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Showing 341 to 360 of 1040 Records
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2011 (1) TMI 1246
RTI application seeking information relating to the expenditure, movable and immovable properties of the petitioner posted as District Food and Supplies Controller, Yamuna Nagar. - Held that:- The word “Third-Party” has been defined under Section 2(n) of the Act, to mean a person other than the citizen making a request for information and includes a public authority (and not otherwise). - It is not a matter of dispute that respondent No. 5-Shamsher Singh sought the information from the SPIO and it was the SIC, which directed the SPIO to supply the information, vide impugned speaking orders (Annexures P-4 and P-14). Since, the matter was between respondent No. 5, SPIO and FAA, so, the question of providing any opportunity of hearing to the petitioner, did not arise at all, as he cannot possibly be termed to be a third-party, as defined under Section 2(n) of the Act, in the obtaining circumstances of the case. If the argument of the learned counsel for the petitioner is accepted as such, then no information is permissible, which would certainly nullify the aims and objects of the Act. Therefore, the contrary arguments of the learned counsel for the petitioner “stricto sensu” deserve to be and are hereby repelled under the present set of circumstances. - information under TRI to be provided - Decided against the petitioner.
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2011 (1) TMI 1245
Transfer pricing adjustment - Pre-operative expenses - Held that:- The assessee has incurred expenditure from 1.1.2004 to 14.3.2004 i.e. after entering into agreement with AE on 1.1.2004 and this amount is liable for mark up at 10% because no customer would pay mark up before entering into agreement - The expenditure incurred after agreement only has to be mark up - The Revenue has not brought any material on record to show that the assessee has incurred any expenditure before entering into service agreement on the impugned issue - Decided against Revenue.
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2011 (1) TMI 1244
Amount accrued but not received - Accrued interest on securities – Held that:- The decision in DCIT (International Taxation) vs. Bank of Bahrain and Kuwait [2010 (8) TMI 578 - ITAT, MUMBAI] followed – the interest accrues only on the coupon dates and not on day to day basis - Union Bank of India cannot be prevented from urging in the return that the interest on govt. securities accrued only on the specified coupon dates notwithstanding that credit has been taken in the profit & loss account for the interest on day to day basis – Decided in favour of Assessee.
Disallowance of loss on unmatured foreign exchange contracts – Held that:- The decision in DCIT (International Taxation) vs. Bank of Bahrain and Kuwait [2010 (8) TMI 578 - ITAT, MUMBAI] followed – Forward Foreign exchange contract means an agreement to exchange different currencies at a forward rate. Forward rate is a specified rate for exchange of currency at a specified date. The assessee enters into forward contract with clients to buy or sell foreign exchange at an agreed price at a future date in order to hedge against the possible future financial loss on account of wide fluctuation in the rate of foreign currency - where a forward contract is entered into by the assessee to sell the foreign currency at an agreed price at a future date falling beyond the last date of accounting period, the loss is incurred to the assessee on account of evaluation of the contract on the last date of the accounting period i.e. before the date of maturity of the forward contract – Decided in favour of Assessee.
Reduction of claim of bad debt u/s 36(1)(vii) of the Act – Held that:- The decision in Oman International Bank, SAOG vs. DCIT [2003 (11) TMI 286 - ITAT BOMBAY-H ] followed - The deduction s. 36(1)(vii) is only supplemental in nature inasmuch as it comes to the play only when, and is admissible to the extent, the provision for bad and doubtful debts allowed u/s 36(1)(viia)(b) falls short of the actual bad debts written off as irrecoverable – thus, the AO is directed to allow deduction u/s 36(1)(vii), without taking into account the admissible deduction u/s 36(1) (viia)(b) for the relevant previous year which can only be taken into account for computing deduction u/s 36(1)(vii) for subsequent year(s) – Decided partly in favour of Assessee.
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2011 (1) TMI 1243
Disallowance of Cenvat credit - Utilization on the strength of the fake invoices issued by their supplier - reasonable steps to be taken - Imposition of penalty - Held that:- evidence on record indicates that the appellant was really engaged in the manufacturing activities and for the manufacture of the finished goods they needed copper rod/copper wire. Therefore, it cannot be said that copper rod/copper wire had not ever been received in their factory. The evidence brought on record shows that the copper rod/copper wire were received by them from their (the appellant’s) job workers after the job workers had converted the same from the ingots. But the crucial question is whether the ingots which were received by the job workers were also of duty paid nature and whether the same were really covered by the invoices issued by M/s. VKM (VKMW).
