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2009 (11) TMI 694
Pre-deposit - Held that: - The Board’s circular cited by counsel also appears to favor grant of exemption under the above notification to indirect supplies of petroleum products to the Indian Navy subject to proof of co-relation between the original supply and the goods received on board the Naval vessels - It is true that the exemption notification should be strictly construed. It was upon such strict interpretation of the notification - we are inclined to grant waiver of pre-deposit and stay of recovery subject to the condition that the appellants produce bonds covering the entire duty liability.
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2009 (11) TMI 693
Issues involved: Appeal by Revenue challenging declaration of assessment as null and void u/s 147/144 of Income-tax Act and cross-objection by assessee regarding non-adjudication of specific grounds by Commissioner of Income-tax (Appeals).
Revenue's Appeal:
The Revenue appealed against the declaration of assessment as null and void u/s 147/144 of the Income-tax Act, where an addition was made on account of unexplained bogus purchases. The grounds raised included procedural errors in reassessment, lack of proper reasoning, and abuse of process of law. The Commissioner of Income-tax (Appeals) declared the assessment null and void based on a decision of the Bombay High Court, leading to the appeal by the Revenue.
Assessee's Cross-objection:
The assessee's cross-objection highlighted the failure of the Commissioner of Income-tax (Appeals) to adjudicate on specific grounds challenging the impugned addition made by the Assessing Officer. The grounds raised by the assessee included procedural irregularities in reassessment, lack of proper reasoning, and disputing the treatment of purchases as unexplained expenditure without proper verification.
The Tribunal found that the order of the Commissioner of Income-tax (Appeals) was non-speaking and cryptic, failing to comply with the provisions of section 250(6) of the Income-tax Act. The order did not address the specific grounds raised by the parties, leading to confusion and depriving the parties of clarity on the decision. As a result, the Tribunal set aside the order of the Commissioner of Income-tax (Appeals) and directed a fresh speaking order to be passed, ensuring compliance with the provisions of the Act. Both parties were granted a reasonable opportunity to be heard in the matter.
In conclusion, the appeal filed by the Revenue was allowed for statistical purposes, and the cross-objection filed by the assessee was also allowed. The decision was pronounced in open court on November 12, 2009, following the conclusion of the hearing.
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2009 (11) TMI 692
Issues:
1. Whether legal expenses incurred for the benefits of the members of the association qualify as a charitable activity?
2. Whether the activity of fighting legal cases can be considered a charitable activity when not mentioned in the memorandum of association?
Analysis:
1. The case involved an appeal by the Revenue against the Commissioner of Income-tax (Appeals) order regarding the treatment of legal expenses incurred by an assessee-society. The society, registered under the Societies Registration Act and Income-tax Act, declared nil income but had significant expenditures, including legal expenses. The Assessing Officer disallowed a substantial amount of legal expenses, citing lack of documentation on how these expenses benefited the public. The Commissioner of Income-tax (Appeals) noted that the society was formed with charitable objectives and had valid registration, emphasizing the need for specific instances where activities deviated from charitable purposes. The Commissioner deleted the disallowance, as certain legal cases were found to benefit the public at large, supported by the remand report. The Tribunal upheld the Commissioner's decision, as the Revenue failed to counter the factual findings, leading to the dismissal of the Revenue's appeal.
2. The second issue pertained to whether fighting legal cases could be considered a charitable activity without explicit mention in the society's memorandum of association. The Commissioner of Income-tax (Appeals) based the decision on specific instances where legal expenses were deemed beneficial to the public, despite not being explicitly stated in the memorandum. The authorized representative for the assessee provided detailed case-wise payments of legal fees and case briefs to support the contention that the legal expenses were justified. The Tribunal concurred with the Commissioner's reasoning, upholding the deletion of the disallowance of legal expenses by the Assessing Officer. The Tribunal emphasized the importance of factual findings and the lack of contradiction by the Revenue in supporting the Commissioner's decision.
