Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

Income tax – Sec 14A – Assessee can claim deduction of interest paid on borrowed funds utilised for acquisition of shares only if shares are held as stock-in-trade and not investment: HC

THE issue before the HC is - Whether the assessee is entitled to deduction of substantial amount paid towards interest on borrowed funds utilised for acquisition of shares in a company in which assessee over a period of 10 years, acquired controlling interest upto 90%.

Service Tax

In view of fact that demand is confirmed under Central Excise Act & CENVAT Credit Rules there is no merit in contention of Appellant that provisions of s. 85 of Finance Act, 1994 come into play and delay upto 3 months in filing appeal can be condoned by Commissioner(A) – Appeal filed in ST-4 form of no consequence - Stay petition and appeal dismissed: CESTAT

IN this case, the appellant was issued a demand notice seeking to deny CENVAT Credit by invoking the CCR, 2004 as well as the provisions of section 73 of the Finance Act, 1994. Penal provisions u/s 11AC of the CEA, 1944 and section 78 of the Finance Act, 1994 were also invoked. In adjudication, the original authority confirmed the demand of duty of Rs.9,08,273/- after denying CENVAT credit under Rule 14 of CENVAT Credit Rules read with proviso to Section 11A of Central Excise Act and penalty was imposed under CENVAT Credit Rules.

Central Excise

Plea of automatic accrual of interest is not relevant to context where a statutory provision for levy of interest is under scrutiny – pre-amended section 11AB of CEA, 1944 is not applicable when there are no allegations of fraud, collusion in SCNs: CESTAT

THE period of demand of Central Excise duty is from May, 1992 to March, 2000. The Dy. Commissioner while confirming the duty demand of more than one crore rupees raised in the various show-cause notices did not find it proper and legal to order recovery of interest u/s 11AB of the CEA, 1944. In appeal by the Department, the Commissioner (A) ordered for levy of interest on the above amount of duty. The appellant is now before the CESTAT contending that the order of the Commissioner (A) for levy of interest from the appellant is not sustainable in law or on facts.

See our columns Tomorrow for the judgements