Impugned order has admitted itself that the goods in question (i.e. copper ingots) had been received by the appellant in the form of copper rod/copper wire after being converted (from copper ingots) by their job workers who had directly received the said copper ingots on these invoices from M/s. VKMW on behalf of the appellant. Further it has also been admitted in the impugned order that the appellant had discharged its contractual liability by making payment of these invoices through banking channel by cheques.
Neither the show cause notice alleges any other source of procurement of the said copper ingots, received under these invoices nor the impugned order found any other source of procurement of such copper ingots. The provisions governing the availment of the credit envisages that the assessee availing the credit should ensure that the inputs should have suffered duty at the hands of the manufacturer and the inputs covered under the invoices have been received and the same have been utilized in the manufacture of their final goods.
Appellant therefore, cannot be asked to go beyond the duty payment document in his hand. The appellant had checked the authenticity of the invoice issued by the manufacture and the latter is registered with the Central Excise. Thus, I find that the appellant have taken due care while procuring the duty paid inputs. Therefore, the Cenvat credit may not be disallowed on such inputs i.e. copper ingots received against these invoices simply on the ground that the goods were not the same. Thus, and impugned order is devoid of merit and the same is not sustainable - Following decision of M/s. Manaksia Ltd. v. C.C.E., Rajkot [2008 (6) TMI 149 - CESTAT AHEMDABAD] and C.C.E, Chandigarh v. Hitkari Industries Ltd. [2008 (2) TMI 124 - CESTAT, NEW DELHI] - Decided in favour of Appellant.
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2011 (1) TMI 1242
Disallowance of expenses – Expenses incurred on interior decoration, extension and renovation of various buildings on lease – Held that:- The expenditures are on the interior decorations and creation of the office atmosphere - The expenditure has not resulted in any building coming into existence nor has the existing building been modified or the structure altered - As the existing building has not been altered and there is no change to its structure as a result of the expenditure incurred by the assessee, it cannot be said that the expenditure incurred by the assessee is in the capital field - the expenditure on the repairs and maintenance in the form of electrical fittings, electrification, cabinet, work station, partition, cupboard, stand etc. are liable to be treated as a revenue expenditure – Order of the CIT(A) reversed – also the depreciation as allowed by the Assessing Officer on the said expenditure which has been capitalized would stand reversed – Decided in favour of Assessee.
Enhancement of disallowance made u/s 14A of the Act r.w Rule 8D of the Rule – Held that:- The decision in GODREJ AND BOYCE MFG. CO. LTD. Versus DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER [ 2010 (8) TMI 77 - BOMBAY HIGH COURT] followed - no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to such income which does not form part of the total income under the Act, by virtue of the provisions of Section 14A(1) - the issue of enhancement has not been challenged by the assessee - the issue of disallowance by application of sec. 14A is restored to the file of the Assessing Officer for re-adjudication.
Deletion made for prior paid expenses – Computation of book profits u/s 115JB of the Act – Held that:- The decision in CIT v. Khaitan Chemicals And Fertilizers Ltd [2008 (9) TMI 89 - DELHI HIGH COURT] followed - the net profit (as referred to in Section 115 JA) of the assessee company is to be computed only after deducting the expenses on prior period / extraordinary items which are business expenditure –the expenses which have been disclosed as for prior period items/extra-ordinary items are part of the profit & loss account and properly deductible in computing the book profits – the order of the CIT(A) upheld – Decided against Revenue.
LTA treated as benefit granted to employees – Liability to pay Fringe benefit tax – Held that:- The LTA is treated as a perquisite and part of the salary and TDS has also been deducted therefrom, in view of the circular issued by the CBDT the same is not liable for the Fringe Benefit Tax – order of the CIT(A) set aside – Decided in favour of Assessee.
