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Showing 61 to 80 of 576 Records
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2008 (6) TMI 587
Trading addition - Deduction u/s. 10BA.
Trading addition - Assessee contended that the AO had erred in making trading addition on ad hoc basis in the years under consideration sum in AY 2004-05 and in AY 2005-06, and the same was rightly deleted by the learned CIT(A) for both the years - HELD THAT:- We find no reason or basis to interfere with the decision taken by learned CIT(A) more particularly when ld DRe has placed reliance on the order of the AO without pointing out any error in well reasoned decision reached by him - The learned CIT(A) has considered the nature of business activity, market conditions, quality of raw material used, and the fact that the AO laid no material on record to suggest that there has been any suppression of income nor that the assessee carried any activity outside the books - We also find from the remand report given by the assessing authority in appeal before learned GIT(A) that he had deputed the Ward Inspector to verify the records of the assessee and reportedly found no discrepancy or inconsistency in the business transaction of the assessee. Finding no merit in the ground in appeal for both the years, the same stands rejected. For parity of reasons and as the facts and law are same in all other appeals on the ground of Revenue in those appeals also stands rejected.
Deduction u/s. 10BA - CIT(A) directed the AO to allow deduction u/s. 10BA on account of DEPB and DDB receipts ignoring the fact that DEPB and DDB are not derived from export of eligible articles or things - HELD THAT:- In the assessee's case before us the AO has accepted the fact that exemption provisions contained u/s. 10BA of the Act are applicable to the assessee. The same were, therefore, to be interpreted liberally for granting deduction in terms of sub-s. (4) unless the amount of profit arising from credit of DEPB and DDB was taken away expressly - The judgment rendered by apex Court in CIT v. Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME COURT] is a judgment that relates to deduction u/s. 80HHC in relation to total turnover as to whether excise duty, sales-tax, commissions, interest, rent, etc. partake the character of turnover. In the present case in appeal before us, the amount of profit of DEPB/DDB has specifically been included as profits and gains of business and as already found the amount thereof will not enter in the turnover of the business of the undertaking - Ld DR appearing on behalf of Revenue did not point out any such provision u/s. 10BA of the Act which could permit the Revenue to take away the amount of profit of DEPB/DDB from the profits of business of the undertaking. He however, did make a reference to cl. (i) of s. 28 to say that profits and gains of the business are distinct from profits on DDB in cl. (iiic) and profits on DEPB in cl. (iiid) , but by that position, we find it difficult to accept that the exemption that is sought to be granted u/s. 10BA of the Act has been taken away expressly - It is settled law that an exemption is to be granted unless it is expressly taken away and a reference to this principle may be had from the judgment rendered by apex Court in Adityapur Industrial Area Development Authority v. Union of India [2006 (5) TMI 61 - SUPREME COURT] - We hold that the amount of credit on account of DEPB/DDB has to be included as profits of the business of the undertaking for the purpose of s. 10BA(4) of the Act and the said amount of credit of DEPB or DDB will not enter into the total turnover or export turnover of the undertaking for the purpose of calculating profits derived from business of undertaking of the assessee within the meaning of sub-s. (4) and for allowing deduction to the respondent in terms of subs. (1) of s. 10BA of the Act in the two appeals in and for parity of reasons also in the appeals by Revenue and where facts and law are identical - The conclusion reached by learned CIT(A) to allow deduction, therefore, needs no interference. Finding no merit in the grounds in appeals by Revenue, the same stand rejected.
In the result all the appeals of the Revenue stand dismissed.
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2008 (6) TMI 586
Depreciation claimed on Cost of labour work for site development, Civil work control room and Internal road development - Windmil 100 per cent depreciation - transformer upto DP structure - whether a building can be treated as a plant - HELD THAT:- The Hon'ble Supreme Court in the case of Indian Hotels Co. Ltd. vs. ITO [2000 (8) TMI 5 - SUPREME COURT] with the approval "A statute cannot always be construed with the dictionary in one hand and the statute in the other. Regard must also be had to the scheme, context and to the legislative history of the provision".
In Karnataka Power Corporation [2000 (7) TMI 72 - SUPREME COURT] Hon'ble Supreme Court has given a clear observation that the question whether a building can be treated as a plant, basically is a question of fact and where it is found as fact that a building has been so planned and constructed as to serve the assessee special technical requirements, it will qualify to be treated as a plant for the purpose of investment allowance.
For interpreting the scheme of depreciation as prescribed u/s. 32 it is not necessary that we should adopt a judge-sense meaning, which is sometimes artificial and imprecise in application by giving a meaning altogether different from the statutory provisions. The scheme of s. 32 unequivocally leads to the conclusion that on one hand "plant" and on the other hand "machinery" are to be treated as separate for the purpose of allowance of depreciation. Moreover, how one can ignore the block of assets as prescribed in the table of rates for the purpose of allowance of depreciation in Appendix I of IT Rules.
As per this Appendix Part 'A' contains building in a separate head, furniture and fittings in another head and machinery and plant in a different head by prescribing different rates of depreciations. The scientific reason is often discussed as the period of diminution for tangible assets. If the period of diminution or wear-tear is very fast than higher rate of depreciation is granted. Naturally the speed with which a machinery gets discarded due to wear and tear, the buildings do not get wear and tear so fast. On this basis, as well, we cannot hold that building of control room, internal roads etc. being civil construction work in nature are not at par with the "windmill" as far as the period of diminution is concerned.
