Jurisprudentiol – Friday's cases

By Vijay Kumar

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

Admissibility of deemed credit to small scale units – HC reverses Larger Bench decision – Rules credit is admissible

THIS issue pertains to admissibility of deemed credit to the assessees availing small scale exemption under Notification 1/93 CE. In the year 1994, deemed credit was allowed in respect of Ingots and rerollable material purchased from outside or lying in stock with the units availing exemption under Notification 1/93 CE as on 1st of April 1994.

Income Tax

Excise Duty deposited in PLA, though not due – allowable deduction under Sec 43B ; Prior period expenses allowed irrespective of year in which it pertains as liability got crystallized during relevant previous year; Issuance of shares in lieu of interest liability cannot be considered payment towards expenditure – disallowed: ITAT

Deduction for tax, excise duty etc. is allowable under section 43B on payment basis even before incurring liability to pay such amount. Since in the present case the amount is already paid by way of excise duty, though lying in PLA balance, yet the same is payment towards excise duty and hence allowable in terms of section 43B of the Act.

The word "expenditure" is not defined under the Act. When the assessee issues shares the assessee does not incur any expenditure as the assessee is not to make any payment legally towards shares issued. Thus by issuance of shares the assessee cannot be said to have incurred any expenditure and hence issuance of shares in lieu of interest liability cannot be considered to have been payment towards expenditure. Accordingly the interest liability discharged is not an allowable expenditure.

Customs

Import of hazardous waste - developed nations are trying to dump their municipal waste in developing countries - Third Round in High Court – Review petition dismissed

The Court had pointed out as to how the developed nations are trying to dump their municipal waste in the developing countries. In the counter affidavit filed by the 7th respondent herein in the Writ Appeal, they themselves have agreed that even if the containers are directed to be re-exported, they cannot be sent to any country. Had this business tactic and cunning intention to segregate and dispose the municipal waste at the Tuticorin Port and disposing off the plastic waste alone to their identified firm, was permitted by this Court, it would have posed a dangerous threat of pollution to our land and water.

See our columns Tomorrow for the judgements