Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

Assessee escapes duty liability of Rs. 9.6 Cr - CESTAT holds there is no infirmity in differential duty paid in November 2006 based on price escalation clause for period April to August by utilizing Credit available in month of Nov 2006 – Apex Court decision in SKF India delivered a week later

CLEARANCE of iron ore pellets to sister concern by paying duty on value arrived in terms of Rule 8 of Valuation Rules, 2000 – No infirmity in differential duty paid in November 2006 after considering price escalation for the period April to August 2006 by utilizing CENVAT Credit available in November 2006 since differential duty liability crystallized only in November 2006 – Impugned order not sustainable, liable to be set aside.

Income Tax

90% of service income is to be excluded from profit of business for computing deduction u/s 80HHE; 90% of other income to be excluded for purpose of determining profit of business; Computer software – capital or revenue expenditure? - Functional test to be applied; Interest u/s Sec 234D has no retrospective application: ITAT

WHEN the assessee acquires a computer software or for that matter the licence to use such software, he acquires a tangible asset and becomes the owner thereof Once the tests of ownership and enduring benefit are satisfied, the question whether expenditure incurred on computer software is capital or revenue has to be seen from the point of view of its utility to a businessman and how important an economic or functional role it plays in his business. Once the tests of ownership and enduring benefit are satisfied, the question whether expenditure incurred on computer software is capital or revenue has to be seen from the point of view of its utility to a businessman and how important an economic or functional role it plays in his business.

Service Tax

Eligibility of credit of service tax paid on outward freight – CESTAT adjourns case till stay application of Revenue against Larger Bench decision in M/s ABB Ltd & Ors 2009-TIOL-830-CESTAT-BANG-LB is disposed of by Karnataka High Court

THE controversy surrounding the availability of CENVAT credit of service tax paid on outward freight for transportation of goods refuses to die. This hydra headed monster rears its head again and this time the controversy is stoked by the Chennai Bench of CESTAT.

This adjournment by the CESTAT to await the outcome of a stay petition before the High Court will certainly set a wrong precedent. If all the cases before the various benches of the CESTAT were to be adjourned this way on the pretext that either the Revenue or the assessee has appealed against a particular decision on a given issue before a higher judicial forum, then proceedings in CESTAT will come to a grinding halt.

See our columns Tomorrow for the judgements