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2009 (7) TMI 937
The Appellate Tribunal CESTAT, New Delhi heard a case regarding a company with sugar, chemical, and paper divisions. Molasses cleared from the sugar division were used by the chemical division, with duty paid by the sugar division taken as credit. The Tribunal found the company entitled to Cenvat credit, waiving the pre-deposit of dues and staying recovery until appeal disposal.
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2009 (7) TMI 936
Issues: Claim for refund of duty; Rejection by lower appellate authority; Applicability of certain judgments; Arithmetical error in assessment; Entitlement to refund without appeal against assessment; Interpretation of appeal provisions under Section 35 of Central Excise Act.
Analysis:
1. Claim for Refund of Duty and Rejection by Lower Appellate Authority:
The appellant filed a claim for refund of duty amounting to Rs. 41,457, which was rejected by the lower appellate authority. The rejection was based on the ground that the assessment on which the duty was paid was not challenged by the assessee. The authority also referred to supplementary instructions in the CBEC's excise manual and relied on judgments such as CCE v. Flock (India) P. Ltd. and Priya Blue Industries Ltd. The appellant's counsel argued that the duty was paid due to an arithmetical error in the Cenvat account, citing support from the High Court's decision in Central Office Mewar Palace Org. The ld. SDR defended the order by referring to the Tribunal's Larger Bench decision in CCE v. Eurotex Indus. and Exports Ltd.
2. Arithmetical Error in Assessment and Refund Claim:
Upon examination, it was found that there was an arithmetical mistake in totaling the assessable value for a specific month, resulting in duty being paid on an erroneous total assessable value of Rs. 72,82,301. Subsequent reconciliation revealed that the actual total assessable value was Rs. 70,30,727. The refund claim was based on this corrected value, indicating an overpayment due to the error in assessment.
3. Entitlement to Refund Without Appeal Against Assessment:
The lower appellate authority contended that without an appeal against the assessment, the assessee was not entitled to a refund. However, it was argued that the concept of "assessment" includes "self-assessment" as per certain supplementary instructions, but this interpretation may not apply to appeals under Section 35 of the Central Excise Act. The provision for appeal under Section 35 is specifically against orders passed by Central Excise officers, and the authority's view on the need for an appeal against self-assessment was considered flawed. Consequently, a stay of recovery was granted in this case.
This detailed analysis of the judgment highlights the key issues surrounding the claim for refund, the error in assessment leading to overpayment, and the interpretation of appeal provisions under the Central Excise Act, providing a comprehensive understanding of the legal reasoning and decisions involved in the case.
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2009 (7) TMI 935
Issues Involved:
1. Liability of the appellant to pay excise duty.
2. Invocation of the extended period of limitation.
3. Financial hardship as a ground for waiver of pre-deposit.
4. Calculation errors in the duty amount.
Issue-wise Detailed Analysis:
1. Liability of the appellant to pay excise duty:
The appellants contested the excise duty demand of Rs. 61,22,732/- on the grounds that they were not the manufacturers but merely supplied raw materials to M/s. Tristar Beverages Pvt. Ltd., who were the actual manufacturers. They argued that the agreement dated 7-12-04 between the appellant and Tristar Beverages clearly indicated that the manufacturing process was controlled by Tristar Beverages. The appellants claimed they were merely marketing the product and assisting in procurement of raw materials, not manufacturing it. The adjudicating authority, however, found that the appellants had pervasive control over the production process, including specifications, raw material supply, and packing, which made them the actual manufacturers as per the Central Excise Act, 1944. The Tribunal upheld this finding, referencing the Apex Court's decision in Ujagar Prints Textile v. UOI, which clarified that excise duty is imposed on the production or manufacture of goods, independent of ownership.
2. Invocation of the extended period of limitation:
The appellants argued that there was no justification for invoking the extended period of limitation as there was no suppression of facts. They contended they were not obligated to submit ER 1 returns since they were not the manufacturers. The Tribunal, however, found that the appellants were indeed the manufacturers and thus were required to disclose the manufacturing activities. The Tribunal rejected the appellants' reliance on the decision in Gufic Pharma v. CCE, stating that the principle of non-disclosure not amounting to suppression did not apply in this case.
3. Financial hardship as a ground for waiver of pre-deposit:
The appellants claimed that they suffered heavy financial losses during the financial year 2008-09, and insisted that depositing the demanded duty would cause undue financial hardship. The Tribunal noted that financial losses alone do not justify waiving the requirement of pre-deposit, as established in settled law. Therefore, the claim of financial hardship was not accepted as a valid ground for waiver.
