Rule 3(1) allows a manufacturer of final products to take credit inter alia of service tax which is paid on (i) any input or capital goods received in the factory of manufacturer of the final product; and (ii) Any input service received by the manufacturer of the final product. The subordinate legislation in the present case makes a distinction between inputs or capital goods on the one hand and input services on the other other.
So far as question (i) is concerned, the respondent assessee has claimed deduction of interest on tax free bonds of Rs.5,60,11,644/-. During the course of the assessment proceedings, the assessee was asked to give details of interest on tax free bonds. While preparing the said details, it was noticed that 6% Government of India Capital Index Bonds purchased during the year had inadvertently been categorized as tax free bonds and, therefore, interest of Rs.75,00,000/- earned on such bonds had also inadvertently escaped tax.
In its reply dated 19th June 2012 to the notice dated 26th May 2012 the Respondent has denied any liability whatsoever. It is, inter alia, stated in the reply sent by the Respondent through its counsel that “In the facts and circumstances, please advise your client that my client is not liable to pay any sum of US$ 350,000 or any other amount under the Agreement dated 18.05.2008 as alleged.
Delhi HC upholds deduction claim under Section 80HHC, dismissing penalty. Ruling based on Supreme Court decisions. Full analysis of ITA 47/2013 judgment.
In this view of the matter, we opine that the Tribunal was correct in taking the view that the Appellate Commissioner was not justified in reversing the view taken by the Assessing Officer and the order of the Tribunal is proper, does not suffer from any error of law and therefore we answer the questions posed in the affirmative to hold that the Tribunal was correct in taking the view that the assessee was not entitled to claim the benefit of deduction even before adjusting unabsorbed depreciation of the earlier years.
Here, the only question, which false for our determination, is as to whether the Additional Director had the authority under section 132 (1) of the Act to issue warrant of search and seizure. In view of the amendment brought by Finance (No. 2) Act, 2009, this point need not detain us much. Finance (No. 2) Act, 2009 has specifically inserted the words “Additional Director” in section 132 (1) of the Act with effect from 01.06.1994, besides other authorities.
Admittedly, it is the case of the petitioner that the assessment orders passed on remand are the subject matter of appeals before the Commissioner (Appeals) or the Tribunal, as the case may be. It is, therefore, for the petitioner to work out its remedy in the said forum including appropriate interlocutory orders as against tax and interest. The writ petition filed challenging the letter demanding payment of arrears is, per se, not maintainable for the abovesaid reason. The petitioner, having availed the statutory remedy, has to seek indulgence in the appeals said to have been filed.
The entire case is based on principal claim of revenue neutrality and non-applicability of the principle of unjust enrichment. It is undisputed fact that the duty amount was not paid on the due date in relation to the period for which the authority had found short-payment essentially because there was subsequent payment of the said amount, that cannot ipso facto result in revenue neutrality, merely because the appellants are entitled to avail credit in respect of the duty paid.
The petitioner trust, in this case, is also being deprived of a sum of Rs. 8,93,773 for which it cannot be blamed at all : it had no liability whatsoever to pay this amount to the Revenue. Yet, the Revenue has refused to refund the same by taking some hypertechnical view of the matter. If the petitioner-trust is being deprived of a sum of Rs. 8,93,773 which legitimately belongs to it due to perverse view taken by the Revenue, is it still rational to say that no genuine hardship is being caused to it ?
Mere pendency of the public interest litigation would not extinguish the liability of assessee to pay tax on the income received. The amount received by the assessee is not in pursuance to any interim order of the court wherein, the interim order merges with the final order and such payment is contingent depending upon the final verdict in the litigation. In this case, ultimately when the Government Order is set aside, if the assessee repays the money, he is eligible for adjustment of tax paid for the income received or for refund of the said amount. On the pretext that the third party has filed the public interest litigation for the relevant assessment year, he cannot avoid payment of tax on the said revenue receipt. In the event of assessee losing the battle, he will be bound to refund the amount of Rs. 2,06,33,600/- to the Government. If he were to pay tax under the Act, when once that amount is returned, he would be entitled for refund of the said tax or adjustment of tax in future, but that does not enable him to withhold payment of tax on the pretext of pending litigation. In that view of the matter, the approach of the Tribunal is not proper.
