Jurisprudentiol– Tomorrow's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Income Tax

Income Tax - sale proceeds of special import license being in nature of business income cannot be excluded under clause (baa) of explanation to Sec 80- HHC; profit part of DEPB receipts to be excluded under clause (baa) of Explanation and not cost part of DEPB receipts

THE DEPB received by assessee is sold to manufacturer of packing material on premium. Thus the DEPB receipts consist of two parts, namely,(i) the cost; and (ii) the profit. The profit part is covered under section 28(iiid) and clause (baa) of section 80HHC of the Act will apply accordingly. There is no dispute that the entire amount of DEPB receipt is assessable to tax. The face value of DEPB is the reimbursement of import duty included in packing material purchased by the assessee and represents the benefit derived from the business of exports. Therefore, the cost of element of DEPB will be assessable as business income under section 28(iv) of the Act.

Income Tax

Income Tax - assessee was a manufacturer, not merely carrying on repair – Deduction under 80IA eligible - Revenue could not contend that sale-tax is payable on repair or on job work

JUDICIAL Member was not right in putting burden of proof on the assessee in proceedings u/s 263 and in not examining profit and loss account and balance sheet of the assessee and its claim that it was involved in the manufacture of electromechanical parts. The material available on record was also not examined in the light of the claim made by the assessee. The observations of the Judicial Member in the proposed order are also not factually correct.

Excise

Whether penalty under rule 26 of CER, 2002 can be imposed against persons who have not dealt with any goods - Matter referred to President on account of difference in opinion

ACCORDING to the Supreme Court judgement, firm is a person. Once a firm is held a person, Rule 26 of the Central Excise Rules, 2002 will apply and firm will also the liable to penalty. The decisions of the Tribunal referred to above are per incuriam and do not have precedential value.

Happy Sankranti

See our columns tomorrow for the judgements