4. Calculation errors in the duty amount:
The appellants pointed out that there was an error in the calculation of the duty amount by the adjudicating authority. They argued that the demand was incorrectly raised on the entire job charges, which included conversion of inputs into fruit drinks and packing charges, instead of being limited to the manufacture of bottles. The Tribunal acknowledged the potential error but noted that the appellants had not presented any specific calculation to the lower authorities. Despite this, the Tribunal found merit in the contention and decided to direct the appellants to deposit a reduced amount of Rs. 25 lakhs, waiving the rest of the demand and penalty during the pendency of the appeal.
Conclusion:
The Tribunal directed the appellants to deposit Rs. 25 lakhs within eight weeks and waived the remaining duty and penalty demands during the appeal's pendency. The matter was scheduled for a compliance report on 18-9-2009.
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2009 (7) TMI 934
Issues:
1. Whether the applicant is eligible for Cenvat credit by debiting DEPB scrips as duty paid.
2. Whether the demand raised by the customs authorities is time-barred.
Analysis:
1. The applicant purchased DEPB scrips and used them to avail exemption from payment of CVD, debiting the scrips as duty paid and taking credit of CVD. However, a show cause notice was issued challenging this practice. The applicant argued that they believed in good faith that using DEPB credit for CVD payment was permissible, citing Tribunal decisions from 2002 and 2003. The Commissioner (Appeals) upheld the demand, but the Tribunal noted that the applicant's action was bona fide. Despite the unfavorable decision on merits, considering the prevailing Tribunal decisions at the time and the time lapse between the audit in 2003 and the show cause notice in 2007, the Tribunal found the demand potentially time-barred. Consequently, the Tribunal waived the pre-deposit of dues and stayed the recovery pending appeal.
2. The Tribunal acknowledged that the applicant's Cenvat credit claim was ultimately unsuccessful on merits. However, the Tribunal found that the demand raised in 2007 may be time-barred due to the audit conducted in 2003 and the delay in issuing the show cause notice. The Tribunal considered the timing of events and the prevailing legal interpretations during the relevant period. Despite the unfavorable decision on the substantive issue, the Tribunal granted relief to the applicant based on the potential time bar, allowing a waiver of the dues and staying the recovery pending the appeal's disposal.
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2009 (7) TMI 933
Issues:
1. Application for restoration dismissed due to delay.
2. Lack of explanation for delay in approaching the Tribunal.
3. Grounds for filing restoration application.
4. Lack of disclosure regarding advocate's failure to appear.
5. Verification of facts in the application.
6. Exercise of discretion in condoning delay.
7. Advocate withdrawing appearance and subsequent application.
Analysis:
The judgment involves the dismissal of a restoration application due to a delay beyond the prescribed limitation period. The advocate for the appellant acknowledged the limitation period but failed to provide any separate application for condonation of delay or offer an explanation for the delay in approaching the Tribunal. The sole ground disclosed for the restoration application was the advocate's inadvertent failure to notice and appear before the Tribunal on the relevant date, leading to the matter being unattended. However, the application did not provide details about the advocate's identity or the basis for the contention of the advocate's failure.
The Tribunal emphasized the importance of justifying any delay in approaching the Court or Tribunal within the prescribed time frame. It highlighted the need for parties to disclose facts that would warrant condonation of delay, as it involves taking away accrued rights from the opposite party. The discretion to condone delay must be exercised judiciously based on materials on record that justify the delay. In this case, the Tribunal found insufficient justification for condoning the delay in filing the restoration application.
Furthermore, the application lacked proper verification of facts, as it failed to disclose the source of information regarding the advocate's failure to appear. The Tribunal stressed the importance of verifying facts received from others and the need for necessary corroboration to accept such information as true. Additionally, records revealed that the advocate in question had already withdrawn appearance, indicating discrepancies in the application and raising doubts about the validity of the grounds presented.
Ultimately, the Tribunal dismissed the restoration application, citing the lack of a compelling case for entertaining the application and condoning the delay. The judgment underscores the significance of adhering to prescribed timelines, providing adequate justifications for delays, and ensuring the veracity of information presented in legal applications to uphold the integrity of the judicial process.
