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Showing 261 to 280 of 654 Records
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2007 (11) TMI 449
Capital gains ... ... ... ... ..... ions relied on by the learned counsel for the assessee M.C.A. Khaleeli rsquo s case (supra) and Jagan Nath Singh Lodha rsquo s case (supra). (xii)The assessee has not placed on record any certificate to show that all the papers filed before the Tribunal are the same which were filed before the revenue authorities. 15. Under these circumstances and in the interest of justice we are of the view that the matter should go back to the file of the Assessing Officer and accordingly, we set aside the order passed by the Assessing Officer and the learned CIT(A) on this account and restore the issue, to the file of the Assessing Officer, who shall examine the same afresh in the light of our observations hereinabove and according to law, after providing a reasonable opportunity of being heard to the assessee and accordingly all the grounds taken by the assessee are partly allowed for statistical purposes. 16. In the result, appeal of the assessee stands allowed for statistical purposes.
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2007 (11) TMI 448
Income from house property, Depreciation ... ... ... ... ..... the full year which has not been disputed by the authorities below, the proportionate rateable value for five months via November 2002 to March 2003 which comes to Rs. 28,731 for say Rs. 30,000 may be included in the total income for assessment year 2003-04 only. In view of the submission of ld. Counsel for the assessee filed on 2-11-2007, we direct the authorities below to make the addition of Rs. 30,000 only because there is no other material available on record to justify the findings of the authorities below. The assessee would be entitled for usual deduction under Chapter IV-C of the Income-tax Act. This issue is partly decided in favour of the assessee and partly in favour of the Revenue in ITA No. 3962/06 only. No other point is argued or pressed. 17. As a result, ITA No. 3960, ITA No. 3961/2006 and WTA No. 157/06, WTA No. 158/06 and WTA No. 159/2006 of the appeals of the assessee are allowed. However, assessee rsquo s appeal in ITA No. 3962 of 2006 is partly allowed.
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2007 (11) TMI 447
Deemed wealth ... ... ... ... ..... g the fact that he has transferred the rights to the lessee by way of lease from month to month or for a period not exceeding one year. Legal ownership will remain unaffected so long as the term of lease is less than twelve years in terms of the provisions of section 269UA(f) of the Income-tax Act. Question 3 Whether lease agreement for a period for less than one year with an extension clause which is normally an agreement of Leave and Licence, will not be covered by section 4(8)(b) of the Wealth-tax Act and section 269UA(f) of the Income-tax Act. Answer The fiction created by section 4(8)( b) applies to leases and not to leave and licence agreements. Leave and licence agreements are clearly outside the scope of section 4(8)(b) of the Wealth-tax Act. In a leave and licence arrangement, the legal owner shall continue to be the owner of the licensed premises and assessable to wealth-tax as such. 26. The matter shall now go back to the Division Bench for disposal of the appeals.
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2007 (11) TMI 446
Business expenditure, Losses - Carry forward to set off of, in case of amalgamation, etc. ... ... ... ... ..... the aforesaid in the total turnover for purposes of computing the deduction under section 80HHC, also added the amount of Rs. 5,17,144 as the assessee rsquo s income from business (Item No. 19 in the computation of the taxable income at page 9 of the assessment order). The CIT (Appeals) held that the amount cannot be added as the business income of the assessee as it was collected by the assessee under the U.P. Sheera Niyantran Act, 1964, under which the utilization of the amount is controlled under the aforesaid Act and that the assessee had no control or power to utilize the amount as it liked. He, therefore, deleted the same from the assessment. In line with our decision in respect of ground No. 3 in the assessee rsquo s appeal, we affirm the decision of the CIT (Appeals) and dismiss the ground. 13. In the result, the department rsquo s appeal is dismissed. 14. To sum up the assessee rsquo s appeal is partly allowed and the department rsquo s appeal is dismissed. No costs.
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2007 (11) TMI 445
Issues: The appeal involves the issue of disallowance of set-off of unabsorbed depreciation of earlier years against income from "house property" for the assessment year 1999-2000.