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2011 (1) TMI 1241
Transfer of share in favour of NRI - Permission for such transfer was not obtained from RBI - Compounding of offence by RBI - Imposition of penalty - Held that:- offence has taken place when FERA was in force as it is clearly reflected by the letter of RBI who refused to entertain the application for compounding stating that the violation is under FERA and the provision of compounding was not there under the said Act. The compounding is permissible only under the provisions of FEMA. The show cause notice in the present case is issued on 20th May, 2009 i.e. after the expiry of 2 years of sun set period provided under Section 49(3) - violation has taken place when FERA was in force and therefore under Section 49(3) of FEMA it was necessary for the Directorate Enforcement to take notice of the said violation before 31st May, 2006 i.e. before expiry of sun set period. As the show cause notice was issued in 2009 for violation of provision of FERA the same cannot be set to be within limitation and in accordance with law - Decided in favour of appellant.
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2011 (1) TMI 1240
Demand of information - Petitioner instead of supplying information arbitrarily asked for extra fees - Appellate authority directed petitioner to supply documents free of costs - Held that:- there is a provision under the Act/Rules, vide which, the SIC can direct the petitioner-SPIO to supply the information free of costs to Respondent - SPIO did not comply with the time-limits specified in sub-section (1) of Section 7 of the Act and did not supply the information, despite specific order/letter (Annexure P3/T) of FAA. In that eventuality, the SIC was within its jurisdiction to direct the petitioner-SPIO to supply the information free of charges, vide impugned order - Decided against Petitioner.
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2011 (1) TMI 1239
Violation of Section 9(1)(b), 9(1)(c) and 9(1)(d) of FERA - Imposition of penalty - Confiscation of seized money - Admissibility of evidence - Held that:- Adjudicating Authority has recorded statement of Smt. Gurmej Kaur who in her statement admitted that her husband is staying at Dubai and the documents (loose sheets and diary) is written in the handwriting of her husband who alone can explain the same regarding recovery of Rs. 65,000/- seized from her resident - Smt. Gurmej Kaur did not retract with her statement. Apart from that statement of Narinder Singh are also on record in which he has admitted that he has paid a sum of Rs. 2,30,000/- to Smt. Gurmej Kaur. Thus, her statements are corroborated by the statement of Narinder Singh to that extent and thus, receipt of Rs. 3,30,000/- is proved. Apart from that statement of Gulzar Singh, Kuldip Kaur, Surinder Kaur, Harmesh Lal, Gurdev Singh Fauji, Piara Lal, Rattan Singh, Pushapawati of Ludhiana are on record. These persons shows that the appellant has paid a sum of Rs. 8,37,000/- to these persons at different time in different amount.
Thus, there is ample evidence on record to show that Harbhajan Singh was involved in selling of foreign exchange without permission of Reserve Bank of India (RBI) and he sold foreign exchange to the tune of Rs. 8,57,000/-. However, there is no evidence on record to show that the appellant has disbursed a sum of Rs. 1,35,28,275/-. As the loose papers recovered from his house, appellant does not fall with Section 34 of the Evidence Act which provides that entries in a Book of Account recovery kept in the course of business are admissible in evidence. The entries in the diary and the loose sheets cannot be said to be account kept in regular course of business and, therefore they are not admissible in evidence - Penalty reduced - But confiscation sustained - Decided partly in favour of Appellant.
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2011 (1) TMI 1238
Estimation of profit - Held that:- On examination of the books of account with reference to the voucher produced, the Assessing Officer found that the voucher does not tally with the cashbook - When the voucher does not tally with cashbook, the book results will not reflect the correct profit of the assessee - The Assessing Officer has rightly rejected the books of account.
When the books of account were rejected the only method available to the Assessing Officer is to estimate the profit - The profit ratio cannot be a constant factor for each and every year - Tribunal has been uniformly estimating the profit from main contract at 8% to 12.5% depending upon the factual situation and 5% to 7% on the sub contract depending upon the factual situation.
Seiniorage charges - Held that:- Following Brij Bhushanlal [1978 (10) TMI 2 - SUPREME Court] - The material supplied by the Government/contractor will not have any element of profit - The same shall be reduced from the contract receipts.
Depreciation - Held that:- By Finance (No.2) Act of 2009 with effect from 1.4.2011 - The restriction of the total contract receipts of ₹ 40 lakhs has been removed - The deduction available u/s 30 to 38 shall be deemed to have been already given full effect and no further deduction under those sections shall be allowed - Decided against assessee.