Moreover sometimes to promote a particular activity the statute provides certain incentives in the shape of higher depreciation. We have to keep in mind such an intention of the legislature as well. However no such intention has ever been expressed in the legislature to provide higher rate of depreciation in respect of structure surrounding the windmill. Rather the Appendix and the depreciation schedule has categorically worded that "windmills and any specially designed devices which run on wind mills" are qualified for 100 per cent rate of depreciation.
Since the civil work of control room, the site development and the internal road development are not specially designed devices hence in our considered opinion, as per the discussion made herein above, are not entitled for 100 per cent depreciation. The claim in this regard is disallowed.
Depreciation on "transformer upto DP structure" - The appellant had paid a sum for the purpose of supplying of electrical items like transformer upto DP structure, internal line upto metering. The said payment was made to Suzlon Developers (P) Ltd. This gadget is for transmission of electrical power generated upto sub-station of MSEB at site. In our humble opinion the electrical energy so produced by the wind mill is a waste if it is not transmitted to MSEB sub-station. The function of such unit is that the electricity so generated is required to be transferred and transmitted to cable line upto sub-station, where the actual units so generated are stored and metered.
Since this is the function of transformer upto DP structure, hence ought to be held as an integral part of the windmill. The other reasons such as the period during which a machinery gets depreciated, as discussed hereinabove, does also apply in case of this machinery. Since we have held so, therefore, the appellant is consequently entitled for higher rate of depreciation as prescribed in IT Rules.
In the result, as per the grounds of appeal the claim of depreciation in respect Cost of labour work for site development, Civil work control room and Internal road development are rejected and claim of depreciation in respect of item Transformer upto DP structure is allowed. Resultantly, this appeal is partly allowed.
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2008 (6) TMI 585
Issues Involved:
1. Validity of the assessment order due to non-service of notice u/s 143(2) within the prescribed time.
2. Applicability of Section 292BB of the IT Act, 1961.
Summary:
Issue 1: Validity of the Assessment Order due to Non-Service of Notice u/s 143(2) within the Prescribed Time
The assessee argued that the CIT(A) erred in not quashing the assessment order as the notice u/s 143(2) was not served within the statutorily prescribed time, constituting a jurisdictional default. The CIT(A) held that the notice was issued within time and that the provisions of s. 143(2) were not mandatory but obligatory, and non-compliance did not render the assessment null and void. The Tribunal found no evidence that the notice dated 11th/13th Nov., 1997, was served on the assessee before 30th Nov., 1997, as required. The Tribunal concluded that the assessment was invalid due to the failure to serve the notice within the prescribed time, supported by the decision in CIT vs. Vardhman Estate (P) Ltd. (2007) 208 CTR (Del) 251.
Issue 2: Applicability of Section 292BB of the IT Act, 1961
The Tribunal noted that Section 292BB, which came into effect from 1st April, 2008, was not applicable to the assessment year 1996-97. The provision would apply to hearings conducted on or after 1st April, 2008, where the assessee participated, or to proceedings for the assessment year 2008-09 and subsequent years. Therefore, this provision did not advance the case of the Revenue.
Conclusion:
The Tribunal allowed the appeal of the assessee on the preliminary ground of non-service of notice u/s 143(2) within the prescribed time, leading to the cancellation of the assessment. Consequently, the appeal of the Revenue was dismissed.
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2008 (6) TMI 584
Issues involved:
The issue involves whether the process carried out by the assessee on angles, shapes, and sections of iron or non-alloy constitutes manufacturing under the excise law.
Summary:
Issue 1: Manufacturing Process
The Commissioner alleged that the process carried out by the assessee, a civil and electrical contractor, on iron or non-alloy does not result in the creation of new goods. The Commissioner examined various judgments and concluded that the activity does not amount to a manufacturing process as no new article with a different name, use, or character is produced. The appeal challenges this determination.
Issue 2: Judicial Precedents
The appellant argued that a previous Final Order by the bench in a similar case upheld the Commissioner's view and dismissed revenue appeals. The appellant sought to apply the same ratio to the present case, emphasizing the similarity of the issues and grounds.
Issue 3: Legal Analysis
The Tribunal reviewed the previous Final Order in a similar case and upheld the Commissioner's decision, finding that the activity undertaken by the assessee did not amount to manufacturing. The Tribunal noted that the process of cutting and drilling carried out by the assessee did not result in the creation of new products with distinct characteristics. The Tribunal relied on legal precedents and the interpretation of the term "manufacture" to support its decision to reject the revenue appeal.
In conclusion, the Tribunal upheld the Commissioner's decision that the process undertaken by the assessee did not amount to manufacturing under the excise law. The Tribunal found no merit in the revenue's appeals and rejected them based on the legal analysis and precedents cited in the judgment.
