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2001 (3) TMI 237
Rectification Of Mistake ... ... ... ... ..... h could be rectified by him by his subsequent order dated 25-5-1984 ? 2. The facts of the case are fully brought on record by the learned Accountant Member and the Judicial Member. The point of difference was whether the issue is debatable in view of the conflicting decisions of the jurisdictional High Court in the case of Hari Ram and of the Madras High Court in the case of V Devaki Ammal 3. At the hearing before me none appeared on behalf of the assessee. After hearing Shri Tarsem Lal, the learned Sr. D.R., I am of the view that this issue is finally settled by the Hon ble Supreme Court in Asstt. CED v. V. Devaki Ammal 1995 212 ITR 395. Since the Hon ble Supreme Court has reversed the decision of the Hon ble Madras High Court, there is no more debate and the view taken by the learned Accountant Member stands confirmed. Accordingly, I concur with the learned Accountant Member on this point. 4. The matter will now go back to the Division Bench for passing consequential order.
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2001 (3) TMI 236
Commissioner, Powers Of ... ... ... ... ..... Commissioner (Appeals) by the appellant. 7. The above specific provisions also fully cover the issue. The learned CIT(Appeals) in this case before reducing the deduction under section 35B of the Act gave proper hearing and opportunity to the assessee. Over and above the Explanation itself gave jurisdiction to the Appellate Authority to consider and decide any matter arising out of the proceedings in which the order a pealed against was passed notwithstanding that such matter was not raised before the Appellate Authority as the case may be. Since the matter regarding deduction under section 35B has been the subject-matter before the learned CIT(Appeals), he was fully justified in resorting to the provisions of section 154 for amending the mistake which is also a statutory mistake beyond doubt. There is, therefore, no infirmity in the order of the learned Accountant Member with which I concur. 8. The matter will now go back to the Division Bench for passing consequential order.
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2001 (3) TMI 235
Business Loss ... ... ... ... ..... s. In the meanwhile the assessee commuted and accepted a sum of Rs. 1,10,000 during the previous year relevant to the assessment year. In such a case also, the loss cannot be laid to arise during the year. Even if it is to be treated as normal business loss, it can only be considered at the end of the 10 year period when the final instalment is due. Even if it is admitted that the transaction is a normal business transaction, then the loss can only be considered on the basis of the terms of payment as per the Resolution of the Board and that will arise only at the end of the 10 years period. There is, therefore, no reason to allow the claim during the present assessment year. The learned Commissioner was fully justified in directing the Assessing Officer to disallow the claim of Rs. 90,000 by his order under section 263 of the Act. On these facts, I fully agree with the learned Accountant Member. 8. The matter will go back to the regular Bench for passing consequential order.
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2001 (3) TMI 234
... ... ... ... ..... those credits were set aside by the Tribunal. The learned Departmental Representative could not controvert the submissions made by the learned authorised representative of the assessee. He, however, submitted that the assessee has not shown any reason as to why the information now sought to be filed before the Tribunal could not be furnished before the AO at the time of assessment proceedings. After hearing the parties to the dispute, we find that in almost similar circumstances the Tribunal has set aside the issue to the file of the AO for fresh adjudication in the case of Gopichand Nebhumal and Co. sister concern of the assessee, in ITA No. 3933/Ahd/1992. Respectfully following the said decision of the Tribunal, we restore this issue also to the file of the AO for fresh adjudication in accordance with law. 7. In the result, the first three appeals, i.e., ITA Nos. 4502, 4503 and 4504/Ahd/1991 are allowed and ITA No. 3862/Ahd/1992 is partly allowed for statistical purposes.
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2001 (3) TMI 233
Issues Involved: 1. Additions on account of alleged "on money" paid for the purchase of shops. 2. Additions on account of low household expenditure. 3. Charging of interest u/s 139(8)/215.
Summary:
1. Additions on Account of Alleged "On Money" Paid for the Purchase of Shops: The main issue in ITA Nos. 4512, 4501, 4506, 4508, 4510, 4505, and 4513/Ahd/1991 revolves around the additions made by the AO due to alleged "on money" paid by the assessees for purchasing shops in JJ Air-conditioned Market, Surat from M/s JJ Corporation. The AO believed that the market price of these shops was higher than the recorded price, leading to additions based on presumed "on money" payments. The CIT(A) confirmed some additions and restored others for fresh adjudication. The Tribunal found that the AO did not provide sufficient evidence to prove that the assessees paid any "on money" and directed the deletion of these additions.