Issue 1: Disallowance of set-off of unabsorbed depreciation
The Assessing Officer denied setting-off unabsorbed depreciation of earlier years against income from house property, citing the absence of provision for such set-off under section 72 of the Income-tax Act when the business has been permanently discontinued. The CIT (Appeals) upheld this decision, emphasizing the necessity for the business to be carried on by the assessee in the relevant previous year for set-off under the amended section 32(2) from the assessment year 1997-98 onwards. The appellant challenged this, arguing that the amendment was prospective and relied on various ITAT decisions supporting the applicability of the old provision to unabsorbed depreciation brought forward up to the assessment year 1996-97.
Issue 2: Interpretation of section 32(2) pre and post-amendment
The pre-amended section allowed unabsorbed depreciation to be carried forward and set-off against assessable income of subsequent years, irrespective of the existence of the business for which depreciation was allowable. However, the post-amendment provision from the assessment year 1997-98 required the business to be continued in the previous year relevant to the assessment year for set-off. The ITAT held that unabsorbed depreciation up to and inclusive of the assessment year 1996-97 could be set-off against taxable business profit or income under any other head for the assessment year 1997-98 and subsequent years, based on the Finance Minister's speech clarifying the prospective nature of the amendment.
Decision: The ITAT reversed the lower authorities' decision and directed the Assessing Officer to allow setting off of unabsorbed depreciation brought forward up to the assessment year 1996-97 against income from house property for the assessment year 1999-2000. The appeal of the assessee was allowed based on the interpretation of the pre-amended section 32(2) and the prospective nature of the amendment introduced by the Finance (No. 2) Act, 1996.
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2007 (11) TMI 444
Computation of export turnover u/s 10A - newly established undertakings in free trade zone - expenses incurred towards link charges - Uplinking charges reduced from the export turnover -Loss of one STP unit - Computation of arm's length.
Deduction u/s 10A - newly established undertakings in free trade zone - expenses incurred towards link charges - Uplinking charges reduced from the export turnover - HELD THAT:- The details of expenses incurred towards link charges are available with the assessee company. It would not have been difficult for the assessee company to have asked the services provider to give the details of expenses incurred in transmitting information from India. The assessee could have obtained the details of expenses of outward transmission of data. When a specific information is available with the assessee and if the same is not produced, then adverse inference can be drawn. The assessee in the course of proceedings before the learned CIT(A) estimated such expenditure for transmission of data at 50 per cent of the expenditure on link charges. The learned CIT(A) discussed the software development with a number of representatives of various companies. Facts as mentioned by the learned CIT(A) in his order have not been controverted by the ld AR.
Therefore, we decline to interfere with the finding of the learned CIT(A) in estimating that 80 per cent of uplinking charges are to be reduced from the export turnover. Such finding is upheld for both the assessment years.
Uplinking charges reduced from the export turnover - Following the decision in the case of Tata Elxsi Ltd. v. Asstt. CIT [2007 (10) TMI 630 - ITAT BANGLORE] and CIT v. Infosys Technologies Ltd.[2007 (10) TMI 627 - ITAT BANGALORE] held that the components entering into export turnover and the total turnover should be the same. Thus, This ground of appeal is common for both the assessment years and, therefore, the decisions mentioned will be applicable for both the assessment years.
Determining profits of the business for the purposes of section 10A/10B - Loss of one STP unit - set off from profits of other STP units - HELD THAT:- In absence of the facts, it is not possible to say that Pune unit was an independent undertaking engaged in the business of software development, which was in no way related to the software development done at Bangalore or Chennai unit. In case, the Pune unit is found to be independent, then loss from such unit is to be independently calculated. In case such unit is associated with the activities, which are carried out at Bangalore or Chennai unit, then Pune unit will -be considered as part of that undertaking.
Hence, the issue of ascertaining as to whether Pune unit was an independent unit or a unit associated with activities of other two units is restored back on the file of the Assessing Officer. In case it is found that it is part of the other two units and is associated with the activities done in other two units, then it will be considered as part of the same undertaking and loss will be adjusted. However, in case, if it is found, it is an independent unit, then it will be treated as independent undertaking and the assessee cannot be forced to have exemption in respect of such independent undertaking. In that case the loss will (not) be adjusted against other income.
Computation of arm's length - HELD THAT:- In the instant case, the assessee himself has computed the arm's length prices and has disclosed the income on the basis of arm's length prices. It is not a case, where there is an enhancement of income due to determination of arm's length price. Hence, it is held that assessee was entitled to deduction under section 10A in respect of income declared in the return of income on the basis of computation of arm's length price.