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2008 (6) TMI 583
Interpretation of statutes - TDS u/s 194LA - interest levied for non-compliance - seeking to cover Payments made by way of compensation on acquisition of certain immovable property - Whether meaning of ‘agricultural land’ as found in the definition of ‘capital asset’ u/s 2(14) is imported for the purpose of section 194LA - non-remitting deduction at source at 10 per cent of the compensation distributed to the owners of agricultural land whose land had been acquired - petitioner-authority had distributed compensation payment in favour of the owners who had owned certain agricultural lands which had been acquired by the authority -
HELD THAT:- A proper reading and understanding of section 194LA leaves one with no ambiguity or misunderstanding about the object and scope of this section. It is very clear that obligation cast on a person distributing compensation is only in respect of payment for immovable property. Such immovable property does not include agricultural land and such agricultural land may be located in any place including in an urban agglomeration and the meaning of ‘agricultural land’ as given in section 2(14) of the Act is not imported for the purpose of section 194LA of the Act.
The authority functioning under the Act has obviously gone wrong by quoting artificial meaning of ‘agricultural land’ as contained in section 2(14) of the Act, defining capital asset. The definition of capital asset is given for the purpose of indicating that the transfer of capital asset if has resulted in some gain and becomes capital gain, it is an income taxable as income includes capital gains.
When statutory provision is so very clear, it is rather surprising that the authority functioning under the Act has misread this provision and emphatically enforced the provision in a way not provided under the section itself and further threatened the petitioner with the possibility of mulcting with penalty u/s 271(1) of the Act.
It is also surprising that the Commissioner before whom the revision petition was taken, could not see the scope content and meaning of section 194LA of the Act which is as clear as a day light and allowed further proceedings against the complaining petitioner.
Therefore, this writ petition is allowed. The impugned order passed by the Income-tax Officer is hereby quashed in this petition itself and there is no further need for the petitioner to pursue the revision petition u/s 264 of the Act.
Petitioner awarded cost of ₹ 10,000 against the respondents. Rule made absolute.
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2008 (6) TMI 582
Issues Involved:
1. Classification of coconut oil sold in various packages.
2. Applicability of Chapter Note 2 of Chapter 33 post-amendment.
3. Interpretation of relevant tariff entries and HSN alignment.
4. Validity of the Commissioner's findings and the application of interpretative rules.
Summary:
1. Classification of Coconut Oil:
The primary issue is the classification of coconut oil sold by M/s. Madhan Agro Industries (India) Pvt Ltd (MAIL). Initially classified under CSH 15.03 as coconut oil, the Commissioner revised it to CSH 3305 as unperfumed hair oil. The appeal challenges this revision.
2. Applicability of Chapter Note 2 of Chapter 33 Post-Amendment:
Effective from 01.03.2005, Chapter Note 2 of Chapter 33 was amended, deleting the segment that included products labeled for use as cosmetics or toilet preparations. The Commissioner found that the impugned goods, advertised with a picture of an actress, suggested their use as hair oil, not cooking oil. This led to the reclassification under CSH 33059011.
3. Interpretation of Relevant Tariff Entries and HSN Alignment:
The learned Sr. Counsel argued that the alignment of tariff entries with HSN post-01.03.05 supported the continued classification of the product as coconut oil under Chapter 15. The CBEC Circular No.145/56/95-CX dated 1.8.95 and previous CESTAT decisions supported this classification. The Tribunal found that the impugned product did not satisfy the HSN Explanatory Notes for classification under CSH 3305.
4. Validity of the Commissioner's Findings and the Application of Interpretative Rules:
The Tribunal noted that the impugned product did not meet the criteria for classification under Chapter 33, as it was not labeled or packed in a form specialized for use as hair oil. The Tribunal's previous decisions and the CBEC Circular were consistent with classifying the product under Chapter 15. The impugned order was found inconsistent with the Tribunal's reading of the tariff entries and HSN Notes.
Conclusion:
The Tribunal set aside the impugned order and allowed the appeal, maintaining the classification of the product under Chapter 15. The decision was pronounced in open court.
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2008 (6) TMI 581
Issues Involved:
1. Whether assessment proceedings are pending for years where returns have been filed but not processed or notices not issued.
2. Whether assessment proceedings are pending for years where returns have been processed but time for issuing notices has expired.
3. Interpretation of the term "date of conclusion of proceeding" u/s 245A(b)(iv).
4. Validity of a composite settlement application for multiple years with mixed pendency status.
Summary:
First Issue:
The Special Bench concluded that for the years where returns have been filed but neither processed u/s 143(1) nor notices issued u/s 143(2), the assessment proceedings are considered pending.
Second Issue:
For the years where returns have been processed u/s 143(1) but the time for issuing notices u/s 143(2) has expired, the assessment proceedings are still considered pending. This conclusion is supported by the CBDT circular explaining that an intimation u/s 143(1) is not an assessment order, and the assessment is deemed completed only upon the service of the assessment order.
Third Issue:
The term "date of conclusion of proceeding" u/s 245A(b)(iv) was interpreted to mean that proceedings for assessment are pending only as long as the Assessing Officer has the power to take action. The Bench favored a harmonious construction over a strict literal interpretation to avoid absurd results, concluding that proceedings are pending only for years where the Assessing Officer can still initiate action.
Fourth Issue:
The Bench decided that a composite settlement application need not be declared invalid if assessment proceedings are pending for some years and not for others. The application can proceed for the years where proceedings are pending.
Conclusion:
The settlement application was not declared invalid, and the decision was in favor of the assessee.