Interest and salary to partners - Held that:- In view of the amendment made u/s 44AD which has been made effective from 1.4.2011 - The Legislature intended to allow the interest and salary separately from the estimated income - Salary and interest paid to the partner shall be deducted from the income computed under subsection (1) of section 44AD subject to limitation u/s. 40(b) of the Act - Decided in favour of assessee.
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2011 (1) TMI 1237
Issues: 1. Violation of Section 9(1)(a) of FERA. 2. Opportunity for cross-examination in FERA proceedings. 3. Nature of proceedings under FERA - civil or criminal. 4. Imposition of penalty based on preponderance of probabilities.
Detailed Analysis: 1. The appeals were filed against an Adjudication Order imposing a penalty for violating Section 9(1)(a) of FERA. The case involved misuse of provisions related to remittances of foreign exchange, where individuals were accused of depositing black market foreign exchange into NRE Accounts. The appellants admitted receiving cheques without RBI permission, leading to the penalty imposition by the Adjudicating Authority.
2. The issue of the right to cross-examine witnesses was raised, alleging a violation of natural justice. While the appellants contended for this right, the Tribunal noted that they had admitted receiving the cheques and had opportunities for personal hearings but chose not to cross-examine witnesses. Citing precedents, the Tribunal concluded that by not attending the personal hearing, the appellants waived their right to cross-examination.
3. The nature of FERA proceedings was debated, with one party arguing for quasi-criminal status based on a Supreme Court judgment. However, the Tribunal referenced various judgments, including Director of Enforcement v. MCTM Corporation Pvt. Ltd., to establish that FERA proceedings are civil in nature. The Tribunal emphasized that penalties are imposed for civil breaches, not criminal offenses, based on preponderance of probabilities.
4. Considering the lack of evidence regarding a relationship between the appellants and the individual issuing the gift cheques, the Tribunal inferred that the appellants likely made payments to convert black money into white. The Tribunal held that without a plausible relationship, the appellants violated Section 9(1)(a) of FERA by receiving gifts, leading to the dismissal of all appeals and upholding the penalty imposition.
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2011 (1) TMI 1236
Issues: Violation of Section 8(3) of FERA - Imposition of penalty
Issue 1: Violation of Section 8(3) of FERA - Imposition of penalty
The appeal was filed challenging the order imposing a penalty of Rs. 12,000 on the appellant for the alleged violation of Section 8(3) of FERA. The facts of the case revealed that foreign currency was seized from the residential premises of the appellant, who claimed to have acquired it for a business promotion tour from Authorized Dealers. The appellant stated that he was abroad from 18-3-1992 to 18-8-1992 and was required to surrender the foreign exchange within 90 days from the date of return, as per a Notification issued by the Reserve Bank of India.
The Directorate of Enforcement contended that as per Notification No. FERA/73/88-RB, unutilized foreign exchange should be surrendered within 90 days from the date the individual becomes aware that it cannot be used. The raid was conducted within 10 days of the appellant's return from the foreign tour, falling within the stipulated period. However, it was argued that in such circumstances, the appellant could not be held guilty of violating Section 8(3) of FERA.
The appellate tribunal, chaired by Justice Subhash Samvatsar, found that the appellant could not be deemed to have contravened Section 8(3) of FERA, and that the penalty imposed by the Directorate of Enforcement was erroneous. Consequently, the appeal was allowed, the impugned order was set aside, and the penalty amount deposited by the appellant was directed to be returned to him.
This detailed analysis provides a comprehensive overview of the legal judgment, focusing on the issue of violation of Section 8(3) of FERA and the subsequent imposition of a penalty. The summary encapsulates the key arguments, findings, and the ultimate decision rendered by the appellate tribunal, ensuring a thorough understanding of the case.
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2011 (1) TMI 1235
Issues: Violation of Section 9(1)(b) and 9(1)(d) of FERA - Imposition of penalty based on retracted statement and corroborating evidence.
