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2011 (1) TMI 1347
Issues involved: Application for stay of recovery order u/s wrongful availment of cenvat credit based on bogus invoices.
Summary: The case involved an application for stay of an order dated 07/10.09.2009, which demanded the recovery of a significant amount u/s wrongful availment and utilization of cenvat credit. The allegations were related to the procurement of PVC compound necessary for manufacturing PVC insulated wires and cables from a specific company, M/s Kashish Products Impex Pvt. Limited, through bogus invoices. The Commissioner found the charge against the appellants to be established based on statements and evidence, while the appellants argued that the charge was unsubstantiated as they had proper records and documentation. The appellants were not allowed to cross-examine key witnesses, raising concerns about the principles of natural justice. The Tribunal noted that the findings were based on statements without proper verification and raised doubts about the denial of the right to cross-examination. Considering the financial difficulties faced by the appellants, the Tribunal granted a prima-facie waiver of the amount demanded under the impugned order until the appeal's disposal.
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2011 (1) TMI 1346
Whether the respondent had claimed that he was denied reasonable opportunity of hearing at the enquiry and the same has caused serious prejudice to his defense?
Whether the Disciplinary Authority has not relied on any recommendations of the CVC and the respondent has failed to plead or prove any prejudice having been caused, the disciplinary proceedings can not be said to be vitiated?
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2011 (1) TMI 1345
The Delhi High Court dismissed the appeal regarding penalty imposed under Section 11AC of the Central Excise Act, 1944. The court allowed the appellant to seek a review of the order by moving an application under the appropriate provisions of law.
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2011 (1) TMI 1344
Issues involved: The judgment involves the assessment years 2003-04 & 2004-05, with common grounds of appeal by the Department, including the treatment of a warehouse as an asset u/s. 2(ea)(i)(3) / 2(ea)(i)(5) of the Wealth Tax Act, 1957, and the utilization of the warehouse by the assessee or tenant for business purposes to claim exemption u/s. 2(ea)(i)(5).
Issue 1: Treatment of warehouse as an asset The Department appealed against the Ld. CIT(A)'s decision to allow relief to the assessee by excluding the warehouse from assessable wealth under the Wealth Tax Act. The Assessing Officer considered the warehouse as assessable wealth, but the Ld. CIT(A) reversed this decision based on the property's utilization for commercial activity, not solely by the assessee. The Ld. CIT(A) emphasized the amended provisions of the Wealth Tax Act post-Finance Act, 1992, focusing on how the property is utilized rather than who utilizes it. The Ld. CIT(A) concluded that the property is excluded from the list of assets as per Section 2(ea)(i)(3) and 2(ea)(i)(5) of the Wealth Tax Act, leading to the Department's further appeal before the Tribunal.
Issue 2: Utilization of warehouse for business purposes The Department argued that the rental portion of the warehouse should not be excluded from computing assessable wealth, citing precedents that rented property cannot be considered used by the assessee for business purposes. However, the Ld. Authorised Representative for the assessee supported the Ld. CIT(A)'s decision. The Tribunal analyzed the relevant provisions of the Wealth Tax Act post-amendments and previous case law, emphasizing that the nature and purpose of property use for commercial activity determine its exclusion as an asset. As a part of the warehouse was used by the assessee for business and the rest let out for commercial purposes, the entire warehouse was deemed used for commercial activity, leading to its exclusion as an asset under Section 2(ea)(i)(5).
Conclusion: The Tribunal upheld the Ld. CIT(A)'s orders for both assessment years, dismissing the Department's appeals. The judgment highlighted the importance of the commercial nature of property use in determining its classification as an asset under the Wealth Tax Act.
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2011 (1) TMI 1343
Whether the MRTP Act is a self-contained Code or not, if so, to what effect?
Whether, in any event, all the provisions of the Land Acquisition Act, as amended by Central Act 68 of 1984 with emphasis on Section 11A can be read into the provisions of the MRTP Act?
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2011 (1) TMI 1342
Issues involved: The legality of Alert Circular No. 31/2010-JNCH DT. 05.08.2010 issued by the Respondent, and the lack of opportunity for hearing before its issuance.
