CIT vs. Cadbury India Ltd (Delhi High Court) – Levy of penalty under section 271C is not automatic. Before levying penalty, the concerned officer is required to find out that even if there was any failure referred to in the concerned provision the same was without a reasonable cause. The initial burden is on the assessed to show that there existed reasonable cause which was the reason for the failure referred to in the concerned provision. Thereafter the officer dealing with the matter has to consider whether the Explanationn offered by the assessee or the person, as the case may be, as regards the reason for failure, was on account of reasonable cause. “Reasonable cause” as applied to human action is that which would constrain a person of average intelligence and ordinary prudence. It can be described as a probable cause. It means an honest belief founded upon reasonable grounds, of the existence of a state of circumstances, which assuming them to be true, would reasonably lead any ordinary prudent and cautious man, placed in the position of the person concerned, to come to the conclusion that same was the right thing to do. The cause shown has to be considered and only if it is found to be frivolous, without substance or foundation, the prescribed consequences will follow.
I. K. Agencies Pvt Ltd vs. WTO (Calcutta High Court) – The authorities below totally overlooked the fact that initiation of the proceedings for reassessment was vitiated for not giving notice under Section 17 of the Wealth Tax Act to the Appellant and the notice issued upon M/s. Abhudey Properties Pvt. Ltd. which was not in existence at that time was insufficient to initiate proceedings against the Appellant who had taken over the liability of M/s. Abhudey Properties Pvt. earlier to the issue of such notice and such fact was also made known to the Revenue.
Kalpesh Ratilal Kalathia v CIT- Following the course of action adopted by the Supreme Court in the aforesaid decision, having held that the petitioner is not entitled to the benefit of the Scheme since the payment was not made in terms of the Scheme, the respondent authority is directed to either refund or adjust the amount of Rs.4,74,584/- already deposited by the assessee in purported compliance of the provisions of the Scheme, in accordance with law.
The identical questions of law came up for consideration before this Court in the case of CCE v. Stanzen Toyotetsu India (P.) Ltd. [2011] 32 STT 244. This Court held that the transportation/Rent-a-Cab service is provided by the assessee to their employees in order to reach their factory premises in time which has a direct bearing on manufacturing activity.
It is not in dispute that the assessees used the inputs and have exported the impugned goods and the refund is only in respect of input credit attributable to the inputs utilized in the exported goods. It is not necessary to prove one-to-one correlation of inputs with that of exported goods. The assessees were not in a position to utilize the credit availed on inputs used in the manufacture of goods which were exported under bond and which were getting accumulated from time to time. In those circumstances, when once the appellate authority correctly applied Rule 5 and granted the refund.
M/s Durga Dass Devki Nandan vs. ITO (HP High Court) – The CBDT circular can only be held to be valid if it is in terms of the main section. As held above, the Section 40(b)(v) only lays down that either the working partner should be paid an amount specified in the partnership deed or it should not exceed the amount laid down in the Section. In the present case the partners have been paid their remuneration/salary strictly in accordance with the terms of the partnership deed and this amount paid to the partners does not exceed the maximum permissible amount and therefore, the assessee is entitled to the deduction.
CIT vs. Gujarat Power Corporation Ltd (Gujarat High Court) – Assessee is fully justified in arranging its affairs in such a manner where his tax liability is reduced provided the assessee does not resort to any illegal means or enter into a sham transaction for the said purpose. It is the prerogative of the assessee to use its own fund in the manner in which it considers proper. The Revenue cannot dictate the assessee that how the assessee should use its own fund. Thus in our considered opinion the A.O.’s approach in the instant case was not justified. The nexus between the interest bearing fund and interest free investment as claimed by the A.O. was not correct when it is not in dispute that the own funds were utilized for making tax free investment.
Recently, the Delhi High Court in the case of CIT v. DCM Limited (ITR Nos.87-89/1992) held that payments made for transfer of comprehensive technical information and know-how, which included all trade secrets and technical information, designs and drawings, etc. cannot be treated as income from royalty under the India-UK tax treaty (tax treaty). Accordingly, the taxpayer was not liable to deduct tax on the payments made to the foreign company.
It was not disputed by the learned counsel appearing for the respondent that the averments raised by the appellant herein need to be decided on merits by the appellate authority in view of the issue raised by the appellant with regard to his liability. The impugned order has been passed on a prima facie view of the appellate authority. Keeping in view the averments raised by the appellant and the fact that he is an aged person of about 80 years and has no source of income of his own and the fact that he has already deposited a sum of Rs.5.00 lakhs as a pre-deposit for hearing the appeal, we are of the view that the pre-deposit order of an additional amount of Rs.20.00 lakhs is not justified. In the given circumstances, we set aside the impugned order to the extent of asking for the pre-deposit of Rs.20.00 lakhs.
Rule 7 of the Cenvat Credit Rules, 2004 – Cenvat credit – Distribution of credit on inputs by office or any other premises of output service provider – Assessee paid service tax pertaining to advertisement of its product manufactured in a unit – It availed Cenvat credit of service tax so paid in another unit – Revenue denied said credit on ground that assessee was entitled to take credit only in unit where product was manufactured –