Detailed Analysis: The judgment by the Appellate Tribunal for Foreign Exchange, New Delhi pertains to two appeals against an order passed by the Special Director of Enforcement, Bombay, imposing a penalty on the appellant for violating Section 9(1)(b) and 9(1)(d) of FERA. The case involved the appellant depositing a significant amount in a fictitious account, allegedly on behalf of a resident of Dubai, thereby breaching FERA provisions. The appellant contested the charges, claiming that his statement was obtained under duress and retracted, citing the Apex Court's ruling in Vinod Solanki v. Union of India.
The appellant argued that his retracted statement, the basis for the penalty, was coerced during custody by the Enforcement Directorate, rendering it unreliable. The Adjudicating Authority, however, relied on this statement, suggesting self-inflicted injuries to explain the retraction. The Tribunal highlighted the burden on the department to prove the voluntary nature of statements recorded in custody, as per the Vinod Solanki case. In this instance, the department failed to demonstrate the statement's voluntariness, undermining its validity as evidence.
Furthermore, the Tribunal scrutinized the corroborating evidence, emphasizing the necessity of supporting the retracted statement. The raid on the appellant's premises yielded no incriminating documents, raising doubts about the search and seizure procedures. The appellant's defense regarding the ownership of the premises and the documents found therein added complexity to the case. Despite the appellant's attempt to discredit the seized documents, Section 72 of FERA presumes the authenticity of such documents unless proven otherwise.
Ultimately, the Tribunal concluded that the retracted statement, when substantiated by the recovery of bank deposit slips, validated the charges against the appellant. The corroborative evidence indicated the appellant's involvement in depositing funds on behalf of a Dubai resident, aligning with the alleged FERA violations. Consequently, the Tribunal upheld the penalty imposed by the Adjudicating Authority, dismissing both appeals for lack of interference in the impugned order.
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2011 (1) TMI 1234
Issues: Challenge to order dropping proceedings for violation of FERA, Competency of Deputy Legal Adviser to file revision on behalf of Director of Enforcement.
Issue 1: Challenge to order dropping proceedings for violation of FERA
The appeal before the Appellate Tribunal for Foreign Exchange, New Delhi involved a revision filed by the Deputy Legal Adviser for the Director of Enforcement challenging an order passed by the Addl. Director General, DGICC, Enforcement Directorate, New Delhi. The order in question, dated 6-10-2004, dropped the proceedings against the respondent for violation of the provisions of the Foreign Exchange Regulation Act, 1973 read with Section 49(3) of FEMA, 1999. The facts of the case revealed that the appellant and a co-noticee were served with a Show Cause Notice for the alleged violation, but the proceedings against the co-noticee were dropped as he was not served due to being in the USA. However, the proceedings against the appellant were also dropped on the grounds that the department did not provide copies of the documents relied upon in the Show Cause Notice. The appellant contended that this order was illegal and contrary to law.
Issue 2: Competency of Deputy Legal Adviser to file revision on behalf of Director of Enforcement
The second issue raised in the appeal was the competency of the Deputy Legal Adviser to file the revision on behalf of the Director of Enforcement. The respondent's counsel argued that the Deputy Legal Adviser lacked the authority to file the revision. In support of this argument, reference was made to a judgment of the Delhi High Court in the case of M/s. M. I. Enterprises v. Director of Enforcement, where it was held that the Deputy Legal Adviser of the Director of Enforcement did not have the authority to file a revision before a specific date. This argument was further supported by citing a judgment of the Tribunal in the case of J.K. Jain v. Director of Enforcement, where a similar view was upheld. Based on the precedents and legal interpretations, the Tribunal concluded that the appeal was not maintainable due to the lack of authority of the Deputy Legal Adviser to file the revision on behalf of the Director of Enforcement and consequently dismissed the appeal.
In conclusion, the Appellate Tribunal for Foreign Exchange, New Delhi, addressed the issues of challenging the order dropping proceedings for violation of FERA and the competency of the Deputy Legal Adviser to file the revision on behalf of the Director of Enforcement. The Tribunal found the order dropping proceedings to be legal and dismissed the appeal based on the lack of authority of the Deputy Legal Adviser to file the revision.
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2011 (1) TMI 1233
Issues: 1. Time-barred appeal due to delay in filing. 2. Challenge to the imposition of a condition on Cenvat credit utilization.
