Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

Penalty – Duty paid before issue of Show Cause Notice – 25% penalty is justified: High Court

IN the present case, the issue is with regard to levy of penalty equivalent to 25% of the duty amount. Since the respondent assessee has already paid the duty amount prior to the issuance of show-cause notice, there is no question of exercise of any option by the respondent - assessee and the assessee is straightway entitled to the benefit of the Proviso 1 & 2 to Section 11AC of the Act.

Income Tax

TDS - Sec 40(a)(ia) - Assessee claims deduction for accrued interest on debentures - AO treats it as contingent liability - Since assessee fails to deduct tax at source on interest expenditure, Revenue's decision to disallow entire expenditure is justified: ITAT

THE intention of the legislature is clear that the nature of expenses mentioned in sub-clause (ia) cannot be allowed unless tax deducted has been paid thereon. If a liability is ascertained and it has been quantified and it has accrued, then, according to mercantile system of accounting, the same has to be allowed as an expenditure irrespective of the fact that whether any such expenditure has been debited to Profit & Loss Account as allowability of an expenditure will not depend upon accounting treatment given by the assessee to a particular expense. If the expenses have been incurred for the purpose of business and they are allowable otherwise, the entry in the books of account, whether it is made or not is not relevant for the purpose of considering the allowability thereof.

FERA

Alleged Offences took place in 1958, first notice issued in 1973, personal hearing in 2003 – writ in 2003 - Department is not entitled to reopen old matters in this manner : High Court

THE long saga of this case started sometime in 1958, 52 years ago. If the alleged offender was 50 years old then, he would be 102 now! No fault can be attributed to the petitioners for this delay and inaction on the part of the respondents. The respondents are not alleging any malice on the part of the petitioners. It is not the case of the respondents that the petitioners are responsible for delaying the proceedings. No justification is to be found in the explanation for causing delay in the adjudication process. The absence of relevant record due to lapse of more than 30-35 years is also a factual aspect which needs to be taken into account. The respondents cannot be allowed to reopen the proceedings. If allowed it would cause serious detriment and prejudice to the petitioners. The Department is not entitled to reopen old matters in this manner.

See our columns Tomorrow for the judgements