Jurisprudentiol – Wednesday's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Central Excise

Valuation of body fabricating and mounting on chassis supplied free of cost by chassis manufacturers using materials procured from vendors identified by chassis manufacturers under Rule 10A and not under Rule 6/11 of Valuation Rules – Duty demand with interest confirmed – Penalty set aside as issue involves interpretation of law – CESTAT

The appellants are engaged in fabricating and mounting bodies of buses and trucks on the chassis manufactured and supplied free of cost by M/s Eicher Motors Ltd and M/s Tata Motors Ltd. This body building activity was carried out by the appellants on the automobile chassis supplied to them using raw materials procured from vendors identified by the said manufacturers of automobile chassis.

Income Tax

DTAA – Expatriate Salary – UK Firm's employees working in Delhi Branch – fully deductible business expenditure - ITAT

As per A.O. these employees continue to draw their salary from the overseas office from which they are being seconded. It is the claim of the assessee that as these expatriate employees are working wholly and exclusively for the branch office, their expenses have been claimed as fully deductible business expenditure in computing taxable income on A T K (UK) from its Indian operations. By the impugned order CIT( A) deleted the disallowance of expenses by observing that since the Indian branch is said to be a PE of a non resident's company as per Article 5 of DTA , for the purpose of computing business profits of the assessee under Article 7, the expenses attributable to such PE are required to be allowed. No infirmity in this order.

Service Tax

Input Service - Mobile phones procured by the company and supplied to functionaries/employees and mobile phone bills were paid by the company under presumption that the same are to be used in connection with business of the company - As this presumption is in favour of assessee, the rebuttal has to come from Revenue – Credit allowed – CESTAT

Irregular availment of CENVAT credit by way of fraud, collusion, suppression/misstatement of facts or contravention of rules with intention to evade payment of duty attracts a penalty under the said provisions - In the present case, none of these ingredients was alleged in any of the show-cause notices and none was found by any of the lower authorities. Therefore, the penalty imposed on the assessee cannot be sustained and the same is set aside.

See our columns Tomorrow for the judgements