Analysis: 1. The appellant filed an appeal against an order passed by the Commissioner of Central Excise, which was communicated by the Joint Commissioner. The Revenue raised an objection, stating the appeal was time-barred as the order was communicated on 4-8-2006, and the appeal was filed on 26-9-2007. The appellant argued that they requested the speaking order from the Commissioner, but only received a communication from the Deputy Commissioner on 18-6-2007. The Tribunal found that since the appellant did not receive the speaking order despite specific requests, the appeal was not time-barred as per the relevant Notification. Hence, the appeal was not dismissed on grounds of being time-barred.
2. On the merits of the case, the appellant challenged a condition imposed on the non-utilization of Cenvat credit for inputs and capital goods in the distillery unit for the payment of Central Excise Duty on sugar. The Revenue justified the condition, stating that molasses and capital goods in the distillery cannot be considered as inputs for sugar production. The Tribunal noted that the order imposing the condition was passed without giving the appellant an opportunity to be heard. Therefore, the Tribunal set aside the order and remanded the issue back to the Commissioner of Central Excise for fresh consideration after providing an opportunity for the appellant to present their case and taking into account relevant Tribunal decisions. The appeal was disposed of in favor of the appellant on this issue.
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2011 (1) TMI 1232
Issues: - Appeal against the Commissioner (Appeals) order allowing the appeal filed by the respondents. - Disallowance of abatement claimed by the appellants on CDS freight. - Reliance on subsequent Certificate rectifying the mistake in the earlier Certificate. - Time-barring of the demand based on the submission of Certificates and payment of duty.
Analysis: The appeal before the Appellate Tribunal CESTAT Kolkata was filed by the Revenue against the order of the Commissioner (Appeals) which had favored the respondents. The case revolved around the disallowance of abatement claimed by the appellants on CDS freight for the year 1999-2000. The adjudicating authority had confirmed the demand disallowing the abatement, but the Commissioner (Appeals) overturned this decision after considering the subsequent Certificate dated 10-8-2000 which rectified the mistake in the earlier Certificate provided by the C.A. The Revenue contended that the abatement claimed by the appellants was not admissible, and thus, the amount received should be added to the assessable value of the goods. On the other hand, the respondents argued that the subsequent Certificate showed no abatement claimed for CDS freight, and therefore, supported the impugned order.
The Appellate Tribunal noted that the Revenue had initially relied on the C.A.'s Certificate dated 23-6-2000, which claimed a deduction for CDS freight. However, the subsequent Certificate dated 10-8-2000 did not include this deduction, leading the Commissioner (Appeals) to accept the rectified Certificate unless proven to be manipulated, which was not averred in the grounds of appeal. The Tribunal agreed with the Commissioner (Appeals) and found no basis to challenge the subsequent Certificate as a manipulated document, thereby upholding the impugned order.
Furthermore, the Commissioner (Appeals) also addressed the issue of time-barring the demand. It was highlighted that the appellants had submitted both Certificates in the year 2000, and the differential duty was calculated and paid based on the second Certificate in 2001. The show-cause notice alleging suppression with intent to evade duty was issued in 2004. The Commissioner (Appeals) deemed the demand to be time-barred due to the submission of Certificates and payment of duty within the relevant time frames. Consequently, the Appellate Tribunal dismissed the appeal and disposed of the Cross Objection, affirming the decision of the Commissioner (Appeals) on both the abatement issue and the time-barring of the demand.
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2011 (1) TMI 1231
Whether the goods 'star anise seeds' (sombu) is liable to be taxed under Entry 28 of Part C of the First Schedule or under Entry 2 of Part B of the First Schedule to the TNGST Act, 1959?
Held that:- While setting aside the orders of the Tribunal as well as the Appellate Assistant Commissioner and the Assessing Authority, insofar as it related to the assessment years 1997-1998 and 1998-1999 in respect of the petitioner in T.C.Nos.642 and 646 of 2006 and assessment year 1998-1999 in respect of the petitioner in T.C.No.643 of 2006, insofar as it related to 'star anise seeds' alone, we remit the matter back to the Assessing Authority to consider the question as to whether the petitioners are entitled for the benefit of the clarification letter dated 21.11.2000 for those relevant assessment years and whether the Assessing Authority should follow its own subsequent assessment order in respect of the very same item in relation to the petitioner in T.C.No.643 of 2006 for the assessment year 1999-2000.