Judgment Summary:
Issue 1: Legality of Alert Circular The petitioner filed a writ petition under Article 226 of the Constitution of India seeking to quash the impugned Alert Circular No. 31/2010-JNCH DT. 05.08.2010 as arbitrary and illegal. The petitioner's counsel argued that the circular was issued without affording an opportunity of hearing. On the other hand, the respondent's counsel contended that the circular was merely an alert circular, not casting any stigma or blacklisting the petitioner. It was explained that such alerts are issued for inspection purposes when goods at the port do not match the declaration certificate. The court held that the circular should not be considered stigmatic towards the petitioner and clarified that the petitioner had not been blacklisted by the department. The respondents were directed to publish this clarification on their website.
Issue 2: Lack of Opportunity for Hearing The petitioner's counsel raised the issue of lack of opportunity for hearing before the issuance of the circular. However, the court's decision focused on clarifying the non-stigmatic nature of the circular towards the petitioner, rather than delving into the procedural aspect of affording a hearing. The writ petition was disposed of with the above observations and directions, without any order as to costs.
Conclusion The High Court of Delhi held that the impugned Alert Circular No. 31/2010-JNCH DT. 05.08.2010 was not stigmatic towards the petitioner and clarified that the petitioner had not been blacklisted by the department. The court did not address the issue of lack of opportunity for hearing before the circular's issuance, focusing instead on the non-stigmatic nature of the circular.
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2011 (1) TMI 1341
The Madras High Court issued an order for interim stay in a case, directing petitioners to deposit 50% of the penalty imposed within four weeks to maintain the stay. The respondents were instructed not to dispose of seized gold and foreign currency pending further orders.
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2011 (1) TMI 1340
Issues involved: The issue involved in this case is the deletion of disallowance of excessive payment of remuneration to dealers by the assessee, for assessment year 2006-07.
Issue 1 - Disallowance of Excessive Payment of Remuneration: The Assessing Officer (AO) disallowed a balance payment of &8377; 89,98,913/- made by the assessee to its dealers, treating it as unreasonable and excessive, while restricting the claim of deduction of remuneration paid to dealers at 6% of total commission receipts. The Commissioner of Income Tax (Appeals) directed the AO to delete the addition, following the first appellate order for assessment year 2005-06.
Issue 2 - Error in Tribunal Order: The Tribunal observed an error in its previous order where it stated that a decline in payment of remuneration was warranted due to the setting up of outlets, which was factually incorrect. The Tribunal acknowledged that the facts for the year under consideration were similar to those in assessment year 2005-06, and the observation regarding decline in payment was a mistake apparent from the record.
Issue 3 - Correction of Tribunal Order: Upon realizing the errors in the previous order, the Tribunal recalled its order dated 30.11.2009. It substituted the relevant paragraphs to confirm the action of the Commissioner of Income Tax (Appeals) in deleting the disallowance of excessive payment of remuneration to dealers, based on a similar Tribunal order for assessment year 2005-06. The Department's appeal was rejected, and the appeal of the Department was dismissed.
In summary, the Tribunal corrected its previous order regarding the disallowance of excessive payment of remuneration to dealers by the assessee for assessment year 2006-07. The Tribunal acknowledged errors in its initial observations and confirmed the deletion of the disallowance based on the similarity of facts with assessment year 2005-06, ultimately dismissing the Department's appeal.
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2011 (1) TMI 1339
Issues involved: Registration under Section 12A of the Income Tax Act and exemption under Section 10(23C) for the assessment year 2007-08.
Summary: The petitioner, a registered trust running an Engineering College, applied for registration under Section 12A of the Income Tax Act. The application was initially rejected due to technical grounds and failure to rectify defects. A review request was made, stating all required documents were submitted with reasons for delay. Despite this, further documents were requested, and the application remained pending. The petitioner faced a tax liability for the assessment year 2007-08 due to the rejection of exemption under Section 10(23C).
The respondents contended that the application was defective, and the petitioner indicated they were not pursuing registration under Section 12A as they were focused on exemption under Section 10(23C). The application was considered withdrawn and not pursued further.
The court noted that the petitioner's claim of the pending application for registration under Section 12A was not accurate. However, it was informed that registration under Section 12A had been granted for subsequent years. The court allowed the petitioner to reapply for registration for previous periods and challenge the dismissal of exemption under Section 10(23C) through appropriate proceedings.
Ultimately, the court disposed of the writ petition, directing the petitioner to approach the authority for registration under Section 12A for periods before 2010-11 and challenge the exemption dismissal under Section 10(23C). The authority was instructed to consider any new applications promptly and make decisions in accordance with the law.