In conclusion, the judgment highlighted the necessity of demonstrating how expenses align with charitable objectives, even if not explicitly mentioned in the memorandum of association. The decision underscored the significance of factual evidence and specific instances to justify expenses and upheld the Commissioner's order in favor of the assessee-society, leading to the dismissal of the Revenue's appeal.
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2009 (11) TMI 691
Issues Involved:
1. Validity of the assessment order passed by the Assessing Officer considering the provisions of section 10 of the General Clauses Act.
2. Jurisdiction of the Assessing Officer and the validity of the special audit under section 142(2A).
3. Extension of time limit for submission of the special audit report.
Summary:
1. Validity of the Assessment Order Considering Section 10 of the General Clauses Act:
The Revenue contended that the assessment order passed on August 29, 2005, was valid as August 28, 2005, was a Sunday, and August 27, 2005, was a Saturday. They argued that the order was correctly passed on the next working day, i.e., August 29, 2005, in accordance with section 10 of the General Clauses Act. The Tribunal, however, upheld the Commissioner of Income-tax (Appeals)'s decision that the order was time-barred, stating that the General Clauses Act does not generally apply to the limitation period under the Income-tax Act.
2. Jurisdiction of the Assessing Officer and Validity of the Special Audit under Section 142(2A):
The assessee contested the jurisdiction of the Assessing Officer and the validity of the special audit under section 142(2A). The Tribunal noted that the Assessing Officer extended the period for submission of the special audit report from April 28, 2005, to June 28, 2005, without an application from the assessee, which was not in accordance with the provisions of section 142(2C). The Tribunal held that the Assessing Officer had no suo motu power to extend the time limit, and such power was only inserted with effect from April 1, 2008.
3. Extension of Time Limit for Submission of the Special Audit Report:
The Tribunal observed that the Assessing Officer extended the period for submission of the special audit report based on an application from the special auditor and not from the assessee. Since the assessee did not seek an extension, the extension granted by the Assessing Officer was invalid. Consequently, the assessment order should have been passed on or before June 27, 2005. The Tribunal concluded that the order passed on August 29, 2005, was beyond the time limits provided under the Act.
Conclusion:
The Tribunal upheld the Commissioner of Income-tax (Appeals)'s decision to annul the assessment order as it was barred by limitation. The Revenue's appeal was dismissed, and the cross-objection by the assessee was considered allowed for statistical purposes. The order was pronounced in the open court on November 10, 2009.
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2009 (11) TMI 690
Issues Involved:
1. Whether the expenditure on foreign education of a partner is a personal expenditure or an allowable business expenditure under section 37(1) of the Income-tax Act.
Issue-wise Detailed Analysis:
1. Nature of Expenditure on Foreign Education:
The primary issue in this case is whether the expenditure on foreign education of a partner can be considered as a personal expenditure or an allowable business expenditure under section 37(1) of the Income-tax Act. The assessee argued that the expenditure was wholly and exclusively for business purposes, citing that the partner's education would enhance the firm's human resource capabilities. The Commissioner of Income-tax (Appeals) and the Assessing Officer, however, held that the expenditure was personal in nature and not incurred wholly and exclusively for business purposes.
2. Judicial Pronouncements and Precedents:
The assessee relied on various judicial pronouncements to support their claim, arguing that the expressions "for the purpose of business" and "wholly and exclusively" should cover the expenditure. Conversely, the Revenue cited the Pune Bench decision in Dr. S. N. Naik v. Asst. CIT and the jurisdictional High Court judgment in CIT v. Hindustan Hosiery Industries, which held that such expenditures are personal and not allowable under section 37(1).
3. Analysis of Section 37(1) of the Income-tax Act:
The Commissioner of Income-tax (Appeals) analyzed the provisions of section 37(1) and concluded that the expenditure on foreign education of a partner is personal and not laid out wholly and exclusively for business purposes. The Commissioner noted that the significant increase in the partner's salary post-education indicated that the education benefited the partner personally rather than the business.