In the result, both appeals are partly allowed.
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2007 (11) TMI 443
Jurisdiction of Assessing Officer - Proceedings Initiated u/s 153A r/w section 153C - Undisclosed income - Search and seizure - receipt of huge cash loans found - HELD THAT:- It is nowhere stated that these books of account or documents showed that all the transactions belonging to the assessee. The books of account or documents seized during the course of search have a close association with the group concern of Shri Reddy. It records the transaction carried out by that group. It does not record the transaction carried out by the assessee.
In the instant case, documents or books of account found during the course of search and seized cannot be termed, to be indicating any limited interest of the ownership of the assessee in such books of account or documents. The language used in section 153C is materially different from the language used under section 158BD. As per section 158BD, if any undisclosed income relates to other person, then action against such other person can be taken provided such undisclosed income is referable to the document seized during the course of search. However, section 153C says that if valuable or books of account or documents belonging to other persons are seized then action under section 153C can be taken against that person. In the instant case, we are satisfied that books of account or documents do not belong to the assessee and, therefore, the Assessing Officer was not justified in initiating action under section 153A read with section 153C of the Income-tax Act. The Assessing Officer is free to take proper remedial measure as per law.
In the result, the appeals filed by the assessee are allowed. Since, we are holding that Assessing Officer was not having jurisdiction to assess under section 153A read with section 153C, therefore, we are not deciding the issue on merits, so as to preempt any finding on merits in respect of the issues to be taken by the Assessing Officer in case recourse is taken for remedial measure if any.
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2007 (11) TMI 442
Salaries - Perquisites ... ... ... ... ..... s made by both sides, material on record and orders of authorities below. Admittedly, the assessee is a senior personnel and that is why he has been accommodated in a luxury hotel. having regard to the status of the employee and duration of stay in India during the year under consideration, the disallowance made by the revenue authorities appears reasonable. Accordingly, all these grounds of the assessee stand dismissed. 19. Ground No. 5 is relating to hypothetical tax was not pressed, hence, the same is dismissed as not pressed. 20. Ground No. 6 is regarding computation of interest under section 234B of the Act is of consequential nature, hence, the Assessing Officer may give due relief to the assessee, if any, in consequence to the order passed by us. 21. In the result, appeal filed by the assessee stands partly allowed for statistical purposes. 22. To sum up, revenue rsquo s appeal stands dismissed and assessee rsquo s appeal stands partly allowed for statistical purposes.
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2007 (11) TMI 441
Denial of deduction u/s 80-IB - Manufacturing or production of perfumery components is "Manufacturing or Production activities or not"? - Consumption of electricity is very small amount - Assessee did not employ ten or more workers in the manufacturing process - scope of term workers "Manager and the Assistant could be categorized as workers?" - Addition u/s 69C - Unexplained expenditure.
Engaged in manufacturing or production - HELD THAT:- We find that the finished products are chemically and commercially different from the raw materials used in the making of such finished products, hence, as settled by various judicial decisions, the assessee can be said to be engaged in the manufacture and, thus, it qualifies on this account. Even otherwise, the section has also used the term "production" and the term "production" is certainly wider than the term "manufacture". The Three Judge Bench of Hon’ble Apex Court in the case of CIT v. Sesa Goa Ltd.[2004 (11) TMI 14 - SUPREME COURT] held that where human efforts were involved in the making of a product, then, such product fell within the term production and even it was not necessary that such product should be commercially different and, therefore, the assessee was entitled for exemption under section 80-I of the Act. Thus, assessee’s claim for deduction u/s 80-IB cannot be rejected as there is a production of a thing and human efforts along with mechanical process are also involved.
Consumption of electricity - Assessee has submitted the bill of the meter installed in connection with the machinery used for manufacturing, hence, if the consumption is low due to the involvement of machinery in the processing activity, the same cannot be a valid ground for denying the deduction u/s 80-IB of the Act and for holding that the assessee is carrying manufacturing activities without aid of power, hence, required to employ 20 or more workers particularly when the Legislature has not prescribed any minimum criteria for consumption of electricity in the manufacturing process.