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2009 (7) TMI 932
The Appellate Tribunal CESTAT, New Delhi, in appeal nos. E/5955 of 2004 and E/5954 of 2004, refused to admit the appeals regarding disputed refund amounts of Rs. 6,136.89 and Rs. 3,197/- respectively. The appeals were found inadmissible as they did not involve any valuation or duty rate issues. The appeals were rejected.
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2009 (7) TMI 931
Issues Involved: Compliance with Stay Order regarding payment of duty and penalty from CENVAT account.
Detailed Analysis:
1. Issue of Compliance with Stay Order: The Applicants had filed an Application for waiver of pre-deposit of duty and penalty along with their Appeals before Commissioner (Appeals). The Commissioner (Appeals) directed the Applicants to deposit a part of the duty amount for the hearing of the Appeal, which the Applicants paid from their CENVAT account. However, the Commissioner (Appeals) held that the Applicants should have paid the amounts in cash as per the Stay Order and dismissed the Appeals for non-compliance with the provisions of Section 35F of the Central Excise Act.
2. Legal Precedents: The issue of whether compliance with the Stay Order can be achieved by paying the amounts from the CENVAT account had been settled previously. The judgment referred to the decision of the Hon'ble Allahabad High Court in the case of India Casting Co. v. CESTAT, where compliance was accepted when the amount was deposited from the CENVAT account. Additionally, the Tribunal's decision in the case of Birla Yamaha v. Collr. also supported this view. The impugned order relied on a different Tribunal decision where the issue was not about the amount of pre-deposit paid from the credit account.
3. Decision and Remand: In light of the precedents set by the Hon'ble Allahabad High Court and the Tribunal, it was concluded that the amount deposited by the Applicants from the CENVAT account did comply with the conditions of the Stay Order. Consequently, the impugned orders were set aside, and the matter was remanded to the Commissioner (Appeals) to decide the Appeals on their merits after providing the Appellants with an opportunity for a hearing. The Appeals were allowed by way of remand, ensuring that the Applicants' compliance with the Stay Order was deemed satisfactory.
This detailed analysis of the judgment highlights the key issues surrounding compliance with the Stay Order and the legal precedents that guided the decision to set aside the impugned orders and remand the matter for further consideration by the Commissioner (Appeals).
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2009 (7) TMI 930
Issues:
Interpretation of Rule 6(3)(b) of Cenvat Credit Rules regarding payment for iron ore fine considered as excisable goods produced but exempted, and imposition of penalty for not maintaining separate accounts for dutiable and exempted goods.
Analysis:
The judgment dealt with the issue of whether iron ore fine, obtained from duty-free iron ore during the manufacture of sponge iron, should be considered excisable goods produced but exempted under Rule 6(3)(b) of Cenvat Credit Rules. The authorities had required the appellant to pay 10% of the sale price of iron ore fine and imposed a penalty for not maintaining separate accounts for common inputs used for dutiable and exempted goods. The appellant argued that iron ore fine should not be treated as manufactured out of iron ore and, therefore, should not be considered excisable. The appellant also contended that Rule 6(3)(b) should not apply to the clearance of iron ore fine. The appellant had already deposited a sum of Rs. 5 lakhs as per the order under Section 35F before the Commissioner (Appeals) and argued against the imposition of penalty under Section 11AC since iron ore fine was deemed an exempted product by the Department.
The Tribunal, after considering both parties' submissions, prima facie agreed with the appellant's position that iron ore fine should not be treated as a separate product from iron ore, thus warranting a waiver of dues as per the impugned order. The Tribunal noted that the appellant had already deposited Rs. 5 lakhs in compliance with the Commissioner (Appeals)'s order. Consequently, the Tribunal decided to waive the pre-deposit of the balance amount of duty, penalty, and interest until the appeal's final disposal. The stay petition was disposed of accordingly, granting relief to the appellant regarding the payment and penalty issues related to the iron ore fine.
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2009 (7) TMI 929
The Appellate Tribunal CESTAT, DELHI, consisting of Justice R.M.S. Khandeparkar and Shri M. Veeraiyan, heard an appeal by the Department against an order by the Commissioner (Appeals) No. 302-CE/APPL/NOIDA/04 dated 30-9-04. During November and December 2001, the respondent failed to pay duty by the due date, paying it later with interest. The Commissioner (Appeals) dropped the demand for duty but imposed a penalty of Rs. 2 lakhs for defaulting fortnightly payments. The Department sought confirmation of duty and penalty, but the Tribunal found that the party had paid the full duty amount with interest, and upheld the decision not to demand further duty. The Tribunal rejected the Department's appeal, stating that the penalty imposed was justified given the circumstances. The penalty was not enhanced as the default was rectified with interest. The appeal was dismissed by the Tribunal.