4. Commercial Expediency and Business Necessity:
The Tribunal examined whether the expenditure was incurred out of commercial expediency. It was found that the partner's foreign education did not lead to an immediate or significant improvement in the firm's business performance. The Tribunal emphasized that the expenditure must have a direct nexus with the business and not be merely beneficial to the partner.
5. Precedents from High Courts:
The Tribunal referred to the Bombay High Court's judgment in Hindustan Hosiery Industries and the Madras High Court's judgment in M. Subramaniam Brothers v. CIT, which held that expenditures on partners' education abroad are personal and not allowable as business expenses. These judgments underscored that such expenditures lack the necessary commercial expediency and direct business nexus.
6. Evaluation of Assessee's Arguments:
The Tribunal found that the assessee's arguments were general and lacked specific evidence to demonstrate that the expenditure was wholly and exclusively for business purposes. The Tribunal concluded that the acquisition of additional lands and premises by the partner did not justify the expenditure on foreign education, as such tasks could have been performed by any partner without foreign education.
7. Conclusion and Decision:
The Tribunal upheld the findings of the Commissioner of Income-tax (Appeals) and the Assessing Officer, concluding that the expenditure on foreign education of the partner was personal in nature and not allowable under section 37(1). The appeal of the assessee was dismissed.
Judgment:
The Tribunal dismissed the appeal of the assessee, affirming that the expenditure on foreign education of a partner is personal and not allowable as a business expenditure under section 37(1) of the Income-tax Act. The order was pronounced on November 30, 2009.
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2009 (11) TMI 689
Validity of Assessment order - survey proceedings - AO issued notice u/s 142(1) - parallel proceedings during the pendency of assessment proceedings - information gathered during the course of survey and post survey investigation, the AO issued notice u/s 148 which the assessee was required to file the return of income within 20 days from the date of service of the notice - HELD THAT:- Power Under Section 142 was given to the AO for the purpose of making an assessment under the Income Tax Act. Section 142(1) starts with the wording 'for the purpose of making an assessment' under the Act, the Assessing Officer may serve on any person who has made a return or in whose case the time allowed under Sub-section (1) of Section 139 for furnishing the return has expired'. Thus, the proceedings Under Section 142(1) were initiated for the purpose of making an assessment. There is nothing on record to suggest that proceedings so initiated through notice Under Section 142(1) were either dropped or concluded.
During the pendency of such proceedings, the AO has issued a notice Under Section 148. Before initiating proceedings Under Section 148, the AO has also issued a notice Under Section 142(1)(ii) vide which the AO called for certain details. Basically, such details can be asked only for the purpose of making an assessment. But the Assessing Officer cannot have jurisdiction Under Section 142(1) to call for the details unless the assessment proceedings or some other proceedings are pending. During the pendency of such assessment proceedings, the AO has initiated parallel proceedings Under Section 148 by issuing a notice Under Section 148.
In the notice, the AO has mentioned that he is proposing to assess the assessee and require the assessee to file the return. Hence, it is not a case of re-assessment but a case of assessment. This impliedly suggests that proceedings initiated Under Section 142 were not concluded before the proceedings Under Section 148 were initiated. Notice Under Section 148 can be issued for making an assessment, re-assessment or re-computation.
We are aware of the fact that in case the proceedings initiated Under Section 142 were dropped or concluded then it will mean the termination of the proceedings and the AO will assume jurisdiction Under Section 147 on the basis of information gathered during the course of survey. But no material was brought before us to say that the proceedings were dropped. Moreover, the survey has been conducted on 12th January, 2006. Notice Under Section 142(1) was issued on 18th October, 2006 i.e. after the date of survey. Hence, information gathered during the course of survey was available with the AO while issuing notice Under Section 142(1) on 18th October, 2006. Hence, after the survey, the assessment proceedings were still pending and during the pendency of such proceedings, the AO could not have issued the notice Under Section 148 of the IT Act.