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2011 (1) TMI 1230
Issues: - Interpretation of Notification No. 10/2006 for exemption from CVD for imported glasses for corrective spectacles - Applicability of Notification No. 5/2006 for concessional excise duty on rough blanks - Classification of ophthalmic rough blanks under Chapter Heading 7015.10 - Validity of denial of exemption by Commissioner (Appeals)
Analysis: 1. Interpretation of Notification No. 10/2006: The appellants imported glasses for corrective spectacles and claimed exemption from CVD under S.No. 10 of Notification No. 10/2006. The Commissioner (Appeals) denied the exemption, stating that rough ophthalmic blanks were not eligible. The appellant argued that the glasses fell under Chapter Heading 7011.10 and were fully exempted under S.No. 10 of Notification No. 10/2006. The Tribunal agreed, emphasizing that the broad description of "glasses for corrective spectacles" under sub-heading 7015.10 included ophthalmic rough blanks and flint buttons. The Tribunal held that the appellants were entitled to the exemption under the notification.
2. Applicability of Notification No. 5/2006: The Commissioner (Appeals) had held that only finished goods were eligible for exemption under Notification No. 10/2006 and that rough blanks were covered by Notification No. 5/2006 for concessional excise duty. However, the Tribunal disagreed, stating that the specific inclusion of rough ophthalmic blanks under Chapter Heading 7015.10 meant that they were covered by the broader category of "glasses for corrective spectacles." The Tribunal noted the deletion of Sl. No. 20 of Notification No. 5/2006, further supporting the eligibility of rough blanks for full exemption under Notification No. 10/2006.
3. Classification of Ophthalmic Rough Blanks: The Tribunal analyzed the tariff sub-heading 7510, which included ophthalmic rough blanks under Chapter Heading 7015.10. The Tribunal clarified that since S.No. 10 of the notification granted exemption to glasses for corrective spectacles falling under 7015.10, it naturally included rough blanks. The Tribunal emphasized that the requirement of further processing for rough blanks did not affect their classification under the notification.
4. Validity of Denial of Exemption: The Tribunal found merit in the appeal, setting aside the Commissioner (Appeals)'s order that denied exemption under S.No. 10 of Notification No. 10/2006. The Tribunal allowed the appeal, providing consequential relief in accordance with the law. The judgment highlighted the correct interpretation of the notifications and the classification of goods for exemption from CVD, ensuring that the appellants received the entitled benefits under the law.
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2011 (1) TMI 1227
Issues Involved: 1. Annual Letting Value of Agra Building 2. Depreciation on Barge 3. Tug Hire Charges 4. Deduction of Unreimbursed Expenses 5. Disallowance of Diwali Gifts 6. Disallowance of Security Deposits 7. Disallowance of Club Fees 8. Depreciation on Tractors/Trailers 9. Disallowance of Telephone Expenses 10. Disallowance of Motor Car Expenses
Detailed Analysis:
1. Annual Letting Value of Agra Building The assessee challenged the annual letting value of the Agra building, arguing that the municipal taxes paid by sub-tenants should not be included in the rental income. The Tribunal noted that the Assessing Officer did not consider the issue of municipal taxes paid directly by sub-tenants. The Tribunal set aside this issue to the Assessing Officer for verification and examination of facts, referencing a previous Tribunal decision that the building is covered under the Bombay Municipal Rent Control Act and cannot have a fair market value above the standard rent.
2. Depreciation on Barge The assessee did not press this ground during the hearing. Consequently, the Tribunal dismissed this ground as not pressed.
3. Tug Hire Charges The assessee claimed tug hire charges for 34 months, but the Assessing Officer allowed only a proportionate amount, considering the payment to a sister concern as a sham transaction. The Tribunal allowed the hire charges for 13 months, aligning with the contract period, but rejected the claim for an additional three months for demobilization, as the contract was not executed.
4. Deduction of Unreimbursed Expenses The assessee claimed expenses not reimbursed by M/s. Stovec Industries Ltd. The Tribunal noted that the assessee failed to produce sufficient evidence before the lower authorities. The Tribunal set aside this issue to the Assessing Officer for verification and examination of relevant evidence.