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2011 (1) TMI 1338
Issues involved: 1. Disallowance of provision made towards ageing of inventory of work in progress and finished goods. 2. Disallowance of amount capitalized on account of foreign exchange fluctuation. 3. Disallowance of loss due to restatement/revaluation of debtors and creditors. 4. Disallowance of running and maintenance expenses and depreciation for personal usage.
Disallowed provision for ageing of inventory: The Revenue appealed the deletion of disallowance of Rs. 28,45,951 made by the Assessing Officer. The Tribunal upheld the deletion, citing precedent where a similar issue was decided in favor of the assessee. The genuineness of the claim was upheld, and the addition was deleted.
Disallowance of foreign exchange fluctuation amount: The Revenue challenged the deletion of disallowance of Rs. 1,47,876 on account of foreign exchange fluctuation. The Tribunal upheld the deletion, as the issue had been decided in favor of the assessee in previous years. The liability was deemed notional, and depreciation was allowed based on previous tribunal decisions.
Loss due to restatement/revaluation of debtors and creditors: The Revenue contested the deletion of disallowance of Rs. 2,61,469 due to restatement/revaluation of debtors and creditors. The Tribunal upheld the deletion, following a precedent set by the Hon'ble Apex Court, where such losses were considered as expenditure under section 37(1) of the IT Act.
Disallowance of running and maintenance expenses for personal usage: The assessee objected to the disallowance of running and maintenance expenses and depreciation for personal usage. The Tribunal set aside the order of the Ld. Commissioner of Income Tax (Appeals) and decided the issue in favor of the assessee, based on previous tribunal decisions in similar cases.
In conclusion, the appeal filed by the Revenue was dismissed, and the cross objection filed by the assessee was allowed based on the Tribunal's decisions and precedents.
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2011 (1) TMI 1337
Issues Involved: 1. Condonation of delay in filing the appeal. 2. Bona fide administrative delay. 3. Prejudice to public exchequer. 4. Disciplinary action against erring officials.
Summary:
1. Condonation of Delay in Filing the Appeal: The petition was filed to condone a delay of 3081 days in filing an appeal against the judgment and decree dated 29.6.2001 in L.A.O.P. No.33/1997 by the III Additional Sub-Court, Madurai. The Sub-Court had enhanced the compensation from Rs. 250/- per cent to Rs. 2,500/- per cent. The delay was attributed to administrative issues, including the misplacement of the certified copy of the judgment and subsequent staff transfers.
2. Bona Fide Administrative Delay: The petitioner claimed the delay was neither willful nor wanton but due to bona fide administrative delays. The delay was discovered during a review in December 2008, and a new copy of the judgment was obtained on 8.12.2008. The appeal was eventually filed on 4.3.2010.
3. Prejudice to Public Exchequer: The learned Additional Advocate General argued that not condoning the delay would cause irreparable loss to the public exchequer, as the compensation amount was significantly increased by the Sub-Court. The petitioner initiated disciplinary action against the responsible officials. The court considered whether the delay would result in a loss to the public exchequer and noted that in connected cases, the compensation amount was reduced on appeal.
4. Disciplinary Action Against Erring Officials: The petitioner identified 12 officers responsible for the delay, with four having retired. Proposals were sent to the Government to take action u/s 9(2) of the Tamil Nadu Pension Rules and charges framed u/s 17(b) of the Tamil Nadu Civil Services (Discipline and Appeal) Rules, 1973. The Housing Board was also asked to take action against four Executive Engineers.
Judgment: The court acknowledged the inordinate delay but emphasized the need to protect the public exchequer. Citing precedents, the court held that the expression "sufficient cause" should be liberally construed to advance substantial justice. The delay was condoned on the condition that the petitioner pays Rs. 13,500/- to the respondents within ten days, failing which the petition would be dismissed.
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2011 (1) TMI 1336
Issues involved: Reassessment under Section 21 of the U P Trade Tax Act, 1948 for Assessment Years 2000-01 to 2004-05.
Facts: The petitioner traded in 'Banphool Oil' in the Assessment Year 2000-01 and in both 'Banphool Oil' and 'Arnica Oil' for subsequent years. Assessment orders were passed for these years, followed by reassessment proceedings initiated later. Approval was granted for reassessment for certain years, while for one year within the time limit, no approval was required.
