not a case of concealment as envisaged in section 271(1)(c) attracting levy of penalty especially when all the material facts relevant to the said claim were duly furnished by the assessee before the AO. In that view of the matter, we set aside the impugned order of the ld CIT(A) imposing the penalty u/s 271(1)(c) and cancel the penalty so imposed.
In the result, the appeal of the assessee is allowed.
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2008 (5) TMI 298
Issues Involved:
1. Erroneous and prejudicial assessment order regarding brought forward losses and deduction u/s 80HHC.
2. Deduction u/s 80HHC and its computation with export incentives.
3. Computation of book profit u/s 115JB.
4. Jurisdiction of Commissioner of Income-tax u/s 263.
5. Application of the Supreme Court's decision in IPCA Laboratory Ltd. v. Deputy CIT.
6. Merger of the Assessing Officer's order with the Commissioner of Income-tax (Appeals) order.
7. Incorrect application of law and its impact on Revenue.
Summary:
1. Erroneous and Prejudicial Assessment Order:
The Commissioner of Income-tax held that the assessment order was erroneous and prejudicial to the interests of the Revenue because the brought forward losses amounting to Rs. 5,71,15,119 should have been adjusted against the gross total income before calculating the deduction u/s 80HHC.
2. Deduction u/s 80HHC and Export Incentives:
The Commissioner of Income-tax found that the assessee's profits from exports were reduced to negative after reducing export incentives from the income under the head 'Business and profession'. Therefore, no deduction u/s 80HHC should have been allowed. The Assessing Officer had allowed a deduction of Rs. 1,53,84,762, which was incorrect as there was a loss in exports.
3. Computation of Book Profit u/s 115JB:
The Commissioner of Income-tax held that the book profit computed at nil was incorrect because the assessee was not entitled to any deduction u/s 80HHC. The book profit should have been computed after reducing the available deduction u/s 80HHC, which was not permissible.
4. Jurisdiction of Commissioner of Income-tax u/s 263:
The Commissioner of Income-tax invoked his powers u/s 263, directing the Assessing Officer to first set off the carry forward business losses and depreciation to arrive at the gross total income on which deduction can be computed u/s 80HHC. The Tribunal upheld this jurisdiction, stating that the Commissioner can revise the assessment order in respect of items not decided in appeal.
5. Application of Supreme Court's Decision:
The Commissioner of Income-tax applied the ratio of the Supreme Court in IPCA Laboratory Ltd. v. Deputy CIT [2004] 266 ITR 521, which states that deduction u/s 80HHC is admissible only when there is profit from export. The Tribunal found this application correct.
6. Merger of Orders:
The Tribunal found that the issue regarding the computation of gross total income and set off of brought forward losses and depreciation was not before the Commissioner of Income-tax (Appeals). Therefore, the order of the Assessing Officer did not merge with the order of the Commissioner of Income-tax (Appeals).
7. Incorrect Application of Law:
The Tribunal noted that the Assessing Officer's failure to consider the provisions of sections 80A(2), 80AB, and 80B(5) rendered the order erroneous. The Supreme Court's decision in CIT v. Kotagiri Industrial Co-operative Tea Factory Ltd. [1997] 224 ITR 604 clarified that gross total income must be computed after setting off unabsorbed business losses and depreciation before allowing any deduction under Chapter VI-A.
Conclusion:
The Tribunal allowed the appeal of the assessee in part, upholding the jurisdiction of the Commissioner of Income-tax u/s 263 and the requirement to set off brought forward losses and depreciation before computing deductions u/s 80HHC. The decision was pronounced on May 30, 2008.
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2008 (5) TMI 297
Issues Involved:
1. Validity of proceedings initiated under Section 147 read with Section 148.
2. Applicability of Section 68 regarding the credit of Rs. 1 crore in the name of M/s Mahadev Industries Ltd.
3. Justification of the addition of Rs. 1 crore made by the Assessing Officer (AO).
Detailed Analysis:
1. Validity of Proceedings Initiated Under Section 147 Read with Section 148:
The AO initiated proceedings under Section 147 read with Section 148 based on information from the Deputy Director of IT (Investigation), Varanasi, regarding dummy entries in the assessee's books. The AO issued a notice under Section 148, and the assessee objected, claiming the notice was issued without application of mind. The CIT(A) held the notice invalid, but the Tribunal disagreed, stating:
- The AO had definite information from the Deputy Director of IT (Investigation), Varanasi.