2. Additions on Account of Low Household Expenditure: In ITA Nos. 4505, 4513, 4500, 4509, and 4511/Ahd/1991, the AO made additions due to low household expenditure shown in the books, estimating higher expenses based on a seized milk bill and other factors. The CIT(A) provided partial relief by estimating the household expenses at Rs. 8,000 per month per family, resulting in an addition of Rs. 71,000 per assessee. The Tribunal found the AO's and CIT(A)'s estimates unsupported by evidence and reduced the addition to Rs. 20,000 per assessee.
3. Charging of Interest u/s 139(8)/215: The assessees challenged the charging of interest u/s 139(8)/215, arguing that no opportunity was given to them before levying the interest. The Tribunal admitted this additional ground, referencing the Hon'ble Supreme Court's decision in National Thermal Power Co. Ltd. vs. CIT and the Hon'ble Andhra Pradesh High Court's decision in Ambica Chemical Products vs. ITO. The Tribunal restored the issue to the AO for fresh adjudication, ensuring the assessees are given an opportunity to present their case.
Conclusion: The appeals were partly allowed, with directions to delete the additions related to "on money" and reduce the additions for household expenditure. The issue of interest u/s 139(8)/215 was remanded to the AO for fresh consideration.
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2001 (3) TMI 232
Alleged Bogus Purchases ... ... ... ... ..... and there is no material on record to show that price of goods was inflated. All these questions are required to be examined in accordance with law. Therefore, setting aside of penalty order is fully justified on facts and in the circumstances of the case. In the light of the above decision, I fully agree with the view of the learned A.M. His order of remand for reconsideration of issue is fully justified. The matter will now go to the regular Bench which heard the appeal for passing an order as per the majority view. T.N. CHOPRA, A.M. 29th March, 2001 In conformity with the opinion of the Hon ble Vice-President, dt. 17th Jan., 2001, we restore the matter relating to leviability or non-leviability of penalty in question to the file of the AO. He is directed to decide the matter afresh in the light of findings of fact given by the Tribunal in the quantum appeal of the assessee and in accordance with law. 2. In the result, assessee s appeal is allowed for statistical purposes.
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2001 (3) TMI 231
Failure To Get Accounts Audited ... ... ... ... ..... dabad Bench B of the Tribunal wherein it has been held that there is no justification for levy of penalty under s. 271B in the facts and circumstances of the case. The assessee could entertain bona fide belief that the turnover of dealing in shares made on behalf of various buyers and sellers of shares through the assessee in the capacity of sub-broker is not includible for determining the applicability of s. 44AB. Such bona fide belief was fortified by the fact that in several past assessments and the assessments for subsequent years, the AO himself has not initiated any penalty proceedings under s. 271B. Such bona fide belief constitutes a reasonable cause within the meaning of s. 273B which justifies the cancellation of penalty levied in the aforesaid facts and circumstances of the case. Accordingly, the AO was directed to cancel the penalty. Most respectfully following the same, we direct the AO to cancel the penalty under s. 271B. 4. In the result, the appeal is allowed.
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2001 (3) TMI 230
... ... ... ... ..... ating to registration of the firm and the finding of the Assessing Officer that the remaining partners were benamidars of Shri H.J. Patel. 2. As per order sheet entry dated 6-1-2000 signed by the Registrar, Income-tax Appellate Tribunal, it is revealed that the Hon ble President nominated Shri Vimal Gandhi, the Hon ble Vice-President as Third Member to hear and decide the aforesaid point. 3. The Hon ble Vice-President has expressed his opinion on the points of difference between the learned Brothers vide opinion dated 23rd February, 2001. The Hon ble Vice-President has held that the partnership firm has satisfied all the conditions of the partnership and requirements of getting registration under the Income-tax Act. The firm was held to be genuine firm and is entitled to grant of registration. The learned Vice-President agreed with the view expressed by the learned Accountant Member on the points of difference. 4. In the result, Revenue s appeal is treated as partly allowed.
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2001 (3) TMI 229
Issues Involved: 1. Deemed Dividend u/s 2(22)(a) 2. Accumulated Profits Calculation 3. Capital Gains Tax
Summary:
1. Deemed Dividend u/s 2(22)(a): The primary issue was whether the distribution of capital by Alkapuri Investment Pvt. Ltd. (AIPL) to its shareholders due to the reduction of share capital should be treated as deemed dividend u/s 2(22)(a). The Assessing Officer (AO) included the distributed amount as deemed dividend, but the CIT(A) held that in the absence of accumulated profits, no dividend could be deemed. The Tribunal upheld the CIT(A)'s decision, stating that the distribution of capital does not attract the provisions of section 2(22)(a) in the absence of accumulated profits.