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2009 (7) TMI 928
Issues: Jurisdiction of lower appellate authority post-amendment in Section 35A of the Central Excise Act, 1944.
Upon hearing the learned Advocate for the appellant and learned DR for the respondent, it is observed that the impugned order is challenged primarily on the ground of failure of the lower appellate authority to consider the fact that it lacks jurisdiction to remand the matter post-amendment in Section 35A of the Central Excise Act, 1944. The provision of law under sub-section (3) of Section 35A clearly states that the Commissioner (Appeals) is required to pass an appropriate order confirming, modifying, or annulling the decision or order, without the power of remand. The impugned order, passed after the 2001 amendment, remanding the matter is deemed unsustainable. Therefore, the matters are to be sent back to the Commissioner (Appeals) for proper adjudication in accordance with the law.
It has been brought to light that the Additional Commissioner has proceeded to quantify the duty liability based on the direction in the impugned order. However, since the orders passed by the Commissioner (Appeals) are considered to be without jurisdiction, any actions taken by the Additional Commissioner pursuant to the impugned order would lack legal enforceability. Consequently, the appeals succeed on the limited ground, and the impugned orders are set aside without delving into the merits of the case. The matters are remanded to the Commissioner (Appeals) for further proceedings in compliance with the provisions of law under Section 35A(3) of the Central Excise Act, 1944.
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2009 (7) TMI 927
Issues:
1. Rejection of remission of duty application
2. Destruction of goods due to fire in the factory
3. Controversy regarding negligence leading to the fire
4. Interpretation of duty liability for goods in the process of manufacture
5. Grant of stay on the impugned demand
Analysis:
1. The appellate tribunal, in the present case, dealt with the rejection of the remission of duty application amounting to Rs. 1,37,29,232/- against the appellant. The tribunal directed the appellant to pay the said amount along with interest and an equal penalty, as per the impugned order.
2. The undisputed facts revealed that goods produced by the appellant, including menthol powder and de-menthol, were destroyed due to a fire in the factory. The controversy arose regarding whether the fire resulted from negligence on the part of the appellant. It was noted that insurance was claimed and cleared by the insurance company following the mishap.
3. The appellant contended that the goods were in the process of manufacture and had not reached the stage of being marketable, thus absolving them of duty liability. However, the authority rejected this argument, citing relevant provisions from the Central Excise Tariff Act. The tribunal observed that the order did not address whether the goods had reached a marketable stage, raising a prima facie case for granting a stay on the demand.
4. Considering that the goods were already destroyed and the main issue of marketability was not conclusively addressed, the tribunal found no prejudice to the Revenue's interest. Imposing the duty demand would result in an unwarranted financial burden on the appellant. Consequently, the tribunal allowed the application for a stay, waiving the demanded amount until the appeal's disposal.
5. In conclusion, the tribunal granted a stay on the impugned demand, allowing the appeal to be listed for further hearings. The stay application was disposed of accordingly, providing temporary relief to the appellant pending the appeal's resolution.
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2009 (7) TMI 926
Issues involved:
Rectification of mistake in the order of the Tribunal regarding enforcement of bond without relevant details and duty liability under Notification No. 33/90.
Analysis:
The judgment involves an application for the rectification of a mistake in the order of the Tribunal related to two appeals. The first appeal concerns the enforcement of a bond without providing relevant details and an opportunity to defend the case. The second appeal pertains to the duty liability arising under Notification No. 33/90, as the appellants obtained excisable goods without paying duty and failed to account for them. The Tribunal initially held that duty was not demandable under Rule 9(2) since the appellant was not a manufacturer. However, it ordered the enforcement of the bond in accordance with the law. The appellant argued that the lower authorities' appropriation of the amount due from the refund sanctioned to them was invalid. The Tribunal did not make any observations regarding the second appeal.
The learned advocate representing the appellant contended that the Tribunal's decision necessitates the adjudicating authority to provide details of the bonds enforced and allow the appellant an opportunity to respond before deciding on the enforcement of the bond. Consequently, the order for appropriation of the refund amount towards the enforcement of the bond was set aside, and the original adjudicating authority was directed to reconsider the issue of appropriation afresh. The Tribunal agreed with the advocate's submission and modified the order by adding a specific paragraph to address the issue raised by the appellant.