- The information indicated dummy entries and was sufficient for forming a belief that income had escaped assessment.
- The AO was justified in presuming the information correct and forming a reasonable belief.
- The Tribunal cited the Supreme Court's decisions in *Phool Chand Bajrang Lal & Anr.* and *Raymond Woollen Mills Ltd.*, emphasizing that the adequacy of reasons for forming the belief is not for the court to judge.
Therefore, the Tribunal concluded that the CIT(A) was not justified in holding the notice under Section 148 invalid.
2. Applicability of Section 68 Regarding the Credit of Rs. 1 Crore in the Name of M/s Mahadev Industries Ltd.:
The AO treated the credit of Rs. 1 crore as undisclosed income under Section 68, as the assessee failed to provide confirmation and PAN details of M/s Mahadev Industries Ltd. The CIT(A) deleted the addition, stating the amount was share application money, and Section 68 was not applicable. However, the Tribunal noted:
- The credit entry was not in the name of a shareholder, as the shares were issued in the financial year 2000-01, while the credit was in the year under appeal.
- The authorized capital at the time was only Rs. 50 lakhs, and the shares were allotted two years later.
- The Tribunal referenced the Supreme Court's decision in *CIT vs. P. Mohanakala & Ors.*, emphasizing the need for proper, reasonable, and acceptable explanations for sums credited in the books.
The Tribunal concluded that the evidence furnished by the assessee was insufficient to discharge the onus, especially when the AO found no company existed at the given address.
3. Justification of the Addition of Rs. 1 Crore Made by the AO:
The AO added Rs. 1 crore to the assessee's income, treating it as undisclosed income. The CIT(A) deleted this addition, but the Tribunal found:
- The assessee failed to provide sufficient evidence to establish the genuineness of the credit.
- The creditor company, M/s Mahadev Industries Ltd., was not found at the given address, and no confirmation was provided.
- The Tribunal emphasized that the burden of proof lies with the assessee to establish the genuineness of the credit.
The Tribunal decided to give the assessee a final opportunity to discharge the burden of proof regarding the credit of Rs. 1 crore. The AO was directed to decide the issue afresh, giving the assessee a reasonable opportunity to produce necessary evidence. If the assessee fails to establish the genuineness of the credit, the AO would be justified in making the addition under Section 68.
Conclusion:
The Tribunal set aside the CIT(A)'s decision regarding the invalidity of the notice under Section 148 and the deletion of the addition of Rs. 1 crore. The case was remanded to the AO for a fresh decision, giving the assessee a final opportunity to provide necessary evidence regarding the credit of Rs. 1 crore. The appeal of the Revenue was allowed for statistical purposes.
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2008 (5) TMI 296
Issues:
Challenge to disallowance of amortized expenses incurred by the assessee.
Analysis:
The appeal was against the order confirming the disallowance of Rs. 5,44,968 made by the AO in respect of amortized expenses. The AO disallowed the claim, stating that the expenditure incurred by the assessee did not have a direct nexus to the business or income-earning activities. The AO observed that the expenses were mainly for promotional schemes and not related to the business's regular course. The CIT(A) upheld the disallowance, stating that the AO had not accepted the method of accounting in previous years. However, the assessee argued that the expenses were business-related and had been consistently allowed in previous assessments.
The Tribunal noted that the Revenue had accepted the method of accounting and allowed the deferred revenue expenditure in scrutiny assessments for the years 1994-95 and 1996-97. For other years, the expenditure was accepted in summary assessments. No notice for reopening of assessment was issued for any year, and no s. 263 proceedings were initiated. The Tribunal referred to the principle that each assessment year is independent but highlighted the importance of consistency in decisions. Citing legal precedents, the Tribunal concluded that the expenditure claimed by the assessee should be allowed as a deduction. The order of the CIT(A) was set aside, and the AO was directed to allow the deferred revenue expenditure claimed by the assessee.
In light of the facts, the Tribunal found that the Department had consistently allowed the deferred revenue expenditure in previous assessments. Relying on legal principles and the rule of consistency, the Tribunal held that the expenditure claimed by the assessee should be allowed as a deduction. Therefore, the appeal filed by the appellant was allowed, and the order of the CIT(A) was set aside.
