Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

Job work – CENVAT Credit - It is settled law that even in case of job work, CENVAT credit can be availed. High Court at pains to understand approach of Tribunal; Judicial Discipline – failure would result in judicial mayhem – pre – deposit waived – High Court

WE are at pains to understand the approach of the learned Tribunal. Judgments of higher Courts considering judicial discipline have to be followed by the Courts subordinate to the higher court. Failure to do so would result in judicial mayhem. Subordinate courts are bound to follow the judgments unless there be a subsequent judgment of a Higher Court which has taken a view different from the view earlier expressed.

Income Tax

Sec 32(1)(ii) - assessee acquires licence for oil exploration abroad - purchase of right is not deferred revenue expenditure; it is commercial right, eligible for depreciation; Expenses incurred for purchase of seismic data of foreign oil blocks is revenue expenditure as it is incurred during normal course of business: ITAT

ONGC Videsh is a subsidiary of ONGC and is engaged in exploration of oil and gas in fields outside India. The income earned from such activities are governed by profit sharing contracts that are entered into by the company with the foreign governments. In so far as India is concerned, the same is governed by section 42 read with section 293A of the Income-tax Act. ONGC videsh, in the case under review had entered into a contract with other consortium members and the Russian Government for acquiring a 20% participating interest in Sakhalin islands belonging to Russia for a consideration of Rs.15,590.96 corres.By acquiring the participating interest, it acquired proportionate share in rights and licence granted by the Russian State for the Sakhalin Block and became entitled to carry on hydrocarbon operations in the Block. The contention of assessee before the Assessing officer was that the rights and licences, being intangible assets, were entitled to depreciation @ 25% in view of the amended provisions of section 32 of the Act. The claim was negatived by the A.O.

Customs

If the case of prosecution is based solely on statement of accused, which is retracted, there can be no conviction; when two views are possible, accused should get benefit – High Court

IF the case of the prosecution whether launched by Custom Authorities, FERA Authorities or by Directorate of Revenue Intelligence is solely based upon the statement of the accused recorded by the Department pursuant to issuance of a notice given by them only, which stands retracted and there is no corroboration of the same, then the said statement cannot be the basis of conviction of the accused whether it is a statement recorded under Section 40 of the Foreign Exchange Regulation Act or under Section 67 of the NDPS Act or under Section 108 of the Customs Act. In the present case, no recovery has been affected from the respondents. The car from where some seizure of contraband has taken place does not belong to either of the respondents. The case of the petitioners is solely rest upon the statement of the accused recorded under Section 108 of the Customs Act which stands retracted and which is not supported by any other evidence led by the prosecution.

See our columns Tomorrow for the judgements