Employment of workers in the manufacturing process - We find that both the term ‘workers’ and ‘manufacturing process’, as used in section 80-IB(2)(iv) of the Act, have not been defined in the Act. We also find that it is one of the four conditions which are required to be complied with by the assessee for claiming deduction u/s 80-IB of the Act. We also find that the principal object of this section is to encourage the setting up of industrial undertaking by offering tax incentives so as to attain the objective of economic development which, as such, comprises of investment, economic size and employment generation and if all the conditions are read together then, these all the above three parameters would be found implied, as a result of these conditions, in section 80-IB(2) of the Act.
It is also true that it is an incentive provision, hence, it should be interpreted in a manner so as to advance the objective of the provision and not to frustrate it. In this background, we shall firstly look at the aspect of manufacturing process. Manufacturing process has got two words "manufacturing" and "process".
Thus, we are of the considered opinion that Factory Manager and Assistant looking after various activities of a unit should be considered as workers, employed in the manufacturing process. Thus, the assessee also fulfils the condition regarding employment of minimum number of workers. Accordingly, we hold that the assessee is entitled for deduction u/s 80-IB of the Act and we direct the Assessing Officer to accept the claim of the assessee in this regard. Thus, ground Nos. 2, 3 and 4 of the assessee stand allowed.
Addition u/s 69-C - Unexplained expenditure - HELD THAT:- From the perusal of the cash/factory book, we find that it contain entries relating only to cash inflow by way of transfer from head office or withdrawal from HDFC Bank. It is also noted that employees’ wages have been paid mostly at the end of the each month except in the case of the month of June, 2003 and there is a corresponding withdrawal of cash from bank on that date. It is also noted that assessee is a Pvt. Ltd. Co. and managed by independent persons other than owners, hence, normally, there cannot be a situation where the wages being a regular payment, which has been duly recorded in the books of account would be disbursed through unaccounted cash. We also find that there is no dispute regarding the quantum of wages nor any statements have been obtained from the workers in this regard. Thus, taking into account the entire facts, it appears to be a case of accounting mistake only, hence, in our opinion, no addition is warranted. Accordingly, we accept this ground of assessee.
In the result, appeal filed by the assessee stands allowed.
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2007 (11) TMI 440
Unexplained investments, Commissioner (Appeals), Income escaping assessment ... ... ... ... ..... note) 33. In the present case also, the CIT(A) has brought to tax the income of the assessee from abroad by utilizing the powers under section 251(1) of the Act and that is nothing but as held in the case of Sardari Lal and Co. (supra), a new source of income which was not the subject-matter in the assessment which was in challenge before the CIT(A). In our opinion, the principles laid down by the Hon rsquo ble Delhi High Court (FB) in the case of Sardari Lal and Co. ( supra) are squarely applicable to the facts of this case. We are, therefore, of the considered opinion that the CIT(A) is not justified in enhancing the assessee rsquo s income by including the income from abroad by using his powers under section 251 of the Act. We, therefore, do not find any justification to sustain the enhancement made by the CIT(A) and we delete the enhancement of Rs. 22,15,116 and cancel the order of the CIT(A) on this issue. 34. In the result, the assessee rsquo s appeal is partly allowed.
