Jurisprudentiol –Tuesday's cases

By Vijay Kumar

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

No appeal of department would lie to CESTAT against any order passed by Commissioner of Customs under Regulation 23(7) of the CHALR , 1984.

THE CHA was issued a show cause notice asking as to why his licence should not be revoked on the ground that they had violated the CHALR , 1984. The CHA submitted his defence . The enquiry officer appointed to look into the charges framed against the CHA gave a clean chit to the CHA. However, the Commissioner of Customs (General), Mumbai was not satisfied. He appointed another enquiry officer (permissible??) who too submitted a report in favour of the CHA. The Commissioner rejected the report and revoked the CHA licence on the ground of breach of CHALR provisions, under Regulation 23(7) of the CHALR , 1984.

Income Tax

Section 37(1) - Whether expenses incurred to protect business interest of assessee firm in protecting valuable trade mark owned by its sister concern could be allowed as deduction - Whether deduction of expenses on account of foreign tour expenses be allowed on mere filing of credit card bills showing amount spent - Whether expenses incurred on membership and subscription fee be said to be incurred for purpose of business and accordingly allowable

THE assessee is a partnership firm engaged in the business of exporting “Precious” brand agarbattis (incense sticks) which are manufactured by it's sister concern M/s. Hem Corporation - incurs certain expenses in connection with trade mark “Precious” owned by it's sister concern, in respect of a litigation in U.S.A. - While agarbattis are manufactured by the sister concern, the entire export of agarbattis is being handled by the assessee - It was in these circumstances and since the expenses related to export market, the expenditure was borne by the assessee - The AO declined deduction in respect of the same on the ground that the trade mark was owned by the sister concern - CIT(A) allowed only half of the expenditure on the ground that the sister concern ought to bear half of this expenditure as the sister concern also had valuable rights protected by the said litigation;

Service Tax

Laying of pipelines for drinking water supply projects run by Gujarat Water Supply and Sewerage Board, not leviable to tax under either Commercial or Industrial Construction Service or Works Contract Service – CESTAT

THE appellant, M/s. Nagarjuna Constructions Company Ltd., Hyderabad executed laying of long distance pipelines in the State of Gujarat under a contract awarded to them by M/s. Gujarat Water Supply and Sewerage Board (‘GWSSB').

The lower authority found that the appellant had engaged in providing 'Commercial or Industrial Construction Services' during the material period and demanded service tax of Rs 7,15,36,082/- along with applicable interest and imposed a penalty @ 2% on the demand confirmed against the appellant subject to the maximum of the tax demanded. Further, a penalty of Rs . 8 crores under Section 78 of the Finance Act, 1994 was also imposed.

See our columns Tomorrow for the judgements