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2008 (5) TMI 295
Issues:
- Addition of Rs. 7 lakhs under section 68 of the Act
- Genuineness of the gift received by the assessee
- Coercion in recording the statement of the assessee
Analysis:
1. Addition of Rs. 7 lakhs under section 68 of the Act:
- The Revenue appealed against the deletion of the addition of Rs. 7 lakhs made by the Assessing Officer under section 68 of the Act. The Assessing Officer inferred that the gift was not genuine based on the statement of the donee, the assessee. However, the assessee filed various documents to prove the genuineness of the gift, including a confirmatory letter, passport copy of the donor, and bank details. The learned CIT(A) directed the Assessing Officer to treat the gift as genuine and deleted the addition.
2. Genuineness of the gift received by the assessee:
- The learned CIT(A) found that the Assessing Officer was unjustified in treating the gift as non-genuine despite the supporting documents provided by the assessee. The CIT(A) noted that the gift was genuine based on the evidence presented, including the relationship between the assessee and the donor, the donor's creditworthiness, and the identity of the donor. The CIT(A) highlighted that the delay in executing the gift deed did not invalidate the genuineness of the gift. The CIT(A) also observed that the statement of the assessee recorded under section 131 showed signs of mental coercion, which was not a valid basis to reject the genuineness of the gift.
3. Coercion in recording the statement of the assessee:
- The assessee contended that the statement recorded by the Assessing Officer was under mental coercion, leading to the surrender of the genuine gift as income. The assessee retracted the statement through an affidavit, emphasizing that the statement was not binding. The donor supported the claim of the assessee through a confirmatory letter and an affidavit, stating that the gift was given out of natural love and affection. The Tribunal considered all submissions and evidence, concluding that the order of the CIT(A) was legally sound, and declined to interfere with the decision. The appeal filed by the Revenue was dismissed.
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2008 (5) TMI 294
Disallowed Sustained software expenses - Nature of expenses Capital or Revenue ? - w/off bad debt - allowed as Expenses or Business Loss ?
Sustained disallowance of software expenses - HELD THAT:- The emerging scenario is that the payments are all for access to certain software used by share brokers for accessing NSE and controlling their trading functions. Assessee being into the business of share broking, no doubt, such expenditure was for business purpose only. Now, to ascertain whether the expenditure was of capital nature if we apply the tests laid down by the Special Bench of this Tribunal in the case of Amway India Enterprises & Ors. vs. Dy. CIT, [2008 (2) TMI 454 - ITAT DELHI-C], it can be seen that the assessee did not get any enduring benefit. If it had to continue to have the access, it was required to pay the amount periodically. The software ownership was not transferred to the assessee since the invoice of the party clearly mentions 'Client Access Licence'.
Though it did help the assessee to be competitive in its line of business and for the efficient conduct of its day-to-day business, this alone would not be sufficient to hold the outgoes to be expenditure of capital nature. Thus, we find that the disallowance of the impugned amount was not called for. Hence, we set aside the order of the AO and the learned CIT(A) in this regard and delete the disallowance.
Assessee succeeds in ground No. 1.
Sustained a disallowance of w/off - business loss or bad debts - HELD THAT:- It is undisputed fact that the dues to the assessee arose on account of its business dealings with the clients and brokerage on such deals had been considered for computing its income. For that matter, the AO himself has admitted that such clients were debtors of the assessee and so accounted as well.
Therefore, in the light of the decision of the Special Bench of this Tribunal in Dy. CIT vs. Oman International Bank SAOG [2006 (5) TMI 117 - ITAT BOMBAY-H], assessee having written off such amount, it had satisfied the stipulation as per s. 36(1)(vii). If we consider it from the angle of business loss, such deals having been done in the course of its business, they were nothing but business loss, since the write offs were effected due to recoveries having become difficult.
Assessee has also shown as income in later years whatever was recovered. We are also supported in this behalf by the decision of this Tribunal in the case of CIT vs. B.D. Shroff, where in similar circumstances, write off of dues from clients was allowed. Therefore, we are of the opinion that the AO was not correct in not allowing this claim. Resultantly, we set aside the orders of both the learned CIT(A) and the AO in this regard, and delete the disallowance.
Ground No. two of the assessee is allowed.
In the result, appeal of the assessee stands allowed.