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2008 (6) TMI 580
Issues involved: Classification of products under Chapter 2 or Chapter 16 of the Central Excise Tariff, determination of brand name status on unit containers.
Classification Issue: The dispute arose regarding whether products like Cocktail Sausages, Luncheon Meat, and Corned Beef are classifiable under Chapter 2 attracting nil rate of duty or under Chapter 16 attracting 16% duty. The Commissioner (Appeals) held that the products were classifiable under Chapter 1601.90 attracting nil rate of duty. CESTAT remanded the matter back to the Commissioner to determine the correct classification of the products. The Commissioner decided in favor of the respondents, holding that the goods were classifiable under Chapter 1601.90 and attracting nil rate of duty.
Brand Name Issue: The Revenue appealed against the Commissioner's order, arguing that the products were branded and the Commissioner incorrectly applied a Supreme Court decision specific to patent medicines. The Revenue contended that the Apex Court decision in the case of Grasim Industries Ltd. should have been applied, which held that even the name of the company can be considered a brand name if used in relation to the product. The respondents argued that the CESTAT order conclusively decided the brand name issue against the Revenue, and the Commissioner was not required to address it. The Tribunal's remand order dated 28-5-2004 held that the name "COSTA's" was a House Mark and not a brand name, thus attracting nil rate of duty under Chapter 1601.90. The Commissioner rightly did not delve into the brand name issue as per the remand order.
In conclusion, the Tribunal dismissed the Revenue's appeal, stating that the remand proceedings were limited to determining the classification and duty demands, not the brand name issue. The Commissioner correctly followed the remand order, and the CESTAT decision on the brand name issue had attained finality. The Tribunal found no merit in the Revenue's appeal and dismissed it accordingly.
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2008 (6) TMI 579
Issues Involved:1. Violation of Section 18(2) and Section 18(3) of the Foreign Exchange Regulation Act, 1973. 2. Applicability of the Appellate Tribunal's earlier decisions. 3. Presumption of non-recovery of export proceeds under Section 18(3). Summary:Issue 1: Violation of Section 18(2) and Section 18(3) of the ActThis appeal u/s 35 of the Foreign Exchange Management Act, 1999 read with Section 49 thereof and Section 54 of the Foreign Exchange Regulation Act, 1973, challenges the order dated 09.10.2007 by the Appellate Tribunal for Foreign Exchange, which upheld the imposition of a penalty of Rs. 3 Lacs on the appellant for violating Section 18(2) read with Section 18(3) of the Act. The appellant, a former Director of M/s Kwality Jewellers (India) Pvt. Ltd., argued that he had resigned from the company on 01.06.1995 and was not responsible for the non-realisation of export proceeds. However, the adjudicating authority and the Appellate Tribunal found that sufficient efforts were not made to realise the amounts, and the appellant was held responsible for the outstanding proceeds since the exports occurred during his tenure as Director. Issue 2: Applicability of the Appellate Tribunal's earlier decisionsThe appellant contended that the Appellate Tribunal ignored its earlier decisions, specifically the two-member Bench decision in "M/s Leatherage, Kanpur v. Director of Enforcement," which held that no violation of Section 18(2) occurs if an application for extension or offset of export proceeds is pending before the RBI. The appellant argued that the Tribunal should have followed this precedent. However, the Tribunal dismissed this argument, noting that the facts of the present case differed significantly from those in "M/s Leatherage, Kanpur," where bonafide efforts to realise the debt were evident. Issue 3: Presumption of non-recovery of export proceeds under Section 18(3)The court highlighted Section 18(3) of FERA, which presumes that a person has not taken reasonable steps to recover payment for goods if the prescribed period has expired without payment. The appellant failed to rebut this presumption. The court noted the close personal and business relationship between the appellant and the importer, and the lack of meaningful efforts to recover the export proceeds. The appellant's own documents contradicted his claims about the timing of his resignation and his involvement in the company's operations. The court concluded that the appellant's complicity in the failure to realise the export proceeds was evident. Conclusion:The appeal was dismissed with costs of Rs. 10,000/-, affirming the Appellate Tribunal's decision and the penalties imposed for the violation of Section 18(2) and Section 18(3) of the Act.
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2008 (6) TMI 578
Whether a Tribunal established under Section 4 of the Administrative Tribunals Act (for short `the Act') can review its decision on the basis of subsequent order/decision/judgment rendered by a coordinate or larger bench or any superior Court or on the basis of subsequent event/development?
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2008 (6) TMI 576
Assessment on substantive basis - Whether income of Main Trust assessed on a substantive basis and liabilities finally settled under Kar Vivad Samadhan Scheme, 1998 (KVSS) could again be assessed in the hands of corresponding beneficiaries here assessed on a protective basis? - Main Trust had settled the dispute under KVSS - HELD THAT:- We find that Main Trust had settled the dispute under KVSS. This is the dispute which department has originated and is agitating before higher appellate authorities. It was department’s case that income belongs to Main Trust and not to the beneficiaries that is the reason why incomes were assessed substantively in the case of Main Trust and protectively assessed in the case of beneficiaries. When Main Trust settled the disputes under KVSS and paid due taxes, that is the end of the dispute between department and Main Trust as well as Assessees on the taxability of incomes. When in the case of Main Trust where substantive assessments were made, the protective assessments made in other cases viz. beneficiaries of Main Trust should be deleted.