Assessing Officer intended to complete the assessment with reference to notice issued Under Section 148 of the IT Act. Hence, we are not agreeable to the contention of learned AR that the order should be read as passed Under Section 144 of the IT Act. Once it is held that the AO was not competent to initiate the parallel proceedings Under Section 148 then the assessment order passed in pursuance to such notice is invalid in the eye of law.
Is that the AO has not issued a notice Under Section 143(2) after the assessee has filed the return? - return has been filed beyond the time limit prescribed Under Section 139(4) - Whether provisions of Section 139(4) can be imported into Section 148 to say that the return filed by the assessee beyond the period prescribed u/s 139(4) or beyond the period given by the AO vide notice u/s 148 is an invalid return? - HELD THAT:- The words used in Section 148 in respect of application of provisions of Section 139 is that "it shall apply so far as may be".
The meaning of the words "so far as" has been considered by the Hon'ble Supreme Court in the case of Land Acquisition Officer, CITB v. Narayanaiah K 2.[1976 (8) TMI 149 - SUPREME COURT] said that meaning of the words 'so far as they are applicable' used in Section 27 of the Bangalore Act, namely City of Bangalore Improvement Act, 1945, cannot be changed into 'in so far as they are specifically mentioned" with regard to the procedure in the Land Acquisition Act, 1894. These words bring in or making applicable, so far as this is reasonably possible, general provisions, such as, Section 23(1) of the Acquisition Act. They cannot be reasonably construed to exclude the application of any general provisions of the Acquisition Act.
Hence, we have to consider the applicability of 139 to the extent, as it is applicable. It does not mean that the provisions of Section 139 will be squarely applicable. The Legislature could have used the word that the provisions of Section 139 will be applicable, but they have used the word 'so far as' in that section. Section 234A(3) mentions that interest can be charged u/s 234A when the return is furnished after the expiry of the time provided in the notice. It will end on the date of furnishing of the return. This, therefore, squarely suggest that an assessee can file a return beyond the time prescribed in the notice issued u/s 148.
Section 144 can be invoked if the assessee fails to comply with all the terms of notice issued Under Section 142(1). In the instant case, the AO has mentioned that the assessee has filed certain information on various dates but failed to explain all the queries raised by the department. Hence, this is not a case where the assessee has failed to comply with all the terms of notice. The AO has considered the explanation given by the assessee. If an assessment is to be made u/s 143(3) then the AO can consider the evidence which has been filed by the assessee and may consider all relevant materials which he has gathered.
From the assessment order it is clear that the AO has completed the assessment u/s 143(3). This is also clear from MoU of the assessment order. Before us, the learned AR has not filed any rectificatory order to suggest that the AO has-treated the assessment made as made u/s 144. Hence, we cannot treat the assessment as an assessment made u/s 144.
Since the assessment has been made u/s 143(3) without issuing notice u/s 143(2) after the receipt of return in response to notice u/s 148, the assessment order is not valid on this ground.
Hence we hold that the assessment order is void ab initio and therefore is cancelled. Since we are cancelling the assessment order, therefore, we are not adjudicating the additions made by the AOr on merits.
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2009 (11) TMI 688
Validity of Order u/s 263 - show-cause notice without recording own satisfaction or reasons - HELD THAT:- In the instant case, the learned CIT nowhere recorded his satisfaction, rather the satisfaction was of the Income-tax Officer (Technical) who is not competent to revise the order u/s 263. Moreover, the show-cause notice has been issued by the Income-tax Officer (Technical) after considering the proposal of Joint CIT, which also establishes that without examining the assessment order passed by the AO u/s 143(3), the show-cause notice was issued. Furthermore, nothing was brought on record to substantiate that the order passed by the AO was erroneous or prejudicial to the interests of the Revenue.
We, therefore, considering the legal proposition, are of the view that the learned CIT neither applied his mind nor brought on record that the assessment order was erroneous or prejudicial to the interests of the Revenue.