Decision: The notices for reassessment were issued based on relevant decisions and cannot be invalidated. The petitioner's argument that the assessment for 2000-01 cannot be reopened was dismissed as the order indicated a tentative view and subsequent adverse information justified reassessment. The reassessment notice covering both 'Banphool Oil' and 'Arnica Oil' for later years was deemed legal. The approval for reassessment was considered valid even though not detailed, as it was not necessary for the approving authority to provide extensive reasoning.
Outcome: The writ petitions were dismissed, and the petitioner was directed to appear before the Assessing Officer with a certified copy of the order. The time taken for this filing would be excluded from the limitation period for passing the reassessment order.
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2011 (1) TMI 1335
Admissibility of credit on capital goods (power unit) which have been sold but not removed from premises - transactions of sale of power unit and simultaneous lease of premises are wisely resorted to by the assessee as a device to avoid the tax liability on it - said purchaser, after purchasing the power unit from the assessee, has been enjoying the same as its absolute owner and has been supplying to the assessee the power generated from the said power unit on payment basis.
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2011 (1) TMI 1334
Issues involved: The issues involved in the judgment are the petitioner's request for condonation of delay in filing returns, acceptance of the return, and grant of refund of tax amount.
Details of the Judgment:
Issue 1: Condonation of delay in filing returns and grant of refund
The petitioner, a Co-operative Society, sought condonation of delay in filing returns for the assessment year 1989-90 due to re-audit orders and court interventions. The respondent rejected the request, leading to this petition. The petitioner relied on a previous court decision emphasizing the duty of the Assessing Officer to process returns for tax exemption claims, regardless of filing time. The respondent argued that condonation of delay is limited to six years u/s the statute, beyond which only the Board can entertain the matter. A circular allowed condonation of delay for refund claims based on genuine hardship, with varying monetary limits for different authorities. The court noted the delay in seeking refunds due to re-auditing issues caused by the Department and the subsequent cancellation of re-audit orders by the court. The judgment clarified that the Assessing authority can condone delay for up to six years, beyond which the Board has the power. The petitioner was directed to approach the Commissioner of Income Tax for condonation of delay within the six-year limit for refund applications based on suffered losses.
Conclusion:
The court disposed of the writ petitions with the observation that the petitioner should approach the Commissioner of Income Tax within the six-year limit for condonation of delay in refund applications due to suffered losses.
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2011 (1) TMI 1333
Issues involved: The writ petition seeks to challenge the withdrawal of benefits and show cause notices issued by the respondents, alleging them to be illegal and arbitrary, violating constitutional provisions.
Withdrawal of benefits: The petitioners established a unit in Himachal Pradesh based on clarifications from the Directorate General of Export Promotion. The eligible exemption was withdrawn, leading to a show cause notice being issued. The petitioners claim the withdrawal was communicated late, hindering their ability to respond. The court notes the option for the petitioners to seek clarification from the Directorate General of Export Promotion and directs them to make a representation within two weeks. The third respondent is instructed to consider the representation and provide a decision within two months, allowing for a hearing if requested.
Conclusion: The court disposes of the writ petition without delving into the merits of the petitioners' contentions, leaving all arguments open for future consideration. The petitioners are permitted to approach the Directorate General of Export Promotion for interim relief while the matter is pending before them. All pending applications are also disposed of by the court.
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2011 (1) TMI 1332
TDS u/s 195 - Commission paid to the foreign agent for procurement of Export Order - non-deduction of TDS - effect of withdrawal of circulars - HELD THAT:- Reliance was placed on the decision of Dy.CIT vs. M/s.Siemens Aktiengeselschaft [2009 (12) TMI 952 - ITAT, MUMBAI] as held while deciding a similar issue, the Tribunal held that it is axiomatic that a circular in operation through the relevant assessment year cannot be held to be inoperational simply by reason of the fact that it has been withdrawn in the year 2009 - issuance of circular no.7 of 2009 withdrawing the circular no.23 of 1969, 163 of 1975 and 786 of 2000 will be operative only from 22.10.2009 and not prior to that date. Thus, the withdrawal of earlier circulars with effect from 22.10.2009 has no bearing in the instant case.
It is worth mentioning that the previous year involved in 2006- 07 relevant to the assessment year under consideration. At the relevant time, in view of the C.B.D.T. circular No.23 dated 23.7.1969 and circular no.786 dated 7.2.2000, the assessee was not obliged to deduct the tax under Section 195 of the Act and the circular No.7 of 2009 dated 22.10.2009 withdrawing the circular No.23 of 1969 and circular No.786 of 2000 will be operative only from 22nd October, 2009 and not prior to that date.