In conclusion, the judgment highlights the importance of providing relevant details and opportunities for defense in cases involving enforcement of bonds and duty liabilities. It underscores the need for a fair and transparent process in determining the appropriation of amounts due from refunds, emphasizing the rights of appellants to a proper hearing and decision-making process by the adjudicating authorities.
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2009 (7) TMI 925
Issues:
1. Modification of the Tribunal's order dated 4-2-2008 in Excise Appeal No. 2416/07.
2. Time limitation for filing an application seeking modification.
3. Condonation of delay in filing the application.
4. Grounds justifying interference in the Tribunal's order.
5. Authority to rectify errors in the order.
6. Approach to the High Court and its outcome.
Analysis:
1. Modification of Tribunal's Order:
The applicant sought modification of the order dated 4-2-2008 passed by the Tribunal in Excise Appeal No. 2416/07. The contention was regarding the recording in the order that "moulds and dies were received back in the factory and respondents availed the credit within six months from the date of payment of duty."
2. Time Limitation for Filing Application:
The appellant argued that there was no specific period prescribed for availing the credit and it should have been taken within a reasonable time, not necessarily within six months. However, the application for modification was filed on 15-5-2009, beyond the six-month limit for filing such applications.
3. Condonation of Delay:
There was no application for condonation of delay filed by the appellant. The Tribunal emphasized that the statutory period for initiating action cannot be extended, and the discretionary power to condone delay lies with the Tribunal. The application filed beyond the limitation period was considered barred by law.
4. Grounds for Interference in Tribunal's Order:
The Tribunal stated that the grounds disclosed for modification of the order were not sufficient to justify interference. It was noted that if there was a mistake in the order, the appellate authority could rectify it based on the assessment of materials on record. The Tribunal clarified that modification could only be made in case of an error apparent from the record.
5. Authority to Rectify Errors:
The Tribunal highlighted that errors apparent from the record could be subject to modification by the appellate authority. In this case, since there was no such error apparent from the record, the question of modifying the order did not arise.
6. Approach to the High Court:
The applicant had approached the High Court of Punjab and Haryana against the impugned order but was unsuccessful. The Tribunal expressed surprise at the discrepancy between the grounds presented before the High Court and those stated in the application for modification. The Tribunal found no merit in the case for modifying the order and subsequently dismissed the application.
In conclusion, the Tribunal dismissed the application for modification of the order dated 4-2-2008, emphasizing the importance of adhering to statutory time limits and the need for sufficient grounds to justify interference in the Tribunal's orders.
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2009 (7) TMI 924
Issues:
1. Denial of information under RTI Act
2. Application of Section 24(1) of the RTI Act
3. Allegations of collusion among officers
4. Conduct of the Appellate Authority
5. Request for penalty and disciplinary action
Analysis:
1. The appellant filed an RTI application seeking information related to the withdrawal of an appeal before the Delhi High Court. The CPIO denied the information, stating it was beyond the scope of Section 2(f) of the RTI Act. The Appellate Authority upheld this decision, citing Section 8(1)(e) and Section 24(1) of the RTI Act. The Central Information Commission (CIC) found these decisions flawed, emphasizing that the queries were specific and fell within the Act's provisions. The CIC directed the CPIO to provide the requested information and allow the appellant to inspect relevant records.
2. The Appellate Authority applied Section 24(1) of the RTI Act to withhold information originating from the Directorate of Revenue Intelligence (DRI). The CIC criticized this decision, noting that the Appellate Authority should have consulted the DRI before denying the information. The CIC found the application of Section 24(1) unwarranted in this case and directed the CPIO to provide the requested information without such restrictions.
3. The appellant raised concerns about collusion between certain officers and a third party, leading to the withdrawal of the appeal. The CIC acknowledged the appellant's suspicions and emphasized the public interest in understanding the decision-making process that affects revenue and public integrity. The CIC highlighted the importance of transparency and ordered the disclosure of information related to the case.
4. The CIC criticized the Appellate Authority's conduct, particularly the unnecessary remarks made in the order. The CIC emphasized the need for impartial and professional behavior from statutory authorities under the RTI Act. The CIC directed the CPIO to provide the information promptly and ensure the appellant's right to access records and documents.
5. The appellant requested penalties and disciplinary actions against the CPIO and the Appellate Authority. After reviewing the case, the CIC decided not to initiate specific proceedings but advised both officials to handle RTI applications impartially and in compliance with the RTI Act. The CIC closed the complaint at its level and emphasized the importance of adherence to the Act's provisions in dealing with information requests.