In the present case, issue is of protective assessments and substantive assessments. Protective assessments cannot be continued in the appellate proceedings once substantive assessments become final. In the present case, revenue assessed income in the case of Main Trust on a substantive basis, which was accepted.
The finding of CIT is contrary to the decision of Tribunal which is not permitted. CIT being subordinate authority to the Tribunal cannot take contrary to the decision of Tribunal - When CIT revised order, controversy was already decided by this court in Apex Court in the case of ITO V/s. C.H. Atchaiah [1995 (12) TMI 1 - SUPREME COURT]. The decision of CIT in the revision order is contrary to the above decision of court which cannot be permitted. Reference to the larger bench cannot be ground to revise assessment u/s.263 of I.T. Act. On this ground also we uphold the order of Special Bench of ITAT.
We find that this is the only conclusion that once assessment in the substantive case is final, protective assessment cannot be continued in the case of beneficiaries. When CIT revised order, there exist order of this court dt.30.07.01. Hence, atleast this is one of the views, though we find that this is the only view, revision order u/s.263 is not permissible on jurisdictional ground.
This is the decision of Hon’ble Supreme Court in the cases of Malabar Industries Co. Ltd. V/s CIT[2000 (2) TMI 10 - SUPREME COURT] and G.M. Mittal [2002 (12) TMI 13 - SUPREME COURT]. When the decision of High Court was reversed by Supreme Court on merits, Hon’ble Supreme Court held that revision order cannot be sustained as on the date of revision order, order of High Court did exist. Following the same, we hold that CIT had no jurisdiction to pass revision order u/s.263. On that day, the order of this court dt.30.07.01 did exist. On the contrary, this order has become final.
As regards grant of interest on refund, we find that Tribunal was justified in holding that refund should be granted with interest.
We are in full agreement with the order of Special Bench of Tribunal. We repeat that revenue should not drag the respondents to unnecessary avoidable litigation - we dismiss the appeals filed by revenue except Tax Appeals Nos. 182 and 204 of 2002 with Tax Appeals Nos.27 to 30 of 2004, i.e., the appeals of the assessees in the cases of Janak Pramodbhai Patel, Pramodbhai Kanjibhai Patel HUF, Bharat & Piyush ODFT and C.J. Zala ODFT.
Erroneous and prejudicial order revised by CIT u/s.263 - whether the same income can be assessed in the case of Ambica Trust as well as in the case of respondent beneficiaries - HELD THAT:- We find that section 4 of the I.T. Act is clear. Charge is on the income and charge is only once. The same income cannot be taxed in the hands of two different persons. We fully agree with the Tribunal’s finding that under the theory of double taxation also if the income is assessed in the case of trustees, it cannot be again assessed in the case of respondent beneficiaries – vice versa. If assessed in the case of respondent beneficiaries, it cannot be taxed in the case of representative assessees. Therefore, the same income which has been assessed in the case of trust/trustees, again it cannot be assessed in the case of beneficiaries.
We also agree with the Tribunal that interest u/s.244A should be granted on refund of tax. If on giving effect to the appellate order, refund is due that has to be granted with interest.
We find that view taken by A.O. was correct and hence CIT has no jurisdiction to revise the assessment. Mr. Soparkar has also submitted that questions raised before this court were pertaining to KVSS which do not arise from the order of Tribunal. Tribunal has allowed the appeal on the first principle about taxation on representative assessees and not on implications of KVSS. We agree that Tribunal has allowed the appeal on first principle and not of KVSS.
In the result, we confirm the order of Tribunal and dismiss the appeal filed by the revenue.
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2008 (6) TMI 575
Issues Involved:
1. Maintainability of the winding-up petition.
2. Jurisdiction and governing law.
3. Use of winding-up petition as a debt recovery measure.
4. Arbitration clause and its impact on winding-up proceedings.
5. Solvency of the respondent company.
Summary:
1. Maintainability of the Winding-Up Petition:
The petitioner sought the winding up of the respondent company u/s 433(e), 434, and 439 of the Companies Act, 1956, due to an unpaid debt of US$192,343.57. The respondent admitted the debt but failed to pay despite statutory notice. The court found the petition maintainable as the respondent was unable to pay its debts, fulfilling the criteria u/s 433(e) of the Act.
2. Jurisdiction and Governing Law:
The respondent argued that the governing law was the law of Singapore per the agreement. The court held that the respondent, being a company incorporated under the Companies Act, 1956, and having its registered office in Delhi, fell under the jurisdiction of this court for winding-up proceedings. The court emphasized that the laws of Singapore were irrelevant for this relief.
3. Use of Winding-Up Petition as a Debt Recovery Measure:
The respondent contended that the petition was being used to recover dues. The court clarified that the petition aimed to highlight the respondent's inability to pay its debts, which justified winding up in the larger public interest to protect unsuspecting members of the public.
4. Arbitration Clause and Its Impact on Winding-Up Proceedings:
The respondent cited an arbitration clause in the agreement, arguing that disputes should be resolved through arbitration in Singapore. The court dismissed this argument, stating that an arbitrator cannot order the winding up of a company, a power vested solely in the court by the Companies Act. The court referenced the Supreme Court's decision in Haryana Telecom Ltd. vs. Sterlite Industries (India) Ltd., reinforcing that winding-up proceedings cannot be stayed for arbitration.