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2008 (5) TMI 293
Nature of income - Business Centre Service charges - treated as “Business Income” or “Income from house Property” or 'Income from other sources' - HELD THAT:- We find that the facts of the present case are different from the facts before the Hon'ble Supreme Court in the case of Shambhu Investment (P) Ltd. [2003 (1) TMI 99 - SC ORDER]. In the case before the Hon'ble Supreme Court, the assessee had let out the furnished accommodation without any other facilities. However, in the present case. various facilities are provided as noted by the CIT(A) as well as by us in this order such as. receptionist and a telephone operator to attend the customers and their telephone calls, use of common waiting/guest room with attached toilets etc., for use of the customers and guests of the customers. use of central air-conditioning, services of attendants, sweeper, etc., use of telephone and fax machine and furniture, etc. Further, ultimate control over the premises is with the assessee.
Further, there is no intention of mere letting out the property and earn the rental income since customers keep on changing from time-to-time. The space is provided to the customers on weekly/monthly basis for carrying out their work of assignment or for completing the specific work.
Sometimes, there may be no customer and space may remain vacant. In such cases, the activity is to run business centre as a commercial activity like hotels and hospitals and use of the property is incidental to carrying on such business activity. Sec. 22 of the Act specifically excludes those cases where property is used for business purposes.
Therefore, we are of the view that the object of the assessee is to run the business centre by exploiting the property and not mere letting out the property. Consequently, the receipts from such activity must be considered as business receipts. Accordingly, we hold so.
The view taken by us is fortified by the decision of Hon'ble Gujarat High Court in the case of Asstt. CIT vs. Saptarshi Services Ltd. [2003 (2) TMI 415 - GUJARAT HIGH COURT].
Therefore, the order of the CIT(A) is set aside and consequently, the AO is directed to compute the income under the head "Profits and gains from business or profession".
Appeal of the assessee is allowed.
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2008 (5) TMI 292
Issues involved: Appeal against imposition of penalty u/s 271(1)(c) of the Income Tax Act by the Assessing Officer.
Summary:
The appellant, a tour operator company, claimed deduction u/s 80HHD of the Act for the assessment year 1997-98. The company applied for approval from the prescribed authority before filing the return of income, but the approval was granted after the filing date. The company later withdrew the deduction claim during assessment proceedings. The Assessing Officer imposed a penalty for furnishing inaccurate particulars of income. The CIT(A) upheld the penalty, stating that the withdrawal was not voluntary and the claim was not bona fide. However, the ITAT Bombay-F held that there was no concealment of income or furnishing of inaccurate particulars. The appellant had disclosed all facts and withdrew the claim before the assessment was completed. The penalty was canceled, and the appeal was allowed.
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2008 (5) TMI 291
Issues Involved:
1. Classification of items manufactured by the respondent under Chapter Heading No. 3924.90 as "Household Articles" versus Chapter Heading 9403.00 as "Furniture".
2. Conflicting judgments regarding the classification of similar products.
3. Consideration of HSN Explanatory Notes for classification.
Issue-wise Detailed Analysis:
1. Classification of Items:
The primary issue revolves around whether the items manufactured by the respondent should be classified under Chapter Heading No. 3924.90 of CETA 1985 as "Household Articles" or under Chapter Heading 9403.00 as "Furniture". The respondent claims the former, while the Revenue argues for the latter. The Ld. Commissioner (Appeals) accepted the respondent's claim, but the Revenue contends that these items should be classified as furniture, citing previous judgments and dictionary definitions of 'furniture'.
2. Conflicting Judgments:
The referral bench noted conflicting judgments on similar issues. In a previous case involving the same respondent ([2007 (210) E.L.T. 85 (Tri.-Ahmd.)]), the Tribunal classified plastic shelves as household articles under sub-heading 3924.90. Conversely, in Pradeep Rathod v. Commissioner of Central Excise, Surat ([2003 (158) E.L.T. 118 (Tri.-Mumbai)]), the Tribunal classified trolleys with several columns as furniture under heading 94.03. The Revenue emphasized that the Supreme Court had dismissed a civil appeal against this classification, reinforcing their stance.
3. Consideration of HSN Explanatory Notes:
The Tribunal examined the HSN Explanatory Notes to Chapter 94, which exclude small furnishing goods of wood and office equipment of plastics from being classified as furniture. The Tribunal found that the plastic shelves in question are small articles typically placed on tables, kitchen platforms, or bathroom platforms, and thus do not fit the definition of furniture under Chapter 94. Instead, they align more closely with household articles under Chapter 39.24.