2. Accumulated Profits Calculation: The calculation of accumulated profits was contentious. The AO included various reserves and current profits, while the CIT(A) excluded certain items, resulting in a negative accumulated profit figure. The Tribunal analyzed the nature of accumulated profits, emphasizing that they should be commercial profits, not merely assessable income. The Tribunal excluded capital reserves arising from amalgamations and mergers, as well as certain capital gains, from the accumulated profits. It also allowed deductions for tax liabilities, ultimately concluding that AIPL did not possess accumulated profits as defined u/s 2(22).
3. Capital Gains Tax: The issue of capital gains tax arose due to the reduction of share capital, which could be considered a transfer u/s 2(47). The CIT(A) ruled against the levy of capital gains without detailed reasoning. The Tribunal referred to Supreme Court decisions, noting that the reduction of share capital constitutes a transfer, potentially attracting capital gains tax. The Tribunal remanded the issue back to the AO for re-examination in light of these principles, directing a reassessment of the capital gains tax liability.
Conclusion: The Tribunal upheld the CIT(A)'s decision that no deemed dividend is includible due to the absence of accumulated profits. It directed the AO to re-examine the issue of capital gains tax on the reduction of share capital. The appeal of the revenue was partly allowed.
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2001 (3) TMI 228
Issues Involved: 1. Clearance from Committee on Disputes (COD) 2. Deduction of Know-how and Technical Fees as Revenue Expenditure 3. Nature of Rights Acquired under Foreign Collaboration Agreements 4. Allowability of Depreciation and Investment Allowance
Issue-wise Summary:
1. Clearance from Committee on Disputes (COD): The appellant, a Public Sector Undertaking, required clearance from the Committee on Disputes (COD) to pursue the appeal. The COD granted permission to contest the issue regarding the payment of know-how and technical fees for increasing production capacities and product range.
2. Deduction of Know-how and Technical Fees as Revenue Expenditure: The appellant claimed a deduction of Rs. 4,78,49,147 for know-how and technical fees paid during the assessment year 1984-85. The claim was based on the crystallization of legal position due to the insertion of section 35AB of the Income-tax Act. The appellant argued that the expenditure was for acquiring technology for new projects under implementation and should be considered as revenue expenditure, citing various judicial pronouncements.
3. Nature of Rights Acquired under Foreign Collaboration Agreements: The appellant contended that the agreements with M/s. Technomont, Italy, and Du Pont, USA, were for acquiring a license or right to use the know-how, not ownership rights. The agreements included clauses on confidentiality, termination, and assignment, indicating that the appellant acquired only the right to use the know-how. The appellant relied on several judgments to support the contention that such expenditure is revenue in nature.
4. Allowability of Depreciation and Investment Allowance: The appellant agreed to the withdrawal of depreciation and investment allowance granted in the year under consideration and subsequent years if the amount is allowed as revenue expenditure. The Tribunal directed the Assessing Officer to allow the deduction of Rs. 4,64,31,317 as revenue expenditure and simultaneously withdraw the depreciation and investment allowance granted on the said amount.
Conclusion: The Tribunal concluded that the lump sum payment made by the appellant for acquiring technical know-how for improving existing products and expanding the business is allowable as revenue expenditure. The Assessing Officer was directed to allow the deduction and withdraw the depreciation and investment allowance granted on the said amount.
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2001 (3) TMI 227
Income From House Property, Chargeable As ... ... ... ... ..... nt given to bank by the assessee was factually wrong. It is also not the case of the assessee that the stock register maintained by him was found to be correct on verification by the other authorities. Accordingly, we are of the view that lower authorities were justified in making/confirming the addition in principle. 10. However, we find merit in the alternate contention of the counsel for the assessee that only a peak amount should be assessed. It appears from the Annexure to the assessment order that the A.O. has added all the figures of difference relating to various months for making the addition. In our considered opinion, this approach is erroneous. It is only the peak amount which can be assessed. From the perusal of stock statement, we find that the peak amount is of Rs. 64,960 which would cover the entire difference. Accordingly, the order of CIT(A) is modified and the addition is restricted to Rs. 64,960. 11. In the result, appeal of the assessee is partly allowed.