5. Solvency of the Respondent Company:
The respondent claimed to be a running concern with substantial staff and ongoing payments to BSNL, suggesting commercial solvency. The court rejected this, noting that despite being operational, the respondent was heavily indebted and unable to repay its debts, thus deemed unable to pay its debts u/s 433(e) of the Act. The court referenced NEPC India Ltd. vs. Indian Airlines Limited, asserting that the ability to pay does not negate the fact of unpaid admitted liability.
Conclusion:
The court admitted the winding-up petition and appointed the official liquidator as the provisional liquidator for the respondent company. The respondent was restrained from dealing with its assets except to meet liabilities and business expenses. The order was held in abeyance for two weeks to allow the respondent to pay the outstanding debt with interest. If unpaid, the order would be enforced, and citation published. Further proceedings were scheduled for 18.8.2008.
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2008 (6) TMI 574
Unaccounted transaction - between partners and/or persons connected - searched u/s. 132 - Validity of notice issued u/s 158BC - warrant of authorisation - ascertaining whether there was any material with the respondent authority to even prima facie come to the conclusion that an entity by the name of M/s Jalaram Theatre existed as a partnership firm.
HELD THAT:- In the present case, from the record of the respondent authority and the facts which have come on record of this petition it becomes apparent that the prerequisite conditions empowering the AO to exercise the powers for issuing notice u/. 158BC of the Act are not fulfilled. During course of hearing reliance had been placed on a draft document relating to proposed sale of property known as Jalaram Theatre for a sum to submit that the said document was unearthed during course of survey leading to belief that there was unaccounted transaction in property. The said document, on a bare perusal, cannot assist the case of the respondent. Firstly, the said document is not signed by anybody, neither the sellers nor the purchasers. The document reflects proposed transaction of an immovable property.
The law enjoins every person to compulsorily register a document involving transfer of immovable property valued at more than ₹ 100 and hence in absence of any other corroborating evidence that such a transaction took place between the parties the Court is not expected to raise a presumption that a transaction took place in violation of the law of the land.
However, apart from the fact that there are eight purchasers and six sellers and none of the parties have appended their signatures to the document, what is most material is the fact that the vendors are the six petitioners who are described to be co-owners of the immovable property. Thus, even if for the sake of argument the document in question is treated as a relevant piece of evidence only for the purpose of initiating proceedings, even then no entity by the name of M/s Jalaram Theatre, a partnership firm, is mentioned in the document belying the claim of the respondent authorities to the contrary. The document supports the stand of the petitioners that the petitioners are co-owners and are deriving rental income from the property which has duly been reflected in their respective returns of income.
Therefore, it is apparent that the action of the respondent authority in issuing impugned notice u/s. 158BC of the Act, cannot be sustained. Accordingly, the said notice u/s. 158BC of the Act, is hereby quashed.
The petition is allowed accordingly. Rule made absolute. There shall be no order as to costs.
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2008 (6) TMI 573
Issues Involved:
1. Non-production of way-bill at the time of taking delivery of consignment.
2. Imposition of penalty under Section 73 of the VAT Act.
3. Consideration of intent and possibility of tax evasion.
4. Interpretation and application of previous Tribunal and Supreme Court decisions.
Detailed Analysis:
1. Non-production of way-bill at the time of taking delivery of consignment:
The petitioner, a manufacturer and reseller of cement, imported 677 M.T. of raw materials and took delivery on October 16, 2006, without producing the way-bill at the sales tax check-post for endorsement. The petitioner claimed that the way-bill and other documents were produced before the Sales Tax Officer, Alipur, on October 20, 2006, and subsequently advised to present them at the Kharagpur Range Office, which was done on October 23, 2006, due to holidays. The Sales Tax Officer refused to endorse the way-bill, initiating penalty proceedings.
2. Imposition of penalty under Section 73 of the VAT Act:
The Sales Tax Officer imposed a penalty of Rs. 3,80,000, citing contravention of Section 73 of the VAT Act. The officer argued that the petitioner could have produced the way-bill earlier as there were no holidays between October 16 and 20, 2006. The officer believed that the non-production of the way-bill could lead to tax evasion. The Assistant Commissioner and Deputy Commissioner upheld the penalty, with the latter reducing it to Rs. 76,000.
3. Consideration of intent and possibility of tax evasion:
The petitioner argued that the voluntary production of the way-bill indicated no intention to evade tax. The Tribunal noted that there was no conclusive proof that the way-bill was produced on October 20, 2006, but it was admitted that the documents were produced on October 23, 2006. The Tribunal found no evidence of intent to evade tax or conceal the import, as the materials were entered in the stock register, and the authorities did not allege any discrepancies in the documents.
4. Interpretation and application of previous Tribunal and Supreme Court decisions:
The Tribunal referenced its decision in Century Cement v. Assistant Commissioner of Commercial Taxes, which stated that mere contravention of procedural requirements does not automatically lead to penalty unless there is an intention or possibility of tax evasion. The Tribunal criticized the revenue authorities for not considering this principle and acting mechanically. The Tribunal also referred to Cal-Cox Syndicate Pvt. Ltd. v. A.C.C.T., which explained the Supreme Court's decision in Guljag Industries, emphasizing that penalties should not be imposed for mere technical infringements without adverse impact on revenue.