Conclusion:
After considering submissions from both sides, the Tribunal concluded that the judgment in the case of Pradeep Rathod did not adequately consider the HSN Explanatory Notes to Chapter 94. The Tribunal found that the items in question, being small plastic shelves designed for placement on other furniture or platforms, are more appropriately classified under Heading 3924.90 as household articles. The Tribunal upheld the decision in the case of Cello Household Appliances Ltd. ([2007 (210) E.L.T. 85 (Tri.-Ahmd.)]) as the correct judgment for the classification of the articles in dispute.
Final Order:
The Tribunal held that the plastic shelves manufactured by the respondent are properly classifiable under Heading 3924.90. The reference was answered in favor of the respondent, and the Registry was directed to place the file before the Referral bench for further action. The judgment was pronounced in court on 5-5-2008.
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2008 (5) TMI 290
Maintainability of Appeal - whether the goods if any-manufactured by the respondent are excisable goods or not - Held that:- In cases where the dispute relates to the question whether the noticee is the manufacturer of the excisable goods or not, an appeal against such an order passed by the CESTAT would lie only to the apex Court but not to this Court in view of Section 35L of the Act. Thus the appeals are not maintainable in this Court and do not wish either to discuss or to give any finding on the other contentions raised before us by the learned Assistant Solicitor General and the learned counsel for the respondents.
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2008 (5) TMI 289
Detention - Pre-detention/pre-execution stage - Judicial review - Held that:- At pre-detention stage, judicial review on the ground of delay in passing or execution of the detention order being not available.
As long as the service of the detention order is evaded, even if the representation under Section 11 is rejected, the absconder cannot challenge such rejection on grounds other than the five grounds supra or species thereof. The ground of delay in disposal of representation is not available to the Petitioner. Delay, even if any, would not be relevant when the petitioner is not in detention. We otherwise also do not find any inordinate delay.We may also record that we had during the hearing put it to the counsel for the Petitioner that the Petitioner appear before the court to get over the limitations in challenge at pre-execution/pre-detention stage. However, the same was not acceptable to the counsel for the Petitioner.
Though have considered the matter on merits but find the conduct of the Petitioner even otherwise reprehensible. The Petitioner was employed at a sensitive position and owed a greater degree of duty than an ordinary citizen. The Petitioner ought to have surrendered and then urged whatever grounds are available to him. The Petitioner has made a mockery of the detention order by evading the same for the last more than 7 years. The Petitioner is not entitled to invoke the discretion of writ jurisdiction on this ground also. The Petition is dismissed.
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2008 (5) TMI 288
Prosecution - Monetary limit - private complaint - Departmental clarifications - Held that:- It is of considered opinion that prima facie materials are available on record, requiring full fledged trial by the learned Judicial Magistrate. Thus no valid ground to quash the proceedings. Hence, this Criminal Original Petition is dismissed. However, considering the fact that the case has been pending for about six years, the Trial Court is directed to dispose of the same as expeditiously as possible. It is also made clear that the Trial Court shall not get influenced by any of the observations made by this Court in this order.
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2008 (5) TMI 287
Issues:
Impugning order of Customs, Excise and Service Tax Appellate Tribunal regarding waiver of pre-deposit condition.
Analysis:
The petitioners challenged an order by the Customs, Excise and Service Tax Appellate Tribunal which dismissed their application for complete waiver of the pre-deposit condition but reduced the amount to be deposited. The petitioners argued that since the price of goods was in possession of the authorities, they should not be required to deposit the penalty amount as per Section 129E of the Customs Act, 1962. However, the court found no legal or factual basis to interfere with the impugned order. Section 129E mandates that pending an appeal, if duty and interest are demanded in relation to goods not under customs control, the appellant must deposit the required amount. In cases where the duty and interest are demanded for goods under customs control, the appellant is not required to make the deposit. Notably, the requirement for deposit applies to penalties without the condition of goods being under customs control. The appellate authority had already reduced the pre-deposit amounts from Rs. 15 lacs and Rs. 5 lacs to Rs. 5 lacs and Rs. 2 lacs, respectively.
The court emphasized that the word "penalty" in Section 129E is not restricted by the condition of goods being under customs control. Therefore, regardless of the possession of goods, an appellant challenging a penalty order must comply with the pre-deposit condition. The court found no jurisdictional or legal errors warranting intervention under Article 226/227 of the Constitution of India. Consequently, the court dismissed the petition.