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2007 (11) TMI 439
Issues Involved:1. Deduction of interest paid u/s 36(1)(iii) vs. u/s 57(iii) of the Income-tax Act. 2. Taxability of income from the sale of shares as capital gains vs. business income. 3. Application of section 263 of the Income-tax Act. Summary:Issue 1: Deduction of Interest Paid u/s 36(1)(iii) vs. u/s 57(iii)In ITA No. 4331/Mum./2000 for AY 1995-96, the assessee contested the CIT's decision that interest paid should be allowed as a deduction u/s 57(iii) and not u/s 36(1)(iii). The CIT had issued a notice u/s 263, arguing that the interest expenses incurred for purchasing shares, shown as investments, should be deducted u/s 57(iii). The CIT also opined that income from the sale of shares should be taxed as capital gains, not business income. The Tribunal found that the Assessing Officer (AO) had considered all relevant details and allowed the interest deduction u/s 36(1)(iii). The Tribunal held that the AO's view was one of the possible views in law and not erroneous, thus quashing the CIT's order u/s 263. In ITA No. 3069/Mum./2001 for AY 1997-98, the issue was identical. The AO had allowed interest expenditure u/s 57(iii), but the Tribunal reiterated that the assessee's dominant intention was to deal in shares as a trader. Therefore, interest on borrowed capital was allowable u/s 36(1)(iii), not u/s 57(iii). Issue 2: Taxability of Income from Sale of Shares as Capital Gains vs. Business IncomeThe Tribunal noted that the assessee had consistently offered income from the sale of shares as business income, which had been accepted by the department in other years. The Tribunal emphasized that the presentation of shares as investments in the balance sheet was not conclusive. The Tribunal held that the profit from the sale of shares should be treated as business income, considering the assessee's intention and activities. Issue 3: Application of Section 263 of the Income-tax ActThe Tribunal found that the AO had made proper inquiries and considered all relevant details while passing the assessment order. The Tribunal held that the CIT's action u/s 263 was not justified as the AO's order was neither erroneous nor prejudicial to the interests of the revenue. The Tribunal quashed the CIT's order u/s 263, allowing the assessee's appeal. Conclusion:Assessee's appeals in ITA No. 4331/Mum./2000 and ITA No. 3069/Mum./2001 were allowed, and the revenue's appeal in ITA No. 7754/Mum./2003 was dismissed. The Tribunal held that interest on borrowed capital for purchasing shares should be allowed u/s 36(1)(iii), and income from the sale of shares should be treated as business income.
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2007 (11) TMI 438
Business expenditure ... ... ... ... ..... for this claim and came to the conclusion that securities were never transferred by the assessee in the name of both the parties. In view of this, the plea of the assessee that deposit from both the parties, namely Parsi Panchayat and Garib Zathostiona Rehthan Fund cannot be accepted. 33. Coming to alternate plea raised by the Counsel for the assessee, the Reserve Bank of India under sections 21 and 35A of Banking Regulation Act, 1949 has power to give direction and such direction is binding on companies carrying on banking business in India. These directions are mandatory. Admittedly, the assessee has paid excess amount which is in violation of direction of RBI, the Assessing Officer is legally and factually correct in disallowing a sum of Rs. 8,74,321. In the impugned order, the learned CIT(A) has given cogent reason for upholding the disallowance made by the Assessing Officer. We, therefore, decline to interfere. 34. In the result, the appeal of the assessee is dismissed.
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2007 (11) TMI 437
Issues Involved: 1. Disallowance of hedging expenses as speculative loss. 2. Admission of additional ground and deduction u/s 80HHC. 3. Addition of loans and admission of additional evidence.
Summary:
1. Disallowance of Hedging Expenses as Speculative Loss: The assessee, an exporter and dealer of spice, claimed hedging expenses of Rs. 66,28,672 to mitigate price fluctuation risks in the pepper market. The Assessing Officer (AO) treated these expenses as speculative loss, disallowing them. The AO's decision was based on a response from the Indian Pepper & Sales Trade Association (IPSTA), which did not distinguish between hedging and speculative transactions. The CIT(A) upheld the AO's decision, stating that the assessee did not fall under the exceptions in clauses (a), (b), and (c) of section 43(5) of the Income-tax Act, 1961. However, the Tribunal found that the assessee's transactions fell within the purview of clause (c) of the proviso to section 43(5), as they were in the nature of jobbing and arbitrage to guard against loss in the ordinary course of business. Therefore, the loss incurred by the assessee was not speculative and the appeal on this ground was allowed.
2. Admission of Additional Ground and Deduction u/s 80HHC: The assessee contended that the CIT(A) should have admitted an additional ground regarding the allowability of deduction u/s 80HHC. The Tribunal noted that the deduction u/s 80HHC should be allowed on the profit finally assessed by the AO, and any additions or disallowances made should be considered in recomputing the deduction. The Tribunal directed that the claim for deduction u/s 80HHC be recomputed with reference to the finally assessed income, allowing this ground of appeal.