Conclusion:
The Tribunal set aside the orders imposing penalties, noting that the petitioner voluntarily produced the way-bill within seven days and there was no allegation of intent to evade tax. The Tribunal stressed the importance of following established legal principles and cautioned revenue officials to adhere to Tribunal decisions unless inconsistent with higher courts. The application was allowed, and no costs were ordered.
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2008 (6) TMI 572
Issues:
Challenge to notice under West Bengal Value Added Tax Act, 2003 for assessment proceeding initiation.
Detailed Analysis:
1. Challenge to Notice Initiation:
The applicant challenged a notice under the West Bengal Value Added Tax Act, 2003, issued by the Sales Tax Officer for assessment proceedings for a specific period. The applicant contended that the notice should be declared void ab initio as all returns had been filed, and no grounds for assessment initiation were specified in the notice.
2. Legal Arguments:
The applicant's advocate argued that the notice lacked specific grounds for assessment initiation as required by the VAT Act. It was emphasized that the reasons for dissatisfaction with the filed returns should be clearly stated before initiating assessment proceedings to allow the assessee to present their case effectively.
3. Respondent's Submission:
The State Representative contended that various verifications and enquiries were conducted, leading to the satisfaction that the returns were incorrect. The representative argued that the applicant was aware of these activities and had opportunities to explain their case during the process.
4. Tribunal's Decision:
The Tribunal analyzed the legal provisions under the VAT Act regarding assessment initiation and the necessity for specific reasons to be provided in the notice. It was concluded that the notice in question did not adequately disclose the reasons for initiating assessment proceedings, rendering it defective. As a result, the Tribunal set aside the notice but allowed the authorities to initiate assessment proceedings afresh with proper adherence to the law.
5. Conclusion:
The Tribunal's decision highlighted the importance of issuing precise and informative notices in compliance with legal requirements. The ruling emphasized the fundamental principle of natural justice, ensuring that parties are heard and informed adequately during legal proceedings.
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2008 (6) TMI 571
Whether, on the facts and in the circumstances of the case, the Sales Tax Tribunal was legally justified to hold that the transaction in question cannot be treated as sale and consequently is exempt from tax despite the fact that evidences on record reveal otherwise?
Held that:- The very fact that 95 per cent of the sale consideration was received by the dealer-opposite party which according to it was returned subsequently and the fact that the goods were dispatched from the State of U.P. to the State of Gujarat is sufficient to show that the goods were sold by the dealer. In absence of any contrary material, it would show that the sale as a matter of fact, had taken place. It may be noticed that a categorical finding was recorded by the first appellate authority which has not been met by the Tribunal that the dealeropposite party has not produced any evidence or the account books to substantiate its plea of rejection of goods by the purchasing dealer.
The Tribunal was duty bound before reversing the order of the first appellate authority to have met the reasonings given by the first appellate authority. Without adverting to the reasonings furnished by the first appellate authority, the Tribunal has erred in law in allowing the appeal by making observation in one sentence that the goods were not in deliverable state. The order of the Tribunal, therefore, cannot be sustained. Appeal dismissed.
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2008 (6) TMI 570
Whether the applicant is "owner" of the vehicle for the purposes of section 28B of the U.P. Trade Tax Act?
Held that:- All the three authorities below including the Tribunal have found that the dealer-applicant has failed to prove that the vehicle in question, as a matter of fact, was given on hire basis to the alleged transport companies. The said finding is based on relevant material on record. No evidence was produced by the applicant except a bald statement that the said vehicle was given to the concerned transport companies. A fresh opportunity was afforded to the applicant to substantiate the plea by the High Court while passing the remand order but the applicant failed to avail it. He could not establish that he was not in any manner involved with the transportation of the goods in the State of U.P. from the outside of the State. The driver of the vehicle in question, admittedly, got form 34 issued while entering in the State of U.P.
On the facts of the case, it has been rightly held that the applicant is the "owner" of the vehicle in question and is, therefore, liable to pay the sales tax dues. Appeal dismissed.
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2008 (6) TMI 569
Issues Involved:
1. Legality of the initiation of suo motu revisional proceedings under section 85 of the West Bengal VAT Act, 2003.
2. Entitlement of the petitioner dealer to enjoy the benefit of section 16(3) of the West Bengal VAT Act, 2003.
Issue-wise Detailed Analysis:
1. Legality of the initiation of suo motu revisional proceedings under section 85 of the West Bengal VAT Act, 2003:
The petitioner challenged the show-cause notice dated February 9, 2007, and the suo motu revisional order dated April 23, 2007, issued by the Deputy Commissioner of Commercial Taxes, Burrabazar Circle. The petitioners argued that the notice did not specify the order proposed to be revised and claimed that no such order existed, making the proceedings speculative and liable to be quashed.
The State Representative contended that the acceptance of tax at a compounded rate was deemed, similar to deemed assessment, and thus could be reopened. However, the Tribunal found that section 85 of the VAT Act, 2003, read with rule 143 of the West Bengal VAT Rules, 2005, requires the existence of an order passed by a subordinate authority to be revised. No such order was produced, and the suo motu revisional authority did not specify any order in the revisional proceedings.