Decision relied upon by the AO in the case of Van Oord ACZ India (P.) Ltd.[2007 (11) TMI 332 - ITAT DELHI-D] has been overruled by Hon'ble Delhi High Court [2010 (3) TMI 167 - DELHI HIGH COURT]as concluded that Obligation to deduct tax at source u/s 195 is attracted only when the payment is chargeable to tax in India; IT authorities having accepted: that the non-resident recipient is not liable to pay any tax in India, the assessee- payer was not liable to deduct tax at source under s. 195(1) in respect of the mobilization and demobilization costs reimbursed by it to the said non-resident company. Decided against revenue.
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2011 (1) TMI 1331
Whether any statutory, fundamental or other right of any person is being violated and an activity which is prohibited under law is being carried out i.e. production and manufacture of asbestos and allied products?
Whether the Government is actively permitting such illegal activity? Second, whether in any case this Court can, in law, direct the banning of this activity, if not, what directions can be issued by the Court?
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2011 (1) TMI 1330
Denial of SSI exemption (under Notification No. 1/93-C.E., dated 28-2-1993) on ground that assessee is using brand name of another - case of the Revenue is that the appellants had used the brand name ‘K’ belonging VKPL on the excisable goods manufactured and cleared by them - Assessee has not adduced any evidence to substantiate that the logo ‘K’ belonged to others - Moreover, the appellants are not shown to have used the logo ‘K’ written in the peculiar design and style, embossed on the pumps manufactured by VKPL, had been embossed on pumps manufactured by the appellants.
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2011 (1) TMI 1329
Issues: Revenue's appeal against Order-in-Appeal No. 38/2009 for duty default and penalty imposition.
Analysis: The appeal pertains to a case where the respondent defaulted in duty payment for May and June 2007, subsequently paying the due amount with interest. The lower authorities observed the utilization of Cenvat credit during the default period, leading to a duty demand and penalty imposition. The Commissioner (Appeals) set aside the duty demand, acknowledging the correct payment during the default period but upheld the penalty. The respondent did not contest the penalty imposition, leading to the current appeal by the Revenue.
The Tribunal noted that the respondent utilized eligible Cenvat credit for duty payment in subsequent periods, including the default months. The Commissioner (Appeals) based the decision on precedents like Lloyds Steel Industries Ltd. and decisions from the Tribunal. The Tribunal concurred with the Commissioner's decision, emphasizing the adherence to established legal principles by various judicial forums. Consequently, the Tribunal upheld the Commissioner's order, rejecting the Revenue's appeal.
In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the Commissioner (Appeals) decision based on the correct application of legal precedents and established principles. The judgment highlights the importance of adhering to legal interpretations set by higher judicial authorities in resolving duty default cases.
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2011 (1) TMI 1328
Issues involved: Disallowance of repairs expenses and addition of deemed dividend u/s 2(22)(e) of the Act.
Disallowance of repairs expenses: The Revenue appealed against the CIT(A)'s order deleting the disallowance of a specific amount out of repairs expenses, arguing that the expenditure was capital in nature. The A.O. contended that the items purchased were new capital assets, not part of current repairs. However, the CIT(A) allowed the claim, stating that the items were part of repairs and not independent capital assets. The ITAT upheld the CIT(A)'s decision, stating that the expenditure was rightly allowed as repairs and not capital in nature.
Addition of deemed dividend u/s 2(22)(e) of the Act: The Revenue challenged the addition of a certain amount as deemed dividend u/s 2(22)(e) of the Act. The A.O. considered the credit balance in the books of the assessee company and concluded that it fulfilled the conditions under section 2(22)(e) for deemed dividend. However, the assessee argued that the credit balance represented the cost of goods or services received, not a loan or advance, and thus should not be treated as deemed dividend. The CIT(A) analyzed the provisions of section 2(22)(e) and ruled in favor of the assessee, stating that deemed dividend can only be assessed in the hands of a shareholder of the lender company, which the assessee was not. The ITAT upheld the CIT(A)'s decision, rejecting the Revenue's appeal based on relevant legal precedents and principles regarding shareholding.
Conclusion: The ITAT dismissed the appeal, upholding the decisions of the CIT(A) regarding the disallowance of repairs expenses and the addition of deemed dividend u/s 2(22)(e) of the Act. The order was pronounced in open court on 19th January 2011.
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