3. Addition of Loans and Admission of Additional Evidence: The assessee challenged the addition of Rs. 13,21,090 on account of loans from Jagdish Trading Co. and Singhal Oversears Agencies, which were proprietorship concerns of partners in the assessee-firm. The CIT(A) did not admit additional evidence submitted by the assessee to prove the genuineness of the loans. The Tribunal found that the CIT(A) had not provided plausible reasons for not admitting the additional evidence and that adequate opportunity of hearing was not granted. Consequently, the issue was set aside and restored to the AO for reconsideration, allowing the appeal on this ground.
Conclusion: The appeal of the assessee was partly allowed, with the Tribunal ruling in favor of the assessee on the issues of hedging expenses and deduction u/s 80HHC, and remanding the issue of loan addition back to the AO for further examination.
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2007 (11) TMI 436
Deduction of tax at source u/s 194C instead 194J - ''Assessee in Default'' u/s 201(1)/201(1A) - nature of payments is "Professional services or fees for technical services or Not" - maintenance support agreement, fabrication of chilled water line, work order for thermal insulation/erection, conversion of partially oriented yarn (POY) into polyester textured yarn and twisted yarn - HELD THAT:- In the present case, it is seen that there may be use of services of technically qualified persons to render the services but that itself do not bring the amount paid as ‘fees for technical services’ within the meaning of Explanation 2 to section 9(1)(vii). The amounts paid are towards annual maintenance contract of certain machinery or for converting POY into textured/twisted yarn. The technology or the technical knowledge of the persons is not made available to the assessee but only by using such technical knowledge services are rendered to the assessee. In such a case, it cannot be said that the amount is paid as ‘fees for technical services’. Rendering services by using technical knowledge or skill is different than charging fees for technical services. In a latter case, the technical services are made available due to which the assessee acquired certain right which can be further used. In the present case, it is not so.
The persons rendering certain services has only maintained machinery or converted yarn but that knowledge is not now vested with the assessee by which itself it can do research work. Thus, the amount paid cannot be considered as fees for technical services within the meaning of section 194J of the Act.
In the result, the appeal is dismissed.
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2007 (11) TMI 435
Subsequent to order of the Tribunal, Circular No. 58/1/2002-CX. issued by the Central Board of Excise & Customs, - Counsel for the parties agree that keeping in view the said circular the impugned order be set aside and the matter be remanded to the Tribunal for a fresh decision - impugned order is set aside and the matter is remitted to the Tribunal for a fresh decision. All contentions are left open. appeals are allowed accordingly with no order as to costs.
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2007 (11) TMI 434
Classification - whether the criss-cross patches of vulcanized rubber manufactured by the appellant is classifiable under sub-heading 4008.21 of the Central Excise Tariff Act, 1985, as claimed by the Revenue or under sub-heading 4016.99 as claimed by the assessee appellant - Held that:- Order set aside and remanded matter back to the Commissioner (Appeals) for considering whether the process being followed by the manufactures, appeals are allowed accordingly with no order as to costs.
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2007 (11) TMI 431
Penalty - imposition of penalty on the Managing Director of the company invoking Section 112 of the Act has been done without stating any reasons whatsoever - Held that:- without entering a finding that the writ petitioner, as the Managing Director, is guilty of omissions or commissions and had “sought to evade” duty. Neither the Commissioner nor the Appellate Tribunal had found against the version of the petitioner regarding the failure of business and that the international contracts with the Italian collaborators failed, leading the company to fall into liquidation. These factors clearly established that there was no ground to conclude that the situation in hand calls for an order against the Managing Director under Section 112 of the Act, imposes penalty on the writ petitioner as the Managing Director of the company
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2007 (11) TMI 429
Determining applicability of the provisions of the Finance Act, 1994 before investigation - Held that:- respondent is bound to consider the question of applicability of the provisions of the Finance Act, 1994 relating to service tax to the petitioner first, before undertaking any further investigation on the subject. Therefore, the writ petition is allowed
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2007 (11) TMI 427
Evasion of tax - Penalty - it would show that the plea which they have taken before the authorities that ignorance of law cannot be diluted but it cannot be an excuse in law - Bona fide impression for ignorance of law - Penalty is reduced from Rs. 2,08,709 to Rs. 1 lac - Appeal is disposed of
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2007 (11) TMI 424
Interest on delayed refund - refund claim sanctioned by Deputy Commissioner - assessee was entitled for refund. After sanctioning the refund, the said amount was appropriated for other dues - no merit in this appeal - appeal is dismissed
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