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2001 (3) TMI 226
Cenvat/Modvat ... ... ... ... ..... n dispute that these balls are used in the process of manufacture of the final product. These are excluded from the purview of Modvat Credit on account of specific exclusion provided in the Rule itself. We do not find substance that these balls are parts of the plant as they are by themselves equipments capable of performing a complete function that is of removing fluorides which otherwise will poison the PACOL Platinum catalyst. The ratio of the decision in New Vikram Cements is not applicable as in that case the Tribunal came to the conclusion that grinding balls were neither apparatus, appliances nor parts of machine. 10. 8195 We, therefore, hold that Heat Transfer Oil, Caustic Soda Lye, Hydrochloric Acid, Cation and Anion Resins, Chlorine, Betz C-38, C41 and 2020 and Sulphuric Acid are inputs eligible for Modvat Credit under Rule 57A of the Central Excise Rules and that Modvat Credit is not available in respect of Ceramic Alumina Balls. The Appeal is thus partly allowed.
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2001 (3) TMI 225
Appeal - Limitation - Condonation of delay ... ... ... ... ..... in this time-limit. They have kept on taking adjournment from time to time before the Tribunal instead of approaching the concerned post office to get an endorsement. Ultimately, the post office have stated that the appellants have approached beyond the preservation period of documents and in the circumstances, they could not certify about its delivery. Appellants have by their conduct shown negligence both before the Tribunal as well as before the Commissioner inasmuch as they ought to have known from the Commissioner the result of their appeal after having argued the matter. The appellants have not proved that they have not received the cover despatched by the department. The latch is clear on record which does not call for taking a lenient view for condoning the delay. The reason given is not sufficient. As such, the COD application is rejected. In view of rejection of the application on limitation, the appeal along with the stay application gets dismissed as time-barred.
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2001 (3) TMI 222
Modvat/Cenvat ... ... ... ... ..... ed goods. This appeal is against the impugned order of the Commissioner, New Delhi. 2. I have heard Shri Rajesh Chhibber, ld. Advocate for the appellants and Shri H.C. Verma, ld. JDR for the respondents. The ld. Counsel for the appellants is relying on the decision of CEGAT in the case of M/s. Inalsa India Limited v. CCE - 1997 (90) E.L.T. 417 (T) and another decision of the Tribunal in the case of M/s. Havells Industries v. CCE - 2000 (36) RLT 798 (T) in which it is held that the manufacturer cannot be asked to reverse the Modvat credit in respect of the finished goods in respect of which the Central Excise duty is remitted. I find force in these submissions. In the Board s Circular No. 66/88-CX., dt. 6-9-1988 similar instructions are issued. I, therefore, allow the appeal and hold that the appellants are not required to reverse the Modvat credit in respect of the finished goods which have been allowed to be destroyed by the Commissioner on remission of Central Excise duty.
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2001 (3) TMI 219
Manufacture - Yarn ... ... ... ... ..... n CCE v. Banswara Syntex Ltd. - 1996 (88) E.L.T. 645, the Supreme Court has held that doubling or multifolding of yarn does not result in the emergence of a new commodity, and that the yarn continues to be yarn. The departmental representative has no answer. During the relevant period, there was no deeming provision in the tariff to deem such doubling or multifolding to be manufacture. 3. Accordingly we hold that these processes do not amount to manufacture. Hence duty was not payable, or penalty imposable, or the goods or plant and machinery liable to confiscation. 4. Appeal allowed. Impugned order set aside.
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2001 (3) TMI 216
Issues involved: Liability to Central Excise duty, penalty under Section 11AC, interest demand under Section 11AB, invocation of Rule 173Q of Central Excise Rules.
Liability to Central Excise duty: The appellants, manufacturers of Mazza, became liable to Central Excise duty from 14-5-97 under the Finance Act but started payment only from 6-6-97, resulting in non-payment for clearances between 14-5-97 to 5-6-97. A penalty equivalent to the unpaid duty was imposed under Section 11AC, along with an interest demand at 18% under Section 11AB.
Penalty under Section 11AC and interest demand under Section 11AB: The appellant contended that penalty and interest were wrongly imposed as they had paid the unpaid duty before the show cause notice was issued. The appellant argued that Sections 11AC and 11AB apply in cases of short levy due to fraud or suppression, which were not alleged or proven in this case. The Tribunal agreed, noting that both sections require a demand for evaded duty, which was not the case here as duty was paid before any demand was raised.