In conclusion, the court upheld the decision of the Customs, Excise and Service Tax Appellate Tribunal, emphasizing the distinction between deposit requirements for duty, interest, and penalties under Section 129E of the Customs Act, 1962. The judgment clarified that the possession of goods by customs authorities does not exempt an appellant from making a pre-deposit when challenging a penalty order, as opposed to duty and interest demands.
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2008 (5) TMI 286
Whether the amount of Rs. 43 lakhs received by the respondent towards charges for designs, drawings, tooling, jigs and fixtures etc. as per the agreement dated May 10, 1991 could have been loaded on the value of the machine made and delivered subsequently as per the separate written orders?
Held that:- The order passed by the Commissioner does not indicate that no machines were subsequently manufactured by the respondent after using drawings, designs, jigs, fixtures, tooling etc. supplied by the ITC. Therefore, loading of the entire amount of Rs. 43 lakhs without such a finding and recovery of duty thereon was not permissible at all. The order of the Commissioner does not indicate adequate reasons to invoke proviso to Section 11A(1). On the basis of vague allegations made in the show cause notice neither the proviso to Section 11A(1) could have been invoked nor penalty could have been imposed upon the respondent under Rule 173Q of the Central Excise Rules. On the facts and in the circumstances of the case, this Court is of the opinion that the Tribunal did not commit any error in setting aside the order passed by the Commissioner and the instant appeal which lacks merits, deserves dismissal. Appeal dismissed.
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2008 (5) TMI 285
Whether in the, facts and circumstances of the case the Tribunal was right in holding that the deduction under s. 80HHC in respect of duty drawback and cash compensatory support is allowable even though no export was done by the assessee during the asst. yr. 1991-92?
Held that:- The formula as indicated in s. 80HHC(3) itself shows that business profits include export incentives. This formula is also indicated in the circular issued by CBDT indicates that the Parliament as well as CBDT have taken into account the insertion of cl. (iiib) in s. 28, by the Finance Act, 1990. Further, it is also relevant to note that by the same Finance Act, 1990, cl. (iiib) was inserted into s. 28 and changes were also made in s. 80HHC(3). Therefore, s. 80HHC as it stood at the relevant time was required to be read with s. 28(iiib) because both the sections have been amended by the same Finance Act of 1990. This vital aspect has not at all been considered by the High Court.
Thus the words "business profits" in the above formula under s, 80HHC(3) would include cash compensatory allowance and duty drawback and accordingly we direct the AO to work out the deduction in accordance with the law as it stood during the relevant asst. yr. 1991-92. Appeal allowed of assessee.
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2008 (5) TMI 283
Erection of boiler – manufacture – duty liability - CVL had cleared the boiler in SKD/CKD condition including its accessories on payment of duty – held that - . In both the final orders, the Tribunal had found that CVL had cleared boilers in CKD/SKD condition which were assembled at the customer’s site along with duty paid components procured from other vendors. CVL had classified the impugned goods removed from its factory as boilers in CKD/SKD condition falling under CH 8448.10 after filing the classification declaration under Rule 173B of CER. They had discharged duty on the goods manufactured and cleared to the customer’s site, at the rates applicable to boilers. At the customer’s site the components were assembled into boilers and erected piece by piece, on a concrete foundation. Such boilers could be removed only by dismantling them into parts. It had been found that on assembly and erection, the new item that had emerged in each case was immovable property not exigible to excise duty.
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2008 (5) TMI 282
Issue of debentures – commitment charges – deduction u/s 37(1) – held that - the appellate authorities have rightly examined the issue by appreciating as to whether the quantum of expenditure is substantial when compared to gross block of assets so as to suggest that there is a replacement of assets on capital account. It has been found on facts that the expenditure is not very high when compared to gross block of assets in light of the depreciation claimed and allowed during the year which comes to the tune of Rs. 2.82 crores - It has to be borne in mind that once statutory appeals are provided in hierarchy where the appellate authority is superior to the Assessing Authority the order of Assessing Authority merges, on the issue contested, in the order of the appellate authority. The powers of the first appellate authority are co-extensive and co-terminus with that of the Assessing Officer and hence, on facts, once the appellate authority finds that the facts recorded by the Assessing Officer are not correct, in the proposed questions, there should be no suggestion to the contrary.
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