The Tribunal concluded that invoking section 85 was unnecessary for such proceedings. Rule 38(6) of the West Bengal VAT Rules, 2005, is self-sufficient for informing a petitioner of ineligibility for the compounded rate of tax. The Tribunal quashed the suo motu revision proceedings initiated under case No. SMR/DC/BB/RJ-04/06-07.
2. Entitlement of the petitioner dealer to enjoy the benefit of section 16(3) of the West Bengal VAT Act, 2003:
Section 16(3) allows registered dealers to opt for a compounded rate of tax under certain conditions. The petitioner-dealer applied for this benefit for the year 2006-07. The State Representative argued that once a dealer becomes an importer, they are ineligible for the compounded rate benefit for subsequent years as well.
The Tribunal noted that section 16(3) and rule 38(2)(a) of the West Bengal VAT Rules, 2005, disqualify a dealer from the compounded rate benefit if they have stock of imported goods at the beginning of the year or import goods during the year. Each year's eligibility must be determined independently, and disqualification for one year does not imply disqualification for subsequent years.
The Tribunal directed the Deputy Commissioner to conduct an enquiry to determine if the petitioner-dealer had any stock of imported goods as of April 1, 2006, or imported goods during 2006-07. If such stock or imports existed, the petitioner-dealer would be ineligible for the compounded rate benefit. The enquiry was to be completed within three months from the date of the order.
Conclusion:
The Tribunal quashed the suo motu revision proceedings and directed an enquiry to determine the eligibility of the petitioner-dealer for the compounded rate benefit under section 16(3) of the West Bengal VAT Act, 2003, based on the presence of imported goods stock or imports during the relevant period. The application was disposed of without any order as to costs.
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2008 (6) TMI 568
Issues Involved:
1. Correctness of the order passed by the Karnataka Appellate Tribunal in S.T.P. No. 1000 of 2005.
2. Failure of the Tribunal to frame questions arising from the appeal.
3. Errors in the Tribunal's judgment affecting the petitioner's case.
4. Legality of the orders of lower authorities under the Karnataka Sales Tax Act, 1957.
5. Burden of proof on the petitioner to establish the nature of sales.
Analysis:
1. The petitioner challenged the order of the Karnataka Appellate Tribunal, seeking to set aside the orders of the first appellate authority and assessing authority for re-verification of accounts. The ground of attack was the alleged error in passing the order without considering the objections filed by the petitioner.
2. The Tribunal was criticized for not framing questions arising from the appeal, leading to the necessity of further consideration. The petitioner argued that observations made by the Tribunal would impact their case, rendering the order of remand ineffective.
3. The Court examined the Tribunal's judgment and found errors in not acknowledging the objections filed by the assessee regarding the classification of total turnover and the assessment based on an intelligence authority report. The Tribunal's failure to consider these objections rendered its judgment legally flawed.
4. The Tribunal's decision to set aside the orders of the lower authorities was based on the failure to provide proper justification and supporting documentary evidence for the objection statement filed by the assessee. The assessing authority was directed to re-verify the books of account and make appropriate decisions based on the evidence presented.
5. The Court upheld the Tribunal's decision, emphasizing the burden on the petitioner to prove the nature of sales as per section 6A of the Act. The petitioner was required to support their objection statement with relevant purchase bills corresponding to the unaccounted purchases reported by the intelligence authority.
In conclusion, the revision petition was dismissed, affirming the Tribunal's decision to set aside the orders of the lower authorities and directing the assessee to fulfill the burden of proof as mandated by the Karnataka Sales Tax Act, 1957.
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2008 (6) TMI 567
Issues:
Challenging the correctness of the order passed by the Karnataka Appellate Tribunal regarding exemption notifications and retrospective effect.
Analysis:
The revision petition filed by the assessee questioned the order passed by the Karnataka Appellate Tribunal, urging various grounds related to the exemption notifications. The assessing officer had passed an assessment order holding the assessee liable for payment of turnover tax, which was upheld by the Joint Commissioner of Commercial Taxes (Appeals) and subsequently by the Tribunal. The Tribunal rejected the contention of the assessee, stating that the exemption notifications did not have retrospective effect.
The assessee relied on exemption notifications issued by the State Government under the Karnataka Sales Tax Act, specifically exempting payment of turnover tax by a dealer. The assessee contended that the exemption should be applied retrospectively from April 1, 1999, despite the notification being dated January 1, 2000. However, the Tribunal held that the exemption was prospective from the date of the notification and could not be extended to a back period. The Tribunal found that the decisions cited by the assessee, including the Deepam Silk case and the apex court case of Mathra Parshad and Sons, were not applicable to the current situation.
The High Court, in dismissing the revision petition, upheld the decisions of the assessing officer, the first appellate authority, and the Tribunal. It was concluded that the exemption notification was clear in its immediate effect from the date of issuance and did not apply retrospectively. The court found the assessee's claim untenable in law and stated that the authorities had rightfully rejected the contention. Consequently, the court held that the revision petition lacked merit and was liable to be dismissed.
In conclusion, the High Court dismissed the revision petition, affirming the decisions of the lower authorities and emphasizing that the exemption notifications did not have retrospective effect as claimed by the assessee.
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