TMI Blog1985 (5) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... lid for a period not exceeding 12 months from such date but may be renewed for a further period not exceeding 12 months at the discretion of the authority granting the certificate. The failure of the respondent-authority to issue such an eligibility certificate is under challenge in this writ petition. In order to appreciate the contention raised in this petition, brief reference to the relevant fact may be made. The petitioner has started the business on and from 1st March, 1978, for the purpose of manufacturing electrical fans and regulators, The petitioner duly obtained the required Central excise licence in form L4 from the Central excise authorities. The petitioner's business is also registered with the small-scale industries and admittedly assessment under the Income-tax Act was also effected in the manner which lends support to the petitioner's contention that it is a new industrial undertaking. The petitioner for the purpose of business expediency entered into an agreement with M/s. Khaitan Fans (P.) Ltd. on 22nd March, 1976, the latter being described therein as the Proprietor and the former as User. The agreement referred to above, inter alia, contains the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only per fan manufactured by the User as royalty for the permitted use of said trade mark, during the existence of this agreement subject to a minimum of Rs. 5,000 (Rupees five thousand) only per annum apart from any fees the User is required to pay for know-how agreement referred to herein or as envisaged herein apart from the royalties. (k) Royalties as envisaged in para 18 supra shall become payable at the end of every month and shall be paid by the User to the Proprietor within one month of their becoming due. (l) The royalties envisaged in paragraphs 18 and 19 are apart from any fees payable for technical know-how under this and/or any other agreement. (m) On determination of the herein agreement the User shall have no right to manufacture or cause to be manufactured said goods bearing the same design or designs and specification except in so far as they are commonly employed in trade and industry. The User shall on determination of this agreement return to the Proprietor all drawings and other specifications belonging to the Proprietor. (n) Notwithstanding anything herein contained, this agreement shall stand determined under the following circumstances: (i) When e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordance with the provisions of Notification No. 1809-F. T. dated 1st April, 1976, issued under section 4-AA of the 1954 Act. The concept of obtaining the eligibility certificate was, for the first time introduced as noted above by the Notification No. 1658-F. T. dated 1st April, 1980. Apart from extending the period of exemption from 3 years to 5 years the aforesaid notification contains the following: "The certificate of eligibility shall be granted on application and shall be valid for a period not exceeding twelve months from such date as may be specified therein, but may, at the discretion of the authority granting the certificate, be renewed from time to time for a period not exceeding twelve months at a time: Provided that the certificate of eligibility shall not be granted or renewed if the dealer changes the constitution of the business, sells any capital assets otherwise than in the ordinary course of business, violates any condition or does anything without adversely affects the economic viability of the newly set up industry. The authority granting the certificate of eligibility may, for good and sufficient reasons to be recorded in writing and after giving the hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... small industrial undertaking and it was contended that question of scrutiny of the agreement in detail was wholly unnecessary and the petitioner would be entitled to obtain exemption irrespective of the fact as to whether agreement can be termed to be another method of avoiding tax liability. In this context, strong reliance was placed on the decision of the Supreme Court in the case of Commissioner of Income-tax, Gujarat v. A. Raman and Co. reported in [1968] 67 ITR 11 (SC), wherein the Supreme Court observed: "The plea raised by the Income-tax Officer is that income which could have been earned by the assessees was not earned, and a part of that income was earned by the Hindu undivided families. That according to the Income-tax Officer was brought about by 'a subterfuge or contrivance'. Counsel for the Commissioner contended that if by resorting to a 'device or contrivance', income which would normally have been earned by the assessee is divided between the assessee and another person, the Income-tax Officer would be entitled to bring the entire income to tax as if it had been earned by him. But the law does not oblige a trader to make the maximum profit that he can out of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The notification was issued incorporating certain other conditions. In any view, the taxing authority is to act within the four corners of the statute and not otherwise. If the law permits circumvention, there cannot be said to be any illegality. It is for the law makers to plug the loop-holes rather than the enforcement agency to do the same. There is no scope for any guess-work and it is not open to the taxing authority to travel beyond the limits prescribed by the statute. It is significant to note in this context that exemption as provided under Notification No. 1809-F.T. dated 1st April, 1976, was allowed by the Commercial Tax Officer, 24 Parganas, in respect of first assessment relating to the period from 24th April, to 17th May, 1978, and the Commercial Tax Officer accepted the petitioner to be a dealer eligible for exemption from payment of tax as newly set up small-scale industrial unit according to the Notification No. 1809-F.T. dated 1st April, 1976, issued under the Act of 1954. The factum of such finding by the Commercial Tax Officer has not been denied. In the contrary in the counteraffidavit it has been stated as follows: "18...... I state that if in the earli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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