By addressing the issues raised in the judgment, the CIC affirmed the importance of transparency, public interest, and adherence to the RTI Act's provisions in handling information requests and disciplinary matters.
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2009 (7) TMI 923
Issues Involved:
1. Deduction under Section 80HHE of the Income-tax Act.
2. Exclusion of certain receipts from Export turnover.
3. Definition and applicability of "computer software" under Section 80HHE.
4. Eligibility of projects for relief under Section 80HHE.
5. Estimation of expenditure for earning dividend income under Section 80M of the Income-tax Act.
Issue-wise Detailed Analysis:
1. Deduction under Section 80HHE of the Income-tax Act:
The assessee claimed a deduction of Rs. 8,73,88,358 under section 80HHE in the Return of Income. The Assessing Officer reduced the allowable deduction to Rs. 5,33,997 by adjusting the export turnover from Rs. 42,10,00,414 to Rs. 25,81,65,326. The adjustments involved excluding receipts related to maintenance/support charges, consultancy charges, and receipts from CPC India. The Assessing Officer reasoned that these receipts were not covered under Section 80HHE as they were related to software changes and services utilized in India.
2. Exclusion of Certain Receipts from Export Turnover:
The CIT(A) sustained the exclusion of Rs. 4,47,37,074 (maintenance/support charges), Rs. 1,65,64,862 (consultancy charges), and Rs. 81,91,691 (CPC India receipts) from the export turnover. The CIT(A) grouped the receipts into two types: those related to released new software versions and maintenance charges for the year of release, and those unrelated to released software versions. The CIT(A) held that only the former category was eligible for deduction under Section 80HHE.
3. Definition and Applicability of "Computer Software" under Section 80HHE:
The CIT(A) analyzed the concept of "development of software" and rejected the claim that development is a continuous process. The CIT(A) held that only receipts related to released new software versions and maintenance charges for the year of release qualified for deduction. The assessee argued that all activities, including enhancements, bug fixing, and maintenance, should be considered part of software development. The CIT(A) disagreed, stating that the services rendered were more related to assistance in software application rather than development.
4. Eligibility of Projects for Relief under Section 80HHE:
The CIT(A) held that projects for CPC India and COSMIS Systems were not eligible for relief under Section 80HHE as the software developed remained in India. The CIT(A) stated that deduction is allowable only if the software is exported out of India. The assessee contended that the software was shipped outside India and the proceeds were received in convertible foreign exchange.
5. Estimation of Expenditure for Earning Dividend Income under Section 80M:
The CIT(A) estimated the expenditure for earning dividend income at 5% of the total dividend income, reducing it from the Assessing Officer's ad hoc estimate of 15%. The CIT(A) held that only actual expenditure incurred in earning dividend income should be deducted, not an estimated proportion.
Conclusion:
The Tribunal referred the issues back to the Assessing Officer for fresh examination, emphasizing that the receipts incidental to activities involving the writing of computer software are eligible for deduction. The Tribunal also directed the Assessing Officer to consider the retrospective applicability of the CBDT Notification and the definition of "computer programme" under the Copyrights Act, 1957. The Tribunal instructed the Assessing Officer to allow deductions if the assessee proves that the services provided were in connection with the development or production of computer software. The Tribunal also referred the issue of estimating expenditure for earning dividend income back to the Assessing Officer for decision based on the Special Bench decision in the case of ITO v. Dagao Capital Management (P.) Ltd.
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2009 (7) TMI 922
Issues:
- Whether the payments made by the assessee to non-resident companies for obtaining Transponder Services are liable to tax deduction at source.
- Whether the CIT(Appeals) erred in quashing the orders of the TDS Officer under section 201(1) and 201(1A) and directing a refund to the assessee.
- Whether the conduct of the assessee in not remitting the tax deducted at source to the Central Government justifies treating the assessee as an assessee in default.
- Whether the past conduct of the assessee in deducting tax at source and paying to the Central Government is a valid ground for the TDS Officer to treat the assessee as an assessee in default.
Analysis:
The appeals before the Appellate Tribunal ITAT Cochin involved the issue of tax deduction at source concerning payments made by an assessee, a Television Channel operating from Kochi, to non-resident companies for Transponder Services. The TDS Officer had treated the assessee as an assessee in default under section 201(1) and 201(1A) for failure to remit the tax deducted at source to the Central Government. The CIT(Appeals) had quashed the TDS Officer's orders, stating that the payments made by the assessee were not income liable to tax in India, thus no obligation for tax deduction at source existed.
