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.
Glass bottles used by a soft drink company are “fixed capital investment” and are exempted from trade tax, the Supreme Court ruled in the case, Commissioner of Trade Tax, Uttar Pradesh vs Varun Beverages Ltd. However, crates used to carry the bottles are not fixed capital investment, the court added. The argument of the soft drink company was that it was entitled to exemption for all fixed capital investment including land, building, apparatus, components and equipment which are necessary for the establishment and running of the factory. The Allahabad high court agreed with the contention, stating that for the manufacture of soft drinks, bottles and crates are essential equipment, especially in a captive industry where the liquid is prepared and collected by way of a continuous process in bottles and thereafter kept in crates. But the revenue authorities appealed to the Supreme Court. It held that bottles were exempted, but not the crates.
The Supreme Court last week ruled that Industrial Finance Corporation of India is a ‘public financial institution’ under Section 4A of the Companies Act and it was entitled to invoke the Securitisation Act to enforce a “security interest”. Upholding the view of the Delhi high court in the appeal case, Bharat Steel Tubles Ltd vs IFCI, the apex court stated that the conversion of the IFCI into a company did not alter its position and status as a financial institution in view of Section 5 of the Industrial Finance Corporation (Transfer of Undertaking and Repeal) Act. All matters, including all benefits, relating to the corporation, stood wholly transferred in favour of the new company.
In this case, the Commissioner (Appeals) has reduced the tax amount and hence the respondents cannot take advantage of the provision under the fourth proviso to Section 78. Having not paid the penalty amount within one month from the date of the Order-in-Original even though the legal provision was clearly brought to the notice of the respondents by the original authority in para 14 of his order, the respondents cannot be given the benefit of paying 25% of the reduced penalty.
The question whether ‘Mithi River’ is a river or not, is a pure question of fact which needs to be examined and settled at the final hearing stage of the appeal. For the present, we consider the fact that the activity undertaken by the appellant in the aforesaid stream of water was ‘dredging’. Their limited case is that the activity was undertaken in a drain and not in a river. WE note that even the agreement between the appellant and MMRDA describes the stream as ‘Mithi River’. It cannot be called otherwise merely by reason of the fact that rainwater or domestic sewage from the surrounding areas are also flowing into it or that industrial effluents are discharged into it.
We have a case where the equipment is purchased or taken on lease by the applicant. It is proposed to be granted on a lease for a short term (in fact, on behalf of the petitioner it is submitted that it was proposed to grant a lease for two years only). The lease amount or rent is to bear only a small proportion to the cost of the equipment.
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.