Moreover, the show-cause notice u/s 263 has been issued by the Income-tax Officer (Technical) and not by the CIT after recording his satisfaction, therefore, the said order was void ab initio and deserves to be set aside. Appeal of assessee allowed.
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2009 (11) TMI 687
The assessee, a direct selling agent for HDFC Bank Ltd., was penalized for delay in paying Service tax on agency commission and incentives. The penalty was reduced by the Commissioner (Appeals). The Tribunal held the assessee liable for penalty but reduced it to Rs. 50,000. The penalty under Section 78 was set aside. Another appeal seeking enhancement of penalties was dismissed.
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2009 (11) TMI 686
Issues involved: Determination of liability for service tax on license fee collected from dealers u/s franchise services category.
Summary:
1. The appeals were filed against orders confirming demands of service tax and penalties on the appellant for collecting license fees from dealers. Show cause notices were issued based on the grounds that the license fee collected falls under the taxable category of 'franchise services'.
2. The appellant argued that the license fee is for the usage of infrastructure facilities provided at retail outlets, not for representational rights or display of trademarks. The relationship between the dealer and appellant is of Principal to Principal, not Principal and Agent.
3. The appellant presented arguments citing similar cases and decisions to support their position. The issue of limitation was also raised, questioning the clarity of classification/taxability by the Department.
4. The Commissioner waived the condition of pre-deposit in one appeal based on compliance with a stay order in a similar case. Both appeals were decided together as they involved the same issue.
5. The Commissioner found that the amounts received by the appellant from dealers were for the use of outfit and premises, not falling under the taxable category of 'franchise services'. The license fee was deemed as rent for the use of infrastructure facilities.
6. The Commissioner referred to relevant case law and upheld that the license fee collected did not have a connection with the goods sold, therefore not liable for service tax under 'franchise services'. The introduction of a new taxable category further supported the appellant's position.
7. Consequently, the orders confirming service tax demands and penalties were set aside, and both appeals were allowed in favor of the appellant.
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2009 (11) TMI 685
Issues:
1. Penalty imposed under Section 78 of the Finance Act, 1994
2. Application seeking rectification of apparent mistake in final order
3. Benefit of first proviso to Section 78 not given to the assessee
4. Claiming benefit of first proviso to Section 78
5. Dismissal of the assessee's application
6. Revenue's application regarding penalty-related issue
7. Majority decision on penalty-related issue
Analysis:
1. The judgment dealt with the penalty imposed on the assessee under Section 78 of the Finance Act, 1994. The regular Bench reduced the penalty to Rs. 50 lakhs from Rs. 10 crores imposed by the Commissioner. The Member (Technical) dissented, but the Third Member agreed with the reduction. The final order upheld the Rs. 10 crores penalty and remanded the case for recalculating Service tax. The assessee filed a Modification Application seeking the benefit of the first proviso to Section 78, claiming the penalty could not exceed 25% of the Service tax amount if paid within 30 days.
2. The assessee's Modification Application was dismissed as they never claimed the benefit of the first proviso to Section 78 before, nor pleaded essential facts necessary for such a claim. The Tribunal noted crucial facts were not part of the record during the final order. The assessee's argument citing certain decisions was rejected, as the High Court's judgment was not available during the appeal. The application was dismissed based on lack of evidence and failure to rectify any apparent mistake.
3. The Revenue's application also addressed the penalty issue, arguing against the Tribunal's decision while remanding the case. The application sought to modify the final order based on Section 78 of the Act. However, the Tribunal upheld the majority decision on the penalty issue, emphasizing that no mistake was pointed out regarding the applicability of Section 80. The Revenue's application lacked clarity on any mistake and was dismissed for lacking merit.
This detailed analysis covers the issues of penalty imposition, rectification applications, the first proviso to Section 78, and the Tribunal's decisions on the penalty-related matters, providing a comprehensive understanding of the judgment.