However, the Tribunal found that the CIT(Appeals) overlooked the fact that the assessee had deducted tax at source but failed to remit it to the Central Government. The Tribunal emphasized the mandatory nature of the duty to pay tax deducted at source to the Central Government under section 200 of the Income-tax Act. The failure to remit the tax was deemed sufficient to hold the assessee as an assessee in default, irrespective of whether the payments were actually liable for tax deduction at source.
The Tribunal also highlighted that once tax is deducted at source, it becomes the money due to the Central Government, and neither the deductor nor the deductee can appropriate it. The Tribunal referred to legal precedents supporting the deductor's obligation to pay the tax deducted at source to the Central Government.
Regarding the past conduct of the assessee in deducting tax at source and paying it to the Central Government, the Tribunal upheld the TDS Officer's reliance on this conduct to treat the assessee as an assessee in default. The Tribunal emphasized that the Assessing Officer was justified in considering the past conduct as indicative of the assessee's responsibility to deduct tax at source.
Moreover, the Tribunal cited a relevant judgment by the Income-tax Appellate Tribunal, Mumbai, which held that payments for Transponder Services constituted "royalty" under section 9(1)(vi) of the Act, making them liable for tax deduction at source. Therefore, the Tribunal allowed the Revenue's appeals, restoring the TDS Officer's orders and vacating adverse comments made by the CIT(Appeals) against the TDS Officer.
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2009 (7) TMI 921
In the Appellate Tribunal ITAT COCHIN case of 2009 (7) TMI 921, the appeal was filed by the assessee for the assessment year 2004-05 against a revision order under section 263 of the Income-tax Act, 1961. The Commissioner observed that the assessment order was erroneous and prejudicial to the interest of the revenue due to the treatment of interest expenditure. The Commissioner directed to re-do the assessment, disallowing the interest expenditure and setting aside the claim of loss carry forward. The Tribunal found that the interest expenditure was justifiable, as the interest liability was crystallized during the relevant assessment year. The Tribunal also noted that the project had come to a standstill, making carry forward of losses irrelevant. Citing legal precedents, the Tribunal concluded that the original assessment order was not erroneous and allowed the appeal, vacating the revision order. Overall, the Tribunal upheld the treatment of interest expenditure and rejected the Commissioner's view that the assessment was prejudicial to revenue interests.
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2009 (7) TMI 920
Issues Involved:1. Validity of the Commissioner's direction to set off unabsorbed depreciation for computing profits u/s 10B. 2. Set-off of unabsorbed depreciation for assessment years 1994-95 to 1996-97 against the income of assessment year 2005-06. Summary:Issue 1: Validity of the Commissioner's direction to set off unabsorbed depreciation for computing profits u/s 10BIn the first four appeals, the assessee contested the revision orders passed by the Commissioner of Income-tax (CIT) u/s 263 of the Income-tax Act, 1961. The CIT had directed the Assessing Officer (AO) to adjust unabsorbed depreciation while computing the profits eligible for deduction u/s 10B. The assessee argued that this direction was not justified. The Tribunal examined the issue in detail, referencing previous decisions by the Income-tax Appellate Tribunal (ITAT) in similar cases, such as ITC Technologies (P.) Ltd. v. Dy. CIT and Ford Business Services Centre (P.) Ltd. v. Asstt. CIT. The Tribunal concluded that the benefit of section 10B should be allowed before setting off brought forward losses and unabsorbed depreciation. Therefore, the direction of the CIT to adjust unabsorbed depreciation was found to be unsustainable in law. The Tribunal set aside the CIT's direction and upheld the AO's original computation. Issue 2: Set-off of unabsorbed depreciation for assessment years 1994-95 to 1996-97 against the income of assessment year 2005-06In the appeal for the assessment year 2005-06, the assessee challenged the denial of set-off of unabsorbed depreciation from the assessment years 1994-95 to 1996-97 against the income of 2005-06. The Tribunal referred to the definition of "relevant assessment year" and the Board's Circular No. 794, which clarified that deductions under section 10B should only consider years where the benefit was claimed and allowed. The Tribunal found that since the assessee had not claimed deduction u/s 10B for the years 1994-95 to 1996-97, the unabsorbed depreciation from those years could be set off against the income of 2005-06. The Tribunal directed the AO to allow the set-off of unabsorbed depreciation for the assessment years 1994-95 to 1996-97 against the income of 2005-06. Conclusion:The revision appeals filed by the assessee were partly allowed, and the regular appeal for the assessment year 2005-06 was allowed. The Stay Petitions filed by the assessee were dismissed as infructuous.
