Jurisprudentiol–Thursday's cases

By Vijay Kumar

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

Set off of carry forward loss - 51% of voting power is to be beneficially held during year; Expenditure on Know-how: Section 35AB is applicable when amount paid is not consideration as revenue expenditure but a capital expenditure: ITAT

LOOKING to the definition of the word paid given in sec. 43(2) of the Income-tax Act, ITAT held that the CIT(A) was justified in allowing the deduction. Section 35AB is applicable when the amount paid is not consideration as revenue expenditure but a capital expenditure. It is also useful to note that in case the assessee is not given deduction under sec. 35AB then, it will be entitled to depreciation under sec. 32 of the Act.

Customs

Re-import of export goods by SEZ unit by mis -declaring country of origin – Bonafide of appellants relevant to determine quantum of fine and penalty – Redemption fine reduced and penalties set aside: CESTAT by Majority

THE appellants are manufacturers-exporters of ready made garments having their unit in SEZ. Revenue took up investigation of three containers imported by the appellants and found that the goods imported were in fact originally exported by the appellants earlier. However, in the bills of entry, the country of origin was shown as Dubai. In the course of investigation, it was found by the Revenue that the appellants made certain insertion in the bills of entry indicating the reference of original shipment documents pertaining to earlier exports from the unit, after the Customs noting on the said bills of entry. Action was initiated for confiscation of goods and the Commissioner imposed a redemption fine of Rs. 25 lakhs with penalty of Rs. 10 lakh on the company, Rs. 5 lakhs each on the Director and factory manager and Rs. 2.5 lakhs on the CHA. The Commissioner also ordered that the said exports should not be regarded for computation of NFE.

See our columns Tomorrow for the judgements