Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

Income tax - Sec 80IB - Whether creation of marketing arm be treated as device to shift expenses of assessee firm to former so as to show higher profits of assessee and claim same u/s 80IB - NO, says ITAT

The assessee is a partnership firm formed in 2004, and is engaged in the manufacture of pens and writing materials. In the return filed for the year under appeal, the assessee claimed deduction u/s 80-IB. While scrutinizing the return, the AO noticed that there was another partnership firm by name M/s Cello Sales and Marketing (“CSM” or marketing arm) and was established on 01.04.2001 to market the products manufactured by the Cello Group of concerns which were in existence at that time. The assessee marketed its products through CSM.

Service Tax

CENVAT on GTA outward freight – Matter to be resolved after Karnataka High Court decision: CESTAT

The Tribunal observed that the issue was decided by the Larger Bench of Tribunal in the case of ABB Ltd Vs CCE, Bangalore and that the departmental appeal against this Larger Bench order is pending before the Hon'ble Karnataka High Court. In view of the above, the Tribunal, in its Miscellaneous Order had directed the Registry to list the matter once the decision of the Karnataka High Court is available. Final Order would be passed on the matter on the basis of the decision of the Karnataka High Court.

Central Excise

Deemed violation of rule 8(3A) of CER, 2002 – Voluntary payment of short paid Education Cess with interest - No mens rea - CCE ordering for appropriation of duty paid through CENVAT as being made through PLA – Sound case for invoking section 11A(2B) of CEA, 1944 – Penalty and interest set aside: CESTAT

The assessee is before the CESTAT with a submission that it was clerical mistake on their part in taking a wrong credit in the PLA; that nobody would like to intentionally make a short payment of Rs.34,498/- attracting consequences as held by the Commissioner; that show cause notice did not attribute mens rea on the part of the appellant. More over, since the appellant themselves detected the error and made the payment of short paid amount along with interest, show cause notice itself should not have been issued to them in terms of Section 11A(2B) of the Central Excise Act.

See our columns Tomorrow for the judgements