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2009 (7) TMI 919
Issues Involved:1. Applicability of section 73 of the Income-tax Act to the assessee's case. 2. Relief from interest charged u/s 234B and 234C of the Income-tax Act, 1961. Summary:Issue 1: Applicability of Section 73 of the Income-tax ActThe assessee-company, engaged in dealing in Cement & Shares, claimed set-off of unabsorbed speculation loss from earlier years against the current year's profit from the sale of shares. The Assessing Officer disallowed this claim, stating that the transactions did not qualify as 'speculation transactions' u/s 43(5) since the delivery of shares had been taken. The AO argued that section 73 pertains to 'losses in speculation business' and cannot be applied to determine the nature of income. The CIT(A) upheld the AO's decision, reasoning that the transactions resulted in 'business income' rather than 'speculation income' and that the Explanation to section 73 is intended to cover losses, not profits. The Tribunal, however, disagreed with the lower authorities, emphasizing that the Explanation to section 73 should be given full effect. The Tribunal noted that the term "purchase and sale of shares" in the Explanation is unqualified and should include all transactions, whether delivery-based or not. The Tribunal cited the decision of the Hon'ble Bombay High Court in Prasad Agents (P.) Ltd. v. ITO, which clarified that a company engaged in the purchase and sale of shares is deemed to be carrying on speculation business for the purposes of section 73. Consequently, the Tribunal concluded that the assessee's transactions should be treated as speculative transactions, allowing the set-off of unabsorbed speculation loss. Issue 2: Relief from Interest Charged u/s 234B and 234CGround No. 2 regarding relief from interest charged u/s 234B and 234C was deemed consequential to the main issue and was not separately addressed in detail. Conclusion:The appeal filed by the assessee was allowed, with the Tribunal holding that the transactions in question should be treated as speculative transactions, thereby permitting the set-off of unabsorbed speculation loss from earlier years.
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2009 (7) TMI 918
Issues Involved:
1. Penalty u/s 271(1)(c) for furnishing inaccurate particulars of income.
2. Withdrawal of deduction claim u/s 80-IB.
3. Disallowance of capital expenditure amounting to Rs. 64,800.
Summary:
1. Penalty u/s 271(1)(c) for furnishing inaccurate particulars of income:
The appeal was filed against the CIT(A) order confirming the penalty of Rs. 24,39,353 imposed by the Assessing Officer (AO) u/s 271(1)(c) of the Income-tax Act, 1961. The penalty was levied for furnishing inaccurate particulars of income concerning the deduction u/s 80-IB and disallowance of capital expenditure.
2. Withdrawal of deduction claim u/s 80-IB:
The assessee, engaged in manufacturing and marketing butter and cheese, claimed deduction u/s 80-I in its return for AY 2004-05, supported by an auditor's certificate in Form No. 10CCB. The AO withdrew the deduction based on the audit objection regarding unabsorbed depreciation, leading to no tax impact. The assessee withdrew its claim for deduction u/s 80-IB for AY 2004-05 to avoid litigation, following legal advice and before the start of scrutiny assessment proceedings.
3. Disallowance of capital expenditure amounting to Rs. 64,800:
The AO initiated penalty proceedings for furnishing inaccurate particulars of income, including the disallowance of capital expenditure. The AO rejected the assessee's argument of bona fide belief and imposed a penalty, stating the claim was withdrawn only after detection by the department.
CIT(A) Decision:
The CIT(A) confirmed the penalty, stating that the appellant had concealed particulars of income and furnished inaccurate particulars, leading to a logical conclusion of conscious concealment.
ITAT Decision:
The ITAT considered the rival submissions and relevant case laws. It noted that the assessee's claim was supported by an auditor's report and was made under a bona fide belief. The ITAT referenced the Gujarat High Court decision in BTX Chemical (P.) Ltd., which held that reliance on expert opinion for claims does not constitute concealment. The ITAT concluded that the penalty u/s 271(1)(c) could not be imposed as the assessee had disclosed all necessary particulars and acted in good faith. The appeal was allowed, and the penalty was deleted.
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