Invocation of Rule 173Q of Central Excise Rules: The Department argued that penalty was justified as the appellants intentionally evaded duty by not paying for clearances between 14-5-97 to 5-6-97 until 13-11-97. They also invoked Rule 173Q for penalty imposition. However, the Tribunal held that penalty under Section 11AC was sufficient and that invoking other provisions simultaneously did not change the penalty's nature.
Conclusion: The Tribunal found that the penalty and interest demanded were not legally justified as duty was paid before any demand was raised, rendering Sections 11AC and 11AB inapplicable. The penalty imposed and interest demanded were set aside with consequential relief to the appellant.
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2001 (3) TMI 214
Confiscation, fine and penalty (Customs) ... ... ... ... ..... We find that no fine can be imposed without declaring the Market Price by the adjudicator. Fine imposed is therefore not upheld. (h) We find that admittedly the importers are a well known Actual user of the parts, under imports, are regular importers of the same. We would instead follow the decision in the case of Indian Sugar and General Egg Co. - 1995 (77) E.L.T. 907 (Tribunal) wherein considering the imports to be Actual Users the penalty of Rs. 1 lakh imposed was set aside even though a licence offence was established by the Tribunal, however, the order of confiscation on merits, of goods valued at 15.77 lacs was sustained. We find that in this case, there are no reason for ordering a penalty under Section 112(a) on the importers, keeping in mind the Actual User Status and the fact that there was no Licence issue involved for imports made in this case after the Licensing authority regularising the same. 6.In view of our findings, we set aside the order, allow the appeal.
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2001 (3) TMI 212
Rectification of mistake ... ... ... ... ..... 35B of the Act declining to admit the appeal of the assessee. The provisions of Section 35C(2) of the Act will not apply to such an order. 2. The application is dismissed.
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2001 (3) TMI 211
... ... ... ... ..... ection 112 (a) would not be sustainable inasmuch as any such findings would be beyond the scope of the show cause notice. The order of the lower appellate authority upholding such penalties also, therefore, cannot be sustained. Moreover, it is an admitted fact that the impugned goods are subject matter of provisional assessment and that such provisional assessment is yet to be finalised. This position is evident from the operative part of the order of adjudication in this case. Without a finalisation of assessment, there was no warrant for any penal action against the importer or their employees as proposed in the show cause notice. 7. In view of our findings recorded above, we are unable to sustain the orders passed by the lower authorities. We set aside both the orders and allow the present appeals. It is upto the Customs authorities to finalise the assessment first and then proceed against the appellants in accordance with law as well as the principles of natural justice.
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2001 (3) TMI 210
Issues Involved: 1. Clubbing of clearances of different units. 2. Seizure of goods and imposition of penalties. 3. Entitlement to SSI exemption Notification No. 1/93-C.E.
Summary:
Clubbing of Clearances: The appellants were engaged in the manufacture of oil expellers and parts without Central Excise registration and were availing SSI exemption Notification No. 1/93-C.E. illegally. The Preventive Party discovered that the manufacturing activities were carried out in a common premises with shared resources and common office. The partners in all units were inter se blood relations and virtually belonged to one family. The Deputy Commissioner confirmed the demand of Rs. 5,45,054/- for the period February 1997 to March 1998 and imposed penalties. The Commissioner (Appeals) upheld this order. The Tribunal found that the units were not independent and had common manufacturing activities, thus justifying the clubbing of clearances.
Seizure of Goods and Imposition of Penalties: During a visit on 16-1-1997, unaccounted goods valued at Rs. 6,37,268.00 involving Central Excise duty of Rs. 95,590.00 were seized. The goods were provisionally released on a bank guarantee of Rs. 1,60,000/-. The Deputy Commissioner ordered confiscation of the goods with an option to redeem on payment of Rs. 1,60,000/- and imposed penalties of Rs. 50,000/- on each appellant u/r 173-Q. The Commissioner (Appeals) affirmed this order. The Tribunal upheld the seizure and penalties, noting that the appellants had common manufacturing premises and activities, and the seizure was justified under the law.
Entitlement to SSI Exemption Notification No. 1/93-C.E.: The appellants argued that their units were separately located, had different partners, and were independently registered. However, the Tribunal found that the separate registrations were a facade to evade Central Excise duty. The units were not independent as they shared manufacturing activities, premises, and resources. The Tribunal concluded that the appellants were not entitled to the SSI exemption as they did not operate as independent units.
Conclusion: The Tribunal upheld the orders of the Commissioner (Appeals), confirming the clubbing of clearances, seizure of goods, and imposition of penalties. All six appeals were dismissed as being without merit.
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