5. Disallowance of Diwali Gifts The Assessing Officer disallowed 50% of the expenses on Diwali gifts due to missing vouchers and cash payments. The Tribunal upheld this disallowance, agreeing that the assessee failed to substantiate the claim with proper evidence.
6. Disallowance of Security Deposits The assessee claimed security deposits paid to executive engineers as civil work expenses. The Assessing Officer disallowed these expenses as they pertained to a previous year and were not substantiated with evidence. The Tribunal upheld the disallowance, noting the lack of relevant evidence and the time gap in claiming the expenses.
7. Disallowance of Club Fees The Tribunal allowed the club membership fee of Rs. 10,000 as a business expense, referencing jurisdictional High Court decisions. However, it disallowed Rs. 8,100 paid against receivables due to lack of evidence that it was incurred wholly and exclusively for business purposes.
8. Depreciation on Tractors/Trailers The Tribunal allowed the higher rate of depreciation at 40% for tractors and trailers used in the business of transportation of goods on hire, referencing Circular No. 652 dated June 14, 1993.
9. Disallowance of Telephone Expenses The Tribunal deleted the disallowance of Rs. 24,112 for telephone expenses reimbursed to executives, treating it as perquisites in the hands of the employees.
10. Disallowance of Motor Car Expenses The Tribunal modified the disallowance of motor car expenses, limiting it to 10% of the expenditure on petrol and current repairs, instead of a flat 25% disallowance.
Conclusion: The Tribunal allowed some grounds for statistical purposes, requiring further verification by the Assessing Officer, while upholding or modifying other disallowances based on the evidence and legal principles. The order was pronounced in the open court on January 21, 2011.
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2011 (1) TMI 1226
Claim of depreciation on intangible assets - goodwill - facts of the case, the assessee is engaged in the business of mining, export of iron ore, ship and crane building. From the AY under consideration the assessee undertook business of manufacture of pellets after amalgamation of Mandovi Pellets Ltd. ("MPL" for short), into Chowgule and Co. Ltd. as a going concern pursuant to approval of scheme by the order of the HC.
HELD THAT:- In this view of the matter there being no goodwill (intangible asset) on which depreciation can be said to have been allowed to the undertaking in the scheme of amalgamation nor any actual cost having been incurred by the amalgamating company as well as by the amalgamated company, the claim made by it in the return of income for the year under consideration with regard to goodwill (intangible asset) which has been found only a fictitious asset in the hands of the appellant and also the claim of depreciation amounting to Rs. 11,51,47,507 being 25 per cent. of Rs. 46,05,90,029 is neither bona fide nor tenable and thus the learned CIT(A) was justified in his conclusion in rejecting the appellant's claim. The appellant has also raised an alternative plea to allow deduction for capital loss. Considering the entire material on record and no specific argument having been made at the time of hearing of this appeal, we find that the assessee has incurred loss in acquisition of an undertaking which is a capital loss to it. The same, therefore, cannot be allowed as deduction and as such the alternative plea so made being devoid of any merit, stands rejected. In the overall conspectus we find no merit in the grounds raised in appeal by the assessee. The same stands rejected and the appeal stands dismissed. In the result, the appeal stands dismissed.
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2011 (1) TMI 1225
Validity of order passed by CIT u/s 263 - no enquiry done by AO - HELD THAT:- no specific objection has been raised by the learned CIT and the general observations were made by him in paragraph 10 of the impugned order that it is explicit that the AO has not made any enquiry and he did not take any pain to examine the issue any further in view of the fact that the seized documents and material shown several new evidence against the assessee. We have examined the questionnaire dated November 17, 2006 issued by the AO which has covered all the points which are raised by the learned CIT in his show-cause notice and in the impugned order passed by him u/s 263 and on all these points, reply along with necessary details and evidence were furnished by the assessee before the AO in the course of assessment proceedings and hence, it has to be accepted that the AO has applied his mind on all these issues and hence the order of the learned CIT u/s 263 is not sustainable in view of the factual and legal position discussed.
In the present case, all the points raised by the CIT, enquiry was made by the AO and even if such enquiry was inadequate in the opinion of the learned CIT, this does not give power to the learned CIT to pass order, u/s 263 merely because he has different opinion in the matter. We hold that the common order passed by the learned CIT u/s 263 is not sustainable and hence we quash the same.
In the result, all the appeals are allowed.
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