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2009 (11) TMI 684
Abatement claim - GTA service - denial of abatement on the ground that the facility of abatement was not available to them as they were discharging Service tax liability while the service was provided by the GTA - the adjudication orders, however, reject the claim for abatement on the ground that the conditions stipulated for seeking abatement are not fulfilled by the assessees - scope of SCN - Held that: - the ground on which the demands stand confirmed was not a ground in the show-cause notice, the demands cannot be sustained - appeal allowed - decided in favor of appellant.
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2009 (11) TMI 683
Issues Involved:
1. Classification of service rendered by the appellant.
2. Applicability of service tax on services rendered prior to 1-6-2007.
3. Validity of demand, interest, and penalties imposed by the Joint Commissioner.
4. Consideration of specific projects and their taxability.
5. Application of the extended period for the show cause notice.
6. Relevance of case laws cited by the appellant.
Detailed Analysis:
1. Classification of Service Rendered by the Appellant:
The appellant, a partnership firm engaged in construction activities, contended that their services fell under the "works contract" category, recognized by the department from 1-6-2007. They argued that prior to this date, their services should not be classified under "construction of commercial complex" or "construction of residential complex." The Joint Commissioner, however, determined that services rendered before 1-6-2007 were taxable under the pre-existing categories of construction services, as per sub-sections (25b) and (30a) of Section 65 of the Finance Act, 1994.
2. Applicability of Service Tax on Services Rendered Prior to 1-6-2007:
The appellant argued that since their services were recognized as "works contract" from 1-6-2007, they should not be retrospectively taxed under different categories for the period before this date. They cited case laws to support their claim that the introduction of a new service category implies that such services were not covered by previous entries. The Joint Commissioner, however, rejected this argument, stating that the services were already taxable under the construction service categories from 10-9-2004 and 16-6-2005.
3. Validity of Demand, Interest, and Penalties Imposed by the Joint Commissioner:
The Joint Commissioner confirmed the demand of Rs. 4392188/- plus Education Cess, along with interest and penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The appellant contested these penalties, arguing that their classification under "works contract" should exempt them from prior tax liabilities. The appellate authority, however, found that the demand, interest, and penalties were not sustainable once the service was recognized under "works contract" from 1-6-2007.
4. Consideration of Specific Projects and Their Taxability:
The appellant provided detailed submissions for various projects:
- Mega Plaza and Mega Hall: Claimed as marriage halls, not commercial complexes, and completed before the tax levy date.
- Strides Project: Mobilization advances should not be part of taxable turnover, and they were entitled to a 67% abatement.
- Agnes Holding Pvt. Ltd.: Construction of a compound wall, not taxable as a commercial complex.
- Mangalore Gate Projects: Incomplete residential complex, with steel and cement supplied free of cost.
- Plama Citi Homes: Residential complex completed before the tax levy date on 16-6-2005.
5. Application of the Extended Period for the Show Cause Notice:
The appellant argued that the extended period for the show cause notice was applied mechanically and was barred by time. The notice was issued on 24-9-2007 for the period from 10-9-2004 to 31-12-2006, which they contested as being beyond the permissible period.
6. Relevance of Case Laws Cited by the Appellant:
The appellant relied on several case laws, including Daelim Industrial Company Ltd. and Larsen & Toubro, arguing that works contracts cannot be retrospectively taxed under different categories. The Joint Commissioner dismissed these case laws, stating that service tax was already applicable to the services rendered before 1-6-2007.
Conclusion:
The appellate authority concluded that the appellant's services, recognized as "works contract" from 1-6-2007, could not be retrospectively taxed under different categories. The demand, interest, and penalties imposed by the Joint Commissioner were set aside. The appeal was allowed with consequential relief, if any.
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2009 (11) TMI 682
Issues involved: Undervaluation of goods due to non-inclusion of transportation charges in assessable value u/s Central Excise Act.
Issue 1: Undervaluation of goods
The Adjudicating Authority confirmed a demand and penalty due to alleged undervaluation by not including transportation charges in assessable value. The Tribunal previously remanded the matter for reconsideration based on Chartered Accountant's certificates. The Department argued the certificates lacked proper details. The Adjudicating Authority rejected the certificates, citing incomplete documentation and lack of supporting evidence. However, the Tribunal found discrepancies in the Authority's findings compared to the remand direction. As the appellant agreed to provide additional records, the matter was remanded again for a proper review, emphasizing a timely resolution.
In conclusion, the impugned order was set aside, and the appeal was allowed for remand to the original Adjudicating Authority.
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2009 (11) TMI 681
Refund claim - unjust enrichment - Held that: - the receipt of payment of value of the goods or the duty component is not a determining factor for deciding whether the duty burden has been passed on or not - appeal rejected - decided against appellant.
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2009 (11) TMI 680
CENVAT Credit Cenvat Credit (MODVAT) on Carbon copy of Challan / Invoice - Supreme Court dismissed appeal where High Court held that Moreover, laying down a blanket principle permitting Modvat credit on carbon copy may result into setting up of false claims. On such a principle the possibility of availing Modvat credit by many persons against one transaction would not be ruled out which will be highly damaging to the revenue.
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2009 (11) TMI 679
Whether the correctness and legality of the order of the Adjudicating Authority dated 30.3.2005 which had become the subject matter of an appeal before the Appellate Tribunal has to be examined under the provisions of the FERA or the FEMA?
Held that:- In the instant case the provisions of Section 52(2) read with the provisions of the FERA which is also a legislation dealing with economic offences, clearly stipulates that any person aggrieved by an order of the Adjudicating Authority may appeal to the Appellate Board within a period of 45 days; the Appellate Board may entertain the appeal after the expiry of 45 days but not beyond 90 days. This is the outer limit and a mandate. Application of Section 5 of the Limitation Act is excluded.
Under Section 52 of the FERA, it is clear that the outer limit for filing an appeal is 90 days; beyond the period of 90 days the Court has no power to condone the delay. The Appellate Tribunal on 26.3.2005, had rightly dismissed the appeal on this ground by invoking Section 52 (2) of the FERA holding that the delay of 118 days could not be condoned; the outer limit being 90 days. The said order calls for no interference.
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2009 (11) TMI 678
Issues:
1. Denial of copies of documents after inspection under RTI Act.
2. Providing copies of comments received from third-parties under Section 11(1) of the Act.
Analysis:
1. The appellant raised concerns regarding denial of copies of documents after inspection on 5-5-2009, as the respondents stated that a fresh RTI application was required for copies. The Commission found this position untenable, emphasizing that the RTI Act allows for inspection, taking notes, and obtaining copies of records. The Commission highlighted that these actions are not mutually exclusive, and applicants can be authorized to inspect and take copies in the same petition. Therefore, the Commission directed that the appellant should be allowed to take copies of the documents within two weeks of the order, upon payment of the requisite fees under the RTI Act.
2. The appellant also requested copies of comments received from third-parties under Section 11(1) of the Act. The respondents argued that there was no mandate to provide copies of references made to third-parties and their responses. The Commission noted that while Section 11(1) focuses on consulting third-parties confidentially, it emphasized the need for reasons to be furnished for denial of information under various sections, including Section 11(1). The Commission highlighted that decision-making under Section 11(1) should be supported by reasons, and both the appellant and third-party should be informed of the decision and the grounds for it. The Commission clarified that disclosure of third-party submissions to the CPIO is the norm, except in cases where it may harm or injure the third-party. Consequently, the Commission directed the disclosure of the requested information to the appellant within one week of the order.
In conclusion, the Commission disposed of the appeal by providing directions for allowing the appellant to take copies of documents inspected and disclosing the requested information from third-parties under Section 11(1). The Commission emphasized the importance of providing reasons for decisions under the RTI Act and ensuring transparency in the disclosure process. The parties were instructed to comply with the directions, and a copy of the order was to be sent to them for reference.
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2009 (11) TMI 676
Application for rectification of the earlier order – period of limitation of 6 months - alleged that Tribunal had erroneously assumed that the period of six months operates even for examining the rectification application, that it is within the inherent powers of the Tribunal to entertain an application for rectification – Held that:- In the case of Commissioner of Central Excise v. Hongo India (P) Ltd. (2009 (3) TMI 31 - SUPREME COURT ) wherein the Supreme Court had an occasion to make a distinction about the possibilities for entertaining applications/appeals beyond the normal period of limitation only when it is a limitation supported under the Limitation Act for which even Section 5 may also come into play but where the particular statutory enactment itself prescribes a precise period of limitation, it is not open to the Tribunal or court to go beyond that period as submitted and in the present case - against revenue.
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2009 (11) TMI 675
Demand of duty with interest and penalty - manufacture of coconut oil packed and sold in containers up to 200 ml – Held that:- Reading of Ext. P7(b) order indicates that coconut oil packed and sold in packages of capacity up to 500 ml is not liable to be charged with excise duty – in Raymon Glues & Chemicals (1999 (3) TMI 95 - HIGH COURT OF GUJARAT AT AHMEDABAD ) it was held that circulars and departmental clarifications issued by the department cannot operate when the field is occupied by a decision rendered by the Appellate Tribunal - respondents cannot take the stand that they are entitled to depart from the stand taken by the Tribunal in Ext. P7(b) order - petitioner cannot be called upon to pay excise duty on the goods manufactured by them falling within the ambit of Ex. P7(b) order
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2009 (11) TMI 674
Issues Involved:
1. Whether the premium paid on debt restructuring should be allowed as a revenue expenditure in its entirety in the assessment year 2004-05.
2. Whether the premium paid should be amortized over the period of benefit.
Issue 1: Allowance of Premium as Revenue Expenditure in Assessment Year 2004-05
The Department challenged the CIT(A)'s decision to allow the full premium amount of Rs. 3,80,56,306 as revenue expenditure for the assessment year 2004-05. The Department argued that the benefit from this payment extends over multiple years and should not be confined to the year 2004-05. The assessee, having taken loans at higher interest rates, negotiated with financial institutions to reduce the interest rate in exchange for a premium. The financial institutions agreed to reduce the interest rate to approximately 10% from the original 16% upon payment of the premium in the year under appeal. The assessee claimed the entire premium as a deduction in its return, although it had treated it as deferred revenue expenditure in its accounts, spreading it over ten years.
The Assessing Officer (AO) allowed only a proportionate amount of Rs. 39,60,745, arguing that the benefit of the premium payment extended over ten years and should be amortized accordingly. The CIT(A), however, allowed the entire premium as revenue expenditure, stating that it was not spent on establishing a new industry or expanding an existing business, thus qualifying as revenue expenditure under section 35D.
Issue 2: Amortization of Premium Over the Period of Benefit
The Department argued that the premium payment should be amortized over ten years, aligning with the period over which the benefit of reduced interest rates would be realized. The AO's decision to allow only a proportionate amount was based on the matching principle of accounting, which requires expenses to be matched with the revenues of the period to which they relate. The statutory auditors also treated the premium as deferred revenue expenditure, spreading it over ten years in the financial statements.
The Tribunal agreed with the Department, emphasizing that under the accrual basis of accounting, costs should be matched with revenues in the period they are incurred. The Tribunal referred to the matching principle and relevant judgments, including Taparia Tools Ltd. v. Jt. CIT [2003] 260 ITR 102 (Bom.) and Madras Industrial Investment Corpn. Ltd. v. CIT [1997] 225 ITR 802 (SC), which support the allocation of expenditure over the period of benefit. The Tribunal concluded that allowing the entire premium in one year would distort the profits of that year, and the expenditure should be spread over the ten-year period during which the benefit of reduced interest rates would accrue.
Conclusion:
The Tribunal reversed the CIT(A)'s decision and restored the AO's order, allowing the premium payment on a proportionate basis over ten years. The appeal filed by the Department was allowed, and the memorandum of cross-objections filed by the assessee